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): January 3, 2018

 

 

CNX Midstream Partners LP

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36635   47-1054194

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

CNX Center

1000 CONSOL Energy Drive Suite 400

Canonsburg, Pennsylvania 15317

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (724) 485-4000

CONE Midstream Partners LP

(Former name or former address, if changed since last report)

 

 

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 ( see General Instruction A.2. below):

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☒

 

 

 


Introductory Note

On January 3, 2018, CNX Gas Company LLC, a Delaware limited liability (“CNX Gas”) and an indirect wholly owned subsidiary of CNX Resources Corporation, a Delaware corporation (“CNX”), consummated the previously disclosed acquisition (the “Acquisition”) of a 50% membership interest in CONE Gathering LLC, a Delaware limited liability company (“CONE Gathering”), from NBL Midstream, LLC, a Delaware limited liability company (“Noble”), pursuant to that certain Purchase Agreement dated as of December 14, 2017 between CNX Gas and Noble.

CNX Gas funded the $305 million aggregate purchase price for the Acquisition, which was determined through arms-length negotiation between CNX and Noble, with cash on hand.

Following the closing of the Acquisition (the “Closing”), CNX indirectly owns 100% of the outstanding membership interests in CONE Gathering and NBL Midstream ceased to be a member of CONE Gathering. CONE Gathering holds 100% of the interests in CNX Midstream GP LLC (f/k/a CONE Midstream GP LLC), a Delaware limited liability company (the “General Partner”) and the general partner of CNX Midstream Partners LP (f/k/a CONE Midstream Partners LP), a Delaware limited partnership (the “Partnership”). The General Partner, as the general partner of the Partnership, owns a two percent general partner interest in the Partnership and all of the Partnership’s incentive distribution rights. As a result of the Acquisition, CNX became the sole sponsor of the Partnership. In connection with the closing of the Acquisition, the Partnership changed its name from “CONE Midstream Partners LP” to “CNX Midstream Partners LP” and changed its New York Stock Exchange ticker symbol to “CNXM”. The General Partner also changed its name from “CONE Midstream GP LLC” to “CNX Midstream GP LLC”.

Item 1.01 Entry into a Material Definitive Agreement.

Registration Rights Agreement

On January 3, 2018, in connection with the Closing, the Partnership entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Noble relating to the registered resale of common units representing limited partner interests in the Partnership (the “Common Units”) that Noble acquired in connection with the Partnership’s initial public offering and upon conversion of subordinated units representing limited partner interests in the Partnership (the “Subordinated Units”) (collectively, the “Registrable Securities”).

Pursuant to the Registration Rights Agreement, the Partnership is required to prepare and file a registration statement, or amend an existing registration statement, for the registered resale of the Registrable Securities and to use commercially reasonable efforts to cause such registration statement to become effective as soon as practicable after the Partnership’s release of earnings for the year ended December 31, 2017.

In certain circumstances, and subject to customary qualifications and limitations, Noble will have piggyback registration rights on offerings of Common Units initiated by the Partnership and other holders of Common Units. Noble will also have the right to request that the Partnership initiate up to four Demand Underwritten Offerings (as defined in the Registration Rights Agreement) of Registrable Securities, subject to certain limitations described in the Registration Rights Agreement. The Registration Rights Agreement will terminate no later than the third anniversary of the date on which the registration statement becomes effective.


The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Registration Rights Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.

Second Amended and Restated Gathering Agreement

On January 3, 2017, in connection with the Closing, CNX Gas entered into that certain Second Amended and Restated Gathering Agreement (the “Second A&R Gathering Agreement”) with CONE Midstream Operating Company LLC, a Delaware limited liability company (“OpCo”), CONE Midstream DevCo I LP, a Delaware limited partnership (“DevCo I LP”), CONE Midstream DevCo II LP, a Delaware limited partnership (“DevCo II LP”), and CONE Midstream DevCo III LP, a Delaware limited partnership (“DevCo III LP” and, together with DevCo I LP and DevCo II LP, the “DevCos” and, together with OpCo, the “Gatherer”). The Second A&R Gathering Agreement amended and restated the existing gathering agreement between the parties thereto.

Pursuant to the 20-year, fixed-fee Second A&R Gathering Agreement, CNX Gas has agreed to dedicate to Gatherer its acreage in the Utica Formation in and around the McQuay Area and Wadestown Area, in addition to the previously dedicated acreage in the Marcellus Formation in and around the McQuay Area, the Wadestown Area, the ACAA Area, the Crawford Area, the Majorsville Area, the Mamont Area, and the Shirley Penns Area, in each case for natural gas midstream services (the “Dedicated Acreage”). Gatherer also has the right of first offer to provide midstream services to CNX Gas on certain acreage adjacent to the dedication area (the “ROFO Area”).

Under the Second A&R Gathering Agreement, Gatherer receives a fee based on the type and scope of the midstream services Gatherer provides, which fees vary by area and by formation.

The DevCos have agreed to gather, compress and redeliver all of CNX Gas’ owned and controlled dedicated natural gas produced from the Marcellus Shale on a firm commitment, first-priority basis. The DevCos have agreed to gather, stabilize and store all of CNX Gas’ dedicated condensate produced from the Marcellus Shale on a firm commitment, first priority basis. Each quarter, CNX Gas will provide the DevCos an update on their drilling and development operations, which will include a detailed description of the drilling plans and well locations for the following 24 months and a long-term plan that will include drilling plans and production forecasts. The DevCos will meet monthly with CNX to discuss the DevCos’ current plans to timely construct the necessary facilities to be able to provide midstream services to CNX on the DevCos’ dedicated acreage. In the event that the DevCos do not perform their obligations under the Second A&R Gathering Agreement, CNX Gas will be entitled to certain rights and procedural remedies thereunder.

In addition to the owned and controlled natural gas and condensate that is produced from the Dedicated Acreage, CNX Gas may dedicate other properties located in the ROFO Area (the “ROFO Properties”) to Gatherer. If CNX Gas desires to develop any ROFO Properties, it shall provide Gatherer with written notice, and Gatherer shall have a right of first offer to provide midstream services with respect to such ROFO Properties. If CNX Gas accepts any such offer, the applicable ROFO Properties will be deemed Dedicated Properties.

The Second A&R Gathering Agreement also provides that in certain situations, such as a failure to take production from the Dedicated Acreage for a period of five consecutive days or more than seven days during any consecutive fourteen day period, CNX Gas can temporarily release from the dedication under the Second A&R Gathering Agreement the affected volumes for a period lasting until the first day of the month following 30 days after Gatherer’s notice to CNX Gas that the interruption or curtailment has ended. Any temporary releases of acreage from the dedication could materially adversely affect its business, financial condition, results of operations, cash flows and ability to make cash distributions.


The Second A&R Gathering Agreement generally runs with the land and is binding on a transferee of any of the Dedicated Acreage; however, CNX Gas may exchange a portion of the Dedicated Acreage free of the dedication to Gatherer provided that CNX Gas receives new acreage that will be dedicated to Gatherer of equivalent quantity and quality. There are no restrictions under the Second A&R Gathering Agreement on CNX Gas’ ability to transfer acreage in the ROFO Area, and any transferee of CNX Gas’ acreage in the ROFO Area will not be subject to the Gatherer’s right of first offer.

Upon completion of its initial 20-year term on December 31, 2037, the Second A&R Gathering Agreement will continue in effect from year to year until such time as the Second A&R Gathering Agreement is terminated on or before 180 days prior written notice by either OpCo, the DevCos or CNX Gas.

The foregoing description of the Second A&R Gathering Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Second A&R Gathering Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.

Item 5.01 Changes in Control of Registrant.

As a result of the Acquisition, at the Closing, the General Partner became an indirect, wholly owned subsidiary of CNX and CNX became the sole sponsor of the Partnership.

The information in the Introductory Note, Item 1.01, Item 5.02 and Item 5.03 of this Current Report on Form 8-K is incorporated in this Item 5.01 by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On January 3, 2018, in connection with the Closing, Messrs. Kenneth M. Fisher, John T. Lewis and David M. Khani resigned as directors of the General Partner. CNX, the sole member of the General Partner, appointed Nicholas J. DeIuliis, Timothy C. Dugan and Donald W. Rush as members of the board of directors of the General Partner to fill the vacancies created by the resignations of Messrs. Fisher, Lewis and Khani, effective upon the Closing. The decision of each of Messrs. Fisher, Lewis and Khani to resign as directors of the General Partner was not the result of any disagreement with the General Partner or the Partnership on any matter relating to the operations, policies or practices of the General Partner or the Partnership.

None of Messrs. DeIuliis, Dugan nor Rush are party to any (a) arrangement or understanding regarding their appointment as a director nor do they have any family relationships with any director, executive officer or person nominated or chosen by the Partnership to become a director or executive officer of the General Partner or (b) transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. Likewise neither Mr. DeIuliis, Mr. Dugan nor Mr. Rush has entered into any material plan, contract, arrangement or amendment in connection with his appointment as a director of the General Partner.

On January 3, 2018, in connection with the Closing Mr. Lewis resigned as the Partnership’s Chief Executive Officer and Mr. DeIuliis was appointed to serve as the Partnership’s Chief Executive Officer. Also in connection with the Closing, Mr. Khani resigned as the Partnership’s Chief Financial Officer and Mr. Rush was appointed to serve as the Partnership’s Chief Financial Officer.


Nicholas J. DeIuliis, age 49, is the Chairman of the Board and Chief Executive Officer of the General Partner. Mr. DeIuliis has also served as a Director and the President and Chief Executive Officer of CNX since November 28, 2017. Prior to the separation of CONSOL Energy Inc., the predecessor to CNX, into two separate companies, Mr. DeIuliis had more than 25 years of experience with CONSOL Energy Inc. and its subsidiary CNX Gas Corporation and in that time held the positions of Chief Executive Officer, President, Chief Operating Officer, Senior Vice President – Strategic Planning, and earlier in his career various engineering positions. He was a Director, President and Chief Executive Officer of CNX Gas Corporation from its creation in 2005 through 2009. Mr. DeIuliis was a Director and Chairman of the Board of the general partner of CONSOL Coal Resources LP (formerly known as CNX Coal Resources LP) from March 16, 2015 until November 28, 2017. Mr. DeIuliis is a member of the Board of Directors of the University of Pittsburgh Cancer Institute, the Center for Responsible Shale Development, and the Allegheny Conference on Community Development. Mr. DeIuliis is a registered engineer in the Commonwealth of Pennsylvania and a member of the Pennsylvania bar.

Donald W. Rush, age 34, is a Director and the Chief Financial Officer of the General Partner. Mr. Rush has also served as Executive Vice President and Chief Financial Officer of CNX since July 11, 2017. Mr. Rush held the same position at CONSOL Energy Inc. prior to its separation into two separate companies. He previously served as Vice President of Energy Marketing where he oversaw the CONSOL Energy Inc.’s commercial functions, including mergers and acquisitions, gas marketing and transportation, in addition to holding other strategy and planning, business development and engineering positions during his 12 years with CNX. He successfully guided CNX through every significant transaction during its transition into a pure play natural gas exploration and production company, including the sale of the CNX’s five West Virginia coal mines in 2013 and the separation of CNX’s Marcellus Shale joint venture with Noble Energy Inc. in 2016. Mr. Rush holds a B.S. in civil engineering from the University of Pittsburgh and an M.B.A. from Carnegie Mellon University’s Tepper School of Business.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Certificate of Amendment to Certificate of Limited Partnership

On January 3, 2018, the Partnership filed a Certificate of Amendment to its Certificate of Limited Partnership (the “Certificate Amendment”) with the Secretary of State of the State of Delaware to change the Partnership’s name from “CONE Midstream Partners LP” to “CNX Midstream Partners LP” upon the Closing. The Partnership also changed the ticker symbol under which the Common Units trade on the New York Stock Exchange to “CNXM,” which became effective upon the commencement of trading on January 3, 2018. Along with the ticker symbol change, the Common Units have been assigned a new CUSIP number (12654A 101).

The foregoing description of the Certificate Amendment does not purport to be complete and is qualified in its entirety by reference to the text of the Certificate Amendment, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and incorporated herein by reference.

Second Amended and Restated Agreement of Limited Partnership

On January 3, 2018, in connection with the Closing, the Partnership entered into the Second Amended and Restated Agreement of Limited Partnership of the Partnership (the “Amended Partnership Agreement”) to change the name of the Partnership from “CONE Midstream Partners LP” to “CNX Midstream Partners LP” and to address certain ministerial changes.

The foregoing description of the Amended Partnership Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Amended Partnership Agreement, a copy of which is filed as Exhibit 3.2 to this Current Report on Form 8-K and incorporated herein by reference.


Item 7.01 Regulation FD.

On January 3, 2018, the Partnership and the Company jointly issued a press release announcing the Closing of the Acquisition and certain related matters. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1.

The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act unless specifically identified therein as being incorporated therein by reference.

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit 3.1    Certificate of Amendment to Certificate of Limited Partnership of CNX Midstream Partners LP, dated January 3, 2018
Exhibit 3.2    Second Amended and Restated Agreement of Limited Partnership of CNX Midstream Partners LP, dated January 3, 2018
Exhibit 10.1    Registration Rights Agreement, dated January 3, 2018, between CNX Midstream Partners LP and NBL Midstream, LLC
Exhibit 10.2    Second Amended and Restated Gathering Agreement, dated January 3, 2018, by and among CNX Gas Company LLC, CONE Midstream Operating Company LLC and the other parties thereto
Exhibit 99.1    Joint Press Release of CNX Midstream Partners LP and CNX Resources Corporation, dated January 3, 2018


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 hereunto duly authorized.

 

CNX MIDSTREAM PARTNERS LP
By: CNX MIDSTREAM GP LLC, its general partner
By:  

/s/ Donald W. Rush

Name: Donald W. Rush
Title: Chief Financial Officer and Director

Dated: January 3, 2018

Exhibit 3.1

CERTIFICATE OF AMENDMENT

TO THE

CERTIFICATE OF LIMITED PARTNERSHIP

OF

CONE MIDSTREAM PARTNERS LP

This Certificate of Amendment to the Certificate of Limited Partnership of CONE Midstream Partners LP, a Delaware limited partnership (the “ Partnership ”), is being duly executed and filed by CNX Midstream GP LLC, a Delaware limited liability company, as general partner, in accordance with the provisions of 6 Del. C. §§ 17-202 and 17-204, to amend the Certificate of Limited Partnership of the Partnership, which was filed on May 30, 2014 (the “ Certificate ”).

1. The name of the limited partnership is CONE Midstream Partners LP.

2. The Certificate is hereby amended by deleting paragraph 1 and inserting in lieu thereof a new paragraph to read as follows:

1. Name . The name of the Partnership is “CNX Midstream Partners LP”.

3. The Certificate is further amended by deleting paragraph 3 and inserting in lieu thereof a new paragraph to read as follows:

3. General Partner . The name and business address of the general partner of the Partnership is:

CNX Midstream GP LLC

CNX Center

1000 CONSOL Energy Drive

Canonsburg, PA 15317

4. This amendment of the Certificate shall become effective on January 3, 2018 at 7:00 a.m.

IN WITNESS WHEREOF, the undersigned, being the sole general partner of the Partnership, has executed this Certificate of Amendment to the Certificate of Limited Partnership as of January 3, 2018.

 

GENERAL PARTNER:
CNX MIDSTREAM GP LLC
By:  

/s/ Donald W. Rush

Name: Donald W. Rush
Title: Authorized Representative

Exhibit 3.2

SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

CNX MIDSTREAM PARTNERS LP

A Delaware Limited Partnership

Dated as of

January 3, 2018

 


TABLE OF CONTENTS

 

          Page  

ARTICLE I DEFINITIONS

     1  

Section 1.01

   Definitions      1  

Section 1.02

   Construction      23  

ARTICLE II ORGANIZATION

     24  

Section 2.01

   Formation      24  

Section 2.02

   Name      24  

Section 2.03

   Registered Office; Registered Agent; Principal Office; Other Offices      24  

Section 2.04

   Purpose and Business      24  

Section 2.05

   Powers      25  

Section 2.06

   Term      25  

Section 2.07

   Title to Partnership Assets      25  

ARTICLE III RIGHTS OF LIMITED PARTNERS

     26  

Section 3.01

   Limitation of Liability      26  

Section 3.02

   Management of Business      26  

Section 3.03

   Rights of Limited Partners      26  

ARTICLE IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS

     27  

Section 4.01

   Certificates      27  

Section 4.02

   Mutilated, Destroyed, Lost or Stolen Certificates      28  

Section 4.03

   Record Holders      29  

Section 4.04

   Transfer Generally      29  

Section 4.05

   Registration and Transfer of Limited Partner Interests      29  

Section 4.06

   Transfer of the General Partner’s General Partner Interest      31  

Section 4.07

   Transfer of Incentive Distribution Rights      31  

Section 4.08

   Restrictions on Transfers      31  

Section 4.09

   Eligibility Certificates; Ineligible Holders      33  

ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

     34  

Section 5.01

   Organizational Contributions      34  

Section 5.02

   Contributions by the General Partner      35  

Section 5.03

   Contributions by Limited Partners      35  

Section 5.04

   Interest and Withdrawal      36  

Section 5.05

   Capital Accounts      36  

Section 5.06

   Issuances of Additional Partnership Interests and Derivative Partnership Interests      40  

Section 5.07

   [Reserved.]      41  

 

i


Section 5.08

   Limited Preemptive Right      41  

Section 5.09

   Splits and Combinations      41  

Section 5.10

   Fully Paid and Non-Assessable Nature of Limited Partner Interests      42  

Section 5.11

   Issuance of Common Units in Connection with Reset of Incentive Distribution Rights      42  

ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS

     44  

Section 6.01

   Allocations for Capital Account Purposes      44  

Section 6.02

   Allocations for Tax Purposes      54  

Section 6.03

   Requirement and Characterization of Distributions; Distributions to Record Holders      56  

Section 6.04

   Distributions of Available Cash from Operating Surplus      56  

Section 6.05

   Distributions of Available Cash from Capital Surplus      57  

Section 6.06

   Adjustment of Minimum Quarterly Distribution and Target Distribution Levels      57  

Section 6.07

   [Reserved.]      58  

Section 6.08

   Special Provisions Relating to the Holders of Incentive Distribution Rights      58  

Section 6.09

   Entity-Level Taxation      59  

ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS

     59  

Section 7.01

   Management      59  

Section 7.02

   Certificate of Limited Partnership      62  

Section 7.03

   Restrictions on the General Partner’s Authority to Sell Assets of the Partnership Group      62  

Section 7.04

   Reimbursement of and Other Payments to the General Partner      62  

Section 7.05

   Outside Activities      63  

Section 7.06

   Loans from the General Partner; Loans or Contributions from the Partnership or Group Members      65  

Section 7.07

   Indemnification      65  

Section 7.08

   Liability of Indemnitees      67  

Section 7.09

   Standards of Conduct; Resolution of Conflicts of Interest and Replacement of Duties      68  

Section 7.10

   Other Matters Concerning the General Partner and Other Indemnitees      71  

Section 7.11

   Purchase or Sale of Partnership Interests      71  

Section 7.12

   Registration Rights of the General Partner and Its Affiliates      71  

Section 7.13

   Reliance by Third Parties      76  

Section 7.14

   Replacement of Fiduciary Duties      76  

ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS

     77  

Section 8.01

   Records and Accounting      77  

Section 8.02

   Fiscal Year      77  

Section 8.03

   Reports      77  

ARTICLE IX TAX MATTERS

     78  

Section 9.01

   Tax Returns and Information      78  

Section 9.02

   Tax Elections      78  

Section 9.03

   Tax Controversies      78  

 

ii


Section 9.04

   Withholding      79  

ARTICLE X ADMISSION OF PARTNERS

     79  

Section 10.01

   Admission of Limited Partners      79  

Section 10.02

   Admission of Successor General Partner      80  

Section 10.03

   Amendment of Agreement and Certificate of Limited Partnership      81  

ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS

     81  

Section 11.01

   Withdrawal of the General Partner      81  

Section 11.02

   Removal of the General Partner      82  

Section 11.03

   Interest of Departing General Partner and Successor General Partner      83  

Section 11.04

   Withdrawal of Limited Partners      85  

ARTICLE XII DISSOLUTION AND LIQUIDATION

     85  

Section 12.01

   Dissolution      85  

Section 12.02

   Continuation of the Business of the Partnership After Dissolution      85  

Section 12.03

   Liquidator      86  

Section 12.04

   Liquidation      86  

Section 12.05

   Cancellation of Certificate of Limited Partnership      87  

Section 12.06

   Return of Contributions      87  

Section 12.07

   Waiver of Partition      87  

Section 12.08

   Capital Account Restoration      87  

ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

     88  

Section 13.01

   Amendments to be Adopted Solely by the General Partner      88  

Section 13.02

   Amendment Procedures      89  

Section 13.03

   Amendment Requirements      90  

Section 13.04

   Special Meetings      90  

Section 13.05

   Notice of a Meeting      91  

Section 13.06

   Record Date      91  

Section 13.07

   Postponement and Adjournment      91  

Section 13.08

   Waiver of Notice; Approval of Meeting      92  

Section 13.09

   Quorum and Voting      92  

Section 13.10

   Conduct of a Meeting      93  

Section 13.11

   Action Without a Meeting      93  

Section 13.12

   Right to Vote and Related Matters      93  

ARTICLE XIV MERGER, CONSOLIDATION OR CONVERSION

     94  

Section 14.01

   Authority      94  

Section 14.02

   Procedure for Merger, Consolidation or Conversion      94  

Section 14.03

   Approval by Limited Partners      96  

Section 14.04

   Certificate of Merger or Certificate of Conversion      98  

Section 14.05

   Effect of Merger, Consolidation or Conversion      98  

 

iii


ARTICLE XV RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

     99  

Section 15.01

   Right to Acquire Limited Partner Interests      99  

ARTICLE XVI GENERAL PROVISIONS

     101  

Section 16.01

   Addresses and Notices; Written Communications      101  

Section 16.02

   Further Action      101  

Section 16.03

   Binding Effect      101  

Section 16.04

   Integration      102  

Section 16.05

   Creditors      102  

Section 16.06

   Waiver      102  

Section 16.07

   Third-Party Beneficiaries      102  

Section 16.08

   Counterparts      102  

Section 16.09

   Applicable Law; Forum; Venue and Jurisdiction; Attorneys’ Fee; Waiver of Trial by Jury      102  

Section 16.10

   Invalidity of Provisions      103  

Section 16.11

   Consent of Partners      104  

Section 16.12

   Facsimile and Email Signatures      104  

 

iv


SECOND AMENDED AND RESTATED AGREEMENT OF

LIMITED PARTNERSHIP OF CNX MIDSTREAM PARTNERS LP

THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CNX MIDSTREAM PARTNERS LP, dated as of January 3, 2018, is entered into by and between CNX MIDSTREAM GP LLC, together with any other Persons who become Partners in the Partnership or parties hereto as provided herein.

WHEREAS, the General Partner and the other parties thereto entered into that certain First Amended and Restated Agreement of Limited Partnership of the Partnership dated as of September 30, 2014 (the “ Prior Agreement ”); and

WHEREAS, the General Partner desires to amend and restate the Prior Agreement in its entirety to reflect changes in the name of the Partnership and the General Partner and to remove certain provisions that are no longer applicable to the Partnership.

NOW, THEREFORE, the General Partner does hereby amend and restate the Prior Agreement, pursuant to its authority under Sections 13.01(a) and (d)(i) of the Prior Agreement, to provide, in its entirety, as follows:

ARTICLE I

DEFINITIONS

Section 1.01 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, stock acquisition, merger 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, over the long term, the operating capacity, operating income or revenue of the Partnership Group from the operating capacity, operating income or revenue of the Partnership Group existing immediately prior to such transaction. For purposes of this definition, “long term” generally refers to a period of time greater than twelve months.

Additional Book Basis ” means, with respect to any Adjusted Property, the portion of the Carrying Value of such Adjusted Property that is attributable to positive adjustments made to such Carrying Value as determined in accordance with the provisions set forth below in this definition of Additional Book Basis. For purposes of determining the extent to which 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; and

(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 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. With respect to a Disposed of Adjusted Property, the Additional Book Basis Derivative Items shall be the amount of Additional Book Basis taken into account in computing gain or loss from the disposition of such Disposed of Adjusted Property; provided that the provisions of the immediately preceding sentence shall apply to the determination of the Additional Book Basis Derivative Items attributable to Disposed of Adjusted Property.

Adjusted Capital Account ” means, with respect to any Partner, the balance in such Partner’s Capital Account at the end of each taxable period of the Partnership after giving effect to the following adjustments: (a) credit to such Capital Account any amount which such Partner is (i) obligated to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) or (ii) deemed obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5)) and (b) debit to such Capital Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6). 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 any Partnership Interest shall be the amount that such Adjusted Capital Account would be if such Partnership Interest were the only interest in the Partnership held by such Partner from and after the date on which such Partnership Interest was first issued.

Adjusted Operating Surplus ” means, with respect to any period, (a) Operating Surplus generated with respect to such period less (b) (i) the amount of any net increase in Working Capital Borrowings (or the Partnership’s proportionate share of any net increase in Working Capital Borrowings in the case of Subsidiaries that are not wholly owned) with respect to such period and (ii) the amount of any net decrease in cash reserves (or the Partnership’s proportionate share of any net decrease in cash reserves in the case of Subsidiaries that are not wholly owned) for Operating Expenditures with respect to such period not relating to an Operating Expenditure made with respect to such period, and plus (c) (i) the amount of any net decrease in Working Capital Borrowings (or the Partnership’s proportionate share of any net decrease in Working Capital Borrowings in the case of Subsidiaries that are not wholly owned) with respect to such period, (ii) the amount of any net decrease made in subsequent periods in

 

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cash reserves for Operating Expenditures initially established with respect to such period to the extent such decrease results in a reduction in Adjusted Operating Surplus in subsequent periods pursuant to clause  (b)(ii) above and (iii) the amount of any net increase in cash reserves (or the Partnership’s proportionate share of any net increase in cash reserves in the case of Subsidiaries that are not wholly owned) 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.”

Adjusted Property ” means any property the Carrying Value of which has been adjusted pursuant to Section  5.5(d)(i) or Section  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 IDR Reset Common Units ” has the meaning given such term in Section  5.11(a) .

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 (a) a Contributed Property means the fair market value of such property or asset at the time of contribution and (b) an Adjusted Property means the fair market value of such Adjusted Property on the date of the Revaluation Event, in each case as determined by the General Partner. The General Partner shall use such method as it determines to be appropriate to allocate the aggregate Agreed Value of 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 Contributed Property.

Agreement ” means this Second Amended and Restated Agreement of Limited Partnership of CNX Midstream Partners LP, as it may be amended, supplemented or restated from time to time.

Associate ” means, when used to indicate a relationship with any Person, (a) any corporation or organization of which such Person is a director, officer, manager, general partner or managing member 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.

 

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Available Cash ” means, with respect to any Quarter ending prior to the Liquidation Date:

(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 additional 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 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 Section  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 subclause  (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 with respect to such Quarter; 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 General Partner, its board of directors or board of managers if the General Partner is a corporation or limited liability company, or the board of directors or board of managers of the general partner of the General Partner if the General Partner is a limited partnership, as applicable.

 

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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 a Revaluation Event that gives rise to a Net Termination Loss.

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 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 a Revaluation Event that gives rise to a Net Termination Gain.

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 States of Pennsylvania or 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 any Partnership Interest shall be the amount that such Capital Account would be if such Partnership Interest were the only interest in the Partnership held by such Partner from and after the date on which such Partnership Interest was first issued.

Capital Contribution ” means (a) any cash, cash equivalents or the Net Agreed Value of Contributed Property that a Partner contributes to the Partnership or that is contributed or deemed contributed to the Partnership on behalf of a Partner (including, in the case of an underwritten offering of Units, the amount of any underwriting discounts or commissions) or (b) current distributions that a Partner is entitled to receive but otherwise waives.

Capital Improvement ” means (a) the construction of new capital assets by a Group Member, (b) the replacement, improvement or expansion of existing capital assets by a Group Member or (c) a capital contribution by a Group Member to a Person that is not a Subsidiary in which a Group Member has, or after such capital contribution will have, directly or indirectly, an equity interest, to fund such Group Member’s pro rata share of the cost of the construction of new, or the replacement, improvement or expansion of existing, capital assets by such Person, in each case if and to the extent such construction, replacement, improvement or expansion is made to increase, over the long term, the operating capacity, operating income or revenue of the Partnership Group, in the case of clause  (a) and clause  (b) , or such Person, in the case of clause  (c) , from the operating capacity, operating income or revenue of the Partnership Group or such Person, as the case may be, existing immediately prior to such construction, replacement, improvement, expansion or capital contribution. For purposes of this definition, “long term” generally refers to a period of time greater than twelve months.

 

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Capital Surplus ” means Available Cash distributed by the Partnership in excess of Operating Surplus, as described in Section  6.3(a) .

Carrying Value ” means (a) with respect to a Contributed Property or an Adjusted Property, the Agreed Value of such property reduced (but not below zero) by all depreciation, amortization and other cost recovery deductions charged to the Partners’ Capital Accounts in respect of such 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 , however , that the Carrying Value of any property shall be adjusted from time to time in accordance with Section  5.5(d) 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 to the Partnership or any Limited Partner for actual fraud or willful misconduct in its capacity as a general partner of the Partnership.

Certificate ” means a certificate, in such form (including in global form if permitted by applicable rules and regulations of The Depository Trust Company or its successors and assigns) as may be adopted by the General Partner, issued by the Partnership and evidencing ownership of one or more classes of Partnership Interests. The form of certificate approved as of the date of this Agreement by the General Partner for Common Units is attached as Exhibit A to this Agreement.

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.

Citizen Eligibility Trigger ” has the meaning given such term in Section  4.9(a) .

claim ” or “ claims ” (for purposes of Section  7.12(g) ) has the meaning given such term in Section  7.12(g) .

Closing Date ” means the first date on which Common Units were sold by the Partnership to the IPO Underwriters pursuant to the provisions of the IPO Underwriting Agreement.

Closing Price ” for any day, with respect to Limited Partner Interests of a particular class, 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 last closing bid and ask prices on such day, regular way, in either case as reported on the principal National Securities Exchange 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, the average of the high bid and low ask prices on such day in the over-the-counter market, as reported by 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 ask 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.

 

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CNX ” means CNX Resources Corporation, a Delaware corporation.

CNX Gas ” means CNX Gas Company LLC, a Virginia limited liability company.

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.

Combined Interest ” has the meaning given such term in Section  11.3(a) .

Commences Commercial Service ” means the date upon which a Capital Improvement is first put into or commences commercial service by a Group Member following completion of construction, replacement, improvement or expansion and testing, as applicable.

Commission ” means the United States Securities and Exchange Commission.

Common Unit ” means a Limited Partner Interest having the rights and obligations specified with respect to Common Units in this Agreement.

CONE Gathering ” means CONE Gathering LLC, a Delaware limited liability company, or its successor.

Conflicts Committee ” means a committee of the Board of Directors composed of two or more directors, each of whom (a) is not an officer or employee of the General Partner, (b) is not an officer, director or employee of any Affiliate of the General Partner (other than Group Members), (c) is not a holder of any ownership interest in the General Partner or its Affiliates or the Partnership Group other than (i) Common Units and (ii) awards that are granted to such director in his or her capacity as a director under any long-term incentive plan, equity compensation plan or similar plan implemented by the General Partner or the Partnership and (d) is determined by the Board of Directors to be independent under the independence standards for directors who serve on an audit committee of a board of directors established by the 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 (or if no such National Securities Exchange, the New York Stock Exchange).

Construction Debt ” means debt incurred to fund (a) all or a portion of a Capital Improvement, (b) interest payments (including periodic net payments under related interest rate swap agreements) and related fees on other Construction Debt or (c) distributions (including incremental Incentive Distributions) on Construction Equity.

Construction Equity ” means equity issued to fund (a) all or a portion of a Capital Improvement, (b) interest payments (including periodic net payments under related interest rate swap agreements) and related fees on Construction Debt or (c) distributions (including incremental Incentive Distributions) on other Construction Equity. Construction Equity does not include equity issued in the Initial Public Offering.

 

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Construction Period ” means the period beginning on the date that a Group Member enters into a binding obligation to commence a Capital Improvement and ending on the earlier to occur of the date that such Capital Improvement Commences Commercial Service and the date that the Group Member abandons or disposes of such Capital Improvement.

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 or other asset 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 September 30, 2014, by and among the General Partner, the Partnership, the Operating Company, and the other entities party thereto together with the additional conveyance documents and instruments contemplated or referenced thereunder, as such may be amended, supplemented or restated from time to time.

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 ” means, as of any date for any class of Limited Partner Interests, the average of the daily Closing Prices per Limited Partner Interest of such class for the 20 consecutive Trading Days immediately prior to such date.

Deferred Issuance ” has the meaning given such term in Section  5.3(c) .

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 .

Derivative Partnership Interests ” means any options, rights, warrants, appreciation rights, tracking, profit and phantom interests and other derivative securities relating to, convertible into or exchangeable for Partnership Interests.

Disposed of Adjusted Property ” has the meaning given 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) .

Eligibility Certificate ” has the meaning given such term in Section  4.9(b) .

 

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Eligible Holder ” means a Limited Partner whose, or whose owners’ (a) U.S. federal income tax status or lack of proof of U.S. federal income tax status does not have and is not reasonably likely to have, as determined by the General Partner, the material adverse effect described in Section  4.9(a)(i) or (b)  nationality, citizenship or other related status does not create and is not reasonably likely to create, as determined by the General Partner, a substantial risk of cancellation or forfeiture as described in Section  4.9(a)(ii) .

Estimated Incremental Quarterly Tax Amount ” has the meaning given such term in Section  6.9 .

Event Issue Value ” means, with respect to any Common Unit as of any date of determination, (i) in the case of a Revaluation Event that includes the issuance of Common Units pursuant to a public offering and solely for cash, the price paid for such Common Units, or (ii) in the case of any other Revaluation Event, the Closing Price of the Common Units on the date of such Revaluation Event or, if the General Partner determines that a value for the Common Unit other than such Closing Price more accurately reflects the Event Issue Value, the value determined by the General Partner.

Event of Withdrawal ” has the meaning given such term in Section  11.1(a) .

Excess Additional Book Basis ” has the meaning given such term in the definition of “Additional Book Basis Derivative Items.”

Excess Distribution ” has the meaning given such term in Section  6.1(d)(iii)(A) .

Excess Distribution Unit ” has the meaning given such term in Section  6.1(d)(iii)(A) .

Exchange Act ” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, and any successor to such statute.

Expansion Capital Expenditures ” means cash expenditures for Acquisitions or Capital Improvements. Expansion Capital Expenditures shall include interest (including periodic net payments under related interest rate swap agreements) and related fees paid during the Construction Period on Construction Debt. Where cash expenditures are made in part for Expansion Capital Expenditures and in part for other purposes, the General Partner shall determine the allocation between the amounts paid for each.

First Liquidation Target Amount ” has the meaning given such term in Section  6.1(c)(i)(C) .

First Target Distribution ” means $0.24438 per Unit per Quarter, subject to adjustment in accordance with Section  5.11 , Section  6.6 and Section  6.9 .

General Partner ” means CNX Midstream GP 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).

 

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General Partner Interest ” means the equity 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) and includes any and all rights, powers and benefits to 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. For purposes of determining the Percentage Interest attributable to the General Partner at any point in time, the General Partner Interest shall be deemed to be represented by a specific number of hypothetical limited partner units, and the Percentage Interest attributable to the General Partner Interest shall equal the ratio of the number of such hypothetical limited partner units to the sum of the total number of Units and the number of hypothetical limited partner units. As of the date of this Agreement, the Percentage Interest attributable to the General Partner Interest is 2%, which for the purposes of this definition equates to 1,271,763 hypothetical limited partner units. In connection with the issuance of additional Limited Partner Interests by the Partnership as described in Section  5.2(b) , (i) if the General Partner makes additional Capital Contributions as contemplated by Section  5.2(b) , the number of hypothetical limited partner units represented by the General Partner Interest shall be increased as necessary to maintain the Percentage Interest attributable to the General Partner Interest at the level it was immediately prior to such issuance and (ii) if the General Partner does not make additional Capital Contributions as contemplated by Section  5.2(b) , the number of hypothetical limited partner units represented by the General Partner Interest shall stay the same, which shall result in a reduction of the Percentage Interest attributable to the General Partner Interest.

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.

Group ” means two or more Persons that have, or with or through any of their respective Affiliates or Associates have, 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 over or disposing of any 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, in each case, as such may be amended, supplemented or restated from time to time.

Hedge Contract ” means any exchange, swap, forward, cap, floor, collar, option or other similar agreement or arrangement entered into for the purpose of reducing the exposure of a Group Member to fluctuations in interest rates, the price of hydrocarbons, basis differentials or currency exchange rates in their operations or financing activities and not for speculative purposes.

 

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Holder ” means any of the following:

(a) the General Partner who is the Record Holder of Registrable Securities;

(b) any Affiliate of the General Partner who is the Record Holder of Registrable Securities (other than natural persons who are Affiliates of the General Partner by virtue of being officers, directors or employees of the General Partner or any of its Affiliates);

(c) any Person who has been the General Partner within the prior two years and who is the Record Holder of Registrable Securities;

(d) any Person who has been an Affiliate of the General Partner within the prior two years and who is the Record Holder of Registrable Securities (other than natural persons who were Affiliates of the General Partner by virtue of being officers, directors or employees of the General Partner or any of its Affiliates); and

(e) a transferee and current Record Holder of Registrable Securities to whom the transferor of such Registrable Securities, who was a Holder at the time of such transfer, assigns its rights and obligations under this Agreement; provided , such transferee agrees in writing to be bound by the terms of this Agreement and provides its name and address to the Partnership promptly upon such transfer.

IDR Reset Common Units ” has the meaning given such term in Section  5.11(a) .

IDR Reset Election ” has the meaning given such term in Section  5.11(a) .

Incentive Distribution Right ” means a Limited Partner Interest having the rights and obligations specified with respect to Incentive Distribution Rights in this Agreement (and no other rights otherwise available to or other obligations of a holder of a Partnership Interest).

Incentive Distributions ” means any amount of cash distributed to the holders of the Incentive Distribution Rights pursuant to Sections 6.4(c) , (d) and (e) .

Incremental Income Taxes ” has the meaning given such term in Section  6.9 .

Indemnified Persons ” has the meaning given such term in Section  7.12(g) .

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 manager, managing member, general partner, director, officer, fiduciary or trustee of (i) any Group Member, the General Partner or any Departing General Partner or (ii) 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 a manager, managing member, general partner, director, officer, fiduciary or trustee of

 

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another Person owing a fiduciary duty to any Group Member; 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 because such Person’s status, service or relationship exposes such Person to potential claims, demands, suits or proceedings relating to the Partnership Group’s business and affairs.

Ineligible Holder ” has the meaning given such term in Section  4.9(c) .

Initial Common Units ” means the Common Units sold in the Initial Public Offering.

Initial Limited Partners ” means the Organizational Limited Partner, the General Partner (with respect to the Incentive Distribution Rights received by it) and the IPO Underwriters upon the issuance by the Partnership of Common Units in connection with the Initial Public Offering.

Initial Public Offering ” means the initial offering and sale of Common Units to the public (including the offer and sale of Common Units pursuant to the Over-Allotment Option), as described in the IPO Registration Statement.

Initial Unit Price ” means (a) with respect to the Common Units, the initial public offering price per Common Unit at which the Common Units were first offered to the public for sale as set forth on the cover page of the IPO Prospectus 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 or for a deferred purchase price in the ordinary course of business) by any Group Member and sales of debt securities of any Group Member; (b) issuances of equity interests of any Group Member (including the Common Units sold to the IPO Underwriters in the Initial Public Offering) to anyone other than the Partnership Group; (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; and (d) capital contributions received by a Group Member.

IPO Prospectus ” means the final prospectus relating to the Initial Public Offering dated September 24, 2014 and filed by the Partnership with the Commission pursuant to Rule 424 of the Securities Act on September 25, 2014.

IPO Registration Statement ” means the Registration Statement on Form S-1 (File No. 333-198352), as it has been 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 Public Offering.

 

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IPO Underwriter ” means each Person named as an underwriter in Exhibit A to the IPO Underwriting Agreement who purchased Common Units pursuant thereto.

IPO Underwriting Agreement ” means that certain Underwriting Agreement dated as of September 24, 2014 among the IPO Underwriters, CONE Gathering, the General Partner and the Partnership, providing for the purchase of Common Units by the IPO Underwriters.

Liability ” means any liability or obligation of any nature, whether accrued, contingent or otherwise.

Limited Partner ” means, unless the context otherwise requires, 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 a limited partner of the Partnership.

Limited Partner Interest ” means an equity interest of a Limited Partner in the Partnership, which may be evidenced by Common Units, Incentive Distribution Rights or other Partnership Interests or a combination thereof (but excluding Derivative Partnership Interests), 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 pursuant to the terms and provisions of this Agreement.

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 (d) of the third sentence of Section  12.1 , 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 pursuant to Section  12.3 to perform the functions described in Section  12.4 as liquidating trustee of the Partnership within the meaning of the Delaware Act.

Maintenance Capital Expenditure ” means cash expenditures (including expenditures for the construction of new capital assets or the replacement, improvement or expansion of existing capital assets) by a Group Member made to maintain, over the long term, the operating capacity, operating income or revenue of the Partnership Group. For purposes of this definition, “long term” generally refers to a period of time greater than twelve months.

Merger Agreement ” has the meaning given such term in Section  14.1 .

Minimum Quarterly Distribution ” means $0.2125 per Unit per Quarter, subject to adjustment in accordance with Section  5.11 , Section  6.6 and Section  6.9 .

National Securities Exchange ” means an exchange registered with the Commission under Section 6(a) of the Exchange Act (or any successor to such Section).

 

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Net Agreed Value ” means (a) in the case of any Contributed Property, the Agreed Value of such property or other asset reduced by any Liabilities either assumed by the Partnership upon such contribution or to which such property or other asset is subject when contributed and (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 Liabilities either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution, in either case as determined and required by the Treasury Regulations promulgated under Section 704(b) of the Code.

Net Income ” means, for any taxable period, 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 period 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 period. 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 , however , 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 period, 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 period 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 period. 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 , however , 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 period, (a) the sum, if positive, of all items of income, gain, loss or deduction (determined in accordance with Section  5.5(b) ) that are recognized by the Partnership (i) after the Liquidation Date or (ii) 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), or (b) the excess, if any, of the aggregate amount of Unrealized Gain over the aggregate amount of Unrealized Loss deemed recognized by the Partnership pursuant to Section  5.5(d) on the date of a Revaluation Event; provided , however, that the items included in the determination of Net Termination Gain shall not include any items of income, gain or loss specially allocated under Section  6.1(d) .

Net Termination Loss ” means, for any taxable period, (a) the sum, if negative, of all items of income, gain, loss or deduction (determined in accordance with Section  5.5(b) ) that are recognized by the Partnership (i) after the Liquidation Date or (ii) upon the sale, exchange or

 

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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), or (b) the excess, if any, of the aggregate amount of Unrealized Loss over the aggregate amount of Unrealized Gain deemed recognized by the Partnership pursuant to Section  5.5(d) on the date of a Revaluation Event; provided , however , that the items included in the determination of Net Termination Loss shall not include any items of income, gain or loss specially allocated under Section  6.1(d) .

Noncompensatory Option ” has the meaning set forth in Treasury Regulation Section 1.721-2(f).

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 Section  6.2(b) 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 1.752-1(a)(2).

Notice ” means a written request from a Holder pursuant to Section  7.12 which shall (a) specify the Registrable Securities intended to be registered, offered and sold by such Holder, (b) describe the nature or method of the proposed offer and sale of Registrable Securities and (c) contain the undertaking of such Holder to provide all such information and materials and take all action as may be required or appropriate in order to permit the Partnership to comply with all applicable requirements and obligations in connection with the registration and disposition of such Registrable Securities pursuant to Section  7.12 .

Notice of Election to Purchase ” has the meaning given such term in Section  15.1(b) .

Omnibus Agreement ” means that certain Omnibus Agreement, dated as of September 30, 2014, among the General Partner, the Partnership, the Operating Company and the other entities party thereto, as such agreement may be amended, supplemented or restated from time to time.

Operating Company ” means CONE Midstream Operating LLC, a Delaware limited liability company, and any successors thereto.

Operational Services Agreement ” means that certain Operational Services Agreement, dated as of September 30, 2014, among the Partnership and CNX Gas, as such agreement may be amended, supplemented or restated from time to time.

 

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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 taxes, compensation of employees, officers and directors of the General Partner, reimbursement of expenses of the General Partner and its Affiliates, debt service payments, Maintenance Capital Expenditures, repayment of Working Capital Borrowings and payments made in the ordinary course of business under any Hedge Contracts, subject to the following:

(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;

(c) Operating Expenditures shall not include (i) Expansion Capital Expenditures, (ii) payment of transaction expenses (including taxes) relating to Interim Capital Transactions, (iii) distributions to Partners, (iv) repurchases of Partnership Interests, other than repurchases of Partnership Interests by the Partnership to satisfy obligations under employee benefit plans or reimbursement of expenses of the General Partner for purchases of Partnership Interests by the General Partner to satisfy obligations under employee benefit plans or (v) any other expenditures or payments using the proceeds of the Initial Public Offering as described under “Use of Proceeds” in the IPO Registration Statement; and

(d) (i) amounts paid in connection with the initial purchase of a Hedge Contract shall be amortized over the life of such Hedge Contract and (ii) payments made in connection with the termination of any Hedge Contract prior to the expiration of its scheduled settlement or termination date shall be included in equal quarterly installments over the remaining scheduled life of such Hedge Contract.

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) $50.0 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 and the termination of Hedge Contracts (provided that cash receipts from the termination of a Hedge Contract prior to its scheduled settlement or termination date shall be included in Operating Surplus in equal quarterly installments over the remaining scheduled life of such Hedge Contract), (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) the amount of cash distributions from Operating Surplus paid during the Construction Period (including incremental Incentive Distributions) on Construction Equity, less

 

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(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 (or the Partnership’s proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned) established by the General Partner to provide funds for future Operating Expenditures and (iii) all Working Capital Borrowings not repaid within twelve months after having been incurred, or repaid within such 12-month period with the proceeds of additional Working Capital Borrowings; 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 or to such other person selecting such counsel or obtaining such opinion.

Option Closing Date ” means September 30, 2014.

Organizational Limited Partner ” means CONE Gathering in its capacity as the organizational limited partner of the Partnership pursuant to the Prior Agreement.

Outstanding ” means, with respect to Partnership Interests, all Partnership Interests that are issued by the Partnership and reflected as outstanding in the Partnership Register 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 the Outstanding Partnership Interests of any class, all Partnership Interests owned by or for the benefit of such Person or Group shall not be entitled to 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 Partnership Interests so owned shall be considered to be Outstanding for purposes of Section  11.1(b)(iv) (such Partnership Interests shall not, however, be treated as a separate class of Partnership Interests 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 Interests of any class directly from the General Partner or its Affiliates (other than the Partnership), (ii) any Person or Group who acquired 20% or more of the Outstanding Partnership Interests of any class directly or indirectly from a Person or Group described in clause  (i) , provided , that, upon or prior to such acquisition, 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 more of any Partnership Interests issued by the Partnership with the prior approval of the Board of Directors.

 

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Over-Allotment Option ” means the option to purchase additional Common Units granted to the IPO Underwriters by the Partnership pursuant to the IPO 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 CNX Midstream Partners LP, a Delaware limited partnership.

Partnership Group ” means, collectively, the Partnership and its Subsidiaries.

Partnership Interest ” means any equity interest, including any class or series of equity interest, in the Partnership, which shall include any Limited Partner Interests and the General Partner Interest but shall exclude any Derivative Partnership 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 Register ” means a register maintained on behalf of the Partnership by the General Partner, or, if the General Partner so determines, by the Transfer Agent as part of the Transfer Agent’s books and transfer records, with respect to each class of Partnership Interests in which all Record Holders and transfers of such class of Partnership Interests are registered or otherwise recorded.

Partnership Representative ” has the meaning given such term in Section  9.3(b) .

Per Unit Capital Amount ” means, as of any date of determination, the Capital Account, stated on a per Unit basis, underlying any Unit 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, the Percentage Interest attributable to the General Partner as determined pursuant to the definition of “General Partner Interest” above, (b) as to any Unitholder with respect to Units, the product obtained by multiplying (i) 100% less the Percentage Interest attributable to the General Partner Interest and the percentage applicable to clause  (c) below by (ii) the quotient obtained by dividing (A) the number of Units held by such Unitholder by (B) the total number of Outstanding Units, and (c) as to the holders of other Partnership Interests issued by the Partnership in accordance with Section  5.6 , the percentage calculated in accordance with the method established as a part of such issuance. The Percentage Interest with respect to an Incentive Distribution Right shall at all times be zero.

 

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Person ” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, estate, unincorporated organization, association, government agency or political subdivision thereof or other entity.

Plan of Conversion ” has the meaning given such term in Section  14.1 .

Prior Agreement ” has the meaning given such term in the recitals to this Agreement.

Pro Rata ” means (a) when used with respect to Units or any class thereof, apportioned 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, (c) when used with respect to holders of Incentive Distribution Rights, apportioned among all holders of Incentive Distribution Rights in accordance with the relative number or percentage of Incentive Distribution Rights held by each such holder and (d) when used with respect to Holders who have requested to include Registrable Securities in a Registration Statement pursuant to Section  7.12(a) or Section  7.12(b) , apportioned among all such Holders in accordance with the relative number of Registrable Securities held by each such holder and included in the Notice relating to such request.

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.

Rate Eligibility Trigger ” has the meaning given such term in Section  4.9(a) .

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 receive notice of, or entitled to exercise rights in respect of, any lawful action of Limited Partners (including voting) or (b) the identity of Record Holders entitled to receive any report or distribution or to participate in any offer.

Record Holder ” means (a) with respect to any class of Partnership Interests for which a Transfer Agent has been appointed, the Person in whose name a Partnership Interest of such class is registered in the records of the Transfer Agent and in the Partnership Register as of the Partnership’s close of business on a particular Business Day or (b) with respect to other classes of Partnership Interests, the Person in whose name any such other Partnership Interest is registered in the Partnership Register that the General Partner has caused to be kept as of the Partnership’s close of business on a particular Business Day.

 

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Redeemable Interests ” means any Limited Partner Interests subject to redemption pursuant to amendments adopted by the General Partner pursuant to Section  4.9 .

Registrable Security ” means any Partnership Interest other than the General Partner Interest; provided , however , that any Registrable Security shall cease to be a Registrable Security: (a) at the time a Registration Statement covering such Registrable Security is declared effective by the Commission, or otherwise becomes effective under the Securities Act, and such Registrable Security has been sold or disposed of pursuant to such Registration Statement; (b) at the time such Registrable Security may be disposed of pursuant to Rule 144 (or any successor or similar rule or regulation under the Securities Act); (c) when such Registrable Security is held by a Group Member and (d) at the time such Registrable Security has been sold in a private transaction in which the transferor’s rights under Section  7.12 of this Agreement have not been assigned to the transferee of such securities.

Registration Statement ” has the meaning given such term in Section  7.12(a) of this Agreement.

Remaining Net Positive Adjustments ” means, as of the end of any taxable period, (a) with respect to the Unitholders holding Common Units, the excess of (i) the Net Positive Adjustments of the Unitholders holding Common Units as of the end of such period over (ii) the sum of those Partners’ Share of Additional Book Basis Derivative Items for each prior taxable period, (b) with respect to the General Partner (as holder of the General Partner Interest), the excess of (i) the Net Positive Adjustments of the General Partner as of the end of such period over (ii) the sum of the General Partner’s Share of Additional Book Basis Derivative Items with respect to the General Partner Interest for each prior taxable period, and (c) with respect to the holders of Incentive Distribution Rights, the excess of (i) the Net Positive Adjustments of the holders of Incentive Distribution Rights as of the end of such period over (ii) 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 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 ” has the meaning given such term in Section  5.11(e) .

Reset Notice ” has the meaning given such term in Section  5.11(b) .

Revaluation Event ” means an event that results in adjustment of the Carrying Value of each Partnership property pursuant to Section  5.5(d) .

Second Liquidation Target Amount ” has the meaning given such term in Section  6.1(c)(i)(D) .

 

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Second Target Distribution ” means $0.26563 per Unit per Quarter, subject to adjustment in accordance with Section  5.11 , Section  6.6 and Section  6.9 .

Securities Act ” means the Securities Act of 1933, as amended, supplemented or restated from time to time, and any successor to such statute.

Selling Holder ” means a Holder who is selling Registrable Securities pursuant to the procedures in Section  7.12 of this Agreement.

Share of Additional Book Basis Derivative Items” means in connection with any allocation of Additional Book Basis Derivative Items for any taxable period, (a) with respect to the Unitholders holding Common 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 taxable period bear to the Aggregate Remaining Net Positive Adjustments as of that time, (b) with respect to the General Partner (as holder of the General Partner Interest), 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 taxable period bear to the Aggregate Remaining Net Positive Adjustment as of that time and (c) 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 taxable period bear to the Aggregate Remaining Net Positive Adjustments as of that time.

Special Approval ” means approval by a majority of the members of the Conflicts Committee acting in good faith.

Subordinated Unit ” means a Limited Partner Interest having the rights and obligations specified with respect to Subordinated Units in the Prior Agreement.

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 general partner interests of such partnership 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 ” has the meaning given such term in Section  14.2(b) .

Target Distributions ” means, collectively, the First Target Distribution, Second Target Distribution and Third Target Distribution.

 

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Tax Matters Partner ” has the meaning given such term in Section  9.3(a) .

Third Target Distribution ” means $0.31875 per Unit per Quarter, subject to adjustment in accordance with Section  5.11 , Section  6.6 and Section  6.9 .

Trading Day ” means a day on which the principal National Securities Exchange on which the referenced Partnership Interests of any class are listed or admitted to trading is open for the transaction of business or, if such Partnership Interests are not listed or admitted to trading on any National Securities Exchange, a day on which banking institutions in New York City are not legally required to be closed.

Transaction Documents ” has the meaning given such term in Section  7.1(b) .

transfer ” has the meaning given such term 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 may be appointed from time to time by the General Partner to act as registrar and transfer agent for any class of Partnership Interests in accordance with the Exchange Act and the rules of the National Securities Exchange on which such Partnership Interests are listed or admitted to trading (if any); provided , however , that, if no such Person is appointed as registrar and transfer agent for any class of Partnership Interests, the General Partner shall act as registrar and transfer agent for such class of Partnership Interests.

Treasury Regulation ” means the United States Treasury regulations promulgated under the Code.

Underwritten Offering ” means (a) an offering pursuant to a Registration Statement in which Partnership Interests are sold to an underwriter on a firm commitment basis for reoffering to the public (other than the Initial Public Offering), (b) an offering of Partnership Interests pursuant to a Registration Statement that is a “bought deal” with one or more investment banks and (c) an “at-the-market” offering pursuant to a Registration Statement in which Partnership Interests are sold to the public through one or more investment banks or managers on a best efforts basis.

Unit ” means a Partnership Interest that is designated by the General Partner as a “Unit” and shall include Common Units but shall not include (i) hypothetical limited partner units representing the General Partner Interest or (ii) Incentive Distribution Rights.

Unit Majority ” means at least a majority of the Outstanding Common Units.

Unitholders ” means the Record Holders of Units.

Unpaid MQD ” has the meaning given such term 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).

 

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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.

Unrestricted Person ” means (a) each Indemnitee, (b) each Partner, (c) each Person who is or was a member, partner, director, officer, employee or agent of any Group Member, a General Partner or any Departing General Partner or any Affiliate of any Group Member, a General Partner or any Departing General Partner and (d) any Person the General Partner designates as an “Unrestricted Person” for purposes of this Agreement from time to time.

U.S. GAAP ” means United States generally accepted accounting principles, as in effect from time to time, consistently applied.

Withdrawal Opinion of Counsel ” has the meaning given such term in Section  11.1(b) .

Working Capital Borrowings ” means borrowings incurred pursuant to a credit facility, commercial paper facility or similar financing arrangement that are used solely for working capital purposes or to pay distributions to the Partners; provided that when such borrowings are incurred it is the intent of the borrower to repay such borrowings within twelve months from the date of such borrowings other than from additional Working Capital Borrowings.

Section 1.02 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. The General Partner has the power to construe and interpret this Agreement and to act upon any such construction or interpretation. To the fullest extent permitted by law, any construction or interpretation of this Agreement by the General Partner, any action taken pursuant thereto and any determination made by the General Partner in good faith shall, in each case, be conclusive and binding on all Record Holders, each other Person or Group who acquires an interest in a Partnership Interest and all other Persons for all purposes.

 

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ARTICLE II

ORGANIZATION

Section 2.01 Formation . The General Partner and the Organizational Limited Partner previously formed the Partnership as a limited partnership pursuant to the provisions of the Delaware Act. The purpose of this Second Amended and Restated Agreement of Limited Partnership is to (a) reflect changes in the name of the Partnership and the General Partner and (b) remove certain provisions that are no longer applicable to the Partnership. 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, 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 2.02 Name . The name of the Partnership shall be “CNX Midstream Partners LP”. Subject to applicable law, 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,” “L.P.,” “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 2.03 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, New Castle County, 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 CNX Center, 1000 CONSOL Energy Drive, Suite 400, Canonsburg, Pennsylvania 15317, or 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 CNX Center, 1000 CONSOL Energy Drive, Suite 400, Canonsburg, Pennsylvania 15317, or such other place as the General Partner may from time to time designate by notice to the Limited Partners.

Section 2.04 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 in furtherance of 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 be reasonably likely to cause the Partnership to be treated as an

 

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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 the conduct by the Partnership of any business and may decline to do so 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, and the General Partner in determining whether to propose or approve the conduct by the Partnership of any business shall be permitted to do so in its sole and absolute discretion.

Section 2.05 Powers . The Partnership shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient 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 2.06 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 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 2.07 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 Affiliates of the General Partner or one or more nominees of the General Partner or its Affiliates, 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 Affiliates of the General Partner or one or more nominees of the General Partner or its Affiliates 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 or one or more of the Partnership’s designated Affiliates 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 any successor 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.

 

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ARTICLE III

RIGHTS OF LIMITED PARTNERS

Section 3.01 Limitation of Liability . The Limited Partners shall have no liability under this Agreement except as expressly provided in this Agreement or the Delaware Act.

Section 3.02 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. No 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 be deemed to be participating 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) nor shall any such action affect, impair or eliminate the limitations on the liability of the Limited Partners under this Agreement.

Section 3.03 Rights of Limited Partners .

(a) 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, upon reasonable written demand stating the purpose of such demand, and at such Limited Partner’s own expense:

(i) to obtain from the General Partner either (A) the Partnership’s most recent filings with the Commission on Form 10-K and any subsequent filings on Form 10-Q or Form 8-K or (B) if the Partnership is no longer subject to the reporting requirements of the Exchange Act, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act (or any successor rule or regulation under the Securities Act); provided , that the foregoing materials shall be deemed to be available to a Limited Partner in satisfaction of the requirements of this Section  3.3(a)(i) if posted on or accessible through the Partnership’s or the Commission’s website;

(ii) to obtain a current list of the name and last known business, residence or mailing address of each Partner; and

(iii) to obtain a copy of this Agreement and the Certificate of Limited Partnership and all amendments thereto.

(b) To the fullest extent permitted by law, the rights to information granted the Limited Partners pursuant to Section  3.3(a) replace in their entirety any rights to information provided for in Section 17-305(a) of the Delaware Act, and each of the Limited Partners, each other Person or Group who acquires an interest in a Partnership Interest and each other Person bound by this Agreement hereby agrees to the fullest extent permitted by law that they do not have any rights as Limited Partners, interest holders or otherwise to receive any information either pursuant to Sections 17-305(a) of the Delaware Act or otherwise except for the information identified in Section  3.3(a) .

 

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(c) 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  3.3 ).

(d) Notwithstanding any other provision of this Agreement or Section 17-305 of the Delaware Act, each of the Limited Partners, each other Person or Group who acquires an interest in a Partnership Interest and each other Person bound by this Agreement hereby agrees to the fullest extent permitted by law that they do not have rights to receive information from the Partnership or any Indemnitee for the purpose of determining whether to pursue litigation or assist in pending litigation against the Partnership or any Indemnitee relating to the affairs of the Partnership except pursuant to the applicable rules of discovery relating to litigation commenced by such Person or Group.

ARTICLE IV

CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP

INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.01 Certificates . Record Holders of Partnership Interests and, where appropriate, Derivative Partnership Interests, shall be recorded in the Partnership Register and ownership of such interests shall be evidenced by a physical certificate or book entry notation in the Partnership Register. Notwithstanding anything to the contrary in this Agreement, unless the General Partner shall determine otherwise in respect of some or all of any or all classes of Partnership Interests, Partnership Interests shall not be evidenced by physical certificates. Certificates, if any, shall be executed on behalf of the Partnership by the Chief Executive Officer, President, Chief Financial Officer or any Executive Vice President, Senior Vice President or Vice President and the Secretary, any Assistant Secretary or other authorized officer of the General Partner, and shall bear the legend set forth in Section  4.8(f) . The signatures of such officers upon a Certificate may, to the extent permitted by law, be facsimiles. In case any officer who has signed or whose signature has been placed upon such Certificate shall have ceased to be such officer before such Certificate is issued, it may be issued by the Partnership with the same effect as if he or she were such officer at the date of its issuance. If a Transfer Agent has been appointed for a class of Partnership Interests, no Certificate for such class of Partnership Interests shall be valid for any purpose until it has been countersigned by the Transfer Agent; provided , however , that, if the General Partner elects to cause the Partnership to issue Partnership Interests of such class in global form, the Certificate shall be valid upon receipt of a certificate from the Transfer Agent certifying that the Partnership Interests have been duly registered in accordance with the directions of the Partnership. With respect to any Partnership Interests that are represented by physical certificates, the General Partner may determine that such Partnership Interests will no longer be represented by physical certificates and may, upon written notice to

 

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the holders of such Partnership Interests and subject to applicable law, take whatever actions it deems necessary or appropriate to cause such Partnership Interests to be registered in book entry or global form and may cause such physical certificates to be cancelled or deemed cancelled.

Section 4.02 Mutilated, Destroyed, Lost or Stolen Certificates .

(a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate officers of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type of Partnership Interests 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 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 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 Limited 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 or the Transfer Agent.

If a Limited Partner fails to notify the General Partner within a reasonable period of time after such Limited Partner 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, to the fullest extent permitted by law, such 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.

(c) As a condition to the issuance of any new Certificate 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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Section 4.03 Record Holders .

The names and addresses of Unitholders as they appear in the Partnership Register shall be the official list of Record Holders of the Partnership Interests for all purposes. The Partnership and the General Partner 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 or Group, regardless of whether the Partnership or the General Partner 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 or Group in acquiring and/or holding Partnership Interests, as between the Partnership on the one hand, and such other Person on the other hand, such representative Person shall be the Limited Partner with respect to such Partnership Interest upon becoming the Record Holder in accordance with Section  10.1(b) and have the rights and obligations of a Limited Partner hereunder as and to the extent provided herein, including Section  10.1(c) .

Section 4.04 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 all or any part of its General Partner Interest 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 assigns all or a part of such Limited Partner Interest to another Person who is or becomes a Limited Partner as a result thereof, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, excluding a pledge, encumbrance, hypothecation or mortgage but 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 null and void, and the Partnership shall have no obligation to effect any such transfer or purported transfer.

(c) Nothing contained in this Agreement shall be construed to prevent or limit a disposition by any stockholder, member, partner or other owner of the General Partner or any Limited Partner of any or all of such Person’s shares of stock, membership interests, partnership interests or other ownership interests in the General Partner or such Limited Partner and the term “transfer” shall not include any such disposition.

Section 4.05 Registration and Transfer of Limited Partner Interests .

(a) The General Partner shall maintain, or cause to be maintained by the Transfer Agent in whole or in part, the Partnership Register on behalf of the Partnership.

 

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(b) The General Partner shall not recognize any transfer of Limited Partner Interests evidenced by Certificates until the Certificates evidencing such Limited Partner Interests are duly endorsed and surrendered for registration of transfer. No charge shall be imposed by the General Partner for such transfer; provided , however , that as a condition to the issuance of any new Certificate 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. Upon surrender of a Certificate for registration of transfer of any Limited Partner Interests evidenced by a Certificate, and subject to the provisions of this 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 Certificates evidencing Limited Partner Interests for which a Transfer Agent has been appointed, 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 evidencing the same aggregate number and type of Limited Partner Interests as was evidenced by the Certificate so surrendered. Upon the proper surrender of a Certificate, such transfer shall be recorded in the Partnership Register.

(c) Upon the receipt by the General Partner of a duly endorsed certificate or, in the case of uncertificated Limited Partner Interests for which a Transfer Agent has been appointed, the Transfer Agent of proper transfer instructions from the Record Holder of uncertificated Limited Partner Interests, such transfer shall be recorded in the Partnership Register.

(d) By acceptance of any Limited Partner Interests pursuant to a transfer in accordance with this Article IV , each transferee of a Limited Partner Interest (including any nominee, agent or representative acquiring such Limited Partner Interests for the account of another Person or Group) (i) shall be admitted to the Partnership as a Limited Partner with respect to the Limited Partner Interests so transferred to such Person when any such transfer or admission is reflected in the Partnership Register and such Person becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii) represents that the transferee has the capacity, power and authority to enter into this Agreement and (iv) makes the consents, acknowledgements 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.

(e) 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 shall be freely transferable.

(f) The General Partner and its Affiliates shall have the right at any time to transfer their Common Units to one or more Persons.

 

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Section 4.06 Transfer of the General Partner s General Partner Interest .

(a) Subject to Section  4.6(c) , prior to September 30, 2024, the General Partner shall not transfer all or any part of its General Partner Interest to a Person unless such transfer (i) has been approved by the prior written consent or vote of the holders of at least a Unit Majority (excluding Common Units owned 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.

(b) Subject to Section  4.6(c) , on or after September 30, 2024, the General Partner may transfer all or any part of its General Partner Interest without the approval of any Limited Partner or any other Person.

(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 interest owned by 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 4.07 Transfer of Incentive Distribution Rights . The General Partner or any other holder of Incentive Distribution Rights may transfer any or all of its Incentive Distribution Rights without the approval of any Limited Partner or any other Person.

Section 4.08 Restrictions on Transfers .

(a) Except as provided in Section  4.8(e) , 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 otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed). The Partnership may issue stop transfer instructions to any Transfer Agent in order to implement any restriction on transfer contemplated by this Agreement.

(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 (i) avoid a significant risk of the Partnership becoming taxable as a corporation or otherwise becoming

 

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taxable as an entity for federal income tax purposes (to the extent not already so treated or taxed) or (ii) preserve the uniformity of the Limited Partner Interests (or any class or classes thereof). 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 an IDR Reset Common Unit that was issued in connection with an IDR Reset Election pursuant to Section  5.11 shall be subject to the restrictions imposed by Section  6.8(b) and Section  6.8(c) .

(d) [Reserved . ]

(e) Nothing 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 or book entry evidencing Partnership Interests shall bear a conspicuous legend in substantially the following form:

THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF CNX MIDSTREAM PARTNERS LP THAT THIS SECURITY MAY NOT BE TRANSFERRED IF SUCH TRANSFER (AS DEFINED IN THE PARTNERSHIP AGREEMENT) 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 CNX MIDSTREAM PARTNERS LP UNDER THE LAWS OF THE STATE OF DELAWARE OR (C) CAUSE CNX MIDSTREAM 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). THE GENERAL PARTNER OF CNX MIDSTREAM 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 (A) AVOID A SIGNIFICANT RISK OF CNX MIDSTREAM PARTNERS LP BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED) OR (B) PRESERVE THE UNIFORMITY OF THE LIMITED PARTNER INTERESTS IN CNX MIDSTREAM PARTNERS LP (OR ANY CLASS OR CLASSES THEREOF). THIS SECURITY MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS ON ITS TRANSFER PROVIDED IN THE PARTNERSHIP AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST

 

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MADE BY THE HOLDER OF RECORD OF THIS SECURITY TO THE SECRETARY OF THE GENERAL PARTNER AT THE PRINCIPAL EXECUTIVE OFFICES OF THE PARTNERSHIP. 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 4.09 Eligibility Certificates; Ineligible Holders .

(a) If at any time the General Partner determines, with the advice of counsel, that:

(i) the U.S. federal income tax status (or lack of proof of the U.S. federal income tax status) of one or more Limited Partners or their owners has or is reasonably likely to have a material adverse effect on the rates that can be charged to customers by any Group Member with respect to assets that are subject to regulation by the Federal Energy Regulatory Commission or similar regulatory body (a “ Rate Eligibility Trigger ”); or

(ii) any Group Member is subject to any federal, state or local law or regulation that 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 one or more Limited Partners or their owners (a “ Citizenship Eligibility Trigger ”);

then, the General Partner, without the approval of any Limited Partner, may adopt such amendments to this Agreement as it determines to be necessary or appropriate to (A) in the case of a Rate Eligibility Trigger, obtain such proof of the U.S. federal income tax status of such Limited Partners and, to the extent relevant, their owners, as the General Partner determines to be necessary or appropriate to reduce the risk of occurrence of a material adverse effect on the rates that can be charged to customers by any Group Member or (B) in the case of a Citizenship Eligibility Trigger, obtain such proof of the nationality, citizenship or other related status of such Limited Partners and, to the extent relevant, their owners, as the General Partner determines to be necessary or appropriate to eliminate or mitigate the risk of cancellation or forfeiture of any properties or interests therein.

(b) Amendments adopted pursuant to this Section  4.9 may include provisions requiring all Limited Partners to certify as to their (and their owners’) status as Eligible Holders upon demand and on a regular basis, as determined by the General Partner, and may require transferees of Units to so certify prior to being admitted to the Partnership as Limited Partners (any such required certificate, an “ Eligibility Certificate ”).

(c) Amendments adopted pursuant to this Section  4.9 may provide that (i) any Limited Partner who fails to furnish to the General Partner, within a reasonable period, requested proof of its (and its owners’) status as an Eligible Holder or (ii) if upon receipt of such Eligibility Certificate or other requested information the General Partner determines that a Limited Partner is not an Eligible Holder (an “ Ineligible Holder ”), the Limited Partner Interests owned by such Limited Partner shall be subject to redemption. In addition, the General Partner shall be substituted and treated as the owner of all Limited Partner Interests owned by an Ineligible Holder.

 

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(d) If the General Partner adopts amendments pursuant to this Section  4.9 providing for the redemption of Limited Partner Interests, 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.

(e) The General Partner shall, in exercising, or abstaining from exercising, voting rights in respect of Limited Partner Interests held by it on behalf of Ineligible Holders, distribute the votes or abstentions in the same manner and in the same ratios as the votes of Limited Partners (including the General Partner and its Affiliates) in respect of Limited Partner Interests other than those of Ineligible Holders are distributed, either casting votes for or against or abstaining as to the matter.

(f) Upon dissolution of the Partnership, an Ineligible Holder 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 Holder’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 Holder of its Limited Partner Interests (representing the right to receive its share of such distribution in kind).

(g) At any time after an Ineligible Holder can and does certify that it has become an Eligible Holder, such Ineligible Holder may, upon application to the General Partner, request that with respect to any Limited Partner Interests of such Ineligible Holder not redeemed, such Ineligible Holder be admitted as a Limited Partner, and upon approval of the General Partner, such Ineligible Holder shall be admitted as a Limited Partner and shall no longer constitute an Ineligible Holder, and the General Partner shall cease to be deemed to be the owner in respect of such Ineligible Holder’s Limited Partner Interests.

ARTICLE V

CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.01 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 $140.00 for a 2% General Partner Interest in the Partnership and was admitted as the General Partner of the Partnership, and the Organizational Limited Partner made an initial Capital Contribution to the Partnership in the amount of $6,860.00 for a 98% Limited Partner Interest in the Partnership and was admitted as a Limited Partner of the

 

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Partnership. As of the Closing Date, pursuant to the Contribution Agreement, the interest of the Organizational Limited Partner was partially redeemed in exchange for the return of the initial Capital Contribution of the Organizational Limited Partner, and 98% of any interest or other profit that may have resulted from the investment or other use of such initial Capital Contributions was allocated and distributed to the Organizational Limited Partner, and the balance thereof shall be allocated and distributed to the General Partner. On the Closing Date, the Organizational Limited Partner continued as a limited partner of the Partnership with respect to the portion of its interest that was not partially redeemed.

Section 5.02 Contributions by the General Partner .

(a) On the Closing Date and pursuant to the Contribution Agreement, the General Partner contributed to the Partnership, as a Capital Contribution, the 2% OpCo Interest (as defined in the Contribution Agreement) in exchange for (i) a continuation of its 2% General Partner Interest (after giving effect to the exercise of the Over-Allotment Option), subject to all of the rights, privileges and duties of the General Partner under this Agreement and (ii) the Incentive Distribution Rights.

(b) Upon the issuance of any additional Limited Partner Interests by the Partnership (other than (i) any Common Units issued pursuant to Section  5.11 and (ii) any Common Units issued upon the conversion of any Partnership Interests), the General Partner may, in order to maintain the Percentage Interest with respect to its General Partner Interest, make additional Capital Contributions in an amount equal to the product obtained by multiplying (A) the quotient determined by dividing (x) the Percentage Interest with respect to the General Partner Interest immediately prior to the issuance of such additional Limited Partner Interests by the Partnership by (y) 100% less the Percentage Interest with respect to the General Partner Interest immediately prior to the issuance of such additional Limited Partner Interests by the Partnership times (B) the gross amount contributed to the Partnership by the Limited Partners (before deduction of underwriters’ discounts and commissions) in exchange for such additional Limited Partner Interests.

Section 5.03 Contributions by Limited Partners .

(a) On the Closing Date, pursuant to and as described in the Contribution Agreement, CONE Gathering contributed to the Partnership, as a Capital Contribution, the 98% OpCo Interest (as defined in the Contribution Agreement) in exchange for (i) 9,038,121 Common Units, (ii) 29,163,121 Subordinated Units and (iii) the right to receive a cash distribution from the Partnership as set forth in the Contribution Agreement.

(b) On the Closing Date and pursuant to the IPO Underwriting Agreement, each IPO Underwriter contributed cash to the Partnership in exchange for the issuance by the Partnership of Common Units to each IPO Underwriter, all as set forth in the IPO Underwriting Agreement.

(c) Upon the exercise of the Over-Allotment Option, each IPO Underwriter contributed cash to the Partnership on the Option Closing Date in exchange for the issuance by the Partnership of additional Common Units to each IPO Underwriter, all as set forth in the IPO Underwriting Agreement.

 

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(d) Except for the Capital Contributions made or to be made pursuant to Section  5.3(a) through Section  5.3(c) and for Capital Contributions required to be made by or on behalf of a Person acquiring Partnership Interests or Derivative Partnership Interests in connection with future issuances in accordance with Section  5.6 , no Limited Partner will be required to make any additional Capital Contribution to the Partnership pursuant to this Agreement.

Section 5.04 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 termination 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 5.05 Capital Accounts .

(a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership Interests held by a nominee, agent or representative in any case in which such nominee, agent or representative 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). The Capital Account shall in respect of each such Partnership Interest 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 that 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:

 

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(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 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 or disregarded entity for federal income tax purposes and (y) any other partnership, limited liability company, unincorporated business or other entity classified as a partnership or disregarded entity for federal income tax purposes of which a Group Member is, directly or indirectly, a partner, member or other equity holder.

(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) The computation of all items of income, gain, loss and deduction shall be made, except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m), without regard to any election under Section 754 of the Code that may be made by the Partnership. 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 (including pursuant to Treasury Regulation Section 1.734-2(b)(1)) 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) In the event the Carrying Value of Partnership property is adjusted pursuant to Section  5.5(d) , any Unrealized Gain resulting from such adjustment shall be treated as an item of gain, and any Unrealized Loss resulting from such adjustment shall be treated as an item of loss.

(v) 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.

(vi) An item of income of the Partnership that is described in Section 705(a)(1)(B) of the Code (with respect to items of income that are exempt from tax) shall be treated as an item of income for the purpose of this Section  5.5(b) , and an item of expense of the Partnership that is described in Section 705(a)(2)(B) of the Code (with respect to expenditures that are not deductible and not chargeable to capital accounts), shall be treated as an item of deduction for the purpose of this Section  5.5(b) .

(vii) 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

 

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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.

(viii) 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. The amount of any such adjustment shall be treated for purposes hereof 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 Partnership).

(c) (i) Except as otherwise provided in this Section  5.5(c) , 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.

(ii) Subject to Section  6.8(b) , immediately prior to the transfer of an IDR Reset Common Unit 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 IDR Reset Common Units will (A) first, be allocated to the IDR Reset Common Units to be transferred in an amount equal to the product of (x) the number of such IDR Reset Common 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 IDR Reset Common Units. Following any such allocation, the transferor’s Capital Account, if any, maintained with respect to the retained IDR Reset Common 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 IDR Reset Common Units will have a balance equal to the amount allocated under clause  (A) above.

(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 a Noncompensatory Option, the issuance of Partnership Interests as consideration for the provision of services, the issuance of IDR Reset Common Units pursuant to Section  5.11 , or the conversion of the General Partner’s Combined Interest to Common Units pursuant to Section  11.3(b) , the Capital Account of each Partner 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, and any such Unrealized Gain or Unrealized Loss shall be treated, for purposes of maintaining Capital Accounts, as if it 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 among the Partners at such time pursuant to Section  6.1(c) and Section  6.1(d) in the same

 

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manner as any item of gain or loss actually recognized following an event giving rise to the dissolution of the Partnership would have been allocated; provided , however , that in the event of the issuance of a Partnership Interest pursuant to the exercise of a Noncompensatory Option where the right to share in Partnership capital represented by such Partnership Interest differs from the consideration paid to acquire and exercise such option, the Carrying Value of each Partnership property immediately after the issuance of such Partnership Interest shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property and the Capital Accounts of the Partners shall be adjusted in a manner consistent with Treasury Regulation Section 1.704-1(b)(2)(iv)(s); provided further , however , that in the event of an issuance of Partnership Interests for a de minimis amount of cash or Contributed Property, in the event of an issuance of a Noncompensatory Option to acquire a de minimis Partnership Interest, or in the event of an issuance of a de minimis amount of Partnership Interests as consideration for the provision of services, the General Partner may determine that such adjustments are unnecessary for the proper administration of the Partnership. If, upon the occurrence of a Revaluation Event described in this Section  5.5(d) , a Noncompensatory Option of the Partnership is outstanding, the Partnership shall adjust the Carrying Value of each Partnership property in accordance with Treasury Regulation Sections 1.704-1(b)(2)(iv)(f)(1) and 1.704-1(b)(2)(iv)(h)(2). In determining such Unrealized Gain or Unrealized Loss, the aggregate fair market value of all Partnership property (including cash or cash equivalents) immediately prior to the issuance of additional Partnership Interests (or, in the case of a Revaluation Event resulting from the exercise of a Noncompensatory Option, immediately after the issuance of the Partnership Interest acquired pursuant to the exercise of such Noncompensatory Option if required pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(1)) shall be determined by the General Partner using such method of valuation as it may adopt. In making its determination of the fair market values of individual properties, the General Partner may first determine an aggregate value for the assets of the Partnership that takes into account the current trading price of the Common Units, the fair market value of all other Partnership Interests at such time, and the amount of Partnership Liabilities. The General Partner may allocate such aggregate value among the individual properties of the Partnership (in such manner as it determines appropriate). Absent a contrary determination by the General Partner, the aggregate fair market value of all Partnership assets (including, without limitation, cash or cash equivalents) immediately prior to a Revaluation Event shall be the value that would result in the Capital Account for each Common Unit that is Outstanding prior to such Revaluation Event being equal to the Event Issue Value.

(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately prior to any distribution to a Partner of any Partnership 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, and any such Unrealized Gain or Unrealized Loss shall be treated, for purposes of maintaining Capital Accounts, as if it 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 among the Partners at such time pursuant to Section  6.1(c) and Section  6.1(d) in the same manner as any item of gain or loss actually recognized following an event giving rise to the dissolution of the Partnership would have been

 

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allocated. In determining such Unrealized Gain or Unrealized Loss the aggregate fair market value of all Partnership property (including cash or cash equivalents) immediately prior to a distribution shall (A) in the case of a distribution that is not made pursuant to Section  12.4 or in the case of a deemed distribution, be determined 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 by the Liquidator using such method of valuation as it may adopt.

Section 5.06 Issuances of Additional Partnership Interests and Derivative Partnership Interests .

(a) The Partnership may issue additional Partnership Interests and Derivative Partnership Interests 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 Interest authorized to be issued by the Partnership pursuant to Section  5.6(a) 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 Interests), 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, or shall be required to, redeem the Partnership Interest; (v) whether such Partnership Interest 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 Interest will be issued, evidenced by Certificates and assigned or transferred; (vii) the method for determining the Percentage Interest as to such Partnership Interest and (viii) the right, if any, of each such Partnership Interest to vote on Partnership matters, including matters relating to the relative rights, preferences and privileges of such Partnership Interest.

(c) The General Partner shall take all actions that it determines to be necessary or appropriate in connection with (i) each issuance of Partnership Interests and Derivative Partnership Interests pursuant to this Section  5.6 , (ii) the conversion of the Combined Interest into Units pursuant to the terms of this Agreement, (iii) the issuance of Common Units pursuant to Section  5.11 , (iv) reflecting admission of such additional Limited Partners in the Partnership Register as the Record Holders of such Limited Partner Interests and (v) all additional issuances of Partnership Interests and Derivative Partnership Interests. The General Partner shall determine the relative rights, powers and duties of the holders of the Units or other Partnership Interests or Derivative Partnership Interests 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 Interests or Derivative Partnership Interests or in connection with the conversion of the Combined Interest 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 Interests are listed or admitted to trading.

 

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(d) No fractional Units shall be issued by the Partnership.

Section 5.07 [Reserved.]

Section 5.08 Limited Preemptive Right . Except as provided in this Section  5.8 and in Section  5.2 and Section  5.11 or as otherwise provided in a separate agreement by the Partnership, no Person shall have any preemptive, preferential or other similar right with respect to the issuance of any Partnership Interest, whether unissued, held in the treasury or hereafter created. Other than with respect to the issuance of Partnership Interests in connection with the Initial Public Offering, 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 Interests from the Partnership whenever, and on the same terms that, the Partnership issues Partnership Interests 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 Interests.

Section 5.09 Splits and Combinations .

(a) Subject to Section  5.9(e) , Section  6.6 and Section  6.9 (dealing with adjustments of distribution levels), the Partnership may make a Pro Rata distribution of Partnership Interests to all Record Holders or may effect a subdivision or combination of Partnership Interests 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 or stated as a number of Units are proportionately adjusted.

(b) Whenever such a distribution, subdivision or combination of Partnership Interests 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 (or such shorter periods as required by applicable law). The General Partner also may cause a firm of independent public accountants selected by it to calculate the number of Partnership Interests 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) If a Pro Rata distribution of Partnership Interests, or a subdivision or combination of Partnership Interests, is made as contemplated in this Section  5.9 , the number of hypothetical limited partner units representing the General Partner Interest constituting the Percentage Interest of the General Partner (as determined immediately prior to the Record Date for such distribution, subdivision or combination) shall be appropriately adjusted as of the date of payment of such distribution, or the effective date of such subdivision or combination, to maintain such Percentage Interest of the General Partner.

(d) Promptly following any such distribution, subdivision or combination, the Partnership may issue Certificates or uncertificated Partnership Interests to the Record Holders of Partnership Interests as of the applicable Record Date representing the new number of Partnership Interests held by such Record Holders, or the General Partner may adopt such other

 

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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 Interests Outstanding, the Partnership shall require, as a condition to the delivery to a Record Holder of Partnership Interests represented by Certificates, the surrender of any Certificate held by such Record Holder immediately prior to such Record Date.

(e) The Partnership shall not issue fractional Units (or fractional hypothetical limited partner units representing the General Partner Interest) upon any distribution, subdivision or combination of Units. If a distribution, subdivision or combination of Units would result in the issuance of fractional Units (and fractional hypothetical limited partner units representing the General Partner Interest) but for the provisions of Section  5.6(d) and this Section  5.9(e) , each fractional Unit (and hypothetical limited partner unit) shall be rounded to the nearest whole Unit (or hypothetical limited partner unit), with fractional Units (or hypothetical limited partner units) equal to or greater than a 0.5 Unit (or hypothetical limited partner unit) being rounded to the next higher Unit (or hypothetical limited partner 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 Sections 17-303(a), 17-607 or 17-804 of the Delaware Act.

Section 5.11 Issuance of Common 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 the Partnership has made a distribution pursuant to Section  6.4(e) 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 Common Units (the “ IDR Reset Common Units ”) derived by dividing (i) the average amount of the aggregate cash distributions made by the Partnership for the two full Quarters immediately preceding the giving of the Reset Notice 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 Common Units determined by such quotient is referred to herein as the “ Aggregate Quantity of IDR Reset Common Units ”). If at the time of any IDR Reset Election the General Partner and its Affiliates are not the holders of a majority in interest of the Incentive Distribution Rights, then the IDR Reset Election shall be subject to the prior written concurrence of the General Partner that the conditions described in the immediately preceding sentence have been satisfied. Upon the issuance of such IDR Reset Common Units, the Partnership will issue to the General Partner an additional General Partner Interest (represented by hypothetical limited partner units) equal to the product of (x) the quotient obtained by

 

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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 IDR Reset Common 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 this Section  5.11 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 IDR Reset Common Units and the General Partner will become entitled to receive an additional General Partner Interest on the basis specified above, without any further approval required by the General Partner or the Unitholders other than as set forth in this Section  5.11(a) , 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, 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 Quantity of IDR Reset Common Units that 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 IDR Reset Common Units and the General Partner will be entitled to receive the related additional General Partner Interest on the fifteenth Business Day after receipt by the Partnership of the Reset Notice; provided , however , that the issuance of IDR Reset Common 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 such IDR Reset Common Units 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 IDR Reset Common Units to be issued pursuant to this Section  5.11 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 Interests having such terms as the General Partner may approve, with the approval of the Conflicts Committee, that will provide (i) the same economic value, in the aggregate, as the Aggregate Quantity of IDR Reset Common 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 Interests 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).

 

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(e) The Minimum Quarterly Distribution and the Target Distributions shall be adjusted at the time of the issuance of IDR Reset Common Units or other Partnership Interests pursuant to this Section  5.11 such that (i) the Minimum Quarterly Distribution shall be reset to equal 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 125% of the Reset MQD and (iv) the Third Target Distribution shall be reset to equal 150% of the Reset MQD.

(f) Upon the issuance of IDR Reset Common Units pursuant to Section  5.11(a) , the Capital Account maintained with respect to the Incentive Distribution Rights will (i) first, be allocated to IDR Reset Common Units in an amount equal to the product of (A) the Aggregate Quantity of IDR Reset Common Units and (B) the Per Unit Capital Amount for an Initial Common Unit, and (ii) second, as to any remaining balance in such Capital Account, be retained by the holder of the Incentive Distribution Rights. If there is not sufficient capital associated with the Incentive Distribution Rights to allocate the full Per Unit Capital Amount for an Initial Common Unit to the IDR Reset Common Units in accordance with clause  (i) of this Section  5.11(f) , the IDR Reset Common Units shall be subject to Sections 6.1(d)(x)(B) and (C) .

ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS

Section 6.01 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) ) for each taxable period shall be allocated among the Partners 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 period and all items of income, gain, loss and deduction taken into account in computing Net Income for such taxable period shall be allocated as follows:

(i) First, to the General Partner until the aggregate of the Net Income allocated to the General Partner pursuant to this Section  6.1(a)(i) for the current and all previous taxable periods is equal to the aggregate of the Net Loss allocated to the General Partner pursuant to Section  6.1(b)(ii) for all previous taxable periods; and

(ii) The balance, if any, (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 General Partner’s Percentage Interest.

 

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(b) Net Loss . After giving effect to the special allocations set forth in Section  6.1(d) , Net Loss for each taxable period and all items of income, gain, loss and deduction taken into account in computing Net Loss for such taxable period shall be allocated as follows:

(i) First, to the General Partner and the Unitholders, Pro Rata; provided , however , that 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 period (or increase any existing deficit balance in its Adjusted Capital Account); and

(ii) 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) , Net Termination Gain or Net Termination Loss (including a pro rata part of each item 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 manner set forth in this Section  6.1(c) . 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) Subject to the provisions set forth in the last sentence of this Section  6.1(c)(i) , Net Termination Gain (including a pro rata part of each item of income, gain, loss, and deduction taken into account in computing Net Termination Gain) shall be allocated in the following order and priority:

 

  (A) First, to the General Partner until the aggregate of the Net Termination Gain allocated to the General Partner pursuant to this Section  6.1(c)(i)(A) for the current and all previous taxable periods is equal to the Net Termination Loss allocated to the General Partner pursuant to Section  6.1(c)(ii)(C) for all previous taxable periods;

 

  (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 General Partner’s Percentage Interest, until the Capital Account in respect of each Common Unit then Outstanding is equal to the sum of (1) its Unrecovered Initial Unit Price 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) with respect to such Common Unit for such Quarter (the amount determined pursuant to this clause  (2) is hereinafter referred to as the “ Unpaid MQD ”);

 

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  (C) Third, 100% to the General Partner and all Unitholders, Pro Rata, 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 and (3) the excess of (aa) the First Target Distribution less the Minimum Quarterly Distribution for each Quarter after the Closing Date or the date of the most recent IDR Reset Election, if any, 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(b) for such period (the sum of subclauses (1) , (2) and (3)  is hereinafter referred to as the “ First Liquidation Target Amount ”);

 

  (D) Fourth, (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 (D) , 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 after the Closing Date or the date of the most recent IDR Reset Election, if any, 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(c) for such period (the sum of subclauses (1)  and (2) is hereinafter referred to as the “ Second Liquidation Target Amount ”);

 

  (E) Fifth, (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 (E) , 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 after the Closing Date or the date of the most recent IDR Reset Election, if any, 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(d) for such period; and

 

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  (F) 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 (F) .

Notwithstanding the foregoing provisions in this Section 6.1(c)(i), the General Partner may adjust the amount of any Net Termination Gain arising in connection with a Revaluation Event that is allocated to the holders of Incentive Distribution Rights in a manner that will result (i) in the Capital Account for each Common Unit that is Outstanding prior to such Revaluation Event being equal to the Event Issue Value and (ii) to the greatest extent possible, the Capital Account with respect to the Incentive Distribution Rights that are Outstanding prior to such Revaluation Event being equal to the amount of Net Termination Gain that would be allocated to the holders of the Incentive Distribution Rights pursuant to this Section 6.1(c)(i) if the Capital Accounts with respect to all Partnership Interests that were Outstanding immediately prior to such Revaluation Event and the Carrying Value of each Partnership property were equal to zero.

(ii) Net Termination Loss (including a pro rata part of each item of income, gain, loss, and deduction taken into account in computing Net Termination Loss) shall be allocated:

 

  (A) First (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 General Partner’s Percentage Interest, until the Adjusted Capital Account in respect of each Common Unit then Outstanding has been reduced to zero;

 

  (B) Second, to the General Partner and the Unitholders, Pro Rata; provided that Net Termination Loss shall not be allocated pursuant to this Section  6.1(c)(ii)(B) to the extent such allocation would cause any Unitholder to have a deficit balance in its Adjusted Capital Account (or increase any existing deficit in its Adjusted Capital Account); and

 

  (C) Third, 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 in the following order:

(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

 

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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 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 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 of any other allocations pursuant to this Section  6.1(d) and other than an allocation pursuant to Section  6.1(d)(i) , 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 ) with respect to a Unit for a taxable period exceeds the amount of cash or the Net Agreed Value of property distributed with respect to another Unit within the same taxable period (the amount of the excess, an “ Excess Distribution ” and the Unit with respect to which the greater distribution is paid, an “ Excess Distribution Unit ”), then (1) there shall be allocated gross income and gain to each Unitholder receiving an Excess Distribution with respect to the Excess Distribution Unit until the aggregate amount of such items allocated with respect to such Excess Distribution Unit pursuant to this Section  6.1(d)(iii)(A) for the current taxable period and all previous taxable periods is equal to the amount of the Excess Distribution; and (2) the General Partner shall be allocated gross income and gain with respect to each such Excess Distribution in an amount equal to the product obtained by multiplying (aa) the quotient determined by dividing (x) the General Partner’s Percentage Interest at the

 

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  time when the Excess Distribution occurs by (y) a percentage equal to 100% less the General Partner’s Percentage Interest at the time when the Excess Distribution occurs, times (bb) the total amount allocated in clause  (1) above with respect to such Excess Distribution.

 

  (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 period and all previous taxable periods 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 period; 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; provided , however , that an allocation pursuant to this Section  6.1(d)(iv) shall be made only if and to the extent that such Partner would have a deficit balance in its Adjusted 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)(iv) were not in this Agreement.

(v) Gross Income Allocation . In the event any Partner has a deficit balance in its Capital Account at the end of any 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 , however , 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 Section  6.1(d)(iv) and this Section  6.1(d)(v) were not in this Agreement.

 

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(vi) Nonrecourse Deductions . Nonrecourse Deductions for any taxable period shall be allocated to the Partners Pro Rata. 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 satisfies 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 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, the 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 as determined by the General Partner in accordance with any permissible method under Treasury Regulation Section 1.752-3(a)(3).

(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 (including pursuant to Treasury Regulation Section 1.734-2(b)(1)) 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; Changes in Law .

 

  (A) With respect to an event triggering an adjustment to the Carrying Value of Partnership property pursuant to Section  5.5(d) during any taxable period of the Partnership ending upon, or after, the issuance of IDR Reset Common Units pursuant to Section  5.10 , any Unrealized Gains and Unrealized Losses shall be allocated among the Partners in a manner that to the nearest extent possible results in the Capital Accounts maintained with respect to such IDR Reset Common Units issued pursuant to Section  5.10 equaling the product of (1) the Aggregate Quantity of IDR Reset Common Units and (2) the Per Unit Capital Amount for an Initial Common Unit.

 

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  (B) With respect to any taxable period during which an IDR Reset Common Unit is transferred to any Person who is not an Affiliate of the transferor, all or a portion of the remaining items of Partnership gross income or gain for such taxable period shall be allocated 100% to the transferor Partner of such transferred IDR Reset Common Unit until such transferor Partner has been allocated an amount of gross income or gain that increases the Capital Account maintained with respect to such transferred IDR Reset Common Unit to an amount equal to the Per Unit Capital Amount for an Initial Common Unit.

 

  (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 (1) adopt such conventions as it deems appropriate in determining the amount of depreciation, amortization and cost recovery deductions; (2) make special allocations of income, gain, loss, deduction, Unrealized Gain or Unrealized Loss; and (3) 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  6.1(d)(x)(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.

(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

 

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  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. In exercising its discretion under this Section  6.1(d)(xi)(A) , the General Partner may take into account future Required Allocations that, although not yet made, are likely to offset other Required Allocations previously made. 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) of the second sentence of this Section  6.1(d)(xi)(A) 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 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) The General Partner shall allocate Additional Book Basis Derivative Items consisting of depreciation, amortization, depletion or any other form of cost recovery (other than Additional Book Basis Derivative Items included in Net Termination Gain or Net Termination Loss) with respect to any Adjusted Property to the Unitholders, Pro Rata, and the holders of Incentive Distribution Rights, all in the same proportion as the Net Termination Gain or Net Termination Loss resulting from the Revaluation Event that gave rise to such Additional Book Basis Derivative Items was allocated to them pursuant to Section  6.1(c) .

 

52


  (B) If a sale or other taxable disposition of an Adjusted Property, including, for this purpose, inventory (“ Disposed of Adjusted Property ”) occurs other than in connection with an event giving rise to Net Termination Gain or Net Termination Loss, the General Partner shall allocate (1) items of gross income and gain (aa) away from the holders of Incentive Distribution Rights and (bb) to the Unitholders, or (2) items of deduction and loss (aa) away from the Unitholders and (bb) to the holders of Incentive Distribution Rights, to the extent that the Additional Book Basis Derivative Items with respect to the Disposed of Adjusted Property (determined in accordance with the last sentence of the definition of Additional Book Basis Derivative Items) treated as having been allocated to the Unitholders pursuant to this Section  6.1(d)(xii)(B) exceed their Share of Additional Book Basis Derivative Items with respect to such Disposed of Adjusted Property. For purposes of this Section  6.1(d)(xii)(B) , the Unitholders shall be treated as having been 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)

Net Termination Loss in an amount equal to the lesser of (1) such Net Termination Loss and (2) the Aggregate Remaining Net Positive Adjustments shall be allocated in such a manner, as determined by the General Partner, that to the extent possible, the Capital Account balances of the Partners will equal the amount they would have been had no prior Book-Up Events occurred, and any remaining Net Termination Loss shall be allocated pursuant to Section  6.1(c) hereof. In allocating Net Termination Loss

 

53


  pursuant to this Section  6.1(d)(xii)(C) , the General Partner shall attempt, to the extent possible, to cause the Capital Accounts of the Unitholders, on the one hand, and holders of the Incentive Distribution Rights, on the other hand, to equal the amount they would equal if (i) the Carrying Values of the Partnership’s property had not been previously adjusted in connection with any prior Book-Up Events, (ii) Unrealized Gain and Unrealized Loss (or, in the case of a liquidation, actual gain or loss) with respect to such Partnership Property were determined with respect to such unadjusted Carrying Values, and (iii) any resulting Net Termination Gain had been allocated pursuant to Section  6.1(c)(i) (including, for the avoidance of doubt, taking into account the provisions set forth in the last sentence of Section  6.1(c)(i) ).

 

  (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) . Without limiting the foregoing, if an Adjusted Property is contributed by the Partnership to another entity classified as a partnership for federal income tax purposes (the “ lower tier partnership ”), the General Partner may make allocations similar to those described in Sections 6.1(d)(xii)(A) through (C)  to the extent the General Partner determines such allocations are necessary to account for the Partnership’s allocable share of income, gain, loss and deduction of the lower tier partnership that relate to the contributed Adjusted Property in a manner that is consistent with the purpose of this Section  6.1(d)(xii) .

Section 6.02 Allocations for Tax Purposes .

(a) Except as otherwise provided herein, for U.S. 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 in the manner provided under Section 704(c) of the Code, and the Treasury Regulations promulgated under Section 704(b) and 704(c) of the Code, as determined to be appropriate by the General Partner (taking into account the General Partner’s discretion under Section  6.1(d)(x)(D) ); provided , however , that the General Partner shall apply the principles of Treasury Regulation Section 1.704-3(d) in all events.

 

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(c) 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.

(d) 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.

(e) 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.

(f) Each item of Partnership income, gain, loss and deduction, for federal income tax purposes, shall be determined for each taxable period 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 , 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 or for the proper administration of the Partnership.

 

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(g) 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, agent or representative in any case in which such nominee, agent or representative 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.

(h) If, as a result of an exercise of a Noncompensatory Option, a Capital Account reallocation is required under Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(3), the General Partner shall make corrective allocations pursuant to Treasury Regulation Section 1.704-1(b)(4)(x).

Section 6.03 Requirement and Characterization of Distributions; Distributions to Record Holders .

(a) Within 45 days following the end of each Quarter, an amount equal to 100% of Available Cash with respect to such Quarter shall 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 .” Distributions and redemption payments, if any, by the Partnership shall be subject to the Delaware Act notwithstanding any other provision of this Agreement.

(b) Notwithstanding Section  6.3(a) (but subject to the last sentence of Section  6.3(a) ), in the event of the dissolution and liquidation of the Partnership, all cash 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, as determined appropriate under the circumstances by the General Partner.

(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 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 6.04 Distributions of Available Cash from Operating Surplus . Available Cash with respect to any Quarter that is deemed to be Operating Surplus pursuant to the provisions of Section  6.3 or Section  6.5 shall be distributed as follows, except as otherwise required in respect of additional Partnership Interests issued pursuant to Section  5.6(b) :

 

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(a) First, to the General Partner and all Unitholders, Pro Rata, until there has been distributed in respect of each Unit then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;

(b) Second, to the General Partner and all Unitholders, Pro Rata, 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;

(c) 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;

(d) 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 subclauses (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

(e) 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 , that 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(e) .

Section 6.05 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 be distributed, unless the provisions of Section  6.3 require otherwise, to the General Partner and the Unitholders, Pro Rata, until a hypothetical holder of a Common Unit acquired on the Closing Date has received with respect to such Common Unit distributions of Available Cash that are deemed to be Capital Surplus in an aggregate amount equal to the Initial Unit Price. Thereafter, all Available Cash shall be distributed as if it were Operating Surplus and shall be distributed in accordance with Section  6.4 .

Section 6.06 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels .

(a) The Minimum Quarterly Distribution and Target Distributions 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 Interests in

 

57


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 and Target Distributions shall be adjusted proportionately downward in the same proportion that the distribution had to the fair market value of the Common Units immediately prior to the announcement of the distribution. If the Common Units are publicly traded on a National Securities Exchange, then the fair market value will be the Current Market Price before the ex-dividend date, and if the Common Units are not publicly traded, then the fair market value for the purposes of the immediately preceding sentence will be determined by the Board of Directors.

(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 6.07 [Reserved.]

Section 6.08 Special Provisions Relating to the Holders of Incentive Distribution Rights .

(a) Notwithstanding anything to the contrary set forth in this Agreement, the holders of the Incentive Distribution Rights (1) shall (x) possess the rights and obligations provided in this Agreement with respect to a Limited Partner pursuant to Article III and Article VII and (y) have a Capital Account as a Partner pursuant to Section  5.5 and all other provisions related thereto and (2) shall not (x) be entitled to vote on any matters requiring the approval or vote of the holders of Outstanding Units, except as provided by law, (y) be entitled to any distributions other than as provided in Sections 6.4(c) , (d) and (e) , and Section  12.4 or (z) be allocated items of income, gain, loss or deduction other than as specified in this Article VI ; provided , however , that for the avoidance of doubt, the foregoing shall not preclude the Partnership from making any other payments or distributions in connection with other actions permitted by this Agreement.

(b) A Unitholder shall not be permitted to transfer an IDR Reset Common Unit (other than a transfer to an Affiliate) if the remaining balance in the transferring Unitholder’s Capital Account with respect to the retained IDR Reset Common Units would be negative after giving effect to the allocation under Section  5.5(c)(ii) .

(c) A holder of an IDR Reset Common Unit that was issued in connection with an IDR Reset Election pursuant to Section  5.11 shall not be issued a Common Unit Certificate pursuant to Section  4.1 (if the Common Units are evidenced by Certificates) or evidence of the issuance of uncertificated Common Units, and shall not be permitted to transfer such Common Unit to a Person that is not an Affiliate of such holder, until such time as the General Partner determines, based on advice of counsel, that each such IDR Reset 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  6.8(c) , the General Partner may take whatever steps are required to provide economic uniformity to such IDR Reset Common Units in preparation for a transfer of such IDR Reset Common Units, including the application of Section  5.5(c)(ii) , Section  6.1(d)(x)(B) , or Section  6.1(d)(x)(C) ; provided , however , that no such steps may be taken that would have a material adverse effect on the Unitholders holding Common Units.

 

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Section 6.09 Entity-Level Taxation . If legislation is enacted or the official interpretation of existing legislation is modified by a governmental authority, which after giving effect to such enactment or modification, results in a Group Member becoming subject to federal, state or local or non-U.S. income or withholding taxes in excess of the amount of such taxes due from the Group Member prior to such enactment or modification (including, for the avoidance of doubt, any increase in the rate of such taxation applicable to the Group Member), then the General Partner may, in its sole and absolute discretion, reduce the Minimum Quarterly Distribution and the Target Distributions by the amount of income or withholding 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 and the Target Distributions for any Quarter with respect to all or a portion of any 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 (or the relevant portion of) such Incremental Income Taxes; provided that any difference between such estimate and the actual liability for Incremental Income Taxes (or the relevant portion thereof) for such Quarter may, to the extent determined by the General Partner, 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 7.01 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, in its capacity as such, shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted to 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:

 

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(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 or exchangeable for Partnership Interests, 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 );

(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 the same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case);

(vi) the distribution of cash held by the Partnership;

(vii) the selection and dismissal of officers, employees, agents, internal and 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 ;

 

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(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 Interests, or the issuance of Derivative Partnership Interests;

(xiv) the undertaking of any action in connection with the Partnership’s participation in the management of 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 Record Holder and each other Person who may acquire an interest in a Partnership Interest or that is otherwise bound by this Agreement 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 IPO Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement, the Operational Services Agreement and the other agreements described in or filed as exhibits to the IPO Registration Statement that are related to the transactions contemplated by the IPO Registration Statement (collectively, the “ Transaction Documents ”) (in each case other than this Agreement, without giving effect to any amendments, supplements or restatements thereof entered into after the date such Person becomes bound by the provisions of this Agreement); (ii) agrees that the General Partner (on its own or on behalf of the Partnership) was 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 IPO Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the other Persons who may acquire an interest in Partnership Interests or are otherwise bound by this Agreement; 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 ) did 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 existing at law, in equity or otherwise.

 

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Section 7.02 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  3.3(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.

Section 7.03 Restrictions on the General Partner s Authority to Sell Assets of the Partnership Group .

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 or 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.

Section 7.04 Reimbursement of and Other Payments to the General Partner .

(a) Except as provided in this Section  7.4 , and elsewhere in this Agreement or in the Omnibus Agreement or the Operational Services Agreement, the General Partner shall not be compensated for its services as a general partner or member of any Group Member.

(b) Except as may be otherwise provided in the Omnibus Agreement or the Operational Services Agreement, 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 or its Affiliates in connection with managing and operating the Partnership Group’s business and affairs (including expenses

 

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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 . Any allocation of expenses to the Partnership by the General Partner in a manner consistent with its or its Affiliates’ past business practices shall be deemed to have been made in good faith.

(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 Interests or Derivative Partnership Interests), or cause the Partnership to issue Partnership Interests or Derivative Partnership Interests in connection with, or pursuant to, any employee benefit plan, employee program or employee practice maintained or sponsored by the General Partner or any of its Affiliates, in each case for the benefit of officers, employees, consultants 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 Interests or Derivative Partnership Interests that the General Partner or such Affiliates are obligated to provide to any officers, employees, consultants and directors pursuant to any such employee benefit plans, employee programs or employee practices. 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 Interests or Derivative Partnership Interests 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 pursuant to Section  4.6 .

(d) The General Partner and its Affiliates may charge any member of the Partnership Group a management fee to the extent necessary to allow the Partnership Group to reduce the amount of any state franchise or income tax or any tax based upon the revenues or gross margin of any member of the Partnership Group if the tax benefit produced by the payment of such management fee or fees exceeds the amount of such fee or fees.

(e) The General Partner and its Affiliates may enter into an agreement to provide services to any Group Member for a fee or otherwise than for cost.

Section 7.05 Outside Activities .

(a) 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

 

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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 IPO Registration Statement, (B) the acquiring, owning or disposing of debt securities or equity interests in any Group Member, (C) the guarantee of, and mortgage, pledge or encumbrance of any or all of its assets in connection with, any indebtedness of any Group Member or (D) the performance of its obligations under the Omnibus Agreement.

(b) Each Unrestricted Person (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; provided , that such Unrestricted Person does not engage in such business or activity using confidential or proprietary information provided by or on behalf of the Partnership to such Unrestricted Person. 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 Unrestricted Person.

(c) Subject to the terms of Section  7.5(a) and Section  7.5(b) , but otherwise notwithstanding anything to the contrary in this Agreement, (i) the engaging in competitive activities by any Unrestricted Person (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 duty or any other obligation of any type whatsoever of the General Partner or any other Unrestricted Person for the Unrestricted Persons (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 Unrestricted Persons 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. Notwithstanding anything to the contrary in this Agreement or any duty otherwise existing at law or in equity, the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to any Unrestricted Person (including the General Partner). No Unrestricted Person (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 Unrestricted Person (including the General Partner) shall not be liable to the Partnership, to any Limited Partner or any other Person bound by this Agreement for breach of any duty by reason of the fact that such Unrestricted Person (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 , that such Unrestricted Person does not engage in such business or activity using confidential or proprietary information provided by or on behalf of the Partnership to such Unrestricted Person.

 

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(d) The General Partner and each of its Affiliates may acquire Units or other Partnership Interests 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 and/or other Partnership Interests 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.

Section 7.06 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 such 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 General Partner. No Group Member may lend funds to the General Partner or any of its Affiliates (other than another Group Member), except for short-term cash management purposes.

(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, expressed or implied, of the General Partner or its Affiliates to the Partnership or the Limited Partners existing hereunder, or existing at law, in equity or otherwise, by reason of the fact that the purpose or effect of such borrowing is directly or indirectly to 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.

Section 7.07 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 threatened, pending or completed claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, and whether formal or informal and including appeals, 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 and acting (or refraining to act) in such capacity on behalf of or for the benefit of the Partnership; provided , that the Indemnitee shall not be indemnified and held harmless pursuant to this Agreement if there has been a final and non-appealable judgment entered by a court of

 

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competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Agreement, the Indemnitee acted in bad faith or engaged in intentional 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 any Affiliate of the General Partner (other than a Group Member), or to any other Indemnitee, with respect to any such Affiliate’s obligations pursuant to the Transaction Documents. 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 upon receipt by the Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall be ultimately determined that the Indemnitee is not entitled to be indemnified as authorized by this Section  7.7 .

(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 this Agreement or any other agreement, pursuant to any vote of the holders of Outstanding Limited Partner Interests, as a matter of law, in equity or otherwise, both as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity (including any capacity under the IPO 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, executors 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.

 

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(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 and their heirs, successors, assigns, executors 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.

Section 7.08 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 are bound by this Agreement 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 intentional fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful.

(b) 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, to the Partners or to any such other Persons who are bound by this Agreement, 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 such Partners or to any such other Persons who are bound by this Agreement 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.

 

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Section 7.09 Standards of Conduct; Resolution of Conflicts of Interest and Replacement of Duties .

(a) Whenever the General Partner makes a determination or takes or declines to take any action, or any Affiliate of the General Partner causes the General Partner 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 a lesser standard is provided for in this Agreement, or the determination, action or omission has been approved as provided in Section  7.9(b)(i) or Section  7.9(b)(ii) , the General Partner, or such Affiliate causing it to do so, shall make such determination or take or decline to take such action in good faith. Whenever the Board of Directors, any committee of the Board of Directors (including the Conflicts Committee) or any Affiliate of the General Partner makes a determination or takes or declines to take any action, whether under this Agreement, any Group Member Agreement or any other agreement contemplated hereby or otherwise, then, unless a lesser standard is provided for in this Agreement or the determination, action or omission has been approved as provided in Section  7.9(b)(i) or Section  7.9(b)(ii) , the Board of Directors, any committee of the Board of Directors (including the Conflicts Committee) or any Affiliate of the General Partner shall make such determination or take or decline to take such action in good faith. The foregoing and other lesser standards governing any determination, action or omission provided for in this Agreement are the sole and exclusive standards governing any such determinations, actions and omissions of the General Partner, the Board of Directors, any committee of the Board of Directors (including the Conflicts Committee) and any Affiliate of the General Partner, and no such Person shall be subject to any fiduciary duty or other duty or obligation, or any other, different or higher standard (all of which duties, obligations and standards are hereby eliminated, waived and disclaimed), under this Agreement, any Group Member Agreement or any other agreement contemplated hereby or otherwise, or under the Delaware Act or any other law, rule or regulation or at equity. Any such determination, action or omission by the General Partner, the Board of Directors of the General Partner or any committee thereof (including the Conflicts Committee) or any Affiliate of the General Partner will for all purposes be presumed to have been in good faith. In any proceeding brought by or on behalf of the Partnership, any Limited Partner or any other Person who acquires an interest in a Partnership Interest or any other Person who is bound by this Agreement challenging such determination, action or omission, the Person bringing or prosecuting such proceeding shall have the burden of proving that such determination, action or omission was not in good faith. In order for a determination or the taking or declining to take an 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 action must subjectively believe that the determination or other action is in the best interests of the Partnership.

 

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(b) Unless a lesser standard is otherwise 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 hand, 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, any Group Member Agreement, 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 or (ii) approved by the vote of a Unit Majority (excluding Common Units owned by the General Partner and its Affiliates). The General Partner shall be authorized but not required in connection with its resolution of such conflict of interest to seek Special Approval or Unitholder approval of such resolution, and the General Partner may also adopt a resolution or course of action that has not received Special Approval or Unitholder approval. If the General Partner does not submit the resolution or course of action in respect of such conflict of interest as provided in either clause  (i) or clause  (ii) of the first sentence of this Section  7.9(b) , then any such resolution or course of action shall be governed by Section  7.9(a) . Whenever the General Partner makes a determination to refer any potential conflict of interest to the Conflicts Committee for Special Approval, to seek Unitholder approval or to adopt a resolution or course of action that has not received Special Approval or Unitholder approval, then the General Partner shall be entitled, to the fullest extent permitted by law, to make such determination free of any duty or obligation whatsoever to the Partnership or any Limited Partner, and the General Partner shall not, to the fullest extent permitted by law, be required to act in good faith or pursuant to any other standard or duty imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or otherwise or under the Delaware Act or any other law, rule or regulation or at equity, and the General Partner in making such determination shall be permitted to do so in its sole and absolute discretion. If Special Approval is sought, then it shall be presumed that, in making its decision, the Conflicts Committee acted in good faith, or if the Board of Directors determines that a director satisfies the eligibility requirements to be a member of the Conflicts Committee, then it shall be presumed that, in making its determination, the Board of Directors acted in good faith. 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 or by or on behalf of any Person who acquires an interest in a Partnership Interest challenging any action or decision by the Conflicts Committee with respect to any matter referred to the Conflicts Committee for Special Approval, or challenging any determination by the Board of Directors that a director satisfies the eligibility requirements to be a member of the Conflicts Committee, the Person bringing or prosecuting such proceeding shall have the burden of overcoming the presumption that the Conflicts Committee or the Board of Directors, as applicable, acted in good faith. Notwithstanding anything to the contrary in this Agreement or any duty otherwise existing at law or equity, the conflicts of interest described in the IPO Registration Statement are hereby approved by all Partners and shall not constitute a breach of this Agreement or any such duty.

 

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(c) Whenever the General Partner makes a determination or takes or declines to take any action, or any Affiliate of the General Partner causes the General Partner 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 (i) the General Partner, or such Affiliate causing it to do so, is entitled, to the fullest extent permitted by law, to make such determination or to take or decline to take such action free of any duty (including any fiduciary duty) or obligation whatsoever to the Partnership, any Limited Partner, any other Person who acquires an interest in a Partnership Interest or any other Person who is bound by this Agreement, (ii) the General Partner, or such Affiliate 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 otherwise or under the Delaware Act or any other law, rule or regulation or at equity and (iii) the Person or Persons making such determination or taking or declining to take such action shall be permitted to do so in their sole and absolute discretion. By way of illustration and not of limitation, whenever the phrases “at its option,” “its sole and absolute discretion” or some variation of those phrases, are used in this Agreement, they indicate 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 refrains from voting or transferring its Partnership Interests, it shall be acting in its individual capacity.

(d) 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 general or limited partnership.

(e) 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, or approve the sale or disposition 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 either the General Partner or any of its Affiliates to enter into such contracts shall, in each case, be at its option.

(f) The Limited Partners, any other Person who acquires an interest in a Partnership Interest and any other Person bound by this Agreement hereby authorize the General Partner, on behalf of the Partnership as a general partner or member of a Group Member, to approve actions by the general partner or member of such Group Member similar to those actions permitted to be taken by the General Partner pursuant to this Section  7.9 .

(g) For the avoidance of doubt, whenever the Board of Directors, any member of the Board of Directors, any committee of the Board of Directors (including the Conflicts Committee) and any member of any such committee, the officers of the General Partner or any Affiliates of the General Partner (including any Person making a determination or acting for or on behalf of such Affiliate of the General Partner) make a determination on behalf of or recommendation to the General Partner, or cause the General Partner to take or omit to take any action, whether in the General Partner’s capacity as the General Partner or in its individual

 

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capacity, the standards of care applicable to the General Partner shall apply to such Persons, and such Persons shall be entitled to all benefits and rights (but not the obligations) of the General Partner hereunder, including eliminations, waivers and modifications of duties (including any fiduciary duties) to the Partnership, any of its Partners or any other Person who acquires an interest in a Partnership Interest or any other Person bound by this Agreement, and the protections and presumptions set forth in this Agreement.

Section 7.10 Other Matters Concerning the General Partner and Other Indemnitees .

(a) The General Partner and any other Indemnitee may rely 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 and any other Indemnitee may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisors selected by it, and any act taken or omitted to be taken in reliance upon the advice or opinion (including an Opinion of Counsel) of such Persons as to matters that the General Partner or such Indemnitee, respectively, reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been taken or omitted to be taken in good faith and in accordance with such advice or 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.

Section 7.11 Purchase or Sale of Partnership Interests . The General Partner may cause the Partnership to purchase or otherwise acquire Partnership Interests or Derivative Partnership Interests. As long as Partnership Interests are held by any Group Member, such Partnership Interests 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 Interests for its own account, subject to the provisions of Article IV and Article X .

Section 7.12 Registration Rights of the General Partner and Its Affiliates .

(a) Demand Registration. Upon receipt of a Notice from any Holder, the Partnership shall file with the Commission as promptly as reasonably practicable a registration statement under the Securities Act (each, a “ Registration Statement ”) providing for the resale of the Registrable Securities identified in such Notice, which may, at the option of the Holder giving such Notice, be a Registration Statement that provides for the resale of the Registrable Securities from time to time pursuant to Rule 415 under the Securities Act. The Partnership shall use commercially reasonable efforts to cause such Registration Statement to become effective as soon as reasonably practicable after the initial filing of the Registration Statement and to remain effective and available for the resale of the Registrable Securities by the Selling Holders named

 

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therein until the earlier of (i) six months following such Registration Statement’s effective date and (ii) the date on which all Registrable Securities covered by such Registration Statement have been sold. In the event one or more Holders request in a Notice to dispose of a number of Registrable Securities that such Holder or Holders reasonably anticipates will result in gross proceeds of at least $30 million in the aggregate pursuant to a Registration Statement in an Underwritten Offering, the Partnership shall retain underwriters that are reasonably acceptable to such Selling Holders in order to permit such Selling Holders to effect such disposition through an Underwritten Offering; provided , however , that the Partnership shall have the exclusive right to select the bookrunning managers. The Partnership and such Selling Holders shall enter into an underwriting agreement in customary form that is reasonably acceptable to the Partnership and take all reasonable actions as are requested by the managing underwriters to facilitate the Underwritten Offering and sale of Registrable Securities therein. No Holder may participate in the Underwritten Offering unless it agrees to sell its Registrable Securities covered by the Registration Statement on the terms and conditions of the underwriting agreement and completes and delivers all necessary documents and information reasonably required under the terms of such underwriting agreement. In the event that the managing underwriter of such Underwritten Offering advises the Partnership and the Holder in writing that in its opinion the inclusion of all or some Registrable Securities would adversely and materially affect the timing or success of the Underwritten Offering, the amount of Registrable Securities that each Selling Holder requested be included in such Underwritten Offering shall be reduced on a Pro Rata basis to the aggregate amount that the managing underwriter deems will not have such material and adverse effect. Any Holder may withdraw from such Underwritten Offering by notice to the Partnership and the managing underwriter; provided , such notice is delivered prior to the launch of such Underwritten Offering.

(b) Piggyback Registration . If the Partnership shall propose to file a Registration Statement (other than pursuant to a demand made pursuant to Section  7.12(a) ) for an offering of Partnership Interests for cash (other than an offering relating solely to an employee benefit plan, an offering relating to a transaction on Form S-4 or an offering on any registration statement that does not permit secondary sales), the Partnership shall notify all Holders of such proposal at least five Business Days before the proposed filing date. The Partnership shall use commercially reasonable efforts to include such number of Registrable Securities held by any Holder in such Registration Statement as each Holder shall request in a Notice received by the Partnership within two Business Days of such Holder’s receipt of the notice from the Partnership. If the Registration Statement for which the Partnership gives notice under this Section  7.12(b) is for an Underwritten Offering, then any Holder’s ability to include its desired amount of Registrable Securities in such Registration Statement shall be conditioned on such Holder’s inclusion of all such Registrable Securities in the Underwritten Offering; provided , that, in the event that the managing underwriter of such Underwritten Offering advises the Partnership and the Holder in writing that in its opinion the inclusion of all or some Registrable Securities would adversely and materially affect the timing or success of the Underwritten Offering, the amount of Registrable Securities that each Selling Holder requested be included in such Underwritten Offering shall be reduced on a Pro Rata basis to the aggregate amount that the managing underwriter deems will not have such material and adverse effect. In connection with any such Underwritten Offering, the Partnership and the Selling Holders involved shall enter into an underwriting agreement in customary form that is reasonably acceptable to the Partnership and take all reasonable actions as are requested by the managing underwriters to facilitate the

 

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Underwritten Offering and sale of Registrable Securities therein. No Holder may participate in the Underwritten Offering unless it agrees to sells its Registrable Securities covered by the Registration Statement on the terms and conditions of the underwriting agreement and completes and delivers all necessary documents and information reasonably required under the terms of such underwriting agreement. Any Holder may withdraw from such Underwritten Offering by notice to the Partnership and the managing underwriter; provided , such notice is delivered prior to the launch of such Underwritten Offering. The Partnership shall have the right to terminate or withdraw any Registration Statement or Underwritten Offering initiated by it under this Section  7.12(b) prior to the effective date of the Registration Statement or the pricing date of the Underwritten Offering, as applicable.

(c) Sale Procedures . In connection with its obligations under this Section  7.12 , the Partnership shall:

(i) furnish to each Selling Holder (A) as far in advance as reasonably practicable before filing a Registration Statement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing a Registration Statement or supplement or amendment thereto and (B) such number of copies of such Registration Statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement; provided , however , that the Partnership will not have any obligation to provide any document pursuant to clause  (B) hereof that is available on the Commission’s website;

(ii) if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by a Registration Statement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the managing underwriter, shall reasonably request; provided , however , that the Partnership shall not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action that would subject it to general service of process in any jurisdiction where it is not then so subject;

(iii) promptly notify each Selling Holder and each underwriter, at any time when a prospectus is required to be delivered under the Securities Act, of (A) the filing of a Registration Statement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement or any post-effective amendment thereto, when the same has become effective and (B) any written comments from the Commission with respect to any Registration Statement or any document incorporated by reference therein and any written request by the Commission for amendments or supplements to a Registration Statement or any prospectus or prospectus supplement thereto;

 

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(iv) immediately notify each Selling Holder and each underwriter, at any time when a prospectus is required to be delivered under the Securities Act, of (A) the occurrence of any event or existence of any fact (but not a description of such event or fact) as a result of which the prospectus or prospectus supplement contained in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the prospectus contained therein, in the light of the circumstances under which a statement is made), (B) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement, or the initiation of any proceedings for that purpose or (C) the receipt by the Partnership of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, subject to Section  7.12(f) , the Partnership agrees to, as promptly as practicable, amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include 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 in the light of the circumstances then existing and to take such other reasonable action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto; and

(v) enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of the Registrable Securities, including the provision of comfort letters and legal opinions as are customary in such securities offerings.

(d) Suspension . Each Selling Holder, upon receipt of notice from the Partnership of the happening of any event of the kind described in Section  7.12(c)(iv) , shall forthwith discontinue disposition of the Registrable Securities by means of a prospectus or prospectus supplement until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by such subsection, or until it is advised in writing by the Partnership that the use of the prospectus may be resumed, and receipt of copies of any additional or supplemental filings incorporated by reference in the prospectus.

(e) Expenses . Except as set forth in an underwriting agreement for the applicable Underwritten Offering or as otherwise agreed between a Selling Holder and the Partnership, all costs and expenses of a Registration Statement filed or an Underwritten Offering that includes Registrable Securities pursuant to this Section  7.12 (other than underwriting discounts and commissions on Registrable Securities and fees and expenses of counsel and advisors to Selling Holders) shall be paid by the Partnership.

 

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(f) Delay Right. Notwithstanding anything to the contrary herein, if the General Partner determines that the Partnership’s compliance with its obligations in this Section  7.12 would be detrimental to the Partnership 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 compliance with such obligations for a period of not more than six months; provided , however , that such right may not be exercised more than twice in any 24-month period.

(g) Indemnification .

(i) 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, but subject to the limitations expressly provided in this Agreement, indemnify and hold harmless each Selling 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(g) 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, preliminary prospectus, final prospectus or issuer free writing prospectus under which any Registrable Securities were registered or sold by such Selling Holder under the Securities Act, 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 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 or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus or issuer free writing prospectus 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.

(ii) Each Selling Holder shall, to the fullest extent permitted by law, indemnify and hold harmless the Partnership, the General Partner, the General Partner’s officers and directors and each Person who controls the Partnership or the General Partner (within the meaning of the Securities Act) and any agent thereof to the same extent as the foregoing indemnity from the Partnership to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in a Registration Statement, preliminary prospectus, final prospectus or free writing prospectus relating to the Registrable Securities held by such Selling Holder.

 

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(iii) The provisions of this Section  7.12(g) shall be in addition to any other rights to indemnification or contribution that a Person entitled to indemnification under this Section  7.12(g) may have pursuant to law, equity, contract or otherwise.

(h) Specific Performance . Damages in the event of breach of Section  7.12 by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each party, in addition to and without limiting any other remedy or right it may have, will have the right to seek an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives, to the fullest extent permitted by law, any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not preclude any such party from pursuing any other rights and remedies at law or in equity that such party may have.

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 or representative 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 or representative 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 or representative in connection with any such dealing. In no event shall any Person dealing with the General Partner or any such officer or representative be obligated to ascertain that the 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 representative. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or such officer or representative 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.

Section 7.14 Replacement of Fiduciary Duties . Notwithstanding any other provision of this Agreement, to the extent that, at law or in equity, the General Partner or any other Indemnitee would have duties (including fiduciary duties) to the Partnership, to another Partner, to any Person who acquires an interest in a Partnership Interest or to any other Person bound by this Agreement, all such duties (including fiduciary duties) are hereby eliminated, to the fullest extent permitted by law, and replaced with the duties or standards expressly set forth herein. The elimination of duties (including fiduciary duties) to the Partnership, each of the Partners, each other Person who acquires an interest in a Partnership Interest and each other Person bound by this Agreement and replacement thereof with the duties or standards expressly set forth herein are approved by the Partnership, each of the Partners, each other Person who acquires an interest in a Partnership Interest and each other Person bound by this Agreement.

 

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ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.01 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  3.3(a) . Any books and records maintained by or on behalf of the Partnership in the regular course of its business, including the Partnership Register, 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. The Partnership shall not be required to keep books maintained on a cash basis, and the General Partner shall be permitted to calculate cash-based measures, including Operating Surplus and Adjusted Operating Surplus, by making such adjustments to its accrual basis books to account for non-cash items and other adjustments as the General Partner determines to be necessary or appropriate.

Section 8.02 Fiscal Year . The fiscal year of the Partnership shall be a fiscal year ending December 31.

Section 8.03 Reports .

(a) Whether or not the Partnership is subject to the requirement to file reports with the Commission, as soon as practicable, but in no event later than 90 days after the close of each fiscal year of the Partnership (or such shorter period as required by the Commission), the General Partner shall cause to be mailed or made available, by any reasonable means (including by posting on or making accessible through the Partnership’s or the Commission’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, and such other information as may be required by applicable law, regulation or rule of the Commission or 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.

(b) Whether or not the Partnership is subject to the requirement to file reports with the Commission, as soon as practicable, but in no event later than 45 days after the close of each Quarter (or such shorter period as required by the Commission) except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made available, by any reasonable means (including by posting on or making accessible through the Partnership’s or the Commission’s website), to each Record Holder of a Unit, as of a date selected by the General

 

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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 the Commission or 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 9.01 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 period or year 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 period other than a year ending on December 31, the General Partner shall use reasonable efforts to change the taxable period of the Partnership to a year ending on December 31. The tax information reasonably required by Record Holders for federal, state and local income tax reporting purposes with respect to a taxable period shall be furnished to them within 90 days of the close of the calendar year in which the Partnership’s taxable period 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 9.02 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(f) 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 9.03 Tax Controversies .

(a) Subject to the provisions hereof, the General Partner shall designate the Organizational Limited Partner or such other Partner as the General Partner shall determine as the “tax matters partner” (as defined in Section 6231(a)(7) of the Code as in effect prior to the enactment of the Bipartisan Budget Act of 2015) (the “ Tax Matters Partner ”), and such Person is authorized and required to represent the Partnership (at 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 Tax Matters Partner and to do or refrain from doing any or all things reasonably required by the Tax Matters Partner to conduct such proceedings.

 

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(b) With respect to tax returns filed for taxable years beginning on or after December 31, 2017, the General Partner (or its designee) will be designated as the “partnership representative” in accordance with the rules prescribed pursuant to Section 6223 of the Code (the “ Partnership Representative ”) and shall have the sole authority to act on behalf of the Partnership (at 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. The General Partner (or its designee) shall exercise, in its sole discretion, any and all authority of the Partnership Representative under the Code, including, without limitation, (i) binding the Partnership and its Partners with respect to tax matters and (ii) determining whether to make any available election under Section 6226 of the Code. The General Partner shall amend the provisions of this Agreement as appropriate to reflect the proposal or promulgation of Treasury Regulations implementing the partnership audit, assessment and collection rules adopted by the Bipartisan Budget Act of 2015, including any amendments to those rules.

Section 9.04 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, or established under any foreign law. 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 (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 or Section  12.4(c) in the amount of such withholding from such Partner.

ARTICLE X

ADMISSION OF PARTNERS

Section 10.01 Admission of Limited Partners .

(a) Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive Distribution Rights to the General Partner, the Organizational Limited Partner and the IPO Underwriters in connection with the Initial Public Offering as described in Article V , such Persons, by acceptance of such Limited Partner Interests, and upon becoming the Record Holders of such Limited Partner Interests, were admitted to the Partnership as Initial Limited Partners in respect of the Common Units, Subordinated Units or Incentive Distribution Rights issued to them and were bound by this Agreement, all with or without execution of this Agreement by such Persons.

(b) By acceptance of any Limited Partner Interests transferred in accordance with Article IV or acceptance of any Limited Partner Interests issued pursuant to Article V or pursuant to a merger, consolidation or conversion pursuant to Article XIV , each transferee of, or

 

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other such Person acquiring, a Limited Partner Interest (including any nominee, agent or representative acquiring such Limited Partner Interests for the account of another Person or Group, who shall be subject to Section  10.1(c) below) (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 such Person becomes the Record Holder of the Limited Partner Interests so transferred or acquired, (ii) shall become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii) shall be deemed to represent that the transferee or acquirer has the capacity, power and authority to enter into this Agreement and (iv) shall be deemed to make any consents, acknowledgements or 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 without the consent or approval of any of the Partners. A Person may not become a Limited Partner without acquiring a Limited Partner Interest and becoming the Record Holder of such Limited Partner Interest. The rights and obligations of a Person who is an Ineligible Holder shall be determined in accordance with Section  4.9 .

(c) With respect to any Limited Partner that holds Units representing Limited Partner Interests for another Person’s account (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 Limited Partner shall, in exercising the rights of a Limited Partner in respect of such Units on any matter, and unless the arrangement between such Persons provides otherwise, take all action as a Limited Partner by virtue of being the Record Holder of such Units at the direction of the Person who is the beneficial owner, and the Partnership shall be entitled to assume such Limited Partner is so acting without further inquiry.

(d) The name and mailing address of each Record Holder shall be listed in the Partnership Register maintained for such purpose by the Partnership or the Transfer Agent. The General Partner shall update the Partnership Register from time to time as necessary to reflect accurately the information therein (or shall cause the Transfer Agent to do so, as applicable).

(e) 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 10.02 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 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 (a) the withdrawal or removal of the predecessor or transferring General Partner pursuant to Section  11.1 or Section  11.2 or (b) the transfer of the General Partner Interest 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 is hereby authorized to and shall, subject to the terms hereof, carry on the business of the members of the Partnership Group without dissolution.

 

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Section 10.03 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 Partnership Register 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.

ARTICLE XI

WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.01 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)  through (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) if 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) if the General Partner is a partnership or a limited liability company, the dissolution and commencement of winding up of the General Partner; (C) if the General Partner is acting in such capacity by virtue of being a trustee of a trust, the termination of the trust; (D) if the General Partner is a natural person, his death or adjudication of incompetency and (E) otherwise upon the termination of the General Partner.

 

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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 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, Eastern Time, on September 30, 2024, 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 Unit Majority (excluding Common Units owned 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 under the Delaware Act of any Limited Partner 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, Eastern Time, on September 30, 2024, the General Partner voluntarily withdraws by giving at least 90 days’ advance notice to the Limited Partners, 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. If, prior to the effective date of the General Partner’s withdrawal, a successor is not elected 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 Section  12.1 unless the business of the Partnership is continued pursuant to Section  12.2 . Any successor General Partner elected in accordance with the terms of this shall be subject to the provisions of Section  10.2 .

Section 11.02 Removal of the General Partner . The General Partner may not be removed unless such removal is both (i) for Cause and (ii) approved by the Unitholders holding at least 66   2 3 % of the Outstanding Common Units (including Units held by the General Partner and its

 

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Affiliates) voting as a single class. Any such action by such holders for removal of the General Partner must also provide for the election of a successor General Partner by the Unitholders holding a Unit Majority, 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. 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 11.03 Interest of Departing General Partner and Successor General Partner .

(a) In the event of withdrawal of the General Partner under circumstances where such withdrawal does not violate this Agreement, if a successor General Partner is elected in accordance with the terms of Section  11.1 , then the Departing General Partner shall have the option, exercisable prior to the effective date of the withdrawal of such Departing General Partner, to require such successor General Partner to purchase such Departing General Partner’s General Partner Interest and its or its Affiliates’ general partner interests (or equivalent interests), if any, in the other Group Members and all of its or its Affiliates’ 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 the Departing General Partner’s withdrawal. If the General Partner is removed by the Unitholders pursuant to Section  11.2 or if the General Partner withdraws under circumstances where such withdrawal violates this Agreement and (i) if a successor General Partner is elected in accordance with the terms of Section  11.1 or Section  11.2 , as applicable, or (ii) if the business of the Partnership is continued pursuant to Section  12.2 and the successor General Partner is not the former General Partner, then such successor General Partner 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. In any event described in the preceding sentences of this Section  11.3(a) , 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 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 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

 

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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 withdrawal or removal, 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. 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, the value of the Incentive Distribution Rights and the General Partner Interest 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 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.

 

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Section 11.04 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 12.01 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 withdrawal or removal of the General Partner, if a successor General Partner is elected pursuant to Section  11.1 , Section  11.2 or Section  12.2 , to the fullest extent permitted by law, the Partnership shall not be dissolved and such successor General Partner shall continue the business of the Partnership. The Partnership shall dissolve, and (subject to Section  12.2 ) 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 a Withdrawal Opinion of Counsel is received as provided in Section  11.1(b) or Section  11.2 and such successor is admitted to the Partnership pursuant to Section  10.2 ;

(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 12.02 Continuation of the Business of the Partnership After Dissolution . Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the withdrawal or removal of the General Partner as provided in Section  11.1(a)(i) or (iii)  and the failure of the Unitholders to select a successor to such Departing General Partner pursuant to Section  11.1 or Section  11.2 , then, to the maximum extent permitted by law, within 90 days thereafter, or (b) dissolution of the Partnership upon 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 ;

 

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(ii) if the successor General Partner is not the Departing General Partner, then the interest of the Departing 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;

provided , however , 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 under the Delaware Act 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 12.03 Liquidator . Upon dissolution of the Partnership, unless the business of the Partnership is continued pursuant to Section  12.2 , the General Partner (or in the event of dissolution pursuant to Section  12.1(a) , the holders of a Unit Majority) shall select one or more Persons to act as 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 Unit Majority. 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 Unit Majority. 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 Unit Majority. 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 12.04 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.

 

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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.

(c) All property and all cash in excess of that required to satisfy 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 period 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 period (or, if later, within 90 days after said date of such occurrence).

Section 12.05 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 12.06 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 12.07 Waiver of Partition . To the maximum extent permitted by law, each Partner hereby waives any right to partition of the Partnership property.

Section 12.08 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.

 

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ARTICLE XIII

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

Section 13.01 Amendments to be Adopted Solely by the General Partner . Each Limited Partner agrees that the General Partner, without the approval of any Limited 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:

(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 considered as a whole or any particular class of Partnership Interests as compared to other classes of Partnership Interests in any material respect (except as permitted by subsection (g) of this Section  13.1 ), (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 IPO 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, 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;

 

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(g) an amendment that (i) sets forth the designations, preferences, rights, powers and duties of any class or series of Partnership Interests or Derivative Partnership Interests issued pursuant to Section  5.6 or (ii) the General Partner determines to be necessary, appropriate or advisable in connection with the authorization or issuance of any class or series of Partnership Interests or Derivative Partnership Interests pursuant to Section  5.6 ;

(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 or a Plan of Conversion 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 Section  2.4 or Section  7.1(a) ;

(k) a merger, conveyance or conversion pursuant to Section  14.3(d) or Section  14.3(e) ; or

(l) any other amendments substantially similar to the foregoing.

Section 13.02 Amendment Procedures . Amendments to this Agreement may be proposed only by the General Partner. To the fullest extent permitted by law, the General Partner shall have no duty or obligation to propose or approve any amendment to this Agreement and may decline to do so free of any duty or obligation whatsoever to the Partnership, any Limited Partner or any other Person bound by this Agreement, and, in declining to propose or approve an amendment to this Agreement, 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 otherwise or under the Delaware Act or any other law, rule or regulation or at equity, and the General Partner in determining whether to propose or approve any amendment to this Agreement shall be permitted to do so in its sole and absolute discretion. An amendment to this Agreement shall be effective upon its approval by the General Partner and, except as otherwise provided by Section  13.1 or Section  13.3 , the holders of a Unit Majority, unless a greater or different percentage of Outstanding Units is required under this Agreement. 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. The General Partner shall notify all Record Holders upon final adoption of any amendments. The General Partner shall be deemed to have notified all Record Holders as required by this Section  13.2 if it has posted or made accessible such amendment through the Partnership’s or the Commission’s website.

 

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Section 13.03 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 required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would have the effect of (i) in the case of any provision of this Agreement other than Section  11.2 or Section  13.4 , reducing such percentage or (ii) in the case of Section  11.2 or Section  13.4 , increasing such percentages, unless such amendment is approved by the written consent or the affirmative vote of holders of Outstanding Units whose aggregate Outstanding Units constitute (x) in the case of a reduction as described in subclause  (a)(i) hereof, not less than the voting requirement sought to be reduced, (y) in the case of an increase in the percentage in Section  11.2 , not less than 90% of the Outstanding Units or (z) in the case of an increase in the percentage in Section  13.4 , not less than a Unit Majority.

(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 the General Partner’s 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 Limited Partners 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(f) , 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 13.04 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 specific purposes for which the special meeting is to be called and the class or classes of Units for which the meeting is proposed. No business may be brought by any Limited Partner before

 

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such special meeting except the business listed in the related request. 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 governing the holding of a meeting or the solicitation of proxies for use at such a meeting, the General Partner shall send or cause to be sent a notice of the meeting to the Limited Partners. 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 be permitted to 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. If any such vote were to take place, to the fullest extent permitted by law, it shall be deemed null and void to the extent necessary so as not 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 13.05 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 .

Section 13.06 Record Date . For purposes of determining the Limited Partners who are Record Holders of the class or classes of Outstanding Limited Partner Interests 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 shall 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 or U.S. federal securities laws, in which case the rule, regulation, guideline or requirement of such National Securities Exchange or U.S. federal securities laws shall govern) or (b) in the event that approvals are sought without a meeting, the date by which such Limited Partners are requested in writing by the General Partner to give such approvals.

Section 13.07 Postponement and Adjournment . Prior to the date upon which any meeting of Limited Partners is to be held, the General Partner may postpone such meeting one or more times for any reason by giving notice to each Limited Partner entitled to vote at the meeting so postponed of the place, date and hour at which such meeting would be held. Such notice shall be given not fewer than two days before the date of such meeting and otherwise in accordance with this Article XIII . When a meeting is postponed, a new Record Date need not be fixed unless such postponement shall be for more than 45 days. Any meeting of Limited Partners may be adjourned by the General Partner one or more times for any reason, including the failure of a quorum to be present at the meeting with respect to any proposal or the failure of any proposal to receive sufficient votes for approval. No Limited Partner vote shall be required for any adjournment. A meeting of Limited Partners may be adjourned by the General Partner as to one or more proposals regardless of whether action has been taken on other matters. 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

 

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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 .

Section 13.08 Waiver of Notice; Approval of Meeting . 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 (i) 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 (ii) that attendance at a meeting is not a waiver of any right to disapprove of any matters submitted for consideration or to object to the failure to submit for consideration any matters required to be included in the notice of the meeting, but not so included, if such objection is expressly made at the beginning of the meeting.

Section 13.09 Quorum and Voting . Except as otherwise provided by this Agreement or required by the rules or regulations of any National Securities Exchange on which the Common Units are admitted to trading, or applicable law or pursuant to any regulation applicable to the Partnership or its Partnership Interests, the presence, in person or by proxy, of holders of a majority in voting power 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) entitled to vote at the meeting shall constitute a quorum at a meeting of Limited Partners of such class or classes. Abstentions and broker non-votes in respect of such Units shall be deemed to be Units present at such meeting for purposes of establishing a quorum. For all matters presented to the Limited Partners holding Outstanding Units at a meeting at which a quorum is present for which no minimum or other vote of Limited Partners is required by any other provision of this Agreement, the rules or regulations of any National Securities Exchange on which the Common Units are admitted to trading, or applicable law or pursuant to any regulation applicable to the Partnership or its Partnership Interests, a majority of the votes cast by the Limited Partners holding Outstanding Units shall be deemed to constitute the act of all Limited Partners (with abstentions and broker non-votes being deemed to not have been cast with respect to such matter). On any matter where a minimum or other vote of Limited Partners holding Outstanding Units is provided by any other provision of this Agreement or required by the rules or regulations of any National Securities Exchange on which the Common Units are admitted to trading, or applicable law or pursuant to any regulation applicable to the Partnership or its Partnership Interests, such minimum or other vote shall be the vote of Limited Partners required to approve such matter (with the effect of abstentions and broker non-votes to be determined based on the vote of Limited Partners required to approve such matter; provided that if the effect of abstentions and broker non-votes is not specified by such applicable rule, regulation or law, and there is no prevailing interpretation of such effect, then abstentions and broker non-votes shall be deemed to not have been cast with respect to such matter; provided further , that, for the avoidance of doubt, with respect to any matter on which this Agreement requires the approval of a specified percentage of the Outstanding Units, abstentions and broker non-votes shall be counted as votes against such matter). The Limited Partners present at a duly called or held meeting at which a quorum has been established may continue to transact business until adjournment, notwithstanding the exit of enough Limited Partners to leave less than a quorum.

 

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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 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 submission and 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 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 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 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 Outstanding Units held by such Limited Partners, the Partnership shall be deemed to have failed to receive a ballot for the Outstanding Units that were not voted. If approval of the taking of any permitted 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) approvals sufficient to take the action proposed 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 first 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.

Section 13.12 Right to Vote and Related Matters .

 

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(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.

(b) With respect to Units that are held for a Person’s account by another Person that is the Record Holder (such as a broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing), such Record Holder 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 such Record Holder 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 .

(c) Notwithstanding anything in this Agreement to the contrary, the Record Holder of an Incentive Distribution Right shall not be entitled to vote such Incentive Distribution Right on any Partnership matter.

ARTICLE XIV

MERGER, CONSOLIDATION OR CONVERSION

Section 14.01 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 limited 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 or any other country, 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 14.02 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 duty or obligation whatsoever to the Partnership or any Limited Partner and, in declining to consent to a merger, consolidation or conversion, shall not be required to act in good faith or 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, and the General Partner in determining whether to consent to any merger, consolidation or conversion of the Partnership shall be permitted to do so in its sole and absolute discretion.

 

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(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) the name and state or country of domicile of each of the business entities proposing to merge or consolidate;

(ii) the name and state of domicile 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;

(iv) the manner and basis of exchanging or converting the equity interests of each constituent business entity for, or into, cash, property or interests, rights, securities or obligations of the Surviving Business Entity; and (A) 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 (B) in the case of equity interests 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 , however , 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.

 

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(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;

(iv) the manner and basis of exchanging or converting the equity interests of each constituent business entity for, or into, cash, property or interests, rights, securities or obligations of the converted entity;

(v) in an attachment or exhibit, the certificate of limited partnership of the Partnership;

(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 certificate 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 certificate 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 certificate 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 14.03 Approval by Limited Partners .

(a) Except as provided in Section  14.3(d) and Section  14.3(e) , 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, 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 and, subject to any applicable requirements of Regulation 14A pursuant to the Exchange Act or successor provision, no other disclosure regarding the proposed merger, consolidation or conversion shall be required.

 

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(b) Except as provided in Section  14.3(d) and Section  14.3(e) , the Merger Agreement or the 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 unless the Merger Agreement or the Plan of Conversion, as the case may be, effects an amendment to any provision of this Agreement that, if contained in an amendment to this Agreement adopted pursuant to Article XIII , would require for its approval the vote or consent of a greater percentage of the Outstanding Units or of any class of Limited Partners, in which case such greater percentage vote or consent shall be required for approval of the Merger Agreement or the Plan of Conversion, as the case may be.

(c) Except as provided in Section  14.3(d) and Section  14.3(e) , 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 the 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, 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 limited liability under the laws of the jurisdiction governing the other limited liability entity (if that jurisdiction is not Delaware) of any Limited Partner as compared to its limited liability 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), (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 General Partner determines that the governing instruments of the new entity provide the Limited Partners and the General Partner with substantially 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 limited liability entity if (i) 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 under the laws of the jurisdiction governing the other limited liability entity (if that jurisdiction is not Delaware) as compared to its limited liability 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), (ii) 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 , (iii) the Partnership is the Surviving Business Entity in such merger or consolidation, (iv) 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 (v) the number of Partnership Interests to be issued by the Partnership in such merger or consolidation does not exceed 20% of the Partnership Interests (other than Incentive Distribution Rights) Outstanding immediately prior to the effective date of such merger or consolidation.

 

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(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 (i) effect any amendment to this Agreement or (ii) 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 14.04 Certificate of Merger or Certificate of Conversion . 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 or other filing, as applicable, shall be executed and filed with the Secretary of State of the State of Delaware or the appropriate filing office of any other jurisdiction, as applicable, in conformity with the requirements of the Delaware Act or other applicable law.

Section 14.05 Effect of Merger, Consolidation or Conversion .

(a) At the effective time of the merger or consolidation:

(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 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 conversion:

(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;

 

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(ii) all rights, title, and interests to all real estate and other property owned by the Partnership shall continue to be owned by 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 may be pursued by such creditors and obligees as if the conversion did not occur;

(v) a proceeding pending by or against the Partnership or by or against any of Partners in their capacities as such may be continued by or against the converted entity in its new organizational form and by or against the prior Partners without any need for substitution of parties; and

(vi) the Partnership Interests that are to be converted into partnership interests, shares, evidences of ownership or other securities in the converted entity 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.

ARTICLE XV

RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

Section 15.01 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 Business 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.

(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 applicable Transfer Agent or exchange agent notice of such election to purchase (the “ Notice of Election to Purchase ”) and shall cause the Transfer Agent or exchange 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

 

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the General Partner), together with such information as may be required by law, rule or regulation, at least 10, but not more than 60, days prior to the Purchase Date. Such Notice of Election to Purchase shall also be filed and distributed as may be required by the Commission or any National Securities Exchange on which such Limited Partner Interests are listed or admitted to trading. 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, in the case of Limited Partner Interests evidenced by Certificates, or instructions agreeing to such redemption in exchange for payment, at such office or offices of the Transfer Agent or exchange agent as the Transfer Agent or exchange agent may specify, or as may be required by any National Securities Exchange on which such Limited Partner Interests are listed or admitted to trading. Any such Notice of Election to Purchase mailed to a Record Holder of Limited Partner Interests at such Record Holder’s address as reflected in the Partnership Register 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 or exchange 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 redemption instructions shall not have been surrendered for purchase or provided, respectively, all rights of the holders of such Limited Partner Interests (including any rights pursuant to 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 or exchange agent of the Certificates representing such Limited Partner Interests, in the case of Limited Partner Interests evidenced by Certificates, or instructions agreeing to such redemption, 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 Partnership Register, 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 Record Holder of all such Limited Partner Interests from and after the Purchase Date and shall have all rights as the Record Holder of such Limited Partner Interests (including all rights as owner of such Limited Partner Interests pursuant to Article IV , Article V , Article VI and Article XII ).

(c) In the case of Limited Partner Interests evidenced by Certificates, 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 such holder’s Certificate evidencing such Limited Partner Interest to the Transfer Agent or exchange agent in exchange for payment of the amount described in Section  15.1(a) therefor, without interest thereon, in accordance with procedures set forth by the General Partner.

 

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ARTICLE XVI

GENERAL PROVISIONS

Section 16.01 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. Except as otherwise provided herein, 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 Interests at such Record Holder’s address as shown in the Partnership Register, regardless of any claim of any Person who may have an interest in such Partnership Interests by reason of any assignment or otherwise. Notwithstanding the foregoing, if (i) a Partner shall consent to receiving notices, demands, requests, reports or proxy materials via electronic mail or by the Internet or (ii) the rules of the Commission shall permit any report or proxy materials to be delivered electronically or made available via the Internet, any such notice, demand, request, report or proxy materials shall be deemed given or made when delivered or made available via such mode of delivery. 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 in the Partnership Register 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 such Record Holder’s 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 email and other forms of electronic communication.

Section 16.02 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 16.03 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 16.04 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 16.05 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 16.06 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 16.07 Third-Party Beneficiaries . Each Partner agrees that (a) 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 and (b) any Unrestricted Person 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 Unrestricted Person.

Section 16.08 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) or Section  10.1(b) without execution hereof.

Section 16.09 Applicable Law; Forum; Venue and Jurisdiction; Attorneys Fee; Waiver of Trial by Jury .

(a) This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law.

(b) Each of the Partners and each Person or Group holding any beneficial interest in the Partnership (whether through a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing or otherwise):

(i) irrevocably agrees that any claims, suits, actions or proceedings (A) arising out of or relating in any way to this Agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of this Agreement or the duties, obligations or liabilities among Partners or of Partners to the Partnership, or the rights or powers of, or restrictions on, the Partners or the Partnership), (B) brought in a derivative manner on behalf of the Partnership, (C) asserting a claim of breach of a duty (including any fiduciary duty) owed by any director, officer or other employee of the Partnership or the General Partner, or owed by the General Partner, to the Partnership or the Partners, (D) asserting a claim arising pursuant to any provision of the Delaware Act or (E) asserting a claim governed by the internal affairs doctrine shall be exclusively brought in the Court of Chancery of the State of Delaware, in each case regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or

 

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otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims; provided, however, that any claims, suits, actions or proceedings over which the Court of Chancery of the State of Delaware does not have jurisdiction shall be brought in any other court in the State of Delaware having jurisdiction;

(ii) irrevocably submits to the exclusive jurisdiction of the courts of the State of Delaware in connection with any such claim, suit, action or proceeding;

(iii) agrees not to, and waives any right to, assert in any such claim, suit, action or proceeding that (A) it is not personally subject to the jurisdiction of the courts of the State of Delaware or of any other court to which proceedings in the courts of the State of Delaware may be appealed, (B) such claim, suit, action or proceeding is brought in an inconvenient forum or (C) the venue of such claim, suit, action or proceeding is improper;

(iv) expressly waives any requirement for the posting of a bond by a party bringing such claim, suit, action or proceeding;

(v) consents to process being served in any such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and notice thereof; provided , however , that nothing in this clause  (v) shall affect or limit any right to serve process in any other manner permitted by law;

(vi) agrees that if such Partner, Person or Group does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought in any such claim, suit, action or proceeding sought by such Partner, Person or Group, then such Partner, Person or Group shall be obligated to reimburse the Partnership and its Affiliates for all fees, costs and expenses of every kind and description, including but not limited to all reasonable attorneys’ fees and other litigation expenses, that the Partnership and its Affiliates may incur in connection with such claim, suit, action or proceeding; and

(vii) IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY SUCH CLAIM, SUIT, ACTION OR PROCEEDING.

Section 16.10 Invalidity of Provisions . If any provision or part of a provision of this Agreement is or becomes for any reason, invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions and/or parts thereof contained herein shall not be affected thereby, and this Agreement shall, to the fullest extent permitted by law, be reformed and construed as if such invalid, illegal or unenforceable provision, or part of a provision, had never been contained herein, and such provision and/or part of a provision shall be reformed so that it would be valid, legal and enforceable to the maximum extent possible.

 

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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 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 and Email Signatures . The use of facsimile signatures and signatures delivered by email in portable document format (.pdf) or other similar electronic format affixed in the name and on behalf of the Transfer Agent on Certificates representing Common Units is expressly permitted by this Agreement.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

GENERAL PARTNER:
CNX MIDSTREAM GP LLC
By:  

/s/ Donald W. Rush

Name:   Donald W. Rush
Title:   Chief Financial Officer and Director

 

 

Signature Page to Second Amended and Restated Agreement of

Limited Partnership of CNX Midstream Partners LP


EXHIBIT A

to the Second Amended and Restated

Agreement of Limited Partnership of

CNX Midstream Partners LP

Certificate Evidencing Common Units

Representing Limited Partner Interests in

CNX Midstream Partners LP

 

No.    Common Units

In accordance with Section 4.1 of the Second Amended and Restated Agreement of Limited Partnership of CNX Midstream Partners LP, as amended, supplemented or restated from time to time (the “ Partnership Agreement ”), CNX Midstream 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 in the records 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 CNX Center, 1000 CONSOL Energy Drive, Suite 400, Canonsburg, Pennsylvania 15317. 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 CNX MIDSTREAM PARTNERS LP THAT THIS SECURITY MAY NOT BE TRANSFERRED IF SUCH TRANSFER (AS DEFINED IN THE PARTNERSHIP AGREEMENT) 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 CNX MIDSTREAM PARTNERS LP UNDER THE LAWS OF THE STATE OF DELAWARE OR (C) CAUSE CNX MIDSTREAM 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). THE GENERAL PARTNER OF CNX MIDSTREAM 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 (A) AVOID A SIGNIFICANT RISK OF CNX MIDSTREAM PARTNERS LP BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED) OR (B) PRESERVE THE UNIFORMITY OF THE LIMITED PARTNER INTERESTS IN CNX MIDSTREAM PARTNERS LP (OR ANY CLASS OR CLASSES THEREOF). THIS SECURITY MAY BE SUBJECT TO ADDITIONAL

 

A-1


RESTRICTIONS ON ITS TRANSFER PROVIDED IN THE PARTNERSHIP AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS SECURITY TO THE SECRETARY OF THE GENERAL PARTNER AT THE PRINCIPAL EXECUTIVE OFFICES OF THE PARTNERSHIP. 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.

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 and (iii) 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. This Certificate shall be governed by and construed in accordance with the laws of the State of Delaware.

 

Dated:                                                                                             CNX MIDSTREAM PARTNERS LP
    By:   CNX MIDSTREAM GP LLC,
      its general partner
          By:  

 

          By:  

 

Countersigned and Registered by:

[     ]

as Transfer Agent

 

By:  

 

  Authorized Signature

 

A-2


[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

TEN ENT — as tenants by the entireties

JT                 as joint tenants with right of survivorship and not as tenants in

TEN common

—  

 

UNIF GIFT/TRANSFERS MIN ACT—
                                       Custodian                                  
            (Cust)                                             (Minor)
under Uniform Gifts/Transfers to CD Minors
Act                                                                                                   
(State)

Additional abbreviations, though not in the above list, may also be used.

 

A-3


ASSIGNMENT OF COMMON UNITS OF

CNX MIDSTREAM PARTNERS LP

FOR VALUE RECEIVED, hereby assigns, conveys, sells and transfers unto

 

 

  

 

  

 

  

 

(Please print or typewrite name and address    (Please insert Social Security or other of assignee) 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 in the records of CNX Midstream 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.
    

 

(Signature)

    

 

(Signature)

THE 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     

No transfer of the Common Units evidenced hereby will be registered in the records of the Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered for registration or transfer.

 

A-4

Exhibit 10.1

Execution Version

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “ Agreement ”) is made and entered into as of January 3, 2018 by and between CONE Midstream Partners LP, a Delaware limited partnership (the “ Partnership ”), and NBL Midstream, LLC, a Delaware limited liability company (“ Noble Midstream ” and, together with the Partnership, the “ Parties ” or, each individually, a “ Party ”).

WHEREAS, in connection with the transactions contemplated by the Purchase Agreement (as hereinafter defined), Noble Midstream has requested, and the Partnership has agreed to provide, registration rights with respect to the Registrable Securities (as hereinafter defined) as set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each Party hereto, the Parties hereby agree as follows:

1. Definitions . As used in this Agreement, the following terms have the meanings indicated:

Agreement ” has the meaning set forth in the preamble.

Business Day ” means any day other than a Saturday, Sunday, any federal holiday or any other day on which banking institutions in the State of Pennsylvania or the State of New York are authorized or required to be closed by law or governmental action.

Claim ” has the meaning set forth in Section  8(a) .

Closing Date ” means the date of the closing of the transactions contemplated by the Purchase Agreement.

Common Unit ” means a common unit representing a limited partner interest in the Partnership.

Commission ” means the Securities and Exchange Commission or any other federal agency then administering the Securities Act or Exchange Act.

Demand Underwritten Offering ” has the meaning set forth in Section  2(b) .

Effective Date ” means the time and date that a Registration Statement is first declared effective by the Commission or otherwise becomes effective.

Effectiveness Period ” has the meaning set forth in Section  2(a) .

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

General Partner ” means CONE Midstream GP LLC, a Delaware limited liability company and the general partner of the Partnership.

 


Holder ” means (i) the record holder of Registrable Securities on the date of this Agreement, and (ii) any holder of Registrable Securities to whom registration rights conferred by this Agreement have been transferred in compliance with Section  10(d) .

Indemnified Persons ” has the meaning set forth in Section  8(a) .

Noble Midstream ” has the meaning set forth in the preamble.

Notice ” means a written request from a Holder which shall (i) specify the number of Registrable Securities intended to be registered, offered, and sold by such Holder, (ii) describe the nature or method of the proposed offer and sale of such Registrable Securities, and (iii) contain the undertaking of such Holder to provide all such information and materials and take all action as may be required or appropriate in order to permit the Partnership to comply with all applicable requirements and obligations in connection with the registration and disposition of such Registrable Securities pursuant to this Agreement.

Party ” or “ Parties ” has the meaning set forth in the preamble.

Partnership ” has the meaning set forth in the preamble.

Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of CONE Midstream Partners LP, dated as of September 30, 2014.

Person ” means an individual, corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, estate, trust, government (or an agency or subdivision thereof) or other entity of any kind.

Piggyback Registration ” has the meaning set forth in Section  3(a) .

Prospectus ” means the prospectus included in a Registration Statement (including a prospectus that includes any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A, Rule 430B or Rule 430C promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

Purchase Agreement ” means that certain Purchase Agreement by and between CNX Gas Company LLC, as Buyer, and Noble Midstream, as Seller, dated as of December 14, 2017.

Registrable Securities ” means any Common Units held by Noble Midstream on the Closing Date; provided, however , that a Registrable Security shall cease to be a Registrable Security: (a) at the time a Registration Statement covering such Registrable Security is declared effective by the Commission, or otherwise becomes effective under the Securities Act, and such Registrable Security has been sold or disposed of pursuant to such Registration Statement; (b) at the time such Registrable Security has been sold or disposed of pursuant to Rule 144 (or any

 

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successor or similar rule or regulation under the Securities Act); (c) when such Registrable Security is held by the Partnership or any of its subsidiaries, and (d) at the time such Registrable Security has been sold in a private transaction in which the transferor’s rights under this Agreement have not been transferred to the transferee of such securities in compliance with Section  10(d) .

Registration Statement ” means a registration statement of the Partnership in the form required to register under the Securities Act and other applicable law the resale of the Registrable Securities in accordance with the intended plan of distribution of each Holder of Registrable Securities included therein, and including any Prospectus, amendments and supplements to each such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act.

Rule 415 ” means Rule 415 promulgated by the Commission pursuant to the Securities Act.

Securities Act ” means the Securities Act of 1933, as amended.

Selling Holder ” means a Holder who is selling Registrable Securities pursuant to the procedures in this Agreement.

Shelf Registration Statement ” has the meaning set forth in Section  2(a) .

Underwritten Offering ” means (a) an offering pursuant to a Registration Statement in which Common Units are sold to an underwriter on a firm commitment basis for reoffering to the public, (b) an offering of Common Units pursuant to a Registration Statement that is a “bought deal” with one or more investment banks and (c) an “at-the-market” offering pursuant to a Registration Statement in which Common Units are sold to the public through one or more investment banks or managers on a best efforts basis.

Unless the context requires otherwise: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms; (ii) references to Sections refer to Sections of this Agreement; (iii) the terms “include,” “includes,” “including” and words of like import shall be deemed to be followed by the words “without limitation”; (iv) the terms “hereof,” “hereto,” “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement; (v) unless the context otherwise requires, the term “or” is not exclusive and shall have the inclusive meaning of “and/or”; (vi) defined terms herein will apply equally to both the singular and plural forms and derivative forms of defined terms will have correlative meanings; (vii) references to any law or statute shall include all rules and regulations promulgated thereunder, and references to any law or statute shall be construed as including any legal and statutory provisions consolidating, amending, succeeding or replacing the applicable law or statute; (viii) references to any Person include such Person’s successors and permitted assigns; and (ix) references to “days” are to calendar days unless otherwise indicated.

 

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2. Registration .

(a) Shelf Registration . The Partnership shall prepare and file a registration statement under the Securities Act (or shall amend its registration statement filed on May 17, 2017) to permit the public resale of Registrable Securities then outstanding from time to time as permitted by Rule 415 of the Securities Act with respect to all of the Registrable Securities (the “ Shelf Registration Statement ”). The Shelf Registration Statement filed pursuant to this Section  2(a) shall be on such appropriate registration form of the Commission as shall be selected by the Partnership so long as it permits the resale of Registrable Securities from time to time pursuant to Rule 415 under the Securities Act or such other successor rule as is then applicable. The Partnership shall use commercially reasonable efforts to cause such Shelf Registration Statement to become effective as soon as practicable after the Partnership’s release of earnings for the year ended December 31, 2017 and to remain effective and available for the resale of the Registrable Securities by the Selling Holders named therein until the date on which all Registrable Securities covered by such Shelf Registration Statement shall have ceased to be a Registrable Security (the “ Effectiveness Period ”). The Shelf Registration Statement shall provide for the resale pursuant to any method or combination of methods legally available to, and requested by, the Selling Holders of any and all Registrable Securities covered by such Registration Statement. The Shelf Registration Statement, when effective (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will 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 (in the case of any prospectus contained in such Shelf Registration Statement, in the light of the circumstances under which a statement is made). As soon as practicable following the date that the Shelf Registration Statement becomes effective, but in any event within two Business Days of such date, the Partnership shall provide the Holders with written notice of the effectiveness of the Shelf Registration Statement.

(b) Underwritten Offerings . In the event that one or more Holders request in a Notice to dispose of a number of Registrable Securities that such Holder or Holders reasonably anticipates will result in gross proceeds of at least $50 million in the aggregate (before deduction of underwriting discounts) in an Underwritten Offering (a “ Demand Underwritten Offering ”), the Partnership shall retain one or more underwriters that are reasonably acceptable to such Selling Holders in order to permit such Selling Holders to effect such disposition through an Underwritten Offering; provided, however , that the Partnership shall have the exclusive right to select the bookrunning managers for such offering. The Partnership and such Selling Holders shall enter into an underwriting agreement in customary form that is reasonably acceptable to the Partnership and take all reasonable actions as are requested by the managing underwriters to facilitate the Underwritten Offering and the sale of Registrable Securities therein. No Holder may participate in the Underwritten Offering unless it agrees to sell its Registrable Securities covered by the Registration Statement on the terms and conditions of the underwriting agreement and completes and delivers all necessary documents and information reasonably required under the terms of such underwriting agreement. Any Holder may withdraw from such Underwritten Offering by notice to the Partnership and the managing underwriter; provided , such notice is delivered prior to the launch of such Underwritten Offering.

 

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(c) Limitations on Underwritten Offerings . The Partnership shall have no obligation to facilitate or participate in more than an aggregate of four Demand Underwritten Offerings pursuant to this Agreement; provided , that , the Partnership shall not be obligated to effect more than two Underwritten Offerings during any period of 12 consecutive months and shall not be obligated to effect any Underwritten Offering within 90 days after the pricing of a primary offering of Common Units by the Partnership (other than in connection with any at-the-market offering or similar continuous offering program by the Partnership).

3. Piggyback Registration .

(a) Right to Piggyback . At any time if the Partnership proposes to file a Registration Statement for an offering of Common Units for cash on behalf of the Partnership or another holder of Common Units (other than an offering relating solely to an employee benefit plan, an offering relating to a transaction on Form S-4 or an offering on any registration statement that does not permit secondary sales), the Partnership shall notify all Holders of such proposal at least five Business Days before the proposed filing date and shall provide such Holders the opportunity to include in such offering of Common Units such number of Registrable Securities as such Holders may request in writing (a “ Piggyback Registration ”). The Partnership shall use commercially reasonable efforts to include such number of Registrable Securities held by any Holder in such Registration Statement as each such Holder shall request in a Notice received by the Partnership within two Business Days of such Holder’s receipt of the notice from the Partnership.

(b) Priority on Piggyback Registrations . If the Registration Statement for which the Partnership gives notice under this Section  3 is for an Underwritten Offering, then any Holder’s ability to include its desired amount of Registrable Securities in such Registration Statement shall be conditioned on such Holder’s inclusion of all such Registrable Securities in the Underwritten Offering; provided, that , in the event that the managing underwriter of such Underwritten Offering advises the Partnership and the Holder in writing that in its opinion the inclusion of all or some Registrable Securities would adversely and materially affect the timing or success of the Underwritten Offering, the Partnership will include in such Underwritten Offering such amount of Registrable Securities that the managing underwriter advises may be sold in such offering as follows: (i) in the event of a Demand Underwritten Offering, first , the Registrable Securities to be included by the Holder(s) requesting such Demand Underwritten Offering, second , the Common Units to be included by the Partnership, to the extent it elects to sell Common Units in such Demand Underwritten Offering; and third , the Common Units, if any, proposed to be included in such Demand Underwritten Offering by any other holders of Common Units; (ii) in the event of a Piggyback Registration in connection with an Underwritten Offering of Common Units on behalf of a holder of Common Units other than the Partnership (other than a Demand Underwritten Offering), first , the Common Units requested to be included in such Underwritten Offering by the holder of Common Units that demanded such Underwritten Offering; second , the Common Units requested to be included in such Underwritten Offering by the Partnership; third , the Registrable Securities owned by any Holder, pro rata based on the number of Registrable Securities initially requested by them to be included in such Underwritten Offering and fourth , the Common Units, if any, proposed to be included in the Underwritten Offering by any other holders of Common Units; or (iii) in the event of a Piggyback Registration in connection with an Underwritten Offering of Common Units that is initiated by the

 

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Partnership for a primary offering of Common Units by the Partnership, first , the Common Units to be included in such Underwritten Offering by the Partnership; second , the Registrable Securities owned by any Holder, pro rata based on the number of Registrable Securities initially requested by them to be included in such Underwritten Offering; and third , the Common Units, if any, proposed to be included in the Underwritten Offering by any other holders of Common Units. No Holder may participate in an Underwritten Offering unless such Holder agrees to sell its Registrable Securities covered by the Registration Statement on the terms and conditions of the underwriting agreement and completes and delivers all necessary documents and information reasonably required under the terms of such underwriting agreement. Any Holder may withdraw from such Underwritten Offering by notice to the Partnership and the managing underwriter; provided , such notice is delivered prior to the launch of such Underwritten Offering. The Partnership shall have the right to terminate or withdraw any Registration Statement or Underwritten Offering initiated by it prior to the Effective Date of the Registration Statement or the pricing date of the Underwritten Offering, as applicable.

4. Sale Procedures . In connection with its obligations under this Agreement, the Partnership shall:

(a) prepare and file with the Commission such amendments and supplements to the Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Shelf Registration Statement;

(b) furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing a Registration Statement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing a Registration Statement or supplement or amendment thereto and (ii) such number of copies of such Registration Statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement; provided , however , that the Partnership will not have any obligation to provide any document pursuant to clause (ii) hereof that is available on the Commission’s website;

(c) if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by a Registration Statement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the managing underwriter, shall reasonably request; provided , however , that the Partnership shall not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action that would subject it to general service of process in any jurisdiction where it is not then so subject;

 

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(d) promptly notify each Selling Holder and each underwriter, at any time when a prospectus is required to be delivered under the Securities Act, of (i) the filing of a Registration Statement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement or any post-effective amendment thereto, when the same has become effective and (ii) any written comments from the Commission with respect to any Registration Statement or any document incorporated by reference therein and any written request by the Commission for amendments or supplements to a Registration Statement or any prospectus or prospectus supplement thereto;

(e) immediately notify each Selling Holder and each underwriter, at any time when a prospectus is required to be delivered under the Securities Act, of (i) the occurrence of any event or existence of any fact (but not a description of such event or fact) as a result of which the prospectus or prospectus supplement contained in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the prospectus contained therein, in the light of the circumstances under which a statement is made), (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement, or the initiation of any proceedings for that purpose or (iii) the receipt by the Partnership of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, subject to Section  7 , the Partnership agrees to, as promptly as practicable, amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include 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 in the light of the circumstances then existing and to take such other reasonable action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

(f) upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;

(g) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

(h) cause all Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by the Partnership are then listed;

(i) use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Partnership to enable the Selling Holders to consummate the disposition of such Registrable Securities;

 

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(j) provide a transfer agent and registrar for all Registrable Securities not later than the Effective Date of the Shelf Registration Statement;

(k) enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of the Registrable Securities, including the provision of comfort letters and legal opinions as are customary in such securities offerings;

(l) the Partnership will comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the Registration Statements and the disposition of all Registrable Securities covered by each Registration Statement; and

(m) in connection with any Demand Underwritten Offering, the Partnership will use commercially reasonable efforts to cause appropriate officers and employees to be available, on a customary basis and upon reasonable notice, to meet with prospective investors in presentations, meetings and road shows.

5. Suspension . Each Selling Holder, upon receipt of notice from the Partnership of the happening of any event of the kind described in Section  4(e) , shall forthwith discontinue disposition of the Registrable Securities by means of a prospectus or prospectus supplement until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by such subsection, or until it is advised in writing by the Partnership that the use of the prospectus may be resumed, and receipt of copies of any additional or supplemental filings incorporated by reference in the prospectus.

6. Expenses . Except as set forth in an underwriting agreement for the applicable Underwritten Offering or as otherwise agreed between a Selling Holder and the Partnership, all costs and expenses of a Registration Statement filed or an Underwritten Offering that includes Registrable Securities pursuant to this Agreement (other than underwriting discounts and commissions on Registrable Securities and fees and expenses of counsel and advisors to Selling Holders) shall be paid by the Partnership.

7. Delay Right . Notwithstanding anything to the contrary in this Agreement, if the General Partner determines that the Partnership’s compliance with its obligations in this Agreement would be detrimental to the Partnership because such registration or an Underwritten Offering thereunder would (a) materially interfere with a significant acquisition, reorganization or other similar transaction involving the Partnership, (b) require premature disclosure of material information that the Partnership has a bona fide business purpose for preserving as confidential or (c) render the Partnership unable to comply with requirements under applicable securities laws, then the Partnership shall have the right to postpone compliance with such obligations for a period of not more than six months; provided , however , that such right may not be exercised more than twice in any 24-month period.

 

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8. Indemnification .

(a) The Partnership shall, to the fullest extent permitted by law, but subject to the limitations expressly provided in this Agreement, indemnify and hold harmless each Selling Holder, its officers, directors and each Person who controls the Selling 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  8 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, preliminary prospectus, final prospectus or issuer free writing prospectus under which any Registrable Securities were registered or sold by such Selling Holder under the Securities Act, 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 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 or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus or issuer free writing prospectus 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.

(b) Each Selling Holder shall, to the fullest extent permitted by law, indemnify and hold harmless the Partnership, the General Partner, the General Partner’s officers and directors and each Person who controls the Partnership or the General Partner (within the meaning of the Securities Act) and any agent thereof to the same extent as the foregoing indemnity from the Partnership to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in a Registration Statement, preliminary prospectus, final prospectus or free writing prospectus relating to the Registrable Securities held by such Selling Holder.

(c) The provisions of this Section  8 shall be in addition to any other rights to indemnification or contribution that a Person entitled to indemnification under this Section  8 may have pursuant to law, equity, contract, or otherwise.

9. Facilitation of Sales Pursuant to Rule 144 . To the extent it shall be required to do so under the Exchange Act, the Partnership shall timely file the reports required to be filed by it under the Exchange Act or the Securities Act (including the reports required under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144), and shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144. Upon the request of any Holder in connection with that Holder’s sale pursuant to Rule 144, the Partnership shall deliver to such Holder a written statement as to whether it has complied with such requirements.

 

9


10. Miscellaneous .

(a) Specific Performance . Damages in the event of breach of this Agreement by a Party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each Party, in addition to and without limiting any other remedy or right it may have, will have the right to seek an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the Parties hereto hereby waives, to the fullest extent permitted by law, any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not preclude any such Party from pursuing any other rights and remedies at law or in equity that such Party may have.

(b) Amendments and Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed by the Partnership and Holders that hold a majority of the Registrable Securities as of the date of such waiver or amendment; provided , that any waiver or amendment that would have a disproportionately adverse effect on a Holder relative to the other Holders shall require the consent of such Holder. The Partnership shall provide prior notice to all Holders of any proposed waiver or amendment. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any Party to exercise any right hereunder in any manner impair the exercise of any such right.

(c) Notices . All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made if delivered personally or sent by overnight courier (with evidence of confirmation of receipt) to the Parties at the following addresses:

 

If to the Partnership:

  

CONE Midstream Partners LP

CNX Center
1000 CONSOL Energy Drive
Canonsburg, PA 15317
Attention: Secretary

With copy to:

  

Latham and Watkins LLP

811 Main St., Suite 3700

Houston, Texas 77002

Attention: Jeffrey S. Munoz

If to any Person who is then the registered Holder:

   To the address of such Holder as it appears in the applicable register for the Registrable Securities or such other address as may be designated in writing by such Holder (including on the signature pages hereto).

 

10


(d) Successors and Assigns; Transfer of Registration Rights . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns. The rights of a Holder hereunder may be transferred, assigned, or otherwise conveyed on a pro rata basis in connection with any transfer, assignment, or other conveyance of Registrable Securities to any transferee or assignee; provided , that , all of the following additional conditions are satisfied (i) such transfer or assignment is effected in accordance with applicable securities laws; (ii) such transferee or assignee agrees in writing to become bound by and subject to the terms of this Agreement; (iii) the Partnership is given written notice by such Holder of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned; and (iv) such transfer or assignment consists of a number of Registrable Securities equal to at least 25% of the aggregate amount of Registrable Securities outstanding as of the Closing Date.

(e) Other Registration Rights . Noble Midstream hereby acknowledges and agrees that the registration rights provided for in this Agreement with respect to the Registrable Securities are the sole and exclusive registration rights of Noble Midstream and its Affiliates (as defined in the Partnership Agreement) with respect to securities of the Partnership. For the avoidance of doubt, Noble Midstream hereby acknowledges and agrees that the registration rights under Section 7.12 of the Partnership Agreement, will no longer be available to Noble Midstream and its Affiliates, and Noble Midstream for itself and for and on behalf of its Affiliates renounces any claim to the registration rights under Section 7.12 of the Partnership Agreement.

(f) No Third Party Beneficiaries . Nothing in this Agreement, whether express or implied, shall be construed to give any Person, other than the Parties hereto or their respective successors and permitted assigns, any legal or equitable right, remedy, claim or benefit under or in respect of this Agreement.

(g) Execution and Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile or electronic mail transmission, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such signature delivered by facsimile or electronic mail transmission were the original thereof.

(h) Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(i) Governing Law . This Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) to the extent such rules or provisions would cause the application of the laws of any jurisdiction other than the State of Delaware .

 

11


(j) Waiver of Jury Trial . EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10(J) AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

(k) Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the Parties shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the Parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(l) Entire Agreement . This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior contracts or agreements with respect to the subject matter hereof and the matters addressed or governed hereby, whether oral or written.

(m) Termination . Except for Section  8 , this Agreement shall terminate as to any Holder, on the earlier to occur of (i) when all Registrable Securities held by such Holder no longer constitute Registrable Securities and (ii) the third anniversary of the effectiveness of the Shelf Registration Statement.

[THIS SPACE LEFT BLANK INTENTIONALLY]

 

12


IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

CONE MIDSTREAM PARTNERS LP
By: CONE MIDSTREAM GP LLC, its general partner
By:  

/s/ Stephen W. Johnson

Name:   Stephen W. Johnson
Title:   Chief Administrative Officer

[ Signature Page to Registration Rights Agreement ]


NBL MIDSTREAM, LLC
By:  

/s/ Aaron G. Carlson

Name:   Aaron G. Carlson
Title:   Assistant Secretary

[ Signature Page to Registration Rights Agreement ]

Exhibit 10.2

Execution Version

SECOND AMENDED AND RESTATED GATHERING AGREEMENT

Dated as of

January 3, 2018

By and between

CNX GAS COMPANY LLC,

as Shipper, and

CONE Midstream DevCo I LP

CONE Midstream DevCo II LP

CONE Midstream DevCo III LP, and

CONE Midstream Operating Company, LLC

collectively,

as Gatherer


TABLE OF CONTENTS

 

         Page  

ARTICLE 1 DEFINITIONS

     2  

Section 1.1

  Definitions      2  

Section 1.2

  Other Terms      26  

Section 1.3

  References and Rules of Construction      26  

ARTICLE 2 DEDICATION OF PRODUCTION

     26  

Section 2.1

  Shipper’s Dedication      26  

Section 2.2

  Third Party’s Dedication      27  

Section 2.3

  Conflicting Dedications      27  

Section 2.4

  Shipper’s Reservations      27  

Section 2.5

  Releases from Dedication      29  

Section 2.6

  Covenant Running with the Land      34  

Section 2.7

  Memorandum      34  

Section 2.8

  Dedicated Properties and ROFO Properties      34  

ARTICLE 3 GATHERING SYSTEM EXPANSION AND CONNECTION OF WELLS

     35  

Section 3.1

  Development Report      35  

Section 3.2

  Expansion of Individual Systems and Connection of Well Pads      37  

Section 3.3

  Cooperation      54  

Section 3.4

  Gathering Services With Respect to Execution Date Wells      54  

Section 3.5

  Right of Way and Access Rights      55  

Section 3.6

  Blending Rights      56  

Section 3.7

  Liquid Condensate      57  

Section 3.8

  Gatherer Reports      58  

Section 3.9

  Additional Delivery Points      58  

Section 3.10

  Fuel Gas Measurement and Facilities      59  

ARTICLE 4 TENDER, NOMINATION AND GATHERING OF PRODUCTION

     59  

Section 4.1

  Priority of Service      59  

Section 4.2

  Governmental Action      59  

Section 4.3

  Tender of Dedicated Production      60  

Section 4.4

  Gathering Services      60  

Section 4.5

  Nominations, Scheduling, Balancing and Curtailment      61  

Section 4.6

  Suspension/Shutdown of Service      62  

Section 4.7

  Gas and Condensate Marketing and Transportation      62  

Section 4.8

  No Prior Flow of Gas in Interstate Commerce      62  

Section 4.9

  Right of First Offer      62  

ARTICLE 5 FEES

     63  

Section 5.1

  Fees      63  

Section 5.2

  Fee Adjustments      65  

Section 5.3

  Excess Gathering System L&U      67  

Section 5.4

  Gathering System Fuel Usage      67  

 

i


TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE 6 QUALITY, NO WAIVER AND PRESSURE

     67  

Section 6.1

  Quality Specifications      67  

Section 6.2

  Failure to Meet Specifications      68  

Section 6.3

  No Waiver      68  

Section 6.4

  Pressure      68  

ARTICLE 7 TERM

     74  

Section 7.1

  Term      74  

Section 7.2

  Effect of Termination or Expiration of the Term      74  

ARTICLE 8 TITLE AND CUSTODY

     74  

Section 8.1

  Title      74  

Section 8.2

  Custody      75  

ARTICLE 9 BILLING AND PAYMENT

     75  

Section 9.1

  Statements      75  

Section 9.2

  Payments      75  

Section 9.3

  Audit      76  

ARTICLE 10 DISPUTE RESOLUTION

     77  

Section 10.1

  Negotiation and Arbitration      77  

ARTICLE 11 FORCE MAJEURE

     78  

Section 11.1

  Force Majeure      78  

Section 11.2

  Definition of Force Majeure      78  

Section 11.3

  Alterations, Maintenance and Repairs      79  

Section 11.4

  Rights of Way and Surface Sites      80  

ARTICLE 12 REGULATORY STATUS

     80  

Section 12.1

  Non-Jurisdictional Gathering System      80  

Section 12.2

  Government Authority Modification      81  

ARTICLE 13 INDEMNIFICATION AND INSURANCE

     81  

Section 13.1

  Custody and Control Indemnity      81  

Section 13.2

  Shipper Indemnification      81  

Section 13.3

  Gatherer Indemnification      82  

Section 13.4

  Actual Direct Damages      82  

Section 13.5

  Penalties      82  

Section 13.6

  Insurance      83  

ARTICLE 14 TAXES

     83  

Section 14.1

  Taxes      83  

ARTICLE 15 ASSIGNMENT

     83  

 

ii


TABLE OF CONTENTS

(continued)

 

         Page  

Section 15.1

  Assignment      83  

Section 15.2

  Notice      85  

Section 15.3

  Pre-Approved Assignment      85  

ARTICLE 16 MISCELLANEOUS

     85  

Section 16.1

  Relationship of the Parties      85  

Section 16.2

  Notices      85  

Section 16.3

  Expenses      86  

Section 16.4

  Waivers; Rights Cumulative      86  

Section 16.5

  Entire Agreement; Conflicts      86  

Section 16.6

  Amendment      86  

Section 16.7

  Governing Law      86  

Section 16.8

  Parties in Interest      86  

Section 16.9

  Preparation of Agreement      86  

Section 16.10

  Severability      87  

Section 16.11

  Counterparts      87  

Section 16.12

  Confidentiality      87  

Section 16.13

  Adequate Assurances      88  

Section 16.14

  Amendment and Restatement of First Amended and Restated Agreement      88  

Section 16.15

  Joint and Several Liability      89  

Section 16.16

  Headings      89  

Section 16.17

  No Election      89  

Section 16.18

  Exhibits      89  

Section 16.19

  Time is of the Essence      89  

Section 16.20

  Agreement Regarding Certain Remedies      89  

Section 16.21

  Change of Control      90  

ARTICLE 17 OPERATING TERMS AND CONDITIONS

     90  

Section 17.1

  Terms and Conditions      90  

 

iii


EXHIBITS

EXHIBIT A    OPERATING TERMS AND CONDITIONS
EXHIBIT B-1(a)    DEDICATION AREA (MARCELLUS)
EXHIBIT B-1(b)    DEDICATION AREA (UTICA)
EXHIBIT B-2    EXECUTION DATE WELLS AND COMPRESSION RECEIPT POINTS
EXHIBIT B-3(a)    ACAA MAP
EXHIBIT B-3(b)    ACAA FEES
EXHIBIT B-4    BIG RUN FEES
EXHIBIT B-5(a)    CRAWFORD MAP
EXHIBIT B-5(b)    CRAWFORD FEES
EXHIBIT B-6(a)    FALLOWFIELD MAP
EXHIBIT B-6(b)    FALLOWFIELD FEES
EXHIBIT B-7(a)    MAJORSVILLE MAP
EXHIBIT B-7(b)    MAJORSVILLE FEES
EXHIBIT B-8(a)    MAMONT MAP
EXHIBIT B-8(b)    MAMONT FEES
EXHIBIT B-9    MARCHAND FEES
EXHIBIT B-10(a)    MARSHALL MAP
EXHIBIT B-10(b)    MARSHALL FEES
EXHIBIT B-11(a)    MCQUAY MAP
EXHIBIT B-11(b)    MCQUAY FEES
EXHIBIT B-11(c)    LEGACY MCQUAY SYSTEM
EXHIBIT B-12(a)    [RESERVED]
EXHIBIT B-12(b)    [RESERVED]
EXHIBIT B-13(a)    SHIRLEY PENNS MAP
EXHIBIT B-13(b)    SHIRLEY PENNS FEES
EXHIBIT B-14(a)    WADESTOWN MAP
EXHIBIT B-14(b)    WADESTOWN FEES
EXHIBIT B-15    [RESERVED]
EXHIBIT B-16    MARCELLUS FORMATION LOG
EXHIBIT B-17    UTICA FORMATION LOG
EXHIBIT C    PARTIES’ ADDRESSES FOR NOTICE PURPOSES
EXHIBIT D    FORM OF MEMORANDUM OF GATHERING AGREEMENT
EXHIBIT E    INSURANCE
EXHIBIT F    CONFLICTING DEDICATIONS
EXHIBIT G    ROFO AREA – MARCELLUS FORMATION
EXHIBIT H    DOWNTIME FEE REDUCTION
EXHIBIT I    OPERATING PRESSURE FEE REDUCTION
EXHIBIT J-1    VERTICAL MARCELLUS WELLS
EXHIBIT J-2    LEGACY WELLS
EXHIBIT K    [RESERVED]
EXHIBIT L    LIQUID CONDENSATE DENSITY RANGES
EXHIBIT M    INITIAL WELL DEVELOPMENT SCHEDULE
EXHIBIT N    MCQUAY PROJECT PLAN
EXHIBIT O    WADESTOWN PROJECT PLAN


EXHIBIT P    COMPRESSION CURVES FOR CERTAIN SYSTEMS
EXHIBIT Q    FREE FLOW TARGET PRESSURE
EXHIBIT R-1    DEVCO I AREA
EXHIBIT R-2    DEVCO II AREA
EXHIBIT R-3    DEVCO III AREA
EXHIBIT S    CHANGE OF CONTROL PROVISIONS


SECOND AMENDED AND RESTATED GATHERING AGREEMENT

This SECOND AMENDED AND RESTATED GATHERING AGREEMENT (as the same may be amended from time to time in accordance herewith, this “ Agreement ”) is made as of this 3rd Day of January, 2018 (the “ Execution Date ”), by and between CNX Gas Company LLC, a Virginia limited liability company (“ Shipper ”), and Gatherer (defined below). Shipper and Gatherer are sometimes together referred to in this Agreement as the “ Parties ” and individually as a “ Party .”

RECITALS:

A. Shipper and CONE Midstream Partners LP, a Delaware limited partnership (“ CNNX ”), entered into that certain Gathering Agreement dated as of September 30, 2014 (the “ Original Effective Date ”, and such agreement, as amended, the “ Original Agreement ”), thereafter assigned on the Original Effective Date from CNNX, (i) to CONE Midstream DevCo I LP, a Delaware limited partnership (“ DevCo I LP ”) as to certain portions of the Dedication Area, (ii) to CONE Midstream DevCo II LP, a Delaware limited partnership (“ DevCo II LP ”) as to certain portions of the Dedication Area, and (iii) to CONE Midstream DevCo III LP, a Delaware limited partnership (“ DevCo III LP ”) as to certain portions of the Dedication Area, (DevCo I LP, DevCo II LP and DevCo III LP, the “ Original DevCos ”).

B. Shipper, the Original DevCos and CONE Midstream Operating Company LLC, a Delaware limited liability company (“ OpCo ”) entered into that certain First Amended and Restated Gathering Agreement dated as of December 1, 2016 (such agreement as amended the “ First Amended and Restated Agreement ”) which amended and restated in its entirety the Original Agreement.

C. As of the Execution Date, Gatherer owns and operates (either directly or through an Affiliate) the Individual Systems (defined below), which gathers Gas (defined below) and, as to certain Individual Systems, certain Liquid Condensate (defined below), produced from certain oil and gas leases and fee mineral interests.

D. Gatherer plans to expand the Individual Systems and operate the Individual Systems for, among other things, as applicable, gathering, compressing, dehydrating and treating Gas within certain areas of Pennsylvania and West Virginia.

E. Gatherer also plans, subject to Shipper drilling and completing certain Planned Wells, to construct the Wadestown System and operate the Wadestown System for, as applicable, gathering, compressing, dehydrating and treating Gas within certain areas of West Virginia, and possibly Pennsylvania.

F. Shipper desires to dedicate certain Gas and Liquid Condensate attributable to its and its Affiliates’ right, title and interest in (a) certain oil and gas leases and mineral interests located within the Dedication Area (defined below) to the Individual Systems and (b) the Legacy Wells (defined below).


G. Shipper desires to deliver such Gas and, as to certain Individual Systems, Liquid Condensate, to Gatherer for the purpose of gathering, and, as applicable, blending, compressing, dehydrating, treating, stabilizing, storing, loading and re-delivering such Gas and, subject to the provisions hereof, and as applicable, Liquid Condensate to or for the account of Shipper, and Gatherer desires to provide such services to Shipper on the terms and subject to the conditions of this Agreement.

H. The Parties now desire to amend and restate the First Amended and Restated Agreement in its entirety in accordance with the terms and conditions of this Agreement.

AGREEMENTS:

NOW, THEREFORE, in consideration of the mutual agreements, covenants, and conditions in this Agreement contained, Gatherer and Shipper hereby agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following capitalized words and terms shall have the meaning ascribed to them below:

AAA ” has the meaning given to it in Section  10.1(b)(i) .

ACAA Area ” means an area within a three mile radius of the then existing ACAA System; provided, however, the initial ACAA Area is as set forth on Exhibit B-3(a) , and provided further that for purposes of determining the ACAA Area, the then existing ACAA System shall not include (a) any portion of the ACAA System through which Dedicated Production has not, at any time, flowed or (b) any part of the ACAA System that is downstream of any centralized compression or dehydration station on the ACAA System. For the avoidance of doubt, in no event shall the ACAA Area ever extend beyond the Dedication Area.

ACAA System ” means that certain existing Gathering System generally depicted on Exhibit B-3(a) , as such Gathering System may hereafter be modified or extended from time to time.

Accelerated Target Fuel Gas Date ” has the meaning given to it in Section  3.2(d)(ii)(A) .

Accelerated Target On-Line Date ” has the meaning given to it in Section  3.2(d)(ii)(A) .

Acceleration Costs Differential ” has the meaning given to it in Section  3.2(d)(ii)(B)(3) .

Acceleration Request ” has the meaning given to it in Section  3.2(d)(i) .

Acceleration Request Response ” has the meaning given to it in Section  3.2(d)(ii) .

Additional Connection Costs ” has the meaning given to it in Section  3.2(a)(ix)(B) .

Adequate Assurances of Performance ” has the meaning given to it in Section  16.13 .

Adjusted Amount ” means the dollar amount set forth in Section  3.2(e)(ii) .

 

2


AFE ” means authorization for expenditures. The Parties acknowledge that each Gatherer AFE includes a 10% contingency on all compression and dehydration facilities, and a 20% contingency on all other interests.

Affiliate ” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is Under Common Control With, such Person; provided, however, that for purposes of this Agreement, (a) Shipper and Gatherer shall be deemed not to be “Affiliated” and (b) any Affiliate of Shipper that is primarily engaged in operations other than the exploration and/or production of natural gas shall be deemed not to be an “Affiliate” of Shipper and (c) Gatherer’s Affiliates shall include each other Gatherer. The term “Affiliated” shall have the correlative meaning. A Person that would be an Affiliate but for clause (b) of this definition shall be deemed to be an Affiliate for the purposes of Section  2.5(a) , Section  3.2(b) and Exhibit S .

Agreement ” has the meaning given to it in the preamble hereof.

Annual Escalation Factor ” means 2.5%.

Assignee ” has the meaning given to it in Section  16.13 .

Average Pressure ” means, for a Receipt Point for any Day, the average prevailing pressure (in Psig) at such Receipt Point during such Day, as determined by the Measuring Device at the Receipt Point.

Barrel ” means a quantity consisting of forty-two Gallons.

Big Run System means that certain existing Gathering System generally depicted on Exhibit B-4 .

Blending Gas ” has the meaning given to it in Section  3.6(b) .

Bona Fide Offer ” has the meaning given to it in Section  3.2(b)(iv) .

Btu ” means the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit at a pressure of 14.73 Psia and determined on a gross, dry basis.

Business Day ” means a Day (other than a Saturday or Sunday) on which commercial banks in the State of Pennsylvania are generally open for business.

Capital Expenses ” means all reasonable costs and expenditures that are capitalized and not expensed in accordance with US generally accepted accounting principles.

Claimant ” has the meaning given to it in Section  10.1(b)(ii) .

Claims ” has the meaning given it in Section  13.1(a) .

CNNX ” has the meaning given to it in the recitals hereof.

 

3


Compression Costs ” has the meaning given to it in Section  6.4(e) .

Compression Date ” means, with respect to a Receipt Point, the date upon which such Receipt Point begins receiving Tier 1 Pressure Service or Tier 2 Pressure Service, as applicable.

Compression Fee ” means (a)(i) the Tier 1 Compression Fee or (ii) the Tier 2 Compression Fee, as applicable, (b) the compression fee specified in Exhibit B-8(b) for provision of Existing Pressure Service for Existing Wells connected to the Receipt Point for the Gaut 4IHSU Unit on the Mamont System, (c) the compression fees specified in Exhibit B-11(b) for provision of Existing Pressure Service for Existing Wells connected to the Receipt Point(s) for the NV57 Well Pad and the Existing Wells connected to the Receipt Point(s) for the GH9 Well Pad on the McQuay System, or (d) the Compression Fee negotiated by the Parties or deemed to apply pursuant to Section  6.4(g) to the Receipt Points described in Section  6.4(g) .

Compression Obligation Gas ” has the meaning given to it in Section  5.2(c) .

Compression Obligation Receipt Point ” has the meaning given to it in Section  5.2(c) .

Compression Request ” has the meaning given to it in Section  6.4(f) .

Compression Services ” means compression services provided on an applicable Individual System in order to: (a) with respect to Execution Date Compression Receipt Points, provide Existing Pressure Service, unless Gatherer is excused from providing Existing Pressure Service for such Execution Date Compression Receipt Points under Section  6.4(a) ; (b) with respect to those Receipt Points at which Gatherer is to provide Tier 1 Pressure Service as set forth in Sections 6.4(e) , 6.4(f) and 6.4(g) , provide such Tier 1 Pressure Service; and (c) with respect to those Receipt Points at which Gatherer is to provide Tier 2 Pressure Service as set forth in Sections 6.4(e) , 6.4(f) and 6.4(g) provide such Tier 2 Pressure Service, in each case in accordance with the terms of this Agreement. For the avoidance of doubt, the services described in subsections (a), (b) and (c) of this definition are the only Compression Services that Gatherer is obligated to provide under this Agreement.

Condensate ” means Drip Condensate and Liquid Condensate.

Condensate Gathering Fees ” has the meaning given to it in Section  5.1(b) .

Condensate Services ” means, (a) with respect to the Majorsville System: (i) the receipt of Dedicated Liquid Condensate at the Majorsville System’s Receipt Point; (ii) the collection, injection, gathering and stabilization of such Liquid Condensate; (iii) the handling, storage, loading, and re-delivery at the applicable Majorsville System Delivery Point of such Liquid Condensate for Shipper’s account; and (iv) the other services to be performed by Gatherer in respect of such Liquid Condensate as set forth in this Agreement, all in accordance with the terms of this Agreement and (b) with respect to the ACAA System: (i) the receipt of Dedicated Liquid Condensate at the Receipt Points on the ACAA System; and (ii) the gathering and redelivery of such Liquid Condensate at the applicable ACAA System Delivery Point all in accordance with the terms of this Agreement. For the avoidance of doubt, Gatherer has no obligation to provide Liquid Condensate Services at any Individual Systems other than the Majorsville System and the ACAA System.

 

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Conflicting Dedication ” means any gathering agreement or any commitment or arrangement (including any volume commitment) that would require Shipper’s or its Affiliates’ owned and/or Controlled Gas to be gathered on any gathering system or similar system other than the Individual Systems, including any such agreement, commitment or arrangement burdening properties hereinafter acquired by Shipper or any of its Affiliates in the Dedication Area or covering any of the ROFO Properties.

Connection Costs ” has the meaning given it in Section  3.2(f)(i) .

Control ” (including the terms “Controlling,” “Controlled” and “Under Common Control With”) means (a) with respect to any Person, 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 shares, by contract, or otherwise and (b) with respect to any Gas or Liquid Condensate, such Gas or Liquid Condensate produced from the Dedication Area or the ROFO Area, as applicable, and owned by a Third Party working interest owner in Wells operated by Shipper or any of its Affiliates with respect to which Shipper or its Affiliate, as applicable, has the contractual right or obligation (pursuant to a marketing, agency, operating, unit or similar agreement) to market such Gas or Liquid Condensate and the applicable Third Party elects for Shipper to, or Shipper is obligated to, market such Gas or Liquid Condensate on behalf of the applicable Third Party. Notwithstanding anything to the contrary herein, in no event shall any Gas or Liquid Condensate that a Third Party working interest owner elects to take in kind (but only to the extent such Third Party working interest owner has the right to do so) be considered “Controlled” by Shipper.

CPI-U ” means the All Items Consumer Price Index for Urban Consumers (CPI-U) for the U.S. City Average, 1982-84 = 100, as published by the United States Department of Labor, Bureau of Labor Statistics, or, if the publication of such index is discontinued, such other index or indices mutually agreed upon by the Parties which reflect the range of economic factors represented by such index.

Crawford Area means an area within a three mile radius of the then existing Crawford System; provided, however, the initial Crawford Area is as set forth on Exhibit B-5(a) , and provided further that for purposes of determining the Crawford Area, the then existing Crawford System shall not include (a) any portion of the Crawford System through which Dedicated Gas has not, at any time, flowed or (b) any part of the Crawford System that is downstream of any centralized compression or dehydration station on the Crawford System. For the avoidance of doubt, in no event shall the Crawford Area ever extend beyond the Dedication Area.

Crawford System means that certain existing Gathering System generally depicted on Exhibit B-5(a) , as such Gathering System may hereafter be modified or extended from time to time.

Day ” means a period of time beginning at 10:00 a.m. Eastern Time on a calendar day and ending at 10:00 a.m. Eastern Time on the succeeding calendar day. The term “Daily” shall have the correlative meaning.

 

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Dedicated Gas ” means Gas dedicated and committed to this Agreement pursuant to Section  2.1(a) and Gas committed to this Agreement pursuant to Section  2.1(b) .

Dedicated Liquid Condensate ” means (a) Liquid Condensate produced from the Dedicated Properties and located in the ACAA Area and/or the Majorsville Area and (b) Third Party Liquid Condensate under the Control of Shipper and/or its Affiliate(s) produced from Wells and Planned Wells operated by Shipper or any of its Affiliates in the ACAA Area and/or the Majorsville Area.

Dedicated Production ” means, collectively, the Dedicated Gas and the Dedicated Liquid Condensate.

Dedicated Properties ” means Shipper’s and/or its Affiliate(s)’ interests in the oil and/or gas leases, mineral interests and other similar interests that as of the Execution Date are, or that after the Execution Date become, owned directly or indirectly (including through the acquisition of Control of another Person) by Shipper and/or its Affiliate(s) in (a) the Dedication Area described in Exhibit B-1(a) to the extent and only to the extent that such oil and/or gas leases, mineral interests and other similar interests cover and relate to the Marcellus Formation and (b) in the Dedication Area described in Exhibit B-1(b) to the extent and only to the extent that such oil and/or gas leases, mineral interests and other similar interests cover and relate to the Utica Formation. From and after the date ROFO Properties become Dedicated ROFO Properties, such Dedicated ROFO Properties shall constitute Dedicated Properties, unless otherwise agreed by the Parties.

Dedicated ROFO Properties ” has the meaning given to it in Section  4.9(d) .

Dedication Area ” means the area identified as “Shipper’s Dedication Area” and described on Exhibit B-1(a) and Exhibit B-1(b) .

Dedication Report ” has the meaning given to it in Section  2.8 .

Deemed Tie-In Request means Exhibit M , with respect to each Planned Well identified on Exhibit M .

Delayed Fuel Gas Days ” with respect to any Delayed Fuel Gas Point, means the number of Days from the Fuel Gas Deadline applicable to such Delayed Fuel Gas Point until the Fuel Gas Date for such Delayed Fuel Gas Point.

Delayed Fuel Gas Point ” means a Fuel Gas Point on a Planned Well Pad on an Individual System (a) to which Gatherer fails to extend such Individual System in order to deliver Fuel Gas for the applicable Planned Well(s) requiring such Fuel Gas and/or (b) at which Gatherer is not ready or is unable to provide Fuel Gas for such Planned Well(s), in each case, on or before the applicable Fuel Gas Deadline

Delivery Point ” means with respect to each Individual System, as applicable (a) each point of interconnection of such Individual System with the facilities of a Processing Plant, Downstream Pipeline or Downstream Condensate Storage Tank not a part of such Individual System, with each such point of interconnection located at the outlet of such Individual System

 

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and (b) the outlet flange of any Downstream Condensate Storage Tank that is part of such Individual System at which points, subject to Section  3.6 , Gatherer will re-deliver Gas and/or, as applicable, Liquid Condensate to Shipper for its own account. The Delivery Point(s) for each Individual System as of the Execution Date are set forth on the Individual System Exhibits for such Individual System.

DevCo I Area ” means the area identified as the DevCo I Area on Exhibit R-1 .

DevCo I LP ” has the meaning given to it in the recitals hereof.

DevCo II Area ” means the area identified as the DevCo II Area on Exhibit R-2 .

DevCo II LP ” has the meaning given to it in the recitals hereof.

DevCo III Area ” means the area identified as the DevCo III Area on Exhibit R-3 .

DevCo III LP has the meaning given to it in the recitals hereof.

Development Area ” has the meaning given to it in Section  3.2(b)(i) .

Development Report ” has the meaning given to it in Section  3.1(a) .

Downstream Condensate Storage Tank ” means any storage tank where Condensate is collected and stored prior to being sold and/or delivered to market via trucks or pipeline.

Downstream Pipeline ” means, with respect to each Individual System, any pipeline downstream of any Delivery Point on such Individual System owned by a Third Party.

Downtime Event ” means, with respect to the Gathering System or any Individual System, a period during which all or a portion of the Gathering System or such Individual System was unavailable to provide Gathering Services, due to reasons other than (a) Force Majeure (including any deemed events of Force Majeure under Sections 4.7 and 11.3 ) and/or (b) Gatherer’s failure to provide Compression Services for any Compression Obligation Receipt Point on such Individual System in accordance with this Agreement (for which remedies are provided under Sections 2.5(a)(iv) and 5.2(c) ).

Downtime Percentage ” means (a) for purposes of determining the Downtime Percentage for the Gathering System, an amount equal to the quotient of (i) the sum of all daily losses (in MMBtu) for the Gathering System for the applicable period divided by (ii) the sum of (y) the amount (in MMBtu) of the total deliveries of Dedicated Production for the applicable period and (z) the sum of all daily losses (in MMBtu) for the Gathering System for the applicable period and (b) for purposes of determining the Downtime Percentage for an Individual System, an amount equal to the quotient of (i) the sum of all daily losses (in MMBtu) for such Individual System for the applicable period divided by (ii) the sum of (y) the amount (in MMBtu) of the total deliveries of Dedicated Production for such Individual System for the applicable period and (z) the sum of all daily losses (in MMBtu) for such Individual System for the applicable period.

 

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Drilling Unit ” means the area fixed for the drilling of one Well or Planned Well by order or rule of any applicable Governmental Authority, or (if no such order or rule is applicable) the area fixed for the drilling of a Well or Planned Well reasonably established by the pattern of drilling in the applicable area or otherwise established by Shipper in its reasonable discretion.

Drip Condensate ” means that portion of Gas that is received into an Individual System (without manual separation or injection) that condenses in, and is recovered from, such Individual System as a liquid.

Dry Gas ” means Gas that is not Wet Gas.

Economic Fee Adjustment ” has the meaning given to it in Section  2.5(d)(i) .

Excess Wells ” has the meaning given to it in Section  3.2(g)(ii) .

Execution Date ” has the meaning given to it in the preamble of this Agreement.

Execution Date Compression Receipt Points ” means the Receipt Points existing as of the Execution Date for the Execution Date Wells. Notwithstanding anything to the contrary herein, the Execution Date Compression Receipt Points will not include, and Compression Services will not be provided for any Receipt Points for any Execution Date Wells on the ACAA System, or the Crawford System.

Execution Date Wells ” means those Existing Wells connected to an Individual System as of the Execution Date, which Existing Wells are set forth on Exhibit B-2 .

Existing Pressure Service ” means, with respect to each Execution Date Compression Receipt Point, that Gatherer shall provide sufficient compression to receive Dedicated Production delivered at such Execution Date Compression Receipt Point, such that Gatherer shall maintain an Average Pressure at such Execution Date Compression Receipt Point during each Day of not greater than the Existing Required Pressure for such Execution Date Compression Receipt Point.

Existing Required Pressure ” means, with respect to each Execution Date Compression Receipt Point, either 1) the pressure specified on Exhibit B-2 for such Execution Date Compression Receipt Point or 2) if Exhibit B-2 for such Execution Date Compression Receipt Point references Exhibit P for such Execution Date Compression Receipt Point, the required pressure as specified on Exhibit P for the applicable Individual System for such Execution Date Compression Receipt Point based on Shipper’s volumetric throughput of such Individual System.

Existing Well ” means, as of any time, a Well which has been drilled and completed and which is producing or is capable of producing Dedicated Production.

Existing Well Pad ” means, as of any time, a Well Pad with an Existing Well as of such time.

Expert ” means an individual who has at least 15 years’ experience in the engineering, construction, expansion and operation of Gas gathering systems in West Virginia and/or Pennsylvania and has not previously worked for or provided services to (as an employee or a contractor) either Party or any of their respective Affiliates.

 

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Fallowfield System means that certain existing Gathering System generally depicted on Exhibit B-6(a) .

Fee ” or “ Fees ” means, collectively, the Gas Gathering Fees, and, if applicable, the Condensate Gathering Fees and/or the Compression Fee.

Final Cure Period ” has the meaning given to it in Section  3.2(g)(ii) .

First Amended and Restated Agreement ” has the meaning given it in the recitals hereof.

First Anniversary Deadline ” has the meaning given it in Section  3.2(f)(ii) .

First Party ” has the meaning given to it in Section  16.12(c) .

Force Majeure ” has the meaning given to it in Section  11.2 .

Free Flow Gas ” has the meaning given to it in Section  5.2(d) .

Free Flow Pressure ” means, with respect to a Receipt Point, the then prevailing pressure of the portion of the Individual System on which such Receipt Point is located.

Free Flow Receipt Point ” has the meaning given to it in Section  5.2(d) .

Free Flow Target Pressure ” has the meaning given to it in Section  5.2(d) .

Fuel Gas ” means Dedicated Gas to be delivered by Gatherer to Shipper from an Individual System for use in operating a drilling rig or in hydraulic fracturing operations or other Well Pad operations with respect to a Planned Well to be connected to such Individual System.

Fuel Gas Date ” means, with respect to any Planned Well, the date upon which Gatherer has completed the facilities necessary to deliver Fuel Gas from the applicable Individual System to the Fuel Gas Point for such Planned Well and is ready to commence the delivery of Fuel Gas through such facilities.

Fuel Gas Deadline ” means, with respect to any Planned Well which is the subject of a Tie-In Obligation, the later of (a) the Target Fuel Gas Date for such Planned Well or (b) that date which is 30 Days prior to the date that all facilities for Shipper to receive Fuel Gas at the applicable Fuel Gas Point for the operation of the drilling rig which will drill such Planned Well are complete and ready to be connected to the Fuel Gas Point and such drilling rig is on the drill site and ready to commence drilling such Planned Well.

Fuel Gas Point ” means a mutually agreeable location on a Planned Well Pad at which Gatherer will connect the applicable Individual System to Shipper’s or its Affiliates’ facilities to deliver Fuel Gas to Shipper at or near the planned Receipt Point for the Planned Well requiring such Fuel Gas.

 

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Fuel Point ” has the meaning given to it in Section  1.8(a)(i) of Exhibit A .

Gallon ” means one U.S. gallon.

Gas ” means any mixture of gaseous hydrocarbons, consisting essentially of methane and heavier hydrocarbons, including (unless otherwise expressly provided herein) liquefiable hydrocarbons and Drip Condensate, and including inert and noncombustible gases, in each case, produced from beneath the surface of the earth; provided, however, that the term “Gas” as used herein shall not include Liquid Condensate.

Gas Gathering Fee ” has the meaning given it in Section  5.1(a) .

Gas Services ” with respect to each Individual System, means:

(a) with respect to Dedicated Gas required to be Tendered to a Receipt Point on the ACAA System:

(i) the receipt of Shipper’s Dedicated Gas (including Drip Condensate in such Dedicated Gas) at the Receipt Points for such Individual System;

(ii) the re-delivery of Gas that is thermally equivalent to the Gas that is to be delivered at the Delivery Points for such Individual System for Shipper’s account; and

(iii) the other services required to be performed by Gatherer in respect of such Gas as set forth in this Agreement, including in the case of a Planned Well for which a Fuel Gas Point is established under this Agreement, the delivery of Fuel Gas at such Fuel Gas Point for such Planned Well (but only until Dedicated Gas from such Planned Well commences initial deliveries at the Receipt Point for such Planned Well),

(iv) in each case, in accordance with the terms of this Agreement,

(b) with respect to Dedicated Gas required to be Tendered to a Receipt Point on any Individual System other than the ACAA System:

(i) the receipt of Dedicated Gas (including Drip Condensate in such Dedicated Gas) at the Receipt Points for such Individual System;

(ii) the gathering, and, as applicable, dehydrating, compressing, treating and blending of such Gas and the collection and gathering of any Drip Condensate in such Dedicated Gas;

(iii) the re-delivery of Gas that is thermally equivalent to the Gas that is to be delivered at the Delivery Points for such Individual System for Shipper’s account; and

 

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(iv) the other services required to be performed by Gatherer in respect of such Gas as set forth in this Agreement, including in the case of a Planned Well for which a Fuel Gas Point is established under this Agreement, the delivery of Fuel Gas at such Fuel Gas Point for such Planned Well (but only until Dedicated Gas from such Planned Well commences initial deliveries at the Receipt Point for such Planned Well),

(v) in each case, in accordance with the terms of this Agreement.

Gatherer ” means, (a) with respect to the DevCo I Area, DevCo I LP, (b) with respect to the DevCo II Area, DevCo II LP, (c) with respect to the DevCo III Area, DevCo III LP and (d) with respect to the ROFO Area, OpCo.

Gatherer Group ” has the meaning given to it in Section  13.2 .

Gatherer Reports ” has the meaning given to it in Section  3.8 .

Gatherer Uneconomic Condition ” has the meaning given to it in Section  2.5(d)(i) .

Gathering Services ” means, collectively, the Gas Services and the Condensate Services.

Gathering System ” means each of the Gas and, as applicable, Liquid Condensate gathering systems located in the Dedication Area and/or the ROFO Area consisting, as applicable, of (a) pipelines; (b) compression, dehydration and treating facilities; (c) controls, Delivery Points, meters and measurement facilities; (d) owned (or leased) Condensate collection, gathering, stabilization, handling, and storage facilities; (e) rights of way, fee parcels, surface rights and permits; and (f) all appurtenant facilities, constructed, owned (or leased) and operated by Gatherer, to provide Gathering Services to Shipper and gathering and other services to other Persons as such gathering system and/or facilities are modified and/or extended from time to time to provide Gathering Services to Shipper pursuant to the terms hereof and/or gathering and other services to other Persons.

Gathering System Fuel ” means, with respect to each Individual System, all Gas measured and utilized as fuel for such Individual System, including Gas utilized as fuel for compressor stations, stated in MMBtus.

Gathering System L&U ” means, with respect to each Individual System, any Gas or, as applicable, Liquid Condensate received into such Individual System that is lost or otherwise not accounted for incident to, or occasioned by, the gathering, treating, compressing, blending, stabilization and re-delivery, as applicable, of Gas and Liquid Condensate, including Gas and/or Liquid Condensate released through leaks, instrumentation, relief valves, flares and blow downs of pipelines, vessels and equipment; provided , however that “Gathering System L&U” shall not include any Gas or Liquid Condensate that is lost as a result of Gatherer’s gross negligence or willful misconduct.

Governmental Authority ” means any federal, state, local, municipal, tribal or other government; any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, regulatory or taxing authority or power; and any court or governmental tribunal, including any tribal authority having or asserting jurisdiction.

 

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Greenhill Delivered Production ” has the meaning given to it in Section  5.2(f) .

Greenhill Facility ” has the meaning given to it in Section  5.2(f) .

Gross Heating Value ” means the number of Btus produced by the combustion, on a dry basis and at a constant pressure, of the amount of Gas which would occupy a volume of one cubic foot at a temperature of 60 degrees Fahrenheit and at a pressure of 14.73 Psia, with air of the same temperature and pressure as the Gas, when the products of combustion are cooled to the initial temperature of the Gas and air and when the water formed by combustion is condensed to the liquid state. Hydrogen sulfide shall be deemed to have no heating value.

Group ” means (a) with respect to Shipper, the Shipper Group and (b) with respect to Gatherer, the Gatherer Group.

Imbalance Account ” has the meaning given to it in Section  1.3(c) of Exhibit A .

Individual System ” means each of the ACAA System, the Big Run System, the Crawford System, the Fallowfield System, the Majorsville System, the Mamont System, the Marchand System, the Marshall System, the McQuay System, the Shirley Penns System and the Wadestown System, and any other Gathering System which may be constructed by Gatherer to serve an area within the Dedication Area in accordance with Section  3.2(b) , or within the ROFO Area in accordance with Section  4.9 , not served by any of the other Individual Systems.

Individual System Exhibits ” means those exhibits to this Agreement which pertain solely to a specific Individual System.

Individual Well Deficiency Amount ” has the meaning given to it in Section  3.2(g)(i) .

Initial Term ” has the meaning given to it in Section  7.1 .

Interest Rate ” means, on the applicable date of determination, the Prime Rate plus an additional three percentage points (or, if such rate is contrary to any applicable Law, the maximum rate permitted by such applicable Law).

Intermediate Delivery Point ” means an interconnection of a pipeline to an Individual System upstream of the applicable Delivery Point(s) for such Individual System that allows Shipper to take Gas previously Tendered by Shipper at a Receipt Point for such Individual System and deliver it back to such Individual System at a secondary Receipt Point on another portion of such Individual System in order to facilitate blending of such Gas by Shipper with other Gas moving on such Individual System to cause the resultant combined Gas on such Individual System to meet the specifications of Downstream Pipelines as provided in Section  3.6 or to otherwise enable Shipper to provide certain compression services; in no event shall Gatherer be obligated to install any new Intermediary Delivery Points unless Shipper pays all costs and expenses of same.

 

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Interruptible Basis ” means, with respect to each Individual System, the lowest level of service offered by Gatherer on such Individual System, which Gatherer may interrupt or curtail at any time for any reason at its sole discretion.

Laws ” means any applicable statute, law, rule, regulation, ordinance, order, code, ruling, writ, injunction, decree or other official act of or by any Governmental Authority.

Legacy McQuay System ” means that portion of the McQuay System as existed in the McQuay Area as of December 1, 2016 as generally depicted on Exhibit B-11(c) .

Legacy Wells ” certain existing wells described in Exhibit J-2 to this Agreement to the extent such wells are in the Dedication Area.

Legal Expert ” means an attorney who has at least 15 years’ experience in the negotiation and drafting of asset purchase and sale agreements, and associated sales documents, involving Gas gathering systems and has not previously worked for or provided services to (as an employee or a contractor) either Party or any of their respective Affiliates.

Liquid Condensate ” means liquid hydrocarbons separated (mechanically or otherwise) from Gas at or near a well pad upstream of a receipt point on the ACAA System, or the Majorsville System, as applicable, and injected into such Individual System by Shipper (or another shipper) at a receipt point on such Individual System.

Majorsville Area means an area within a three mile radius of the then existing Majorsville System; provided, however, the initial Majorsville Area is as set forth on Exhibit B-7(a) , and provided further that solely for purposes of determining the Majorsville Area, the then existing Majorsville System shall not include (a) any portion of the Majorsville System through which Dedicated Production has not, at any time, flowed or (b) any part of the Majorsville System that is downstream of any centralized compression or dehydration station on the Majorsville System or (c) any field gathering lines on the Majorsville System connected to any Well Pad that has a surface location in the McQuay Area but that is connected to the Majorsville System pursuant to a valid election by Shipper, including, for the avoidance of doubt, the RHL 11, RHL 13, RHL 27, RHL 28 or RHL 29 Planned Well Pads (but limited to Planned Wells which will produce Wet Gas from the Marcellus Formation) which shall be connected to the Majorsville System, and the RHL 4 and RHL 23 Planned Well Pads, which shall be connected to the Majorsville System until the Dry Ridge Compressor Station (as described on Exhibit N ) is in service. For the avoidance of doubt, in no event shall the Majorsville Area ever extend beyond the Dedication Area.

Majorsville Map ” means the map set forth on Exhibit B-7(a) , attached to, and made a part of, this Agreement.

Majorsville System means that certain existing Gathering System generally depicted on Exhibit B-7(a) , as such Gathering System may hereafter be modified or extended from time to time.

 

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Mamont Area means an area within a three mile radius of the then existing Mamont System; provided, however, the initial Mamont Area is as set forth on Exhibit B-8(a) , and provided further that for purposes of determining the Mamont Area, the then existing Mamont System shall not include (a) any portion of the Mamont System through which Dedicated Gas has not, at any time, flowed or (b) any part of the Mamont System that is downstream of any centralized compression or dehydration station on the Mamont System. For the avoidance of doubt, in no event shall the Mamont Area ever extend beyond the Dedication Area.

Mamont System means that certain existing Gathering System generally depicted on Exhibit B-8(a) , as such Gathering System may hereafter be modified or extended from time to time.

MAOP ” means maximum allowable operating pressure.

Marcellus Formation ” means, (a) in Cambria, Cameron, Clearfield, Elk, Forest, Indiana and Jefferson Counties in Pennsylvania, specifically from the stratigraphic equivalent of the top of the Burkett in the Marchand 3I (API 37-063-37480) at 6874’ MD through to the stratigraphic equivalent of the top of the Onondaga at 7540’ MD and illustrated in the log attached as Exhibit B-16 ; (b) in Armstrong, Clarion, Fayette, Somerset, Venango and Westmoreland Counties in Pennsylvania, specifically from the stratigraphic equivalent of the top of the Burkett in the DeArmitt #1 (API 37-129-27246) at 7000’ MD through to the stratigraphic equivalent of the top of the Onondaga at 7530’ MD and illustrated in the log attached as Exhibit B-16 ; (c) in Allegheny, Beaver, Butler, Greene, Lawrence, Mercer and Washington in Pennsylvania, and Brooke, Hancock, Marshall, Monongalia, Ohio and Wetzel Counties in West Virginia, specifically from the stratigraphic equivalent of the top of the Burkett in the GH-10C-CV (API 37-059-25397) at 7580’ MD through to the stratigraphic equivalent of the top of the Onondaga at 7892’ MD and illustrated in the log attached as Exhibit B-16 ; (d) in Barbour, Grant, Marion, Preston, Taylor and Tucker Counties in West Virginia, specifically from the stratigraphic equivalent of the top of the Burkett in the DEPI #14815 (API 47-001-02850) at 7350’ MD through to the stratigraphic equivalent of the top of the Onondaga at 7710’ MD and illustrated in the log attached as Exhibit B-16 ; (e) in Doddridge, Harrison, Lewis, Randolph, Upshur and Webster Counties in West Virginia, specifically from the stratigraphic equivalent of the top of the Burkett in the CENT3A (47-097-03847) at 7272’ MD through to the stratigraphic equivalent of the top of the Onondaga at 7569’ MD and illustrated in the log attached as Exhibit B-16 ; and (f) in Braxton, Calhoun, Clay, Gilmer, Jackson, Nicholas, Pleasants, Ritchie, Roane Tyler, Wirt and Wood Counties in West Virginia, specifically from the equivalent of the top of the Burkett in the PENS1C (47-085-10011) at 6270’ MD through to the stratigraphic equivalent of the top of the Onondaga at 6380’ MD and illustrated in the log attached as Exhibit B-16 .

Marchand System means that certain existing Gathering System generally depicted on Exhibit B-9 .

Marshall System means those certain existing compression, treating and related facilities located at the site set forth on the map attached here to as Exhibit B-10(a) .

 

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McQuay Area means an area within a three mile radius of the then existing McQuay System; provided, however, the initial McQuay Area is as set forth on Exhibit B-11(a) , and provided further that for purposes of determining the McQuay Area, (a) the then existing McQuay System shall not include (i) any portion of the McQuay System through which Dedicated Gas has not, at any time, flowed or (ii) any part of the McQuay System that is downstream of any centralized compression or dehydration station on the McQuay System and (b) at no time shall the McQuay Area be less than at least the area within a three mile radius of the McQuay System as depicted on Exhibit B-11(a) . For the avoidance of doubt, in no event shall the McQuay Area ever extend beyond the Dedication Area.

McQuay Development Costs ” means, as of any time, the aggregate Capital Expenses incurred by Gatherer and its Affiliates either before or after the Execution Date in connection with the design, construction, installation, inspection, maintenance or monitoring of the McQuay System or the Legacy McQuay System as of such time.

McQuay Facility ” has the meaning given to it in Section  5.2(f) .

McQuay Map ” means the map set forth on Exhibit B-11(a) , attached to, and made a part of, this Agreement.

McQuay Project Plan ” means Gatherer’s plans for the development of the McQuay System.

McQuay System means that certain Gathering System generally depicted on Exhibit B-11(a) , as such Gathering System may hereafter be modified or extended from time to time.

McQuay Wet Gas Response ” has the meaning given to it in Section  3.2(a)(ix)(B) .

Measurement Device ” means the meter body (which may consist of an orifice meter or ultrasonic meter), LACT unit or other Gas or Liquid Condensate metering device, tube, orifice plate, connected pipe, tank strapping, and fittings used in the measurement of Gas flow, Liquid Condensate flow and volume and/or Gas Btu content.

Measurement Table ” has the meaning given to it in Section  1.10 of Exhibit A .

Minimum Well Deficiency Obligation ” has the meaning given to it in Section  3.2(g)(i) .

Minimum Well Period ” has the meaning given to it in Section  3.2(g)(i) .

Minimum Well Requirement ” has the meaning given to it in Section  3.2(g)(i) .

MMBtu ” means one million Btus.

Month ” means a period of time beginning at 10:00 a.m. Eastern Time on the first Day of a calendar month and ending at 10:00 a.m. Eastern Time on the first Day of the next succeeding calendar month. The term “Monthly” shall have the correlative meaning.

Monthly Other Production ” has the meaning given to it in Section  5.2(f) .

MSCF ” means one thousand Standard Cubic Feet.

 

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NAESB ” means North American Energy Standards Board, or its successors.

National Fuel Gas ” means National Fuel Gas Supply Corporation, or its successors.

National Fuel Gas Delivery Point ” means the Delivery Point to National Fuel Gas located in the North Nineveh Sub Area of the McQuay System.

Net Acres ” means, with respect to the Marcellus Formation or the Utica Formation, as applicable, (a) with respect to any oil and gas lease in which Shipper and/or any of its Affiliates has an interest, (i) the number of gross acres in the lands covered by such oil and gas lease, multiplied by (ii) the undivided percentage interest in oil, gas and other minerals covered by such oil and gas lease, multiplied by (iii) Shipper’s and/or its Affiliates’ working interests in such oil and gas lease, and (b) with respect to any mineral fee interest of Shippers and/or its Affiliates, (i) the number of gross acres in the lands covered by such mineral fee interest, multiplied by (ii) the undivided percentage interest of Shipper and/or its Affiliates in oil, gas and other minerals in such lands.

New Interest ” has the meaning given to it in Section  2.5(c) .

New Location ” has the meaning given to it in Section  3.2(c) .

NGL ” means natural gas liquids.

Noble Gas Gathering Agreement ” means that certain First Amended and Restated Gathering Agreement, dated as of December 1, 2016, by and between Noble Energy, Inc. and Gatherer.

Non-Compression Request Receipt Point ” has the meaning given to it in Section  6.4(f) .

Non-Operated Well ” means, as of any time, an Existing Well or a Planned Well not operated by Shipper or any of its Affiliates as of such time.

North Nineveh Station Start Date ” has the meaning given to it in Section  4.5 .

North Nineveh Sub Area ” means the area identified on the McQuay Map as the “North Nineveh Sub Area.”

OFO means an operational flow order or similar order respecting operating conditions issued by a Downstream Pipeline.

On-Line Date ” means, with respect to any Well, the date upon which Gatherer has completed its facilities necessary to commence the performance of Gathering Services (other than the delivery of Fuel Gas) with respect to such Well, and is ready to commence the performance of such Gathering Services.

 

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On-Line Deadline ” means (a) with respect to any Planned Well which is the subject of a Tie-In Obligation, the later of (i) the Target On-Line Date for such Planned Well, or (ii) the date on which (A) such Planned Well has been drilled and completed and (B) all Shipper’s Facilities necessary to deliver Dedicated Production from such Planned Well to the applicable Receipt Point are complete and ready to be connected to such Receipt Point, and (b) with respect to any Existing Well which is the subject of a Tie-In Obligation, the later of (i) the Target On-Line Date for such Existing Well or (ii) the date on which all Shipper’s Facilities necessary to deliver Dedicated Production from such Existing Well to the applicable Receipt Point are complete and ready to be connected to such Receipt Point.

On-Line Delay Days ” with respect to any Existing Well or Planned Well which is the subject of a Tie-In Obligation, means the number of Days from the On-Line Deadline for such Existing Well or Planned Well to the On-Line Date for such Existing Well or Planned Well.

OpCo ” has the meaning given to it in the recitals hereof.

Operated Well ” means, as of any time, an Existing Well or Planned Well operated by Shipper or any of its Affiliates as of such time.

Operating Terms and Conditions ” means those additional terms and conditions applicable to Gathering Services provided under this Agreement, as set forth in Exhibit A .

Original Agreement has the meaning given to it in the recitals hereof.

Original DevCos ” has the meaning given it in the recitals hereof.

Original Effective Date has the meaning given to it in the recitals hereof.

Original Location ” means with respect to each TIO Planned Well Pad, the location of the center of such TIO Planned Well Pad as reflected in the original Tie-In Obligation for the first Planned Well to be located on such TIO Planned Well Pad.

Other Production ” has the meaning given to it in Section  5.2(f) .

Outbound Interests ” has the meaning given to it in Section  2.5(c) .

Party ” or “ Parties ” has the meaning given to it in the Preamble.

PDA ” means, with respect to a Receipt Point or Delivery Point, a predetermined allocation directive from, or agreement with, Shipper.

Person ” means any individual, corporation, company, partnership, limited partnership, limited liability company, trust, estate, Governmental Authority or any other entity.

Planned Well ” means, as of any time, a Well that is not an Existing Well as of such time but that is anticipated to produce Dedicated Production.

Planned Well Pad ” means, as of any time, a Well Pad that is not an Existing Well Pad as of such time.

Pressure Overage Percentage ” means an amount equal to the quotient of (a) the difference between (i) the Average Pressure of a Receipt Point for the applicable Day and (ii) the Target Pressure for such Receipt Point for such Day, divided by (b) the Target Pressure for such Receipt Point for such Day.

 

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Pressure Service ” means, Tier 1 Pressure Service, Tier 2 Pressure Service and Free Flow Pressure.

Prime Rate ” means the rate publicly announced by JPMorgan Chase Bank, N.A., New York, New York (or any successor to such bank) from time to time as its prime rate.

Prior Signatories ” has the meaning given to it in Section  16.14 .

Priority One Dedicated Production ” means all Dedicated Production.

Priority One Service ” means with respect to each Individual System, that type of service that has the highest priority call on capacity of all or any relevant portion of such Individual System, which service shall not be subject to interruption or curtailment except by reason of an event of Force Majeure (including a deemed event of Force Majeure under Section  11.3 ).

Priority Two Service ” means with respect to each Individual System, that type of service that has the second highest priority call on capacity of all or any relevant portion of such Individual System second only to Priority One Service, which service shall not be subject to interruption or curtailment except by reason of an event of Force Majeure (including a deemed event of Force Majeure under Section  11.3 ) and which service in any event has a higher priority than Gathering Services on an Interruptible Basis and any other permissible level of service established by Gatherer pursuant to the terms and conditions of this Agreement (other than Priority One Service).

Processing Plant ” means with respect to each Individual System a Gas processing facility downstream of any Delivery Point on such Individual System (i) to which Shipper has dedicated, or in the future elects to dedicate, Dedicated Gas gathered on such Individual System for processing or (ii) at which Shipper has arranged for such Gas to be processed prior to delivery to a Downstream Pipeline.

Proposal ” has the meaning given to it in Section  3.2(b)(ii) .

psi ” means pounds per square inch.

Psia ” means pounds per square inch absolute.

Psig ” means pounds per square inch gauge.

Purchase Terms ” means, with respect to an Individual System, that Gatherer shall sell, assign, transfer and convey, and Shipper shall purchase, assume and receive, all of Gatherer’s right, title and interest in such Individual System, together with all of Gatherer’s right, title and interest in all contracts (including Gas purchase and/or gathering contracts) and books and records associated with such Individual System, (a) on an AS IS – WHERE IS basis with all faults and without any warranties or representations of any kind, and (b) at a purchase price equal to the depreciated book value of such Individual System as reflected on Gatherer’s books

 

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(before any impairments), as determined in accordance with United States generally accepted accounting principles. In addition, effective as of the effective date of such sale, Shipper shall assume all liabilities and obligations, past, present and future, whether known or unknown, of Gatherer associated with such Individual System and/or such contracts, except (i) for income taxes and (ii) costs and expenses incurred in the normal and customary course of business of the Individual System which are owed (as of the effective date of such sale) but have not yet been paid. Further, Gatherer shall retain all revenues and refunds, and rights to revenues and/or refunds, associated with such Individual System and the period on or before the effective date of such sale, and Shipper shall receive all revenues and/or refunds, and rights to revenues and/or refunds, associated with such Individual System and the period after the effective date of such sale. In the event any of the (A) rights of way or other real property interests or permits which are part of the Individual System, (B) contracts to be included in the sale of such Individual System as set forth above and/or (C) books and records associated with the Individual System, in each case, pertain to more than just such Individual System, only those portions of such real property interests, permits, contracts and books and records associated with such Individual System will be included in such sale. Notwithstanding the foregoing, Gatherer shall have the right to retain copies of all of the books and records associated with such Individual System.

Quarter ” means a period of three (3) consecutive Months, with the first Quarter commencing on the first Day of each January, and each subsequent Quarter commencing at the end of the previous Quarter.

Receipt Point ” means with respect to each Individual System any of the connecting flanges on such Individual System located at or nearby a Well Pad (which flanges, in some cases, has a Measurement Device) where Shipper’s Facilities are connected to such Individual System. The Receipt Points for each Individual System are described on the Individual System Exhibits, which Exhibits shall be updated from time to time by Gatherer as additional Receipt Point(s) are added to such Individual System in accordance with the other provisions of this Agreement. In addition, with respect to any Gas delivered by Shipper for blending on such Individual System pursuant to Section  3.6 , the Receipt Point on such Individual System shall also be the Receipt Point for such blending Gas designated by Shipper from time to time in accordance with Section  3.6 .

Relocation Costs Differential ” means, with respect to the applicable TIO Planned Well Pad, the difference between (a) the estimated Connection Costs that would have been incurred by Gatherer to extend and connect the applicable Individual System to the Original Location for such TIO Planned Well Pad, as such estimated Connection Costs are estimated in good faith and reflected in Gatherer’s AFE applicable thereto (as contained in Gatherer’s Relocation Response), and (b) the estimated Connection Costs that will be incurred by Gatherer to extend and connect the applicable Individual System to the New Location for such TIO Planned Well Pad, as such estimated Connection Costs are estimated in good faith and reflected in Gatherer’s AFE applicable thereto (as contained in Gatherer’s Relocation Response).

Relocation Pressure Issue ” means that, with respect to any Relocation Request, Gatherer reasonably believes that the New Location will cause it to be unable to provide the Free Flow Target Pressure at the Receipt Point for the applicable TIO Planned Well Pad.

 

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Relocation Request ” has the meaning given to it in Section  3.2(c) .

Relocation Response ” has the meaning given to it in Section  3.2(c)(i) .

Relocation Target On-Line Date ” has the meaning given to it in Section  3.2(c)(ii) .

Request ” has the meaning given to it in Section  3.2(b)(i) .

Reservation Amount ” has the meaning given to it in Section  4.1(a) .

Respondent ” has the meaning given to it in Section  10.1(b)(ii) .

Restart Connection Notice ” has the meaning given it in Section  3.2(f)(ii) .

Restart Target On-Line Date ” has the meaning given it in Section  3.2(f)(ii) .

ROFO Area ” means the area described on Exhibit G .

ROFO Notice ” has the meaning given to it in Section  4.9(a) .

ROFO Offer ” has the meaning given to it in Section  4.9(b) .

ROFO Properties ” means (a) with respect to Gas Services, Shipper’s and its Affiliates’ interests in the oil and/or gas leases, mineral interests and other similar interests that as of the Execution Date are, or that after the Execution Date become, owned directly or indirectly (including through the acquisition of Control of another person) by Shipper and/or its Affiliates in the ROFO Area, in each case, to the extent and only to the extent that such oil and/or gas leases, mineral interests and other similar interests, cover and relate to the Marcellus Formation, and (b) with respect to Condensate Services, Shipper’s and its Affiliates’ interests in the oil and/or gas leases, mineral interests and other similar interests that as of the Execution Date are, or that after the Execution Date become, owned directly or indirectly (including through the acquisition of Control of another person) by Shipper and/or any of its Affiliates in the ROFO Area, in each case, to the extent and only to the extent that such oil and/or gas leases, mineral interests and other similar interests cover and relate to the Marcellus Formation.

ROW Notice ” has the meaning given to it in Section  11.4 .

Scheduled Maintenance ” has the meaning given to it in Section  11.3 .

Scheduled Tier 1 Period ” means, with respect to the McQuay System or the Wadestown System, as applicable, the period of time commencing on the Execution Date and ending on that Target Compression Date specified on Exhibit M , for Tier 1 Pressure Service for a Planned Well for such Individual System, which is the furthest in time from the Execution Date, subject to adjustment of the Target Compression Dates on Exhibit M as provided in this Agreement.

Scheduled Tier 1 Start Date ” means, with respect to any Planned Well Pad identified on Exhibit M for the McQuay System or the Wadestown System, as applicable, that Target Compression Date specified on Exhibit M , for Tier 1 Pressure Service for a Planned Well on such Planned Well Pad, which is the earliest in time after the Execution Date, subject to adjustment of the Target Compression Dates on Exhibit M as provided in this Agreement.

 

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Scheduled Tier 2 Period ” means, with respect to the McQuay System or the Wadestown System, as applicable, the period of time commencing on the Execution Date and ending on that Target Compression Date specified on Exhibit M , for Tier 2 Pressure Service for a Planned Well for such Individual System, which is the furthest in time from the Execution Date, subject to adjustment of the Target Compression Dates on Exhibit M as provided in this Agreement.

Scheduled Tier 2 Start Date ” means, with respect to any Planned Well Pad identified on Exhibit M for the McQuay System or the Wadestown System, as applicable, that Target Compression Date specified on Exhibit M , for Tier 2 Pressure Service for a Planned Well on such Planned Well Pad, which is the earliest in time after the Execution Date, subject to adjustment of the Target Compression Dates on Exhibit M as provided in this Agreement.

Shared Priority Deadline ” means December 1, 2018.

Shipper ” has the meaning given to it in the preamble of this Agreement.

Shipper Adverse Pressure Issue ” has the meaning given to it in Section  3.2(d)(ii)(C) .

Shipper Group ” has the meaning given to it in Section  13.3 .

Shipper Meters ” has the meaning given to it in Section  1.4(a) of Exhibit A .

Shipper Requested Design Capacity ” has the meaning given to it in Section  3.9 .

Shipper’s Facilities ” means the assets and properties of Shipper and/or its Affiliates upstream of a Receipt Point, including Wells and Well Pads upstream of a Receipt Point.

Shipper’s Supplemental Notice ” has the meaning given to it in Section  3.2(a)(iii) .

Shirley Penns Area means an area within a three mile radius of the then existing Shirley Penns System; provided, however, the initial Shirley Penns Area is as set forth on Exhibit B-13(a) , and provided further that for purposes of determining the Shirley Penns Area, the then existing Shirley Penns System shall not include (a) any portion of the Shirley Penns System through which Dedicated Gas has not, at any time, flowed or (b) any part of the Shirley Penns System that is downstream of any centralized compression or dehydration station on the Shirley Penns System. For the avoidance of doubt, in no event shall the Shirley Penns Area ever extend beyond the Dedication Area.

Shirley Penns System ” means that certain existing Gathering System generally depicted on Exhibit B-13(a) , as such Gathering System may hereafter be modified or extended from time to time.

Standard Cubic Foot ” means that quantity of Gas that occupies one cubic foot of space when held at a base temperature of 60 degrees Fahrenheit and a pressure of 14.73 Psia.

 

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Statement Deadline ” has the meaning given to it in Section  9.1 .

Stop Connection Notice ” has the meaning given to it in Section  3.2(f)(ii) .

Subject ROFO Properties ” has the meaning given to it in Section  4.9(b) .

System Area ” means each of the ACAA Area, the Crawford Area, the Majorsville Area, the Mamont Area, the McQuay Area, the Shirley Penns Area and the Wadestown Area. In the determination of each System Area at any given point in time, if Gatherer (i) has received a Tie-In Request under which Gatherer is obligated to extend the applicable Individual System to a Receipt Point for an Existing Well or Planned Well or is subject to a Deemed Tie-In Request under which Gatherer is obligated to extend the applicable Individual System to a Receipt Point for a Planned Well in the next 24 Months, (ii) is otherwise obligated under this Agreement at that time to extend the applicable Individual System to a Receipt Point for an Existing Well or Planned Well or (iii) has agreed in writing to extend the applicable Individual System to a Receipt Point for an Existing Well or Planned Well, then such System Area shall also include a three mile radius of such Existing Well or Planned Well, but in no event shall any System Area ever extend beyond the Dedication Area.

System Distance ” means, with respect to any Dedicated Property or New Interest, the shortest distance between any point on the perimeter of such Dedicated Property or New Interest and any point on any Individual System.

System Receipt Point ” has the meaning given to it in Section  1.8(a)(ii) of Exhibit A .

Tap ” means a point on an Individual System downstream of all compression, dehydration, treatment and other similar facilities but upstream of the applicable Delivery Point.

Target Compression Date ” means, (a) for any Receipt Point and category of Compression Services for any Planned Well identified on Exhibit M for the McQuay System or the Wadestown System, as applicable, the On-Line Deadline for such Planned Well plus a number of Days equal to the number of Days identified on Exhibit M for such Compression Services (under the headings “Days Prior to Tier 1” or “Days Prior to Tier 2,” as applicable) for such Planned Well, (b) for any Receipt Point and category of Compression Services for any Execution Date Well identified on Exhibit B-2 , the Target Tier 1 Compression Date or Target Tier 2 Compression Date, as applicable, for such Execution Date Well and (c) for any Receipt Point that is the subject of a Compression Request, the date upon which Shipper desires the applicable Compression Services to be provided, which date will be no sooner than the first anniversary of the date that Shipper delivers such Compression Request to Gatherer, provided that if Gatherer determines in good faith that (i) it will need to obtain a new permit or amend an existing permit at an existing compression station that will serve the Receipt Point to comply with such Compression Request, or (ii) it will need to install a new compression station that will serve the Receipt Point to comply with such Compression Request, the Target Compression Date for such Compression Request will be no sooner than the second anniversary of the date that Shipper delivers such Compression Request to Gatherer. However, the Target Compression Date will be extended by one Day for each Day of delay in any of the activities required to provide the applicable Compression Service, in each case that is attributable to Force Majeure.

 

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Target Fuel Gas Date ” means (a) for any Planned Well that is the subject of a Tie-In Request that is a Tie-In Obligation, the estimated date as set forth in such Tie-In Request which date shall be 45 Days prior to the estimated date on which the drilling rig which will drill such Planned Well will be on the drill site and ready to commence drilling of such Planned Well, which date shall be no sooner than the second anniversary of the date that Shipper delivers such Tie-In Request to Gatherer, or (b) for any Planned Well that is the subject of a Deemed Tie-In Request, the date specified under the heading “Target Fuel Gas Date” on Exhibit M for such Planned Well. For the avoidance of doubt, “ready to commence drilling” means that the drilling rig is actually prepared to begin drilling of the wellbore of such Planned Well. If the Target On-Line Date for any Planned Well which is the subject of a Tie-In Obligation is adjusted herein, the Target Fuel Gas Date for such Planned Well, if any, will be automatically changed as necessary to keep the same number of Days between such Target Fuel Gas Date and the adjusted Target On-Line Date as existed in such Tie-In Obligation between the Target Fuel Gas Date and the Target On-Line Date initially specified in such Tie-In Obligation for such Planned Well. Further, in all cases, the Target Fuel Gas Date will be extended by one Day for each Day of delay in any of the activities required to complete the extension and connection of the Individual System to the Fuel Gas Point for the Planned Well to which such Target Fuel Gas Date applies, in each case that is attributable to Force Majeure.

Target On-Line Date ” means (a) for any Existing Well or Planned Well that is the subject of a Tie-In Request that is a Tie-In Obligation, the estimated date as set forth in such Tie-In Request that such Well will be ready to deliver Dedicated Production to the Receipt Point for such Well, which date shall be no sooner than the second anniversary of the date that Shipper delivers such Tie-In Request to Gatherer, or (b) for any Planned Well that is the subject of a Deemed Tie-In Request, the date specified under the heading “Target On-Line Date” on the Exhibit M for such Planned Well. However, the Target On-Line Date will be extended by one Day for each Day of delay in any of the activities required to complete the extension and connection and/or expansion, as applicable, of the Individual System to the Receipt Point to which such Existing Well or Planned Well is to be connected, in each case that is attributable to Force Majeure.

Target Pressure ” has the meaning given to it in Section  5.2(c) .

Taxes ” means all taxes, assessments, allowances, fees, levies, penalties, interest, fines, charges or costs imposed by or incurred in response to any Laws (whether now existing or hereafter revised or adopted), including to comply with any greenhouse gas or other emissions limitations.

Tender ” means (a) with respect to Gas, the act of Shipper’s making Gas available or causing Gas to be made available to an Individual System at a Receipt Point on such Individual System and (b) with respect to Liquid Condensate, the act of Shipper’s injection or causing the Liquid Condensate to be injected into an Individual System at a Receipt Point on such Individual System; provided Liquid Condensate will only be Tendered at Receipt Points on those Individual Systems where Gatherer is providing Condensate Services (i.e., the ACAA System and the Majorsville System). “Tendered” shall have the correlative meaning.

Term ” has the meaning given to it in Section  7.1 .

 

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Thermal Content ” means, for Gas, the product of the measured volume in MSCFs multiplied by the Gross Heating Value per MSCF, adjusted to the same pressure base and expressed in MMBtus; and for a liquid, the product of the measured volume in gallons multiplied by the Gross Heating Value per Gallon determined in accordance with the GPA 2145-09 Table of Physical Properties for Hydrocarbons and GPA 8173 Method for Converting Mass of Natural Gas Liquids and Vapors to Equivalent Liquid Volumes, in each case as revised from time to time.

Third Anniversary Deadline ” has the meaning given it in Section  3.2(f)(ii) .

Third Party ” means any Person other than a Party to this Agreement or any Affiliate of a Party to this Agreement.

Third Party Adverse Pressure Issue ” has the meaning given to it in Section  3.2(d)(ii) .

Third Party Gas ” means Gas owned by a Person other than Shipper or any of its Affiliates.

Third Party Liquid Condensate ” means Liquid Condensate owned by a Person other than Shipper or any of its Affiliates.

Tie-In Obligation ” means (a) with respect to an Existing Well, the Tie-In Request for such Existing Well, if Gatherer is obligated hereunder to extend an Individual System to the Receipt Point for such Existing Well, or (b) with respect to a Planned Well, (i) the Deemed Tie-In Request for such Planned Well, or (ii) the Tie-In Request for such Planned Well, if Gatherer is obligated hereunder to extend an Individual System to the Receipt Point for such Planned Well, as applicable.

Tie-In Request has the meaning given to it in Section  3.2(a)(iv) .

Tier 1 Compression Fee ” means a fee in cents per MMBtu for Tier 1 Pressure Service as set forth on the Individual System Exhibits for the applicable Individual System.

Tier 1 Pressure Service ” means that Gatherer shall provide compression to receive Dedicated Production delivered at a Receipt Point, such that the Average Pressure at such Receipt Point during a Day is not greater than 600 Psig.

Tier 2 Compression Fee ” means a fee in cents per MMBtu for Tier 2 Pressure Service as set forth on the Individual System Exhibits for the applicable Individual System.

Tier 2 Pressure Service ” means that Gatherer shall provide compression to receive Dedicated Production delivered at a Receipt Point, such that the Average Pressure at such Receipt Point during a Day is not greater than 300 Psig.

TIO Planned Well Pad ” has the meaning given to it in Section  3.2(c) .

Tribunal ” has the meaning given to it in Section  10.1(b)(ii) .

 

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uneconomic ” has the meaning given to it in Section  2.5(d)(iv) .

Utica Formation ” means, (a) in Allegheny, Armstrong, Beaver, Butler, Cambria, Cameron, Clarion, Clearfield, Clinton, Elk, Forest, Indiana, Jefferson, Lawrence, Mercer, Venango and Westmoreland Counties in Pennsylvania, specifically from the top of the Gaut-4IHSU well (API #37-129-28877), drilled by Consol Energy in Westmoreland County, Pennsylvania, from a true vertical depth of 13,103’ KB, to the top of the Trenton formation at a true vertical depth of 13,386’ KB as illustrated in the log attached on Exhibit B-17 ; (b) in Fayette, Greene, Somerset and Washington Counties in Pennsylvania and in Brooke and Ohio Counties in West Virginia, specifically from the top of the GH-AHSU well (API #37-059-26728), drilled by Consol Energy in Greene County, Pennsylvania, from a true vertical depth of 13,295’ KB, to the top of the Trenton formation at a true vertical depth of 13,551’ KB as illustrated in the log attached on Exhibit B-17 ; and (c) in Barbour, Braxton, Calhoun, Clay, Doddridge, Gilmer, Grant, Harrison, Jackson, Lewis, Marion, Marshall, Monongalia, Nicholas, Preston, Randolph, Ritchie, Roane, Taylor, Tucker, Tyler, Upshur, Webster, Wetzel, Wirt and Wood Counties in West Virginia, specifically from the top of the John Burley #1 well (API #47-051-00539), logged by Occidental Petroleum in Marshall County, West Virginia, from a true vertical depth of 12,577’ KB, to the top of the Trenton formation at a true vertical depth of 12,791’ KB as illustrated in the log attached on Exhibit B-17 .

Wadestown Area ” means an area within a three mile radius of the then existing Wadestown System; provided, however, the initial Wadestown Area is as set forth on Exhibit B-14(a) , and provided further that for purposes of determining the Wadestown Area, (a) the then existing Wadestown System shall not include (i) any portion of the Wadestown System through which Dedicated Gas has not, at any time, flowed or (ii) any part of the Wadestown System that is downstream of any centralized compression or dehydration station on the Wadestown System and (b) at no time shall the Wadestown Area be less than, at least the area within a three mile radius of the Wadestown System as depicted on Exhibit B-14(a) . For the avoidance of doubt, in no event shall the Wadestown Area ever extend beyond the Dedication Area.

Wadestown Project Plan ” means Gatherer’s plans for the development of the Wadestown System.

Wadestown System means that certain Gathering System which, subject to Shipper drilling and completing Planned Wells on the Planned Well Pads described on Exhibit M , for the Wadestown Area, in accordance with this Agreement, Gatherer proposes to initially construct within the initial Wadestown Area described on Exhibit B-14(a) , as such Gathering System (once constructed) may thereafter be modified or extended from time to time.

Well ” means a well, whether now existing or hereafter drilled, for the production of hydrocarbons in which Shipper and/or any of its Affiliates owns an interest that is either producing or is capable of producing Dedicated Production and that has been horizontally drilled and hydraulically stimulated in the Marcellus Formation or the Utica Formation, as applicable.

Well Completion Requirements ” has the meaning given it in Section  3.2(f)(i) .

Well Pad ” means the surface installation on which one or more Wells are located.

 

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Wet Gas ” means Gas Tendered by Shipper hereunder that is directly delivered or will be delivered for NGL extraction.

Year ” means a period of time on and after January 1 of a calendar year through and including December 31 of the same calendar year; provided that the last Year shall commence on January 1 of the calendar year and end on the Day on which this Agreement terminates.

Section 1.2 Other Terms . Other capitalized terms used in this Agreement and not defined in Section  1.1 above have the meanings ascribed to them throughout this Agreement.

Section 1.3 References and Rules of Construction . All references in this Agreement to Exhibits, Articles, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Appendices, Articles, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections and other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Article, Section, subsection or other subdivision unless expressly so limited. The word “including” (in its various forms) means “including without limitation.” All references to “$” or “dollars” shall be deemed references to United States dollars. Each accounting term not defined herein will have the meaning given to it under generally accepted accounting principles. Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. References to any Law means such Law as it may be amended from time to time. Unless indicated otherwise, references to any contract or agreement means such contract or agreement as amended from time to time. All references to “Shipper”, “Shipper’s Affiliates”, “Gatherer” and “Gatherer’s Affiliates,” or, in each case, words of similar import, shall also be deemed a reference to any of their respective successors and/or assigns.

ARTICLE 2

DEDICATION OF PRODUCTION

Section 2.1 Shipper s Dedication . Subject to the provisions of Section  2.2 through Section  2.5 , Shipper:

(a) exclusively dedicates to this Agreement the Dedicated Properties and commits to deliver to Gatherer under this Agreement, as and when produced, all of the (i) Gas owned by Shipper and/or its Affiliates produced during the Term from the Dedicated Properties, (ii) Liquid Condensate owned by Shipper and/or its Affiliates produced during the Term from the Dedicated Properties and that are located in the ACAA Area and/or the Majorsville Area (and not any other Dedicated Properties) and (iii) Gas owned by Shipper and/or its Affiliates produced during the Term from the Legacy Wells;

 

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(b) commits to deliver to Gatherer under this Agreement, as and when produced (i) all of the Third Party Gas under the Control of Shipper and/or its Affiliates produced during the Term from Wells (whether now existing or hereafter drilled) now or hereafter operated by Shipper or any of its Affiliates, (ii) all of the Third Party Liquid Condensate under the Control of Shipper and/or its Affiliates produced during the Term from Wells (whether now existing or hereafter drilled) now or hereafter operated by Shipper or any of its Affiliates located in the ACAA Area and/or the Majorsville Area (and not any other Dedicated Properties) and (iii) all of the Third Party Gas under the Control of Shipper produced during the Term from the Legacy Wells; and

(c) except as provided elsewhere in this Agreement, agrees not to deliver, and to cause its Affiliates not to deliver, any Dedicated Production to any other gatherer, purchaser or marketer or other Person prior to delivery to Gatherer at the Receipt Points.

Section 2.2 Third Party s Dedication . Gatherer and Shipper may from time to time mutually agree in writing to permit Third Parties to gather Dedicated Production; provided, however, that such mutual agreement will not result in any release of such Dedicated Production from dedication under this Agreement except to the extent the Parties expressly so agree in writing.

Section 2.3 Conflicting Dedications . Notwithstanding anything in this Agreement to the contrary, Shipper shall have the right to comply with each of the Conflicting Dedications set forth in Exhibit F and any other Conflicting Dedication applicable as of the date of acquisition of the applicable Dedicated Property (but not entered into in connection with such acquisition, provided that assumption of an existing dedication in an acquisition shall not be deemed to be entered into in connection with such acquisition) to any oil and/or gas leases, mineral interests and other similar interests (a) acquired by Shipper or any of its Affiliates after the Execution Date and (b) which are dedicated under this Agreement (but not any entered into in connection with such acquisition, provided that assumption of an existing dedication in an acquisition shall not be deemed to be entered into in connection with such acquisition); provided, however, that Shipper shall have the right to comply with the applicable Conflicting Dedication only until the first Day of the Month following the termination by Shipper of such Conflicting Dedication. Shipper shall have the right to extend any Conflicting Dedication beyond the primary term of such Conflicting Dedication in accordance with the terms of the agreement providing for such Conflicting Dedication unless Gatherer provides written notice to Shipper prior to the expiration of such primary term of Gatherer’s irrevocable election to gather all Dedicated Production subject to such Conflicting Dedication. As of the Execution Date, Shipper represents that, except as set forth in Exhibit F , Dedicated Production from Dedicated Properties owned by Shipper and/or its Affiliates as of the Execution Date is not subject to any other Conflicting Dedication.

Section 2.4 Shipper s Reservations . Shipper reserves the following rights respecting Dedicated Production for itself:

(a) to operate (or cause to be operated) Wells producing Dedicated Production in its sole discretion, including the right (but not the obligation) to drill new Wells, to repair and rework old Wells, temporarily shut in Wells, renew or extend, in whole or in part, any oil and gas lease or term mineral interest, and to cease production from or abandon any Well or surrender any such oil and gas lease, in whole or in part, when no longer deemed by Shipper to be capable of producing Gas or Liquid Condensate in paying quantities under normal methods of operation;

 

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(b) to use Dedicated Production prior to delivery to Gatherer at the Receipt Points, or after receipt from Gatherer at the Delivery Points, for lease operations (including reservoir or production pressure maintenance), drilling operations, hydraulic fracturing operations and water treatment facility operations, in each case relating to any properties of Shipper or its Affiliates, that are Dedicated Properties or, if not Dedicated Properties, relating to such operations on the same Well Pad from which such Dedicated Production was produced;

(c) to deliver or furnish Dedicated Production to Shipper’s lessors of the Dedicated Properties with respect to such Dedicated Production as is required to satisfy the terms of the applicable oil and gas leases; provided neither Shipper nor any of its Affiliates shall amend or modify any such leases to increase the quantities of Dedicated Production required to be delivered under such oil and gas leases;

(d) the sole and exclusive right to process or arrange for the processing (including for purposes of liquids extraction) of such Dedicated Production; provided however that any processing conducted prior to the delivery of Dedicated Production to a Receipt Point shall be conducted using only mechanical, ambient temperature equipment located at surface production facilities or field compression facilities in a System Area;

(e) to pool, communitize or unitize Shipper’s and its Affiliates’ interests with respect to Dedicated Production; provided that Shipper’s and its Affiliates’ share of Gas (including Drip Condensate and Liquid Condensate) produced from such pooled, communitized or unitized interests shall be committed and dedicated under this Agreement;

(f) to retain and not deliver to the applicable Individual System (i) all Dedicated Liquid Condensate that is in excess of the amount of Liquid Condensate with Priority One Service that is capable of being gathered, and, as applicable, collected, stored and/or stabilized in the facilities comprising the applicable Individual System (i.e., the ACAA System or the Majorsville System); (ii) all Dedicated Liquid Condensate that is caught prior to delivery at the Receipt Points on the ACAA System or the Majorsville System during flowback operations with respect to any Well or otherwise related to mechanical failures of liquid separation on the Well Pad (provided that Shipper shall use commercially reasonable efforts to mitigate any such mechanical failures that occur); and (iii) all Dedicated Liquid Condensate that is extracted at the Well Pad prior to delivery at the Receipt Points in the ACAA System or the Majorsville System as a result of the inability of the applicable Individual System to provide Condensate Services for such Dedicated Liquid Condensate;

(g) to retain and not deliver to the applicable Individual System all Gas and Liquid Condensate produced from those wells set forth on Exhibit J-1 ;

(h) with respect to any Existing Well and any Non-Operated Well with respect to which Gatherer exercises its right to provide Gathering Services pursuant to Section  3.2 , until such Existing Well or Non-Operated Well, as applicable, is connected to the applicable Individual System and the applicable Individual System facilities are completed and ready to provide Gathering Services, to temporarily connect such Existing Well or Non-Operated Well, as applicable, into other gathering systems until the On-Line Date for such Existing Well or Non-Operated Well, as applicable;

 

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(i) if Gatherer has failed to connect any Operated Well it is obligated to connect under Section  3.2(a) by the applicable On-Line Deadline for such Operated Well, to temporarily connect such Well into other gathering systems until the On-Line Date for such Operated Well; and

(j) to deliver or furnish Dedicated Production from Wells on Well Pad NV 57 to end users if such end users’ receipt of such Dedicated Production is at a receipt point on Shipper’s gathering system prior to or at a designated Receipt Point.

Section 2.5 Releases from Dedication .

(a) Permanent Releases . Shipper agrees that, except as otherwise expressly provided in this Agreement, including in Section  2.5(c) and Section  3.2 , for so long as Shipper or one or more of its Affiliates directly or indirectly Controls CONE Midstream GP LLC, Shipper shall have no right to receive a permanent release with respect to any of the Dedicated Properties or the Dedicated Production produced therefrom unless otherwise mutually agreed by Shipper and Gatherer in writing.

(b) Temporary Releases . Following the connection of an Individual System to a Receipt Point at which Shipper is to deliver Dedicated Production from a Well, if Shipper Tenders Dedicated Production from such Well at such Receipt Point in compliance with the terms of this Agreement and Gatherer fails for any reason (including Force Majeure declared by Gatherer, but excluding any deemed events of Force Majeure under Section  4.7 ) to take all of the Dedicated Production from such Well which Shipper so Tenders at such Receipt Point, Shipper shall have the right to a temporary release of that portion of such Dedicated Production which Gatherer fails to take for as long as Gatherer fails to take such Dedicated Production; provided, however, if Gatherer fails to take such Dedicated Production for a period of more than five consecutive Days or more than seven Days during any consecutive 14 Day period, then, at Shipper’s written request, the volumes of such Dedicated Production which Gatherer so failed to take shall be temporarily released from dedication under this Agreement for a period commencing as of the date of such request and ending as of the first Day of the Month 30 Days following Shipper’s receipt of written notice from Gatherer that it is ready to commence receipt of all such Dedicated Production.

(c) Exchange of Acreage . In the event that Shipper or any of its Affiliates proposes to enter into an agreement to exchange certain Dedicated Properties within the Dedication Area (but excluding Existing Wells) (“ Outbound Interests ”) for other interests not owned by Shipper or any of its Affiliates in leases and/or lands in the Dedication Area and in the same formation as the Outbound Interests and not otherwise dedicated to Gatherer under any then-existing agreement (the “ New Interests ”), Gatherer, in return for the New Interests being dedicated under this Agreement, shall release the Outbound Interests from the dedication to this Agreement if the following requirements are met:

 

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(i) Equivalent Quantity : The number of Net Acres of Outbound Interests must be less than or equal to the number of Net Acres of New Interests, provided, however, that if such New Interests are located in a System Area and included in a Drilling Unit for a Planned Well located on a Well Pad or Planned Well Pad identified on Exhibit M or is subject to a Tie-In Obligation, and the Outbound Interests are not, and are not expected to be, included in a Drilling Unit for a Planned Well identified on Exhibit M or subject to a Tie-In Obligation, then the number of Net Acres of New Interests must be greater than or equal to 75% of the number of Net Acres of Outbound Interests;

(ii) Equivalent Location : One of the following must be true:

(A) the Outbound Interests and the New Interests are located in the same System Area;

(B) the Outbound Interests and New Interests are each located in System Areas, but not the same System Area, and the reserve quality of the Outbound Interests is reasonably similar to the reserve quality of the New Interests;

(C) the Outbound Interests are located outside of a System Area, and the New Interests are located inside of a System Area; or

(D) the Outbound Interests and the New Interests are both located outside of all System Areas, and the System Distance of the New Interests is not more than the System Distance of the Outbound Interests; and

(iii) DevCo Exchange : Any exchange of acreage in which the Outbound Interests are located in the DevCo I Area and the New Interests are located in the DevCo III Area shall require the written consent of Gatherer prior to such Outbound Interests being released hereunder.

(d) Uneconomic Operation of an Individual System.

(i) If, after the tenth anniversary of the Execution Date, an Individual System is “uneconomic” (as hereafter defined) for any three consecutive Months, Gatherer shall have the right to upon written notice to Shipper (which notice must include reasonable supporting documentation) to initiate the procedures described below in this Section  2.5(d) . All information provided in and/or with such written notice shall be subject to Section  16.12 of this Agreement. During the pendency of such procedures, Gatherer shall continue to provide the Gathering Services hereunder on such Individual System. In the event Shipper disputes Gatherer’s assertion that an Individual System is uneconomic (a “ Gatherer Uneconomic Condition ”), determination of whether or not such Gatherer Uneconomic Condition exists will be exclusively and finally resolved pursuant to the procedure set forth in Section  2.5(d)(iii) below, upon written request by Shipper delivered to Gatherer within 15 Days following Shipper’s receipt of Gatherer’s uneconomic notice (which notice must include Gatherer’s reasonable supporting documentation). In the event Shipper does not dispute such assertion of Gatherer within such 15-Day period, Shipper shall be deemed to have waived the right to dispute that a Gatherer Uneconomic

 

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Condition with respect to the applicable Individual System exists, and Shipper and Gatherer shall promptly negotiate in good faith regarding such notice in an effort to mutually agree on increases to the Fees to be charged for Gathering Services on such Individual System so that such Individual System is no longer uneconomic (an “ Economic Fee Adjustment ”). If the Parties mutually agree on an Economic Fee Adjustment for the provision of Gathering Services hereunder on such Individual System, they shall promptly amend this Agreement to reflect such Economic Fee Adjustment, with such Economic Fee Adjustment to be effective as of the first Day of the first Month after Shipper’s receipt of Gatherer’s uneconomic notice. However, if within 30 Days after the later of (y) Shipper’s receipt of Gatherer’s uneconomic notice or (z) the Expert’s determination under Section  2.5(d)(iii) below that the Gatherer Uneconomic Condition exists (if Shipper disputes the existence of such Gatherer Uneconomic Condition as provided herein), the Parties have not mutually agreed on an Economic Fee Adjustment, determination of the Economic Fee Adjustment will be exclusively and finally resolved pursuant to the procedure set forth in Section  2.5(d)(iii) below, upon written request by either Party.

(ii) The procedure for determining whether or not a Gatherer Uneconomic Condition exists under this Section  2.5(d) shall be identical to the procedure set forth in Section  2.5(d)(iii) except (A) all references to Economic Fee Adjustment shall instead refer to the Gatherer Uneconomic Condition, (B) the Expert will be deciding whether or not a Gatherer Uneconomic Condition exists and (C) the determination of such Gatherer Uneconomic Condition by the Expert shall not become part of this Agreement. If the Expert determines that a Gatherer Uneconomic Condition does not exist, the then-existing Fees shall remain in effect.

(iii) There will be a single disinterested arbitrator, who meets the criteria of an Expert, as selected by mutual agreement of the Parties within 15 Days after a Party’s receipt of the foregoing written request from the other Party referring determination of the Economic Fee Adjustment to this procedure. In the event the Parties are unable to mutually agree upon the Expert within such time period, then each Party will nominate an individual who meets the criteria of an Expert within 10 Days after such time period, and such individuals so nominated by the Parties shall together determine the Expert within 15 Days after such 10-Day period. In the event only one Party nominates such an individual within such 10-Day period, that individual will be deemed appointed as the Expert. Within 15 Business Days after the appointment of the Expert, each Party shall submit to the Expert a written proposal, that is not more than 15 pages, for the Economic Fee Adjustment, explaining such Party’s position, and the Expert shall select which Party’s proposal, as a whole, is the most accurate. For the avoidance of doubt, each Party’s proposal must be consistent with the definition of Economic Fee Adjustment set forth above. The Expert’s determination shall be made within 15 Business Days after the foregoing 15-Business Day period and will be final and binding upon both Parties, without right of appeal, and this Agreement will be deemed amended to reflect the Economic Fee Adjustment selected by the Expert for the applicable Individual System, effective as of the first Day of the first Month after Shipper’s receipt of Gatherer’s uneconomic notice for such Individual System. The Expert shall act as an expert for the limited purpose of determining the specific dispute hereunder in accordance with the

 

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above, and may not determine any Economic Fee Adjustment except one of the two proposals so submitted by the Parties and by selecting one Party’s proposal for the Economic Fee Adjustment, and may not award damages, interest or penalties to either Party with respect to any matter. Each Party shall bear its own legal fees and other costs of presenting its case, and each Party shall bear one-half of the costs and expenses of the Expert.

(iv) For purposes of this Section  2.5(d) , “ uneconomic ” shall mean that the total costs and expenses incurred by Gatherer (A) in providing services on the applicable Individual System (excluding depreciation, amortization and Capital Expenses (other than maintenance Capital Expenses) as determined by Gatherer in good faith) exceeds the total net revenues received by Gatherer from Shipper and Third Parties with respect to such Individual System and (B) in providing Gathering Services hereunder on such Individual System (including a pro-rata share of all costs and expenses of such Individual System (excluding depreciation, amortization and Capital Expenses (other than maintenance Capital Expenses)) as determined by Gatherer in good faith) exceeds the total net revenues received by Gatherer from Shipper hereunder from Gatherer providing Gathering Services on such Individual System.

(v) If the Expert, in its determination of the Economic Fee Adjustment under Section  2.5(d)(iii) above, accepts Gatherer’s written proposal, and Shipper determines that such Economic Fee Adjustment is unacceptable, Shipper shall have the right to purchase the Individual System to which such Economic Fee Adjustment applies in accordance with the following, except that this Section  2.5(d)(v) , including such right to purchase, shall not apply with respect to the Majorsville System or the McQuay System:

(A) Shipper must notify Gatherer in writing within 15 Days of Shipper’s receipt of the Expert’s determination of such Economic Fee Adjustment that it is exercising its right to purchase such Individual System. If Gatherer does not receive such written notice from Shipper within such 15 Day period, Shipper shall be deemed to have waived its right to purchase such Individual System.

(B) If Gatherer receives such a written notice from Shipper, Shipper shall have a period of 30 Days following Gatherer’s receipt of such written notice to conduct a due diligence review of such Individual System. Such due diligence review shall consist of (1) a review of all files and records pertaining to rights of way, surfaces sites, permits and licenses, regulatory compliance, accounting, contracts and such other files and records that are customarily reviewed by a purchaser in a transaction to purchase a pipeline system and (2) a physical inspection of the above ground facilities of such Individual(s) System, including a Phase 1 environmental review, but in no event shall Shipper be permitted to conduct any invasive testing of such Individual System, or the ground upon or under any portion of the Individual System, without Gatherer’s prior written consent. Such due diligence review shall be conducted during Gatherer’s normal business hours, and Gatherer shall have the right to have its representatives present at all times during such due diligence review. Any site visits with respect to the Individual System shall only be conducted with representatives of Gatherer present. All information, whether written, oral or otherwise, obtained by Shipper in conjunction with such due diligence review shall be subject to Section  16.12 of this Agreement.

 

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(C) Shipper shall notify Gatherer in writing, within 30 Days of Gatherer’s receipt of Shipper’s written notice of the exercise of its right to purchase such Individual System, as to whether or not it will proceed with the purchase of such Individual System.

(D) If Shipper notifies Gatherer in writing within such 30 Day period that it will not purchase such Individual System, or if it fails to notify Gatherer in writing within such 30 Day period whether or not it will purchase such Individual System, then Shipper shall not purchase the Individual System, and the Economic Fee Adjustment determined by the Expert shall continue in effect.

(E) If Shipper notifies Gatherer in writing within such 30 Day period that it will purchase such Individual System, then Gatherer shall sell, and Shipper shall purchase, such Individual System on the Purchase Terms. Within 15 Days of Gatherer’s receipt of such written notice from Shipper, Gatherer shall provide to Shipper in writing the form of sales document(s), which shall be consistent with the Purchase Terms, under which such sale shall occur. If Shipper disagrees with any portion of such sales document(s), it shall promptly notify Gatherer in writing of such disagreement(s), and Shipper and Gatherer shall then promptly negotiate in good faith any changes to such sales document(s), with any such changes to be consistent with the Purchase Terms. If the Parties mutually agree on such changes to such sales document(s), the Parties shall promptly close the sale of such Individual System, effective as of the first Day of the Month following such agreement. However, if within 15 Days following Shipper’s receipt of the proposed sales document(s) from Gatherer, the Parties have not mutually agreed on such changes to such sales document(s), determination of the sales document(s) will be exclusively and finally resolved pursuant to the procedure set forth in Section  2.5(d)(v)(F) below, upon written request by either Party.

(F) The procedure for determining such sales document(s) shall be identical to the procedure set forth in Section  2.5(d)(iii) except (1) the arbitrator shall be a Legal Expert rather than an Expert, (2) all references to Economic Fee Adjustment shall instead refer to the form of sales document(s), (3) the form of sale(s) documents must be consistent with the Purchase Terms and (4) the determination of such sales document(s) by the Legal Expert shall not become part of this Agreement. Rather, promptly following the determination by the Legal Expert of such sales document(s), Shipper and Gatherer shall close the sale of such Individual System pursuant to, and in accordance with, the form of sales document(s) so determined by the Legal Expert, effective as of the first Day of the Month following such determination.

 

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(G) The rights of Shipper to purchase an Individual System as set forth in this Section  2.5(d)(v) are limited to the original Shipper, CNX Gas Company LLC; provided, however, if such original Shipper transfers all of its Dedicated Properties located in the System Area of an Individual System to another Person in accordance with Section  15.1 , then any such transferee (and not such original Shipper) shall have the rights set forth in this Section  2.5(d)(v) . For the avoidance of doubt, if a Person is a successor or assign of any of the Dedicated Properties but, as set forth above, does not have the rights set forth in this Section  2.5(d)(v) , then, in the event an Expert determines an Economic Fee Adjustment, that Economic Fee Adjustment shall be effective as set forth in Section  2.5(d)(iii) above and there shall be no right of such Person to purchase the Individual System on which the Gathering Services, which are the subject of such Economic Fee Adjustment, are provided.

(vi) For the avoidance of doubt, if Shipper does not purchase an Individual System in accordance with Section  2.5(d)(v) and the provision of Gathering Services hereunder on an Individual System again becomes uneconomic after determination of an Economic Fee Adjustment for Gathering Services provided hereunder on such Individual System, the provisions of this Section  2.5(d) will again apply with respect to such Individual System.

(e) Evidence of Permanent Release . Within five Business Days after the request of Shipper, the Parties shall execute a permanent release pursuant to a form of release proposed by Shipper and subject to the consent of Gatherer, which consent shall not be unreasonably withheld, reflecting any permanent release of Well(s), Dedicated Properties and Dedicated Production from dedication under this Agreement which occurs in accordance with the provisions of this Section  2.5 .

Section 2.6 Covenant Running with the Land . Subject to the provisions of Section  2.2 through Section  2.5 , the dedication and commitment made by Shipper under this Agreement is a covenant running with the Dedicated Properties. For the avoidance of doubt, (a) in the event Shipper or any of its Affiliates sells, transfers, conveys, assigns, grants or otherwise disposes of any or all of its or their interests in the Dedicated Properties, the provisions of Section  15.1 shall apply and (b) in the event Gatherer sells, transfers, conveys, assigns, grants or otherwise disposes of any or all of its interest in an Individual System which is used to provide Gas Services and/or Condensate Services, then the provisions of Section  15.1 shall apply.

Section 2.7 Memorandum . On the Execution Date, Shipper shall execute and deliver to Gatherer a fully recordable memorandum of this Agreement, substantially in the form of Exhibit  D .

Section 2.8 Dedicated Properties and ROFO Properties . Within 60 Days following the Execution Date, Shipper shall provide to Gatherer a list, prepared in good faith (but without any representation or warranty as to the accuracy or completeness thereof), of all Dedicated Properties and ROFO Properties which shall include the approximate location of each of the Dedicated Properties and the ROFO Properties (the “ Dedication Report ”) and the approximate number of Net Acres of each of the Dedicated Properties and the ROFO Properties. No later

 

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than April 30 of each Year following the Execution Date, commencing April 30, 2018, Shipper shall provide to Gatherer an update to the Dedication Report prepared in good faith (but without any representation or warranty as to the accuracy or completeness thereof) identifying any changes to such report, including any Dedicated Properties and/or ROFO Properties acquired by Shipper and/or any of its Affiliates since the Dedication Report, or any previous update of such report, and the approximate location and approximate Net Acres of each such acquired Dedicated Properties and ROFO Properties whether there is a Conflicting Dedication on any of such acquired Dedicated Properties and/or ROFO Properties, and if so, which ones and the date of expiration of the primary term of such Conflicting Dedication. In the event Shipper becomes aware of any material inaccuracy or material incompleteness in the initial Dedication Report or any subsequent update to such Dedication Report, Shipper shall promptly notify Gatherer of such material inaccuracy or material incompleteness.

ARTICLE 3

GATHERING SYSTEM EXPANSION AND CONNECTION OF WELLS

Section 3.1 Development Report .

(a) On or before each December 31, March 31, each June 30, and each September 30 of each Year following the Execution Date, commencing December 31, 2017 (and more frequently at the discretion of Shipper), Shipper shall provide to Gatherer a report or commencing March 31, 2018, an update of the previous report describing (i) in detail the planned development, drilling and production activities relating to (A) the Dedicated Properties and (B) the ROFO Properties (including any Dedicated ROFO Properties), in each case, for the 48-Month period commencing on the date of such report or update to such report and (ii) generally the long-term drilling and production expectations for each of the System Areas and for any other areas in the Dedication Area and in the ROFO Area, in each case, in which drilling activity is expected to continue beyond such 48-Month period and which will cover at least the ten Years following the date of such report (the report existing as of the Execution Date, as updated in accordance with the foregoing and as the then current report may be amended from time to time, the “ Development Report ”). For the avoidance of doubt, a Development Report and any update to a Development Report shall not be considered a Tie-In Request or a Deemed Tie-In Request.

(b) The Development Report shall include information as to (but only with respect to the 48-Month period commencing as of the date of such report or update to such report):

(i) the Planned Wells that Shipper expects will be drilled during the period covered thereby;

(ii) each expected Planned Well Pad and the expected locations thereof;

(iii) the earliest date on which one or more Planned Wells at each Well Pad or Planned Well Pad are expected to be completed and ready to be placed on-line;

(iv) the anticipated characteristics of the production from such Planned Wells (including gas and liquids composition and characteristics) and the projected production volumes (for both Gas and Liquid Condensate); and

 

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(v) other information reasonably requested by Gatherer that is relevant to the design, construction, and operation of the Individual System which may connect to such Planned Wells, Well Pads and Planned Well Pads.

(c) Shipper shall make representatives of Shipper available to discuss the most recent Development Report, all existing Tie-In Requests, and any matters which are the subject of Sections 3.2 or 6.4 from time to time with Gatherer and its representatives at Gatherer’s request. Gatherer and its representatives shall have the right to meet not less frequently than Monthly with one or more representatives of Shipper. At all such meetings, the Parties shall exchange updated information about their respective plans for the development and expansion of the Dedicated Properties (including updates to the Development Report) and the Individual Systems and shall have the opportunity to discuss and provide comments on the other Party’s plans.

(d) The Parties recognize that the plans for the development of the Dedicated Properties set forth in the Development Report (as updated from time to time) are subject to change and revision at any time at the discretion of Shipper and that such changes may impact the timing, configuration, and scope of the planned activities of Gatherer. Shipper shall not be deemed to have made any representations or warranties regarding any Development Report. For the avoidance of doubt, the provisions of this Section  3.1(d) apply only to the Shipper’s Development Report and do not alter or otherwise affect the Parties’ rights and obligations under the remaining provisions of this Agreement.

(e) Notwithstanding anything herein to the contrary except as set forth in Sections 3.2(f) and 3.2(g) , nothing in this Agreement shall give rise to any liability of Shipper for any failure to develop or produce any hydrocarbons from the Dedicated Properties or to pursue or complete any drilling or development on the Dedicated Properties, whether or not envisioned in any Development Report.

(f) If Shipper’s drilling and completion schedule is delayed for any Planned Well which is the subject of a Tie-In Obligation, Shipper shall promptly notify Gatherer in writing of the delay (identifying the Planned Well and specifying the number of Days of such delay), and the Target On-Line Date, the Target Fuel Gas Date and the Target Compression Date(s) (if any) for such Planned Well will each be automatically extended by a number of Days equal to the number of Days of delay to Shipper’s drilling and completion schedule for such Planned Well; provided, however, Shipper shall not have the right to delay such schedule for any Planned Well which is the subject of a Tie-In Obligation for reasons other than Force Majeure within two years of the Target On-Line Date for such Planned Well, except by delivering a Stop Connection Notice in accordance with and subject to the provisions of Section  3.2(f)(ii) .

(g) If Gatherer’s operations to tie-in any Well are delayed, and Gatherer anticipates that it will not be able to provide Gathering Services on or before the Target On-Line Deadline for such Well, until the On-Line Date for such Well, Gatherer shall provide Shipper written notice of such occurrence and shall thereafter provide periodic updates regarding any such delay and the measures that Gatherer is taking to eliminate or minimize any such delay. If Gatherer’s operations to install certain Compression Services for any Receipt Point are delayed, and Gatherer anticipates that it will not be able to provide the applicable Compression Services on or before the Target Compression Date for such Well, until Gatherer commences the provision of such Compression Services at such Receipt Point, Gatherer shall provide Shipper written notice of such occurrence and shall thereafter provide periodic updates regarding any such delay and the measures that Gatherer is taking to eliminate or minimize any such delay.

 

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(h) The McQuay Project Plan as of the Execution Date is as provided on Exhibit N . Gatherer shall use commercially reasonable efforts to develop and construct the McQuay System as provided on Exhibit N , subject to any modifications necessary to reflect deviations from the McQuay Project Plan pursuant to Section  3.2 herein and subject to any modifications made in Gatherer’s reasonable business judgment. The Wadestown Project Plan as of the Execution Date is as provided on Exhibit O . Gatherer shall use commercially reasonable efforts to develop and construct the Wadestown System as provided on Exhibit O , subject to any modifications necessary to reflect deviations from the Wadestown Project Plan pursuant to Section  3.2 herein and subject to any modifications made in Gatherer’s reasonable business judgment.

Section 3.2 Expansion of Individual Systems and Connection of Well Pads .

(a) Existing Wells and Planned Wells in a System Area . The provisions of this subsection (a) shall apply to each Existing Well (other than an Existing Well already connected to an Individual System as of the Execution Date), and each Planned Well with a surface location to be located in a System Area.

(i) Promptly following the Execution Date, Gatherer agrees, at its sole cost and expense, except as set forth in Section  3.2(f) , to diligently proceed with the construction, extension and expansion of the Individual Systems for the System Areas identified in Exhibit M , consistent with the timing of the Target On-Line Dates for the Planned Wells, in such System Areas, such that each such Individual System will be completed and ready to provide the Gathering Services and will have a design capacity capable of receiving all of the Dedicated Production from such Planned Wells based on the timing in Exhibit M and the production forecasts in Shipper’s Supplemental Notice for such Planned Wells. With respect to each such Planned Well, Gatherer shall, at its sole cost and expense, except as set forth in Section  3.2(f) , complete the facilities necessary to extend the applicable Individual System to the Receipt Point for such Planned Well and be prepared to commence the performance of Gathering Services for such Planned Well by the On-Line Deadline for such Planned Well (other than the delivery of Fuel Gas, which shall be provided by the Fuel Gas Deadline for such Planned Well).

(ii) Subject to Section  3.2(f) , if Shipper is flowing or will flow on or before the Fuel Gas Deadline sufficient Gas through an Individual System to enable Gatherer to deliver Fuel Gas to Shipper at a particular Fuel Gas Point, Gatherer shall, at its sole cost and expense, complete the facilities necessary to extend the applicable Individual System to such Fuel Gas Point for such Planned Well Pad for the purpose of delivering Fuel Gas to Shipper at such Fuel Gas Point Gatherer shall complete such facilities on or before the Fuel Gas Deadline for such Planned Well.

 

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(iii) For each Planned Well identified on Exhibit M that has a Target Fuel Gas Date after the two-year anniversary of the Execution Date, Shipper shall deliver written notice to Gatherer (each a “ Shipper’s Supplemental Notice ”), at least two years prior to the Target Fuel Gas Date specified on Exhibit M for such Planned Well, identifying and/or providing:

(A) the gross working interest of Shipper and its Affiliates in such Planned Well;

(B) a plat showing the surface location and the wellbore location of such Planned Well; and

(C) reasonable good faith production forecasts of Dedicated Production to be produced from such Planned Well.

(iv) If Shipper desires for Gatherer to connect any Existing Well or Planned Well other than a Planned Well identified on Exhibit M , Shipper shall provide Gatherer a written request (the “ Tie-In Request ”) to connect such Existing Well or Planned Well to the Individual System located within the System Area in which the surface location of such Existing Well or Planned Well is or is to be located, as applicable, which request will identify and/or provide:

(A) whether such Existing Well is or Planned Well will be an Operated Well or a Non-Operated Well;

(B) the gross working interest of Shipper and its Affiliates in such Existing Well or Planned Well;

(C) the surface location of the Existing Well Pad on which such Existing Well or Planned Well is or will be located or the Planned Well Pad on which such Planned Well will be located;

(D) a plat showing the surface location and the wellbore location of such Existing Well or Planned Well;

(E) reasonable good faith production forecasts of Dedicated Production to be produced from such Existing Well or Planned Well and from all then Existing Wells and from all Planned Wells that have been, or that Shipper anticipates will be, drilled and completed, on such Existing Well Pad or such Planned Well Pad;

(F) the anticipated characteristics of the production from such Existing Well or Planned Well (including gas and liquids composition and characteristics) and the projected production volumes (for both Gas and Liquid Condensate);

(G) if such a Well is a Planned Well, the Target Fuel Gas Date for such Planned Well (with such Target Fuel Gas Date to be no sooner than 24 Months following Gatherer’s receipt of such Tie-In Request); and

 

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(H) the Target On-Line Date for such Existing Well or Planned Well (and whether such Tie-In Request is also an Acceleration Request, in which case the terms of Section  3.2(d) shall apply).

(v) If the Well which is the subject of such Tie-in Request under Section  3.2(a)(iv) above is a Planned Well located in the McQuay or Wadestown System Areas and has an On-Line Deadline earlier than the four-year anniversary of the Execution Date, the Tie-In Request shall be treated as an Acceleration Request under Section  3.2(d) below and for the purposes of conducting the analysis thereunder, the original Rig Fuel Date and Target On-Line Deadline shall be the fourth anniversary of the Execution Date and the requested acceleration dates shall be those requested in the Tie-In Request.

(vi) If the Well which is the subject of such Tie-In Request under Section  3.2(a)(iv) above is a Planned Well and will be an Operated Well, subject to Section  3.2(f) , Gatherer shall, at its sole cost and expense, complete the facilities necessary to extend the applicable Individual System to a Fuel Gas Point at or near the planned Receipt Point for such Planned Well which is the subject of such Tie-In Request for the purpose of delivering Fuel Gas to Shipper at such Fuel Gas Point. Gatherer shall complete such facilities by the Fuel Gas Deadline for such Planned Well.

(vii) If the Well which is the subject of such Tie-In Request under Section  3.2(a)(iv) above is a Planned Well and will be an Operated Well, subject to Section  3.2(f) , Gatherer shall, at its sole cost and expense, complete the facilities necessary to extend the applicable Individual System to the Receipt Point for such Planned Well which is the subject of such Tie-In Request and be prepared to commence the performance of Gathering Services (other than the delivery of Fuel Gas, which is the subject of Section  3.2(a)(v) ) for such Planned Well by the On-Line Deadline for such Planned Well.

(viii) If the Well which is the subject of such Tie-In Request under Section  3.2(a)(iv) above is an Existing Well and/or is or will be a Non-Operated Well, Gatherer shall notify Shipper in writing within 90 Days of its receipt of such Tie-In Request whether or not it will connect such Well. If Gatherer notifies Shipper in writing within such 90 Day period that it will connect such Well, the provisions of Section  3.2(a)(vi) and Section  3.2(a)(vii) shall apply as if such Well were a Planned Well and an Operated Well subject to Section  3.2(a)(iv) . If Gatherer notifies Shipper in writing within such 90 Day period that it will not connect such Well, or if Gatherer fails to notify Shipper in writing within such 90 Day period whether or not it will connect such Well, such Well, the Dedicated Production from such Well, and the Dedicated Properties in the Drilling Unit applicable to such Well (but in each case, only as to the formation in which such Well was drilled, as to Existing Wells, or proposed to be drilled, as to Planned Wells) shall be permanently released from dedication under this Agreement.

(ix) “Wet” McQuay Wells

 

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(A) The provisions of this Section  3.2(a)(ix) shall apply to any Well that is the subject of a Tie-In Notice under Section  3.2(a)(iv) above and which Gatherer is obligated to connect, the surface location of which is located in the McQuay Area, if Shipper has requested the Gas produced therefrom to be delivered to the Majorsville System. For the avoidance of doubt, this Section  3.2(a)(ix) shall not apply to any Planned Well listed on Exhibit M .

(B) If the Well Pad for such Well is located within 3,000 feet (on a constructed pipe basis) of the then-existing Majorsville System, Gatherer shall proceed with construction of its connection facilities for such Well as provided above in Section  3.2(a)(vi) and Section  3.2(a)(vii) , for connection to the Majorsville System. However, if the Well Pad for such Well is not located within 3,000 feet (on a constructed pipe basis) of the then-existing Majorsville System, Gatherer shall notify Shipper in writing within 30 Days of its receipt of such Tie-In Request with the following information (a “ McQuay Wet Gas Response ”): the estimated distance (on a constructed pipe basis) from such Well Pad’s location to the then-existing Majorsville System; and the estimated additional Connection Costs to be incurred by Gatherer to construct the portion of the connection for such Well to the Majorsville System beyond 3,000 feet in constructed pipe distance from such Well Pad (the “ Additional Connection Costs ”), as such Additional Connection Costs are reflected in Gatherer’s AFE applicable thereto (as contained in Gatherer’s McQuay Wet Gas Response), together with reasonable back-up information supporting Gatherer’s estimate.

(C) Failure of Gatherer to so respond with a McQuay Wet Gas Response within 30 Days after its receipt of such Tie-In Request shall be deemed an election by Gatherer to connect such Well to the Majorsville System.

(D) Within 15 Days after its receipt of a McQuay Wet Gas Response, Shipper shall notify Gatherer in writing of one of the following elections:

(1) Shipper desires that Gatherer connect such Well to the McQuay System at Gatherer’s sole cost and expense, in which case Gatherer shall proceed with construction of its connection facilities for such Well as provided above in Section  3.2(a)(vi) and Section  3.2(a)(vii) , for connection to the McQuay System;

(2) Shipper desires that Gatherer connect such Well to the Majorsville System, and Shipper agrees to pay Gatherer the Additional Connection Costs identified in such McQuay Wet Gas Response, in which case, Gatherer shall proceed with construction of its connection facilities for such Well as provided above in Section  3.2(a)(iv) , for connection to the Majorsville System; or

(3) Shipper desires that Gatherer connect such Well to the Majorsville System but disagrees with the Additional Connection Costs identified in such McQuay Wet Gas Response, and the Parties’ dispute regarding such Additional Connection Costs shall be referred to Section  3.2(a)(ix)(F) for final resolution, in which case Shipper agrees to pay Gatherer the Additional Connection Costs determined by the Expert in accordance with Section  3.2(a)(ix)(F) , and Gatherer shall proceed with construction of its connection facilities for such Well as provided above in Section  3.2(a)(iv) , for connection to the Majorsville System;

 

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however, in each case of subsection (1), (2) or (3) above, the Target Fuel Gas Date and the Target On-Line Date, as applicable, for such Well will each be extended by 45 Days, to account for the passage of time during the McQuay Wet Gas Response process described above in this Section  3.2(a)(ix) .

(E) Failure of Shipper to so notify Gatherer in writing within 15 Days after its receipt of such McQuay Wet Gas Response shall be deemed to be an election by Shipper under subsection (D)(1) above with respect to such McQuay Wet Gas Response. Shipper shall pay Gatherer the applicable Additional Connection Costs due under Section  3.2(a)(ix)(D)(2) or (3) , if applicable, within 30 Days after Shipper’s receipt of Gatherer’s invoice for such Additional Connection Costs.

(F) Any dispute referred to this Section  3.2(a)(ix)(F) shall be exclusively and finally resolved pursuant to the procedure set forth herein. There shall be a single disinterested arbitrator, who meets the criteria of an Expert, as selected by mutual agreement of the Parties within 15 Days after the referral of such dispute to this Section  3.2(a)(ix)(F) . In the event the Parties are unable to mutually agree upon the Expert within such time period, then each Party will nominate an individual who meets the criteria of an Expert within 10 Days after such time period, and such individuals so nominated by the Parties shall together determine the Expert within 15 Days after such 10-Day period. In the event only one Party nominates such an individual within such 10-Day period, that individual will be deemed appointed as the Expert. Within 15 Business Days after the appointment of the Expert, each Party shall submit to the Expert a written proposal, that is not more than 15 pages, for the Additional Connection Costs, explaining such Party’s position, and the Expert shall select which Party’s proposal, as a whole, is the most accurate. The Expert’s determination shall be made within 15 Business Days after the foregoing 15-Business Day period and shall be final and binding upon both Parties, without right of appeal. The Expert shall act as an expert for the limited purpose of determining the specific dispute hereunder in accordance with the above, and may not determine any Additional Connection Costs except one of the two proposals so submitted by the Parties and by selecting one Party’s proposal for the Additional Connection Costs, and may not award damages, interest or penalties to either Party with respect to any matter. Each Party shall bear its own legal fees and other costs of presenting its case. Each Party shall bear one-half of the costs and expenses of the Expert.

(b) Existing Wells and Planned Wells Outside of a System Area . The provisions of this subsection (b) shall apply to each Existing Well (other than an Existing Well already connected to an Individual System as of the Execution Date) or Planned Well, in each case, the surface location of which is, or is to be, located outside of a System Area but within the Dedication Area.

 

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(i) In the event of any such Existing Well or Planned Well, or a specific geographic area involving multiple Existing Wells and/or Planned Wells, Shipper shall provide Gatherer a written request to connect such Existing Wells and/or such Planned Wells. Such request, if for a specific Existing Well and/or Planned Well, shall contain all of the information required to be included in a Tie-In Request. If such request involves a specific geographic area involving multiple Existing Wells and/or Planned Wells, such request shall include, as to such area (the “ Development Area ”), all of the information required to be included in a Development Report and, to the extent known, all of the information required to be included in a Tie-In Request as to each such Existing Well and/or Planned Well. In addition, any request shall also include the desired terms of service (including pressures, connection obligations and take requirement) relating to such Existing Wells, such Planned Wells and/or such Development Area. However, such terms of service shall be for Gathering Services and not the purchase of Dedicated Production (all of the foregoing herein, a “ Request ”).

(ii) Within 60 Days after Gatherer’s receipt of a Request (if a Request is for a specific Existing Well and/or Planned Well for which only the information to be set forth in a Tie-In Request is required) and otherwise within 90 Days after Gatherer’s receipt of a Request, Gatherer shall submit to Shipper a proposal setting forth the fees and other terms upon which Gatherer would provide Gathering Services for the specific Well and/or Planned Well and/or as applicable, the Development Area (the “ Proposal ”). In the event Gatherer has reasonable questions or desires additional reasonable information in connection with the preparation of such Proposal, Shipper agrees to promptly provide such information to the extent it or its Affiliates has such information and, if requested by Gatherer, to promptly make representatives of Shipper and/or its Affiliates who are knowledgeable with the Request and any underlying assumptions and information reasonably available during normal business hours to meet with Gatherer so that Gatherer is in the position of submitting a better informed Proposal within the time limits set forth above; provided, however, if Shipper fails to promptly provide such reasonable information and/or make such representatives reasonably available to Gatherer after Gatherer’s request, such time limits set forth above will be extended by one Day for each Day of delay by Shipper in promptly providing such information and/or making such representatives available. Failure of Gatherer to provide a Proposal within the period required herein shall be deemed an election by Gatherer not to provide a Proposal, and in such event, the Existing Well(s) and/or Planned Well(s) specified in the applicable Request, Dedicated Production from such Existing Well(s) and/or Planned Well(s) and the Dedicated Properties in the Drilling Unit(s) applicable to such Existing Well(s) and/or Planned Well(s) (but only as to the formation in which such Well was or will be drilled, as applicable) shall be permanently released from this Agreement, and if such Request set forth a Development Area, the Dedicated Properties in such Development Area and the Dedicated Production attributable to such Dedicated Properties shall be permanently released from this Agreement.

 

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(iii) Following Shipper’s receipt of the Proposal, Shipper and Gatherer agree to negotiate in good faith regarding Shipper’s Request and Gatherer’s Proposal in an effort to mutually agree on the fees and other terms upon which Gatherer would provide Gathering Services requested by Shipper in the Request, or such other services as Gatherer and Shipper may mutually agree.

(iv) If within 30 Business Days after Shipper’s receipt of Gatherer’s Proposal, the Parties have not reached an agreement under Section  3.2(b)(iii) above, Shipper shall have the right to seek Bona Fide Offers to provide the Gathering Services set forth in the Request for the Existing Well(s), Planned Well(s) and/or, as applicable, the Development Area set forth in the Request. If Shipper receives such a Bona Fide Offer which, subject to Gatherer’s rights under Section  3.2(b)(v) , it will accept, Shipper shall provide Gatherer a complete copy of such Bona Fide Offer. “ Bona Fide Offer ” means a written offer from a Person not an Affiliate of Shipper which is limited to providing Gathering Services for the specific Existing Well(s), Planned Well(s) and/or, as applicable, the Development Area as set forth in the Request. A Bona Fide Offer must include a definitive written agreement containing all of the terms and conditions (including fees) for providing such Gathering Services which, if accepted by Shipper, would be a binding obligation on the parties which would execute such definitive agreement.

(v) Following receipt of such Bona Fide Offer, Gatherer shall have the right to elect whether or not to provide the Gathering Services set forth in the Request for the Existing Well(s), Planned Well(s) and/or, as applicable, the Development Area set forth in the Request, on the terms and conditions (including fees) set forth in the Bona Fide Offer. Gatherer shall notify Shipper in writing of its election within 10 Business Days after receipt of the Bona Fide Offer. If Gatherer notifies Shipper in writing within such 10 Business Day period that it will provide such Gathering Services on the terms and conditions set forth in the Bona Fide Offer, Shipper and Gatherer shall prepare and execute either an amendment to this Agreement or a new agreement for such Gathering Services. If Gatherer notifies Shipper in writing within such 10 Business Day period that it is not making such election or fails to provide Shipper an unqualified election to provide such Gathering Services on such terms and conditions within such 10 Business Day period, Gatherer shall be deemed to have elected not to provide such Gathering Services on the terms and conditions set forth in such Bona Fide Offer. In such event, provided that Shipper enters into a gathering agreement with the applicable third party who provided such Bona Fide Offer on terms that are not materially more favorable to such third party than those set forth in such Bona Fide Offer (as presented to Gatherer pursuant to Section  3.2(b)(iv) ) within 180 Days following the date on which Gatherer is deemed to have elected not to provide such Gathering Services, (A) the Existing Well(s) and/or Planned Well(s) specified in the Request, Dedicated Production from such Existing Well(s) and/or Planned Well(s) and the Dedicated Properties in the Drilling Unit(s) applicable to such Existing Well(s) and/or Planned Well(s) (but only as to the formation in which such Well was or will be drilled, as applicable) shall be permanently released from this Agreement, and (B) if the Request set forth a Development Area, the Dedicated Properties in such Development Area and the Dedicated Production attributable to such Dedicated Properties shall be permanently released from this Agreement. For the avoidance of doubt, in the event that Shipper fails to enter into a

 

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gathering agreement with the applicable third party with respect to any Bona Fide Offer within such 180 Day period or if Shipper desires to enter into a gathering agreement with such third party on terms that are materially more favorable to such third party than those presented to Gatherer, Shipper shall be required to again comply with the procedures set forth in this Section  3.2(b) .

(vi) For the avoidance of doubt, if any offer provided by Shipper to Gatherer under Section  3.2(b)(iv) does not meet all of the requirements of a Bona Fide Offer, such offer shall not be deemed a Bona Fide Offer. Gatherer shall have no obligation to respond to such offer, and Shipper shall have no right to a permanent release with respect to such offer.

(c) Location Change . With respect to each Planned Well Pad having a Planned Well which is the subject of a Tie-In Obligation (such Planned Well Pad, a “ TIO Planned Well Pad ”), Shipper may request to change the Original Location of such TIO Planned Well Pad by written notice to Gatherer (a “ Relocation Request ”) in accordance with this Section  3.2(c) , with each such Relocation Request identifying the applicable TIO Planned Well Pad and the new location requested by Shipper for such TIO Planned Well Pad (the “ New Location ”). If such Relocation Request is received by Gatherer at least two years prior to the Target On-Line Date applicable to such TIO Planned Well Pad in effect at the time of Gatherer’s receipt of such Relocation Request and the New Location is within 3,000 feet (on a constructed pipe basis) of the Original Location of the TIO Planned Well Pad, the Original Location will be automatically changed to the New Location for such TIO Planned Well Pad. If, however, such Relocation Request is received by Gatherer less than two years prior to the Target On-Line Date applicable to such TIO Planned Well Pad in effect at the time of Gatherer’s receipt of such Relocation Request, and/or the New Location is not within 3,000 feet (on a constructed pipe basis) of the Original Location of the TIO Planned Well Pad, such Relocation Request is subject to the following:

(i) If Gatherer in good faith determines that the requested location change (A) will not increase Gatherer’s Connection Costs with respect to such TIO Planned Well Pad, (B) will not require any change to the Target On-Line Date applicable to such TIO Planned Well Pad, and (C) if the New Location is not within 3,000 feet (on a constructed pipe basis) of the Original Location of the TIO Planned Well Pad, such requested location change will not create a Relocation Pressure Issue, Gatherer shall give Shipper written notice (a “ Relocation Response ”) of such determination within 30 Days after receipt of the Relocation Request, and thereupon the Original Location will be automatically changed to the New Location for such TIO Planned Well Pad.

(ii) If Gatherer in good faith determines that the requested location change will (A) increase Gatherer’s Connection Costs with respect to such TIO Planned Well Pad, (B) require a change to the Target On-Line Date applicable to such TIO Planned Well Pad, and/or (C) if the New Location is not within 3,000 feet (on a constructed pipe basis) of the Original Location of the TIO Planned Well Pad and will create a Relocation Pressure Issue, Gatherer shall give Shipper a Relocation Response for such determination within 30 Days after receipt of the Relocation Request, with such Relocation Response specifying, as applicable, (a) the new Target On-Line Date with respect to such TIO Planned Well Pad (the “ Relocation Target On-Line Date ”) (which date shall be as soon

 

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as reasonably practicable under the circumstances, but in any event no later than the second anniversary of the date on which Gatherer received the Relocation Request from Shipper), (b) the Relocation Costs Differential to accommodate such Relocation Request (together with reasonable back-up information for the Relocation Costs Differential) and/or (c) supporting information regarding Gatherer’s assertion that such relocation will create a Relocation Pressure Issue.

(iii) Within 15 Days after Shipper’s receipt of a Relocation Response under clause (ii) above, Shipper shall notify Gatherer in writing of one of the following elections:

(A) Shipper withdraws the Relocation Request associated with such Relocation Response;

(B) Shipper agrees with all of the following if included in such Relocation Response: (I) the applicable Relocation Target On-Line Date; (II) the applicable Relocation Costs Differential; and (III) Relocation Pressure Issue will be created by such relocation, in which case: (x) if there is a Relocation Target On-Line Date, the Relocation Target On-Line Date will be deemed to be the Target On-Line Date for such TIO Planned Well Pad (including its Planned Wells); (y) if there is a Relocation Costs Differential, Shipper agrees to pay Gatherer the Relocation Costs Differential identified in such Relocation Response; and/or (z) if there is a Relocation Pressure Issue, Shipper agrees to waive any pressure obligation at the Receipt Point for such TIO Planned Well Pad; or

(C) Shipper disagrees with any of the following if included in such Relocation Response: (I) the Relocation Target On-Line Date; (II) the Relocation Costs Differential identified in such Relocation Response; and/or (III) whether such relocation will create a Relocation Pressure Issue (and Shipper shall be presumed to agree with any such matter included in such Relocation Response if it does not so disagree with such matter).

If Shipper makes an election under subsection (C), the dispute(s) shall be referred to Section  3.2(c)(iv) for final resolution. Failure of Shipper to so notify Gatherer in writing within 15 Days after its receipt of such Relocation Response shall be deemed to be an election by Shipper under subsection (A).

(iv) Any dispute referred to this Section  3.2(c)(iv) shall be exclusively and finally resolved pursuant to the procedure set forth herein. There shall be a single disinterested arbitrator, who meets the criteria of an Expert, as selected by mutual agreement of the Parties within 15 Days after the referral of such dispute to this Section  3.2(c)(iv) . In the event the Parties are unable to mutually agree upon the Expert within such time period, then each Party will nominate an individual who meets the criteria of an Expert within 10 Days after such time period, and such individuals so nominated by the Parties shall together determine the Expert within 15 Days after such 10-Day period. In the event only one Party nominates such an individual within such 10-Day period, that

 

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individual will be deemed appointed as the Expert. Within 15 Business Days after the appointment of the Expert, each Party shall submit to the Expert a written proposal, that is not more than 15 pages, for, to the extent a dispute exists regarding same, the Relocation Target On-Line Date, the Relocation Costs Differential, and/or the alleged Relocation Pressure Issue at the applicable TIO Planned Well Pad, explaining such Party’s position, and the Expert shall select which Party’s proposal, as a whole, is the most accurate. The Expert shall select one Party’s proposal regarding each disputed matter. The Expert may select one Party’s proposal for all disputed matters, or may select one Party’s proposal for less than all disputed matters, and the other Party’s proposal for the other disputed matters. The Expert’s determination shall be made within 15 Business Days after the foregoing 15-Business Day period and shall be final and binding upon both Parties, without right of appeal. The Expert shall act as an expert for the limited purpose of determining the specific disputes hereunder in accordance with the above, and may not determine any matter except selection one of the two proposals so submitted by the Parties for each disputed matter, and may not award damages, interest or penalties to either Party with respect to any disputed matter. Each Party shall bear one-half of the costs and expenses of the Expert.

(v) If Gatherer does not give Shipper any Relocation Response under clause (ii) above within 30 Days after receipt of the applicable Relocation Request, such Relocation Request will be deemed rejected and the Original Location of the applicable TIO Planned Well Pad will not be changed.

(vi) Within 30 Days after a decision of the Expert pursuant to Section  3.2(c)(iv) , Shipper shall notify Gatherer in writing of one of the following elections:

(A) Shipper withdraws the relevant Relocation Request; or

(B) Shipper desires that Gatherer proceed with the activities described in the Relocation Request, and Shipper agrees to be bound by the decisions of the Expert (and the assertions of the Gatherer in the relevant Relocation Response with which it agreed or deemed to have agreed, if any), in which case Gatherer shall proceed with the activities required to accommodate such Relocation Request.

(vii) Shipper shall pay Gatherer any applicable Relocation Costs Differential due under Section  3.2(c)(iii)(B) or (C) , if applicable, within 30 Days after Shipper’s receipt of Gatherer’s invoice for such Relocation Costs Differential.

As used in this Section  3.2(c) , the “Target On-Line Date applicable to” a TIO Planned Well Pad will be the earliest Target On-Line Date for any Planned Well to be located on such TIO Planned Well Pad. Except as provided in this Section  3.2(c) , Shipper shall not change the location of any TIO Planned Well Pad from its Original Location.

(d) Acceleration of Target On-Line Dates and Fuel Gas Deadlines .

(i) In the event Shipper desires to accelerate the Target Fuel Gas Date and Target On-Line Date for any Existing Well or Planned Well, Shipper may request such acceleration in a Tie-In Request or at any time after the delivery of such Tie-In Request or after a Deemed Tie-In Request, as applicable, for the relevant Existing Well or Planned Well by written notice to Gatherer (an “ Acceleration Request ”).

 

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(ii) Gatherer shall use commercially reasonable efforts to accommodate each Acceleration Request, but Gatherer shall not be obligated to accommodate an Acceleration Request if Gatherer determines in good faith that such Acceleration Request will adversely affect Gatherer’s ability to comply with its compression and/or pressure obligations under any agreement with a Third Party on the applicable Individual System (a “ Third Party Adverse Pressure Issue ”) and/or that Gatherer will not be able to accelerate the Target Fuel Gas Date and Target On-Line Date to an earlier date than as contemplated in the applicable Tie-In Request or Deemed Tie-In Request. Gatherer shall respond in writing to each Acceleration Request within 30 Days after its receipt of such Acceleration Request with the following information (an “ Acceleration Request Response ”):

(A) whether Gatherer can accommodate the Acceleration Request, or if not, if the relevant Target Fuel Gas Date and Target On-Line Date can be accelerated to an earlier date than as currently contemplated in the applicable Tie-In Request or Deemed Tie-In Request (the accelerated Target Fuel Gas Date and Target On-Line Date as provided in this subsection (A) shall be referred to herein as the “ Accelerated Target Fuel Gas Date ” and “ Accelerated Target On-Line Date ”, as applicable);

(B) whether accommodation of the Acceleration Request as provided in subsection (A) will, in Gatherer’s good faith determination, result in Connection Costs to be incurred by Gatherer in connection with the relevant activity that would exceed the Connection Costs that would be incurred in connection with such activity if not so accelerated, and if so:

(1) the estimated Connection Costs to be incurred by Gatherer in connection with accommodating the Acceleration Request, as such estimated Connection Costs are estimated in good faith and reflected in Gatherer’s AFE applicable thereto (as contained in Gatherer’s Acceleration Request Response);

(2) the estimated Connection Costs that would have been incurred by Gatherer in connection with the relevant activities without accommodating the Acceleration Request, as such estimated Connection Costs are estimated in good faith and reflected in Gatherer’s AFE applicable thereto (as contained in Gatherer’s Acceleration Request Response), and

(3) the difference between such estimated Connection Costs (the “ Acceleration Costs Differential ”),

together with reasonable back-up information supporting such calculations;

 

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(C) whether Gatherer has determined in good faith that compliance with such Acceleration Request would adversely affect Gatherer’s ability to comply with its compression and/or compression obligations on the applicable Individual System under this Agreement (a “ Shipper Adverse Pressure Issue ”), together with reasonable back-up information supporting such determination; and

(D) whether Gatherer has determined in good faith that compliance with such Acceleration Request would create a Third Party Adverse Pressure Issue, together with reasonable back-up information supporting such determination.

(1) Failure of Gatherer to so respond to an Acceleration Request within 30 Days after its receipt of such Acceleration Request shall be deemed an election by Gatherer that it cannot accommodate the Acceleration Request.

(iii) Within 15 Days after Shipper’s receipt of an Acceleration Request Response under clause (ii) above, Shipper shall notify Gatherer in writing of one of the following elections:

(A) Shipper withdraws the relevant Acceleration Request;

(B) Shipper disagrees with a determination that Gatherer cannot accommodate the Acceleration Request;

(C) Shipper agrees with all of the following if included in such Acceleration Request Response: (I) the applicable Accelerated Target Fuel Gas Date; (II) the applicable Accelerated Target On-Line Date; (III) the estimated Acceleration Costs Differential; (IV) the determination that there will be a Shipper Adverse Pressure Issue, and/or (V) the determination that there will be a Third Party Adverse Pressure Issue in which case: (v) if there is an Accelerated Target Fuel Gas Date, such date shall be the Target Fuel Gas Date for the relevant Well; (w) if there is an Accelerated Target On-Line Date, such date shall be the Target On-Line Date for the relevant Well; and/or (x) if there is an Acceleration Cost Differential, Shipper agrees to pay Gatherer the Acceleration Cost Differential identified in such Acceleration Request Response; (y) if there is a Third Party Adverse Pressure Issue, Shipper accepts such assertion, and (z) if there is a Shipper Adverse Pressure Issue, Shipper agrees to waive the Free Flow Pressure obligation at applicable Receipt Point; or

(D) Shipper disagrees with any of the following if included in such Relocation Response: (I) the applicable Accelerated Target Fuel Gas Date; (II) the applicable Accelerated Target On-Line Date; (III) the estimated Acceleration Costs Differential; (IV) the determination that there will be a Shipper Adverse Pressure Issue, and/or (V) the determination that there will be a Third Party Adverse Pressure Issue (and Shipper shall be presumed to agree with any such matter included in such Relocation if it does not so disagree with such matter).

 

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(1) If Shipper makes an election under subsections (B) or (D), the dispute(s) shall be referred to Section  3.2(d)(iv) for final resolution. Failure of Shipper to so notify Gatherer in writing within 15 Days after its receipt of such Relocation Response shall be deemed to be an election by Shipper under subsection (A).

(iv) Any dispute referred to this Section  3.2(d)(iv) shall be exclusively and finally resolved pursuant to the procedure set forth herein. There shall be a single disinterested arbitrator, who meets the criteria of an Expert, as selected by mutual agreement of the Parties within 15 Days after the referral of such dispute to this Section  3.2(d)(iv) . In the event the Parties are unable to mutually agree upon the Expert within such time period, then each Party will nominate an individual who meets the criteria of an Expert within 10 Days after such time period, and such individuals so nominated by the Parties shall together determine the Expert within 15 Days after such 10-Day period. In the event only one Party nominates such an individual within such 10-Day period, that individual will be deemed appointed as the Expert. Within 15 Business Days after the appointment of the Expert, each Party shall submit to the Expert a written proposal, that is not more than 15 pages, for, to the extent a dispute exists regarding same, (I) whether Gatherer can accommodate the Acceleration Request; (II) the applicable Accelerated Target Fuel Gas Date; (III) the applicable Accelerated Target On-Line Date; (IV) the estimated Acceleration Costs Differential; (V) the determination that there will be a Shipper Adverse Pressure Issue, and/or (VI) the determination that there will be a Third Party Adverse Pressure Issue, explaining such Party’s position, and the Expert shall select which Party’s proposal, as a whole, is the most accurate. The Expert shall select one Party’s proposal regarding each disputed matter. The Expert may select one Party’s proposal for all disputed matters, or may select one Party’s proposal for less than all disputed matters, and the other Party’s proposal for the other disputed matters. The Expert’s determination shall be made within 15 Business Days after the foregoing 15-Business Day period and shall be final and binding upon both Parties, without right of appeal. The Expert shall act as an expert for the limited purpose of determining the specific disputes hereunder in accordance with the above, and may not determine any matter except selection one of the two proposals so submitted by the Parties for each disputed matter, and may not award damages, interest or penalties to either Party with respect to any disputed matter. Each Party shall bear one-half of the costs and expenses of the Expert.

(v) Within 30 Days after a decision of the Expert pursuant to Section  3.2(d)(iv) , Shipper shall notify Gatherer in writing of one of the following elections:

(A) Shipper withdraws the relevant Acceleration Request; or

(B) Shipper desires that Gatherer proceed with the activities described in the Acceleration Request, and Shipper agrees to be bound by the decisions of the Expert (and the assertions of Gatherer in the relevant Acceleration Request Response with which it agreed or is deemed to have agreed, if any), in which case Gatherer shall proceed with the activities required to accommodate such Acceleration Request.

 

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(vi) Shipper shall pay Gatherer the applicable Acceleration Costs Differential due under Section  3.2(d)(iii)(B) or (C) , if applicable, within 30 Days after Shipper’s receipt of Gatherer’s invoice for such Acceleration Costs Differential.

(vii) Notwithstanding anything to the contrary herein, no Accelerated Target Fuel Gas Date and/or Accelerated Target On-Line Date shall be considered for purposes of Section  2.5(a)(i) and Section  3.2(e) , which shall only consider the original Target Fuel Gas Date and/or Target On-Line Date (as such dates may be adjusted under other provisions of this Agreement outside of this Section  3.2(d) ), as applicable, for the relevant Tie-In Obligation.

(e) Certain Shipper Remedies .

(i) If Gatherer fails to connect a Fuel Gas Point to the applicable Individual System where it is obligated to do so hereunder, and/or is not ready to or is unable to deliver Dedicated Gas (for reasons other than Shipper’s failure to provide such Dedicated Gas) from such Individual System to such Fuel Gas Point, by the applicable Fuel Gas Deadline, then Shipper will be entitled to a credit against amounts owed by Shipper to Gatherer under this Agreement equal to the product of the number of Delayed Fuel Gas Days associated with such Delayed Fuel Gas Point and $1,000/Day; provided that, the aggregate amount of such credit with respect to any particular Delayed Fuel Gas Point shall not exceed $365,000. Any such credit to which Shipper is entitled shall be applied in the invoice issued in the Month following the Month in which such Delayed Fuel Gas Days occurred. This credit constitutes the sole and exclusive remedy available to Shipper with respect to delay in construction of the facilities necessary to deliver Fuel Gas to such Fuel Gas Point and any other delay in commencement of delivery of Fuel Gas through such facilities.

(ii) In the event that the On-Line Date occurs after the On-Line Deadline with respect to any Tie-In Obligation for any Well, Shipper shall be entitled to a credit against amounts owed by Shipper to Gatherer under this Agreement equal to the product of the number of On-Line Delay Days associated with such Tie-In Obligation and $1,000/Day, not to exceed a total credit of $2,800,000 with respect to such Tie-In Obligation for such Well. Any such credit to which Shipper is entitled shall be applied in the invoice issued in the Month following the Month in which such On-Line Delay Days occurred. This credit constitutes the sole and exclusive remedy available to Shipper with respect to any failure or delay by Gatherer in causing the On-Line Date to occur on or before the On-Line Deadline with respect to such Tie-In Obligation, except as otherwise provided in Section  2.5(a)(i) .

(f) Gatherer’s Remedy for Shipper Failure to Complete Well Completion Requirements .

(i) In the event a Planned Well which is the subject of a Tie-In Obligation is not drilled and completed, and/or all Shipper’s Facilities necessary to deliver the Dedicated Production from such Planned Well to the Receipt Point for such Planned Well are not completed and ready to be connected to such Receipt Point (the foregoing

 

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collectively, the “ Well Completion Requirements ”), in each case within 365 Days (which period will be extended by one Day for each Day of delay in drilling or completing the applicable Planned Well or any Shipper’s Facilities necessary to deliver the Dedicated Production from such Planned Well to the Receipt Point for such Planned Well that is attributable to Force Majeure) after the Target On-Line Date for such Planned Well, then Shipper shall reimburse Gatherer for all Capital Expenses incurred by Gatherer in connection with extending the then-applicable Individual System to the Receipt Point and the Fuel Gas Point for such Planned Well (including establishing such Receipt Point, acquiring easements, surface sites and other real property interests or rights, and acquiring all necessary associated permits and authorizations from Governmental Authorities) (all such Capital Expenses herein, the “ Connection Costs ”). For the avoidance of doubt, with respect to any new Individual System (e.g., the Wadestown System), Connection Costs will also include Capital Expenses incurred in connection with the construction of any portion of such new Individual System to any Delivery Point for such Individual System and in establishing any Delivery Point (whether incurred directly by Gatherer and/or paid as an aid in construction to the Person whose pipeline Gatherer’s facilities will interconnect with at such Delivery Point).

(ii) Notwithstanding the foregoing, Shipper shall have the right, at any time, to notify Gatherer to cease making efforts to connect any Planned Well to any Individual System (a “ Stop Connection Notice ”), in which event Gatherer shall use commercially reasonable efforts to promptly cease such efforts and wind down the work on such connection, and Shipper shall reimburse Gatherer for all Connection Costs with respect to such Planned Well, including Capital Expenses incurred by Gatherer in connection with stopping and winding down its efforts associated with connection of such Planned Well, if any. However, at any time thereafter, Shipper shall have the right to notify Gatherer to recommence efforts associated with connecting the Planned Well that was the subject of such Stop Connection Notice to the applicable Individual System (a “ Restart Connection Notice ”), in which event Gatherer shall recommence performance and notify Shipper of the new Target On-Line Date with respect to such Planned Well (the “ Restart Target On-Line Date ”) (which date will be as soon as reasonably practicable under the circumstances, but in any event no later than the second anniversary of the date on which Gatherer received the Restart Connection Notice from Shipper), and the Restart Target On-Line Date will be deemed to be the Target On-Line Date for such Planned Well. If Shipper does not complete the Well Completion Requirements with respect to such Planned Well prior to the first anniversary (the “ First Anniversary Deadline ”) of the later of (a) the On-Line Date or (b) the original Restart Target On-Line Date for such Planned Well, Shipper shall reimburse Gatherer for all Connection Costs (including remobilization and recommencement costs (including costs for new permits and authorizations from Governmental Authorities, if any)) incurred with respect to such Planned Well from and after Gatherer’s receipt of the Restart Connection Notice for such Planned Well. But, if Shipper completes the Well Completion Requirements with respect to such Planned Well prior to the third anniversary (the “ Third Anniversary Deadline ”) of the later of (a) the On-Line Date or (b) the original Restart Target On-Line Date for such Planned Well, Gatherer shall refund to Shipper all Connection Costs paid by Shipper to Gatherer with respect to such Planned Well, less all Capital Expenses incurred by Gatherer in connection with stopping and winding down and remobilizing and

 

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recommencing its efforts associated with connection of such Planned Well, with such refund to be paid within 30 Days of Gatherer’s receipt of Shipper’s written notice that such Well Completion Requirements have been met, together with reasonable supporting documentation of such occurrence. However, if Shipper does not complete the Well Completion Requirements with respect to such Planned Well prior to the Third Anniversary Deadline for such Planned Well, Shipper shall not be entitled to any refund of any Connection Costs paid by Shipper to Gatherer with respect to such Planned Well. The First Anniversary Deadline and the Third Anniversary Deadline will each be extended by one Day for each Day of delay in drilling or completing the applicable Planned Well or any Shipper’s Facilities necessary to deliver the Dedicated Production from such Planned Well to the Receipt Point for such Planned Well that is attributable to Force Majeure occurring after the date on which Gatherer received the Restart Connection Notice from Shipper for such Planned Well. Shipper shall have the right to issue additional Stop Connection Notice(s) and Restart Connection Notice(s) for any Planned Well, and the above provisions of this Section  3.2(f) shall apply to each such Stop Connection Notice and Restart Connection Notice; provided, however, (i) if Shipper issues a Stop Connection Notice after issuing a Restart Connection Notice, the provisions of this Section  3.2(f) applicable to such Stop Connection Notice shall apply in lieu of any further actions with respect to such earlier Restart Connection Notice, and (ii) if more than one Restart Connection Notice is issued for any Planned Well, the “original Restart Target On-Line Date,” as that term is used above in this Section  3.2(f) shall be the Restart Target On-Line Date provided by Gatherer to Shipper in response to Shipper’s most recent Restart Connection Notice.

(iii) Shipper shall make reimbursement to Gatherer under this Section  3.2(f) within 30 Days after Shipper’s receipt of each of Gatherer’s invoices for the applicable Connection Costs, which invoice shall contain reasonable supporting documentation. If Shipper reimburses Gatherer Connection Costs in accordance with Section  3.2(f)(i) for any Planned Well, and prior to the third anniversary of the original Target On-Line Date of such Planned Well, the Well Completion Requirements for such Planned Well have been met, then Gatherer shall reimburse to Shipper such Connection Costs within 30 Days of Gatherer’s receipt of Shipper’s written notice that such Well Completion Requirements have been met, together with reasonable supporting documentation of such occurrence.

(g) Minimum Well Requirement .

(i) In the event Shipper fails for any reason to drill and complete at least the following number of Planned Wells that are also Operated Wells and are not otherwise subject to a Conflicting Dedication in the McQuay Area during each period set forth in the table below (such minimum number of Planned Wells, herein the “ Minimum Well Requirement ” and each such period, a “ Minimum Well Period ”), then Shipper shall pay to Gatherer the well deficiency amount set forth below with respect to such period (the “ Individual Well Deficiency Amount ”) for each such Planned Well which Shipper fails to drill and complete during such Year (the “ Minimum Well Deficiency Obligation ”). For the avoidance of doubt, any Minimum Well Deficiency Obligation amounts paid by Shipper to Gatherer pursuant to this Section  3.2(g) shall, to the maximum extent possible, be made as cost reimbursements (within the meaning of Treasury Regulations Section 1.7704-4(c)(10)(i)) of McQuay Development Costs.

 

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Minimum Well Period

   1/1/2018 to
12/31/2018
     1/1/2019 to
4/30/2020
     5/1/2020 to
4/30/2021
     5/1/2021 to
4/30/2022
 

Minimum Well Requirement

     30        40        40        30  

Individual Well Deficiency Amount

   $ 3,500,000      $ 3,500,000      $ 2,000,000      $ 2,000,000  

(ii) In determining whether such a Planned Well has been drilled and completed, such that it will be applied towards the Minimum Well Requirement for a specific Minimum Well Period, (A) such Planned Well must be drilled and completed, (B) all Shipper’s Facilities connecting such Planned Well to the Receipt Point to be located on or near the Well Pad on which such Planned Well is to be located must be completed such that Shipper’s Facilities are ready to be connected to such Receipt Point(s), and (C) if 125 Wells have been previously drilled and completed in the Marcellus Formation and credited towards the Minimum Well Requirement, such Planned Well must be drilled and completed in the Utica Formation. For purposes of this Section  3.2(g) , such Planned Well will be deemed to have been “drilled and completed” in the Minimum Well Period in which the later of (A) and (B) in the immediately preceding sentence occurs with respect to such Planned Well. Shipper shall pay to Gatherer by wire transfer any Minimum Well Deficiency Obligation for any Minimum Well Period not later than 20 Days after Shipper’s receipt of Gatherer’s invoice for such Minimum Well Deficiency Obligation. If during any Minimum Well Period in which there is a Minimum Well Requirement, Shipper drills and completes more Planned Wells than the Minimum Well Requirement for such Minimum Well Period, all such Planned Wells in excess of such Minimum Well Requirement (the “ Excess Wells ”) will be applied against the next succeeding Minimum Well Period’s Minimum Well Requirement; provided, however, if Shipper has paid a Minimum Well Deficiency Obligation for the immediately preceding Minimum Well Period, in lieu of applying the Excess Wells against the next succeeding Minimum Well Period’s Minimum Well Requirement, Shipper may obtain a refund of that portion of such Minimum Well Deficiency Obligation previously paid equal to the number of such Excess Wells times the Individual Well Deficiency Amount during the Minimum Well Period for which such Minimum Well Deficiency Obligation payment was made, but in no event shall such refund exceed the amount of such Minimum Well Deficiency Obligation previously paid by Shipper. If Shipper desires to receive such a refund, Shipper shall notify Gatherer not later than the end of the Minimum Well Period in which there are Excess Wells, otherwise such Excess Wells will be applied against the next succeeding Minimum Well Period’s Minimum Well Requirement. Any such refund shall be paid by Gatherer within 30 days after Gatherer’s receipt of notice from Shipper that Shipper is entitled to such refund. Additionally, if Shipper pays a Minimum Well Deficiency Obligation with respect to the last Minimum Well Period and drills and completes more than 30 Planned

 

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Wells in the McQuay Area during the period from April 30, 2022 through May 1, 2023 (the “ Final Cure Period ”), for each such Planned Well, Shipper shall be entitled to obtain a refund of that portion of the Minimum Well Deficiency Obligation paid by Shipper with respect to the last Minimum Well Period equal to the product of (A) the number of Planned Wells in the McQuay Area drilled and completed by Shipper during the Final Cure Period in excess of 30 Planned Wells and (B) $2,000,000, and within 30 days after its receipt of notice from Shipper regarding its entitlement to such a refund, Gatherer shall so pay such refund to Shipper.

(iii) If any of Shipper’s activities required to drill and complete a Planned Well in the McQuay Area are delayed by Force Majeure during any Minimum Well Period, with respect to such Planned Well only, such Minimum Well Period will be extended by one Day for each Day of delay in drilling and completing such Planned Well that is attributable to Force Majeure, for purposes of determining any Minimum Well Deficiency Obligation for such Planned Well for such Minimum Well Period. As an example only, if, in the first Minimum Well Period, the Minimum Well Requirement is 30 Planned Wells, Shipper drills and completes 25 Planned Wells in the McQuay Area, and drilling and completion of one Planned Well in the McQuay Area is delayed 31 Days by Force Majeure, Shipper would owe Gatherer a Minimum Well Deficiency Obligation for four Planned Wells, the first Minimum Well Period would be extended by 31 Days with respect to one Planned Well delayed by Force Majeure, and Shipper would only owe Gatherer a Minimum Well Deficiency Obligation for such delayed Planned Well if Shipper fails to drill and complete such Planned Well prior to expiration of such 31-Day extension; but, if Shipper drills and completes such delayed Planned Well prior to expiration of such 31-Day extension, such delayed Planned Well will count towards the Minimum Well Requirement with respect to the first Minimum Well Period, even if drilled and completed during January of 2019.

Section 3.3 Cooperation . Because of the interrelated nature of the actions of the Parties required to obtain the necessary permits and authorizations from the appropriate Governmental Authorities and the necessary consents, rights of way and other authorizations from other Persons necessary to drill and complete each Planned Well and construct the required extensions of the applicable Individual System to each Planned Well Pad, the Parties agree to work together in good faith to obtain such permits, authorizations, consents and rights of way as expeditiously as reasonably practicable, all as provided in this Agreement. The Parties further agree to cooperate with each other and to communicate regularly regarding their efforts to obtain such permits, authorizations, consents and rights of way. Upon request by Shipper, Gatherer shall promptly provide to Shipper copies of all state and federal permits and approvals obtained by Gatherer in order to construct any extension of any Individual System to a Planned Well or a Planned Well Pad. Upon request by Gatherer, Shipper shall promptly provide to Gatherer copies of all state and federal permits and approvals obtained by Shipper in order to drill and complete any Well or to construct Shipper’s Facilities.

Section 3.4 Gathering Services With Respect to Execution Date Wells . For the avoidance of doubt and notwithstanding anything to the contrary, from and after the Execution Date, Gatherer shall provide Gathering Services (other than the delivery of Fuel Gas) to the Execution Date Wells, and, subject to Section  6.4(a) , Existing Pressure Service at the Execution Date Compression Receipt Points.

 

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Section 3.5 Right of Way and Access Rights .

(a) Gatherer is responsible, at its sole cost, for the acquisition and maintenance of rights of way, surface use and/or surface access agreements necessary to construct, own and operate the Individual Systems; provided that Shipper hereby grants to Gatherer, without warranty of title, either express or implied, to the extent that it may lawfully and is contractually permitted to do so without the incurrence of additional expense (or if Shipper will incur additional expenses and Gatherer agrees to reimburse such expenses), a non-exclusive easement and right of way upon the Dedicated Properties and all lands covered by the Dedication Area and the ROFO Area for the purpose of installing, using, maintaining, servicing, inspecting, repairing, operating, replacing, disconnecting and removing all or any portion of the Gathering System utilized in connection with the performance of Gathering Services, including all pipelines, meters and other equipment necessary for the performance by Gatherer of this Agreement. However, Shipper shall provide, at no cost to Gatherer, such space on a Well Pad or Planned Well Pad as may be reasonably necessary to provide Gathering Services for Gas and Condensate received from such Well Pad or Planned Well Pad, and Shipper shall provide and maintain, at no cost to Gatherer, all real property rights and interests necessary for Gatherer’s installation, operation, maintenance and repair of its facilities located in such space as reasonably necessary to provide Gathering Services for Gas and Condensate received from such Well Pad or Planned Well Pad. For the avoidance of doubt, this Section  3.5(a) shall not apply to lands which are the subject of that certain Surface Use Agreement between CONE Gathering LLC, Shipper and the other parties thereto dated as of September 30, 2011, as amended or restated from time to time.

(b) Shipper shall not have a duty to maintain in force and effect any underlying agreements (such as any lease, easement, or surface use agreement) that the grants of easements or rights of way by Shipper to Gatherer pursuant to Section  3.5(a) are based upon, and such grants of easements or rights of way will terminate if Shipper loses its rights to the applicable property, regardless of the reason for such loss of rights.

(c) Gatherer hereby grants to Shipper, without warranty of title, either express or implied, to the extent that it may lawfully and is contractually permitted to do so without the incurrence of additional expense, an easement and right of way upon all lands on which the Gathering System is located, as such Gathering System exists on the Execution Date. Gatherer shall not have a duty to maintain in force and effect any underlying agreements that the grants of easements or rights of way by Gatherer to Shipper pursuant to this Section  3.5(c) are based upon, and such grants of easements or rights of way will terminate if Gatherer loses its rights to the applicable property, regardless of the reason for such loss of rights.

(d) The exercise of the rights granted to a Party by the other Party pursuant to Section  3.5(a) and Section  3.5(c) shall not unreasonably interfere with such other Party’s or its Affiliate’s, as applicable, operations or with the rights of owners in fee with respect to the applicable lands, and such rights will be exercise in material compliance with all applicable Laws and the safety and other reasonable access requirements of the granting Party.

 

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(e) Each Party shall be responsible for, and shall release, defend, indemnify and hold harmless the other Party’s Group for, any Claims caused by such Party’s use of its access rights pursuant to this Section  3.5 . Subject to Section  3.5(b) , Shipper shall maintain all roads owned by it upon the Dedicated Properties as reasonably necessary for Gatherer to access the Wells and its facilities located thereon.

Section 3.6 Blending Rights .

(a) Notwithstanding anything herein to the contrary, Shipper shall be permitted to blend Gas, subject to Section  3.6(d) below, by (i) changing the Receipt Point for any Gas to be Tendered by Shipper to Gatherer hereunder to another Receipt Point on the same Individual System, (ii) taking Gas from an Individual System at an Intermediate Delivery Point selected by Shipper on the same Individual System and re-Tendering such Gas at another Receipt Point selected by Shipper on the same Individual System or (iii) Tendering volumes of other Gas, including, by way of example and not of limitation, coal bed methane Gas or Third Party Gas at (or near) any Tap. All Gas Tendered by Shipper to an Individual System for blending shall be entitled to Priority One Service. In the event that Shipper takes volumes of Gas at an Intermediate Delivery Point and re-Tenders such volumes at a different Receipt Point on the same Individual System in the exercise of its blending rights hereunder, only one fee for such volumes will be due and owing (calculated based upon the volumes of such Gas Tendered by Shipper at the original Receipt Point(s)). In no event shall Gatherer be obligated to install any new Intermediate Delivery Points on an Individual System, or otherwise receive Gas under this Section  3.6(a) , if Gatherer determines, in its sole good faith discretion, to do so could adversely affect Gatherer’s operations and/or its ability to comply with its contractual obligations on such Individual System.

(b) In the event that Shipper Tenders volumes of coal bed methane or other Gas at (or near) any Tap under Section  3.6(a) for the purpose of blending (“ Blending Gas ”) that was produced from or attributable to Shipper or any Affiliate of Shipper’s working interest in any well and Gatherer is not required to perform any additional services with respect to such Gas, no fee will be due and owing by Shipper pursuant to Section  5.1 or otherwise for such Blending Gas. For the avoidance of doubt, (i) the Fee will apply to any Blending Gas for which Gatherer performs Gathering Services, and (ii) Shipper shall be obligated to pay the Fee with respect to any Blending Gas that was not produced from Shipper or any of its Affiliates working interest in any well or from any well in which neither Shipper nor any of its Affiliates possesses a working interest. Notwithstanding anything to the contrary in the foregoing, Shipper shall not Tender volumes of Blending Gas, and Gatherer shall have no obligation to accept any Blending Gas, if Gather’s acceptance of such Blending Gas would result in Gatherer being in breach of its obligations with respect to applicable Gas specifications as set forth in any other gathering agreements with other shippers or could result in Gatherer being subject to additional costs, penalties, fee reductions (including penalties and fee reductions hereunder) or any other liability resulting therefrom.

(c) Any pipeline or gathering system that may be necessary in order for Shipper to Tender Blending Gas to an Individual System will be constructed by Shipper or by a Third Party on behalf of Shipper at Shipper’s cost and expense and shall not constitute a portion of the Individual System; provided that the Parties may separately agree, by an amendment to this Agreement, that Gatherer will build facilities to connect an Individual System to wells to provide Shipper’s owned or Controlled Gas for blending purposes for a fee mutually agreeable by the Parties.

 

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(d) For the avoidance of doubt, in the event that any blended Gas stream among Shipper and other shippers on any portion of an Individual System that services Dry Gas does not meet the then current pipeline specifications of the Downstream Pipeline due to the quality of Shipper’s Gas, Gatherer and Shipper shall use commercially reasonable efforts to find a solution using existing infrastructure to blend any Gas, including residue gas from another system; provided that Gatherer will not be required to construct any new infrastructure, reduce existing throughput capacity or incur any additional costs (unless Shipper reimburses Gatherer for such costs) to satisfy this requirement. Shipper acknowledges that any such new infrastructure or capacity reduction would comprise a new service not originally contemplated under this Agreement, and would require a mutually agreed-upon solution between the Parties.

(e) For the avoidance of doubt, Gatherer shall not be required to comply with any of the obligations contained in this Section  3.6 with respect to Blending Gas to the extent that compliance with such obligations would result in Gatherer being in breach of its obligations with respect to applicable Gas specifications as set forth in the Noble Gas Gathering Agreement (but without regard to any amendments made to the Noble Gas Gathering Agreement after the Execution Date).

Section 3.7 Liquid Condensate . Shipper shall be responsible for injecting Dedicated Liquid Condensate into the Individual Systems on which Condensate Services are provided at the applicable Receipt Point, measuring all Liquid Condensate injected into the Individual Systems at the applicable Receipt Points and providing Gatherer reasonable access to Shipper’s Measurement Devices, including the data therefrom, for such Liquid Condensate, including as set forth in Section  1.4(f) of Exhibit A . Notwithstanding anything to the contrary herein, such Measurement Devices will be deemed to be Shipper Meters, and the provisions of Sections 1.4(c) - ( i ) and 1.6 of Exhibit A will apply mutatis mutandis to Shipper and such Shipper Meters, such that Shipper shall be responsible for complying with the obligations of “Gatherer,” and Gatherer shall have the rights of “Shipper,” under such Sections with respect to such Shipper Meters. Additionally, as soon as practicable after the end of each Month but in no event later than five Business Days following the end of such Month, Shipper shall deliver to Gatherer written notice (including reasonable supporting documentation) of the measured volumes (stated in Barrels) of Liquid Condensate delivered by Shipper to Gatherer at each applicable Receipt Point during the preceding Month. If Gatherer determines it is not satisfied with use of any such Shipper Meter(s) for measurement of Liquid Condensate at one or more Receipt Points on an Individual System, Gatherer may install, own, operate and maintain its own Measurement Devices to measure the Liquid Condensate injected into the Individual Systems at the applicable Receipt Point(s), and if Gatherer elects not to do so Gatherer shall develop a measurement and allocation protocol based on generally accepted industry practices that it will require, or, with respect to any Liquid Condensate delivered pursuant to the Noble Gas Gathering Agreement, shall use commercially reasonable efforts to cause (provided that Gatherer shall not be required to make any payments to any third party in the pursuit of the satisfaction of such obligation), each shipper (including Shipper) on such Individual System to utilize for measurement of volumes of Liquid Condensate at the applicable receipt points, in which event Gatherer shall

 

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require the use of such measurement and allocation protocol in its agreements with such shippers, and use commercially reasonable efforts to enforce such measurement and allocation protocol provisions in all such agreements. The Parties agree that the density of all Liquid Condensate injected into an Individual System by Shipper shall be within the applicable ranges specified on Exhibit L . Gatherer further agrees that it shall use commercially reasonable efforts to cause the density of all Liquid Condensate injected into an Individual System by any other shipper on such Individual System to be within the applicable range specified on Exhibit L , and Gatherer shall use commercially reasonable efforts to include such density range as a Liquid Condensate quality specification on such Individual System in its agreements with such shippers (provided that Gatherer shall not be required to make any payments to any third party in the pursuit of the satisfaction of such obligation) and shall use commercially reasonable efforts to enforce such quality specification in all such agreements; provided that, notwithstanding the foregoing, nothing contained herein shall obligate Gatherer to amend the Noble Gas Gathering Agreement to include such Liquid Condensate specifications and Gatherer shall not be required to comply with the foregoing obligations with respect to Liquid Condensate in connection with the Noble Gas Gathering Agreement to the extent that the obligations set forth in the Noble Gas Gathering Agreement (but without regard to any amendments made to the Noble Gas Gathering Agreement after the Execution Date) with respect to Liquid Condensate are inconsistent with the foregoing. In addition, Gatherer shall use commercially reasonable efforts to include the requirements of the first three (3) sentences of this Section  3.7 in its agreements with other shippers with respect to Liquid Condensate to be gathered on the ACAA System and the Majorsville System (provided that Gatherer shall not be required to make any payments to any third party in the pursuit of the satisfaction of such obligation), shall use commercially reasonable efforts to enforce such requirements in all such agreement(s), and shall maintain records regarding all such Third Party Liquid Condensate measurements and allocations for a period of at least 24 Months.

Section 3.8 Gatherer Reports . Gatherer shall provide Shipper with daily, monthly and yearly operational and production reports relating to the Individual Systems and Dedicated Production delivered by Shipper (such reports, “ Gatherer Reports ”). The Gatherer Reports (other than the daily reports) shall include (i) any Downtime Event relevant to the applicable time period covered by such Gatherer Report and (ii) shall also include a breakdown of the throughput amounts of Dedicated Production delivered by Shipper applicable to each Individual System. The Gatherer Reports shall only include information applicable to Dedicated Production delivered by Shipper and not any information related to other shippers on the Individual Systems.

Section 3.9 Additional Delivery Points . Upon the written request of Shipper (which may be given one or more times during the Term), Gatherer shall use its commercially reasonable efforts to construct, operate and maintain an additional delivery point on an Individual System, after a connection agreement with the applicable Downstream Pipeline for such delivery point, in form and substance mutually agreeable to Gatherer and such Downstream Pipeline, is entered into. Upon the completion of the construction of such delivery point, such delivery point shall constitute a “Delivery Point” for all purposes of this Agreement. Any such request by Shipper shall identify the design capacity desired by Shipper for the applicable delivery point (the “ Shipper Requested Design Capacity ”). Shipper shall reimburse Gatherer for all Capital Expenses incurred in connection with construction of such Delivery Point, and

 

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Shipper shall be entitled to a super-priority as to the use of the capacity at such Delivery Point for the Shipper Requested Design Capacity, to the extent permitted by applicable Laws; provided, however, if Gatherer elects to construct such Delivery Point with a greater design capacity than the Shipper Requested Design Capacity, Shipper’s foregoing reimbursement obligation and super-priority with respect to such Delivery Point will be prorated based on a fraction, expressed as a percentage, the numerator of which is the Shipper Requested Design Capacity and the denominator of which is the actual design capacity of such Delivery Point. In no event shall Gatherer be obligated to install a new Delivery Point at any location on an Individual System, where Gatherer determines, in its good faith discretion, to do so could adversely affect Gatherer’s operations and/or its ability to comply with its contractual obligations on such Individual System

Section 3.10 Fuel Gas Measurement and Facilities . Gatherer shall be responsible for installing necessary measurement devices to measure and for measuring all Fuel Gas delivered to Shipper at any Fuel Gas Point established hereunder. With respect to each Planned Well requiring Fuel Gas hereunder, Gatherer’s obligation under this Agreement to provide Fuel Gas to the Fuel Gas Point for such Planned Well will terminate on the On-Line Date for such Planned Well, and Gatherer will thereafter have the right to remove the Fuel Gas meter and all other facilities installed by Gatherer to deliver Fuel Gas to such Fuel Gas Point, and Gatherer may reuse such meter and facilities for any other Fuel Gas Point.

ARTICLE 4

TENDER, NOMINATION AND GATHERING OF PRODUCTION

Section 4.1 Priority of Service .

(a) All Priority One Dedicated Production Tendered by Shipper for delivery to the Gathering System shall be entitled to Priority One Service; provided , however , that with respect to Priority One Dedicated Production Tendered for delivery by Shipper to the Majorsville System, on or before the Shared Priority Deadline, only such Priority One Dedicated Production up to 122,000 MSCF on any Day shall be entitled to Priority One Service (the “ Reservation Amount ”) and any Priority One Dedicated Production delivered to the Majorsville System by Shipper in excess of such amount shall be entitled to Priority Two Service.

(b) Every six months following the Execution Date until the Shared Priority Deadline, Gatherer and Shipper shall meet to discuss with “Initial Shipper” under the Noble Gas Gathering Agreement, and cooperate in good faith to determine, any changes to the Reservation Amount.

(c) Notwithstanding Section  4.1(a) or anything contained herein to the contrary, all Gas Tendered by Shipper to the Majorsville System or the Legacy McQuay System, in each case, that was produced from the Utica Formation shall only be entitled to Priority Two Service.

Section 4.2 Governmental Action . The Parties intend and agree that all Gathering Services (other than the delivery of Fuel Gas) on each Individual System with respect to Dedicated Production provided to Shipper shall be provided with the priority specified in Section  4.1 , and that Shipper (pro rata, using the same methodology as set forth in Section  1.7 of Exhibit

 

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A , with any other shipper on the applicable Individual System granted Priority One Service and/or Priority Two Service, as applicable) has the first priority call upon the capacity of the Gathering System for service to Shipper for its Dedicated Production for the Term. Notwithstanding the foregoing, in the event any Governmental Authority issues an order requiring Gatherer to allocate capacity to another shipper contrary to the above, Gatherer shall, to the extent permitted to do so by such Governmental Authority, do so by first reducing all Gas and, to the extent applicable, Liquid Condensate entitled to Priority Two Service, and shall only curtail receipts of Gas and Liquid Condensate entitled to Priority One Service (using the same methodology as set forth in Section  1.7 of Exhibit A ) to the extent necessary to allocate such capacity to such other shipper, after complete curtailment of Gathering Services on an Interruptible Basis and Priority Two Service. In such event Gatherer shall not be in breach or default of its obligations under this Agreement and shall have no liability to Shipper in connection with or resulting from any such curtailment; provided, however, that Gatherer shall, at Shipper’s request, temporarily release from dedication under this Agreement all of Shipper’s volumes interrupted or curtailed as the result of such allocation until Gatherer is permitted by such Governmental Authority to take all such volumes of Shipper.

Section 4.3 Tender of Dedicated Production . Subject to the terms and conditions of this Agreement (including Section  2.4 and Article 11 ) and all applicable Laws, each Day during the Term, Shipper shall Tender to the Gathering System at each applicable Receipt Point all of the Dedicated Production produced from Wells upstream of such Receipt Point. Shipper shall have the right to Tender to Gatherer for Gathering Services under this Agreement, at then-existing Receipt Points, Gas and/or Liquid Condensate other than Dedicated Production; provided that, (a) any such Gas and/or Liquid Condensate shall not be entitled to Priority One Service or Priority Two Service but rather shall be provided Gathering Services on an Interruptible Basis only (though all such Gas and Liquid Condensate, once received into a Receipt Point, shall be treated as Dedicated Production for all other purposes of this Agreement other than curtailment), and (b) any such Liquid Condensate can only be Tendered to Receipt Points on the ACAA System and the Majorsville System.

Section 4.4 Gathering Services .

(a) Gatherer shall construct, own, operate and maintain all Individual Systems in a good and workmanlike manner in accordance with standards customary in the industry and in compliance in all material respects with applicable Laws.

(b) Subject to the provisions of this Agreement and rights of all applicable Governmental Authorities, Gatherer shall (i) provide Gathering Services for all Dedicated Gas and, to the extent applicable, Liquid Condensate constituting Dedicated Production that is Tendered to Gatherer at the applicable Receipt Point on an Individual System, (ii) re-deliver to Shipper or for the benefit of Shipper at the relevant Delivery Point on the same Individual System as nominated by Shipper, and confirmed, in accordance with the nomination procedures set forth in Exhibit A , (a) Gas with an equivalent Thermal Content, less the Thermal Content of Drip Condensate, and such Gas consumed as Gathering System Fuel and Gathering System L&U allocated to Shipper, and (b) to the extent applicable, Liquid Condensate and Drip Condensate, in each case, in accordance with this Agreement. Subject to the other provisions of this Agreement (including Sections 3.2(a)(i) , 3.2(f) and 3.2(g) ), Gatherer agrees to construct, install, own and

 

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operate, at its sole cost, risk and expense, the Individual Systems, including facilities required to connect to Receipt Points on the applicable Individual Systems at each Well Pad and Planned Well Pad as described in Section  3.2 . Except through the Fees for applicable Gathering Services pursuant to Section  5.1 or as otherwise expressly provided in this Agreement, Shipper shall have no responsibility for the cost of the Individual Systems or any facilities constructed or to be constructed by Gatherer hereunder.

(c) Notwithstanding anything to the contrary herein, Gatherer shall have no obligation to construct or otherwise provide any facilities at the Fallowfield System or the Marshall System other than those in place on the Execution Date.

(d) As set forth on the Majorsville Map and the McQuay Map, certain pipelines will initially be used to move Gas on both the Majorsville System and the McQuay System, but will transition to serve only the Majorsville System or the McQuay System as set forth on such maps.

Section 4.5 Nominations, Scheduling, Balancing and Curtailment . Nominations, scheduling and balancing of Gas and Liquid Condensate available for, and interruptions and curtailment of, Gathering Services under this Agreement shall be performed in accordance with the applicable Operating Terms and Conditions set forth in Exhibit A , except as otherwise provided below in this Section  4.5 with respect to interruptions and/or curtailments of Gas from the North Nineveh Sub Area of the McQuay System.

From and after the Execution Date and until the date on which Gatherer completes construction of and places into commercial service a new compression station (including related suction piping) located on the McQuay System in the North Nineveh Sub Area (the “ North Nineveh Station Start Date ”), which is estimated to occur approximately June 1, 2019, Shipper shall use commercially reasonable efforts to enter into and maintain arrangements for the nominating and Tender of, and shall, to the extent it is so able, nominate and Tender, all Dedicated Gas from the NV 55, NV 56 and NV 57 Well Pads in the McQuay Area at the Receipt Points for such Well Pads for delivery to the National Fuel Gas Delivery Point. In the event that, at any time prior to the North Nineveh Station Start Date, Shipper is unable to obtain capacity at the National Fuel Gas Delivery Point for the delivery of Dedicated Gas as contemplated by this Section  4.5 , Gatherer shall not be liable for (or be responsible for penalties (including any Fee reductions) resulting from) any failure by Gatherer to maintain the pressures required to be maintained pursuant to Section  6.4 at any Receipt Points in the North Nineveh Sub Area resulting from such failure by Shipper to obtain such capacity and Tender Dedicated Gas for delivery to the National Fuel Gas Delivery Point as contemplated by this Section  4.5 . Prior to the North Nineveh Station Start Date, if, for any reason, at any time, National Fuel Gas does not or will not receive at the National Fuel Gas Delivery Point all Dedicated Gas from the Well Pads connected to Receipt Points in the North Nineveh Sub Area of the McQuay System, Gatherer shall have the right to interrupt and/or curtail receipts of Dedicated Gas from such Well Pads to the extent necessary to remedy and/or avoid any operational problems, including pressure problems, caused and/or that will be caused thereby on any portion of the McQuay System; provided that Gatherer shall use commercially reasonable efforts to minimize the extent and duration of any such interruption and/or curtailment. Notwithstanding anything to the contrary herein, in the event of any such interruption and/or curtailment, Shipper will only have the right to a temporary release of the interrupted and/or curtailed Gas under Section  2.5(b) , and, in no event will such interruption and/or curtailment constitute grounds for any permanent release from this Agreement or for any credits, Fee reductions or other liquidated damages under this Agreement.

 

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Section 4.6 Suspension/Shutdown of Service .

(a) Without prejudice to Shipper’s rights under Sections 3.2(e)(i) , 3.2(c)(ii) , 6.4(e) , 6.4(f) and 6.4(g) , during any period when all or any portion of any of the Individual Systems are shut down because of necessary alterations, maintenance or repairs or Force Majeure or because such shutdown is necessary to avoid injury, or harm to Persons or property, to the environment or to the integrity of any of the Individual Systems, receipts of Dedicated Gas and/or Dedicated Liquid Condensate may be curtailed as set forth in Section  1.7 of Exhibit A ; provided that Gatherer shall use commercially reasonable efforts to minimize the extent and duration of any such curtailments.

(b) It is specifically understood by Shipper that operations and activities on facilities upstream or downstream of the Individual Systems may impact operations on the Individual Systems, and the Parties agree that Gatherer shall have no liability therefor.

Section 4.7 Gas and Condensate Marketing and Transportation . As between the Parties, Shipper shall be solely responsible, and shall make all necessary arrangements at and downstream of the Delivery Points on the Individual Systems, for the receipt, further transportation, processing and marketing of all Gas, Drip Condensate separated from Gas and Liquid Condensate delivered or to be delivered to or for the account of Shipper at such Delivery Points. In the event of (i) the failure of Shipper to make all such arrangements or (ii) the failure of the Persons receiving or to receive, all such Gas, Drip Condensate separated from Gas and Liquid Condensate at such Delivery Points, Gatherer shall be excused from all of its obligations and liabilities hereunder arising out of or resulting from such failures, and such events shall be deemed to be events of Force Majeure of Gatherer.

Section 4.8 No Prior Flow of Gas in Interstate Commerce . Shipper covenants that at the time of Tender, none of the Gas or Condensate delivered at any Receipt Point hereunder has flowed in interstate commerce.

Section 4.9 Right of First Offer .

(a) Promptly after determining that Shipper or any of its Affiliates expects to undertake or participate in any development, drilling and production activities on the ROFO Properties (unless such ROFO Properties are covered by a Conflicting Dedication), Shipper must deliver a notice of such planned development, drilling and production activities, including the information required to be provided in a Development Report set forth in Section  3.1(b)(i) through Section  3.1(b)(v) (each, a “ ROFO Notice ”).

(b) Gatherer shall have 45 Days following receipt of a ROFO Notice to make an offer to Shipper to provide Gathering Services with respect to some or all of the ROFO Properties covered in such ROFO Notice (the “ Subject ROFO Properties ”). If Gatherer elects to make an offer, Gatherer shall, on or before 45 Days following Gatherer’s receipt of a ROFO Notice, deliver to Shipper a notice (the “ ROFO Offer ”) setting forth: (i) the proposed Fees for the

 

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Gathering Services to be provided; (ii) the existing operations, under construction or planned facilities needed to provide Gathering Services to the Subject ROFO Properties and; (iii) the schedule for completing the construction and installation of such planned facilities and all planned Receipt Points and Delivery Point facilities, in each case, for the Planned Well Pads and Planned Wells included in the ROFO Offer. In the event Gatherer has questions or desires additional reasonable information in connection with the preparation of such ROFO Offer, Shipper agrees to promptly provide such information to the extent it or its Affiliates has such information and, if requested by Gatherer, to promptly make representatives of Shipper and/or its Affiliates who are knowledgeable with the ROFO Notice and any underlying assumptions and information reasonably available during normal business hours to meet with Gatherer so that Gatherer is in the position of submitting a better informed ROFO Offer within the foregoing 45-Day period; provided, however, if Shipper fails to promptly provide such reasonable information and/or make such representatives reasonably available to Gatherer after Gatherer’s request, such 45-Day period will be extended by one Day for each Day of delay by Shipper in promptly providing such reasonable information and/or making such representatives reasonably available.

(c) Within 30 Days following receipt of Gatherer’s ROFO Offer, Shipper shall notify Gatherer whether or not it accepts Gatherer’s ROFO Offer; provided that the failure of Shipper to timely notify Gatherer of its acceptance of Gatherer’s ROFO Offer shall be deemed a rejection by Shipper of such ROFO Offer. For the avoidance of doubt, Shipper shall be under no obligation to accept any ROFO Offer from Gatherer.

(d) If Shipper accepts a ROFO Offer (such ROFO Properties described in an accepted ROFO Offer, the “ Dedicated ROFO Properties ”), then (i) Shipper will be deemed to have (A) dedicated such Dedicated ROFO Properties under this Agreement, (B) dedicated and committed to deliver to Gatherer under this Agreement, as and when produced all of the Gas and/or Liquid Condensate, as applicable, owned by Shipper and/or its Affiliates thereafter produced during the Term from such Dedicated ROFO Properties and (C) committed to deliver to Gatherer under this Agreement, as and when produced, all Third Party Gas and/or Liquid Condensate, as applicable, under the Control of Shipper and/or its Affiliates that is thereafter produced during the Term from the lands covered by such Dedicated ROFO Properties and (ii) the Parties will amend this Agreement to incorporate the terms set forth in the accepted ROFO Offer.

(e) If Shipper does not accept or is deemed to have not accepted a ROFO Offer, then Shipper shall have no further obligations hereunder with respect to the Subject ROFO Properties.

ARTICLE 5

FEES

Section 5.1 Fees .

(a) Shipper shall pay Gatherer each Month in accordance with the terms of this Agreement, for all Gas Services provided by Gatherer with respect to Dedicated Gas received by Gatherer from Shipper or for Shipper’s account during such Month at the Receipt Points on an Individual System, an amount equal to the product of (i) the aggregate quantity of such Dedicated Gas (other than Gas used for Gathering System Fuel and Fuel Gas to the extent such Fuel Gas is used on the same Well Pad on which it was produced), stated in MMBtus, in each

 

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case, received by Gatherer from Shipper or for Shipper’s account at the applicable Receipt Points on such Individual System during such Month multiplied by (ii) the fee(s) (in cents per MMBtu) for Gas set forth on the Individual System Exhibits of such Individual System (the “ Gas Gathering Fee ”).

(b) Shipper shall pay Gatherer each Month in accordance with the terms of this Agreement, for all Condensate Services provided by Gatherer on those Individual Systems on which it provides Condensate Services with respect to Dedicated Liquid Condensate Tendered by Shipper hereunder and allocated to Shipper (based on the volumes of Liquid Condensate delivered to Shipper at each relevant Delivery Point) in accordance with this Agreement during such Month, an amount equal to the product of (i) the aggregate quantity of Liquid Condensate, stated in Barrels, allocated to Shipper in accordance with this Agreement on such Individual System during such Month multiplied by (ii) the fee(s) (in dollars per Barrel) for Liquid Condensate set forth on the Individual System Exhibits for such Individual System (the “ Condensate Gathering Fees ”). For the avoidance of doubt, the ACAA System and the Majorsville System are the only Individual Systems which shall gather Dedicated Liquid Condensate.

(c) In addition to the fees under Section  5.1(a) and Section  5.1(b) , and subject to the adjustments in Section  5.2 , to the extent applicable, Shipper shall pay Gatherer each Month in accordance with the terms of this Agreement for the following Compression Services an amount equal to the aggregate quantity of such Dedicated Gas (other than Gas used for Gathering System Fuel and Fuel Gas to the extent such Fuel Gas is used on the same Well Pad on which it was produced), stated in MMBtus, in each case, received by Gatherer from Shipper or for Shipper’s account at each applicable Receipt Point during such Month multiplied by one of the following, if applicable:

(i) For each Receipt Point on an Individual System that Gatherer is obligated to provide Tier 1 Pressure Service, but excluding those Execution Date Wells identified on Exhibit B-2 with the designation of “Yes” under the column “Wells that will benefit from Tier 1 Pressure Service for No Fee”, the Tier 1 Compression Fee;

(ii) For each Receipt Point on an Individual System that Gatherer is obligated to provide Tier 2 Pressure Service but excluding those Execution Date Wells identified on Exhibit B-2 with the designation of “Yes” under the column “Wells that will benefit from Tier 2 Pressure Service for No Fee”, the Tier 2 Compression Fee;

(iii) For the Receipt Point for the Gaut 4IHSU Unit on the Mamont System, the Fee specified in Exhibit B-8(b) ; and

(iv) For the Receipt Points for the NV57 Well Pad and GH9 Well Pad on the McQuay System, the Fee specified in Exhibit B-11(b) .

(d) For the avoidance of doubt, the Parties acknowledge that there is no separate fee chargeable by Gatherer hereunder for Gathering Services with respect to Drip Condensate, the fees chargeable by Gatherer hereunder for Gas are sufficient to compensate Gatherer for Gathering Services with respect to Drip Condensate and, without prejudice to Section  1.8(b) of Exhibit A , no fee is chargeable in connection with the provision of Fuel Gas to the extent such Fuel Gas is used on the same Well Pad on which it was produced.

 

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Section 5.2 Fee Adjustments .

(a) Commencing with (i) January 1, 2018, for the Fees applicable to the Execution Date Wells, and (ii) January 1, 2019, for the Fees applicable to all other Wells and for the Adjusted Amount, and thereafter as of January 1 of each remaining Year through and including calendar year 2034, such Fees and Adjusted Amount will be increased by an amount equal to the sum of the then applicable fee or amount (as applicable) as of the preceding Month plus the product of the Annual Escalation Factor multiplied by such fee or amount. Commencing on January 1, 2035, and as of each January 1 thereafter during the Term, each Fee and Adjusted Amount shall be adjusted to be an amount equal to the sum of the Fee or Adjusted Amount in effect immediately prior to January 1, 2035, and the product of such Fee or Adjusted Amount and the percentage change in CPI-U between January 1, 2034 and January 1, 2035. Such Fees and Adjusted Amount shall be adjusted thereafter on each successive January 1 by adjusting the previous Year’s Fees and Adjusted Amount by the percentage change in CPI-U over the preceding Year. Notwithstanding the foregoing, in no event will any CPI-U adjustment (up or down) exceed 3% of the Fees or the Adjusted Amount in effect immediately prior to such adjustment.

(b) If there has been a Downtime Event, and such Downtime Event caused (i) the Downtime Percentage for the Gathering System during any calendar quarter to be greater than 4% during such calendar quarter; (ii) the Downtime Percentage for any Individual System during any calendar quarter to be greater than 10% during such calendar quarter or (iii) the Downtime Percentage for any Individual System during any two consecutive calendar quarters to be greater than 6% during such two consecutive calendar quarters, then in any such case, the Gas Gathering Fee for Dedicated Gas and the Condensate Gathering Fee for Dedicated Liquid Condensate shall be reduced as set forth in Exhibit H . For the avoidance of doubt, only the highest penalty set forth on Exhibit H shall be applicable to a Downtime Event.

(c) This Section  5.2(c) applies only to Dedicated Gas produced from Wells connected to Receipt Points with respect to which Gatherer is providing (or is obligated to provide) Existing Pressure Service, Tier 1 Pressure Service or Tier 2 Pressure Service pursuant to the provisions of this Agreement (all such Dedicated Gas herein the “ Compression Obligation Gas ”). After the first Day upon which Gatherer is obligated to provide such Compression Services for Compression Obligation Gas received at the applicable Receipt Point receiving such Compression Obligation Gas (the “ Compression Obligation Receipt Point ”), if during any Day, the Average Pressure exceeds the Existing Required Pressure at a Compression Obligation Receipt Point for which Gatherer is providing Existing Pressure Service, six hundred (600) Psig at a Compression Obligation Receipt Point for which Gatherer is providing Tier 1 Pressure Service or three hundred (300) Psig at a Compression Obligation Receipt Point for which Gatherer is providing Tier 2 Pressure Service (the “ Target Pressure ”), then (i) the applicable Gas Gathering Fee for Compression Obligation Gas received at such Compression Obligation Receipt Point shall be reduced for such Day based on the calculation of the Pressure Overage Percentage, as set forth in Exhibit I , and (ii) the applicable Compression Fee for Compression Obligation Gas received at such Compression Obligation Receipt Point shall be $0. The Gas

 

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Gathering Fee and Compression Fee reduction under this Section  5.2(c) constitutes the sole and exclusive remedy available to Shipper with respect to any failure by Gatherer to (i) cause the Average Pressure at any Compression Obligation Receipt Point to not exceed the Target Pressure for such Receipt Point, except as otherwise provided in Sections 2.5(a)(v) and 2.5(a)(vi) , or (ii) commence the applicable Tier 1 Pressure Service or Tier 2 Pressure Service by the applicable Target Compression Date, except as otherwise provided in Section  2.5(a)(iv) .

(d) This Section  5.2(d) applies to all Dedicated Gas that is not Compression Obligation Gas (“ Free Flow Gas ”). After the commencement of Gathering Services to Free Flow Gas at any Receipt Point, until such time as such Free Flow Gas at such Receipt Point (a “ Free Flow Receipt Point ”) becomes Compression Obligation Gas hereunder, if during any Day, the Average Pressure at such Free Flow Receipt Point exceeds the sum of (i) the Average Pressure at the Delivery Point to which the majority of the Free Flow Gas is delivered during such Day and (ii) the CONE Freeflow Pressure Delta specified on Exhibit Q for the relevant Free Flow Receipt Point Area (and the Parties agree to use good faith efforts to mutually agree the areas covered by each Free Flow Receipt Point Area) (the “ Free Flow Target Pressure ”), then the applicable Gas Gathering Fee for Free Flow Gas at such Free Flow Receipt Point shall be reduced for such Day based on the calculation of the Pressure Overage Percentage, as set forth in Exhibit I . The Gas Gathering Fee reduction under this Section  5.2(d) constitutes the sole and exclusive remedy available to Shipper with respect to any failure by Gatherer to cause the Average Pressure at any Free Flow Receipt Point to not exceed the Free Flow Target Pressure for such Free Flow Receipt Point, except as otherwise provided herein.

(e) In calculating any Pressure Overage Percentage as required pursuant to Section  5.2(c) or Section  5.2(d) , any period of time when the Target Pressure at the Compression Obligation Receipt Point is not maintained due to (i) an event of Force Majeure, or (ii) delivery by Shipper of Gas and/or Liquid Condensate, at that or any other Receipt Point on the relevant Individual System, which does not meet the applicable quality specifications set forth in Section  1.1 of the Operating Terms and Conditions, shall, in each case, be excluded from such calculation.

(f) The Parties acknowledge that (i) Shipper owns that certain facility in Rogersville, Pennsylvania (the “ Greenhill Facility ”) that is located near Gatherer’s facility in Rogersville, Pennsylvania (the “ McQuay Facility ”), (ii) production being gathered by Gatherer may flow through the Greenhill Facility, and (iii) certain of Shipper’s production that is not Dedicated Production may flow through the McQuay Facility (such production that is capable of flowing through the McQuay Facility, the “ Other Production ”). For the avoidance of doubt, Other Production is not Dedicated Production and shall not be entitled to Priority One Service. Within 30 Days following the end of each Month, Shipper shall provide to Gatherer a statement setting forth (A) the quantities, stated in MMBtu, of Other Production produced during such Month (the “ Monthly Other Production ”) and (B) the quantities, stated in MMBtu, of production that were delivered at the tailgate of the Greenhill Facility during such Month (the “ Greenhill Delivered Production ”). If the Greenhill Delivered Production exceeds the Monthly Other Production, then Gatherer shall pay Shipper an amount equal to the product of (1) the difference between the Greenhill Delivered Production and the Monthly Other Production, stated in MMBtu, multiplied by (2) the applicable Fee. If the Monthly Other Production exceeds the Greenhill Delivered Production, then Shipper shall pay Gatherer an amount equal to the product of (x) such quantities, stated in MMBtu, of the difference between the Monthly Other Production and the Greenhill Delivered Production multiplied by (y) the applicable Fee.

 

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Section 5.3 Excess Gathering System L&U . If, during any Month, Gathering System L&U allocated to Shipper in accordance with Section  1.8 of Exhibit A of this Agreement exceeds 1.5% of the total quantities of Shipper’s Controlled Gas to the Gathering System in such Month by Shipper, then Gatherer will conduct a field-wide meter balance (or recalibration, gas sampling, leak surveys, field-wide meter balance, as appropriate). Gatherer shall provide Shipper with prior notice of, and reasonable access to observe, any such field-wide meter balance. Commencing with the fourth consecutive Month during the Term, and continuing for each consecutive Month thereafter, if the Gathering System L&U allocated to Shipper in accordance with this Agreement exceeds 2.5% of the total quantities of Shipper’s Controlled Gas delivered to the Gathering System in such Month by Shipper and such discrepancy cannot be corrected by a field-wide meter balance, then Gatherer shall pay Shipper in respect of such excess an amount equal to (a) the volume of such excess multiplied by (b) the price for Shipper’s Controlled Gas in the prior Month.

Section 5.4 Gathering System Fuel Usage .

(a) Gatherer shall measure the Gas used for Gathering System Fuel on each Individual System. Gatherer shall allocate to Shipper its share of such Gathering System Fuel on each Individual System in accordance with Section  1.8 of Exhibit A .

(b) If an Individual System uses electricity in any of its operations during a Month, Shipper shall reimburse Gatherer for its share of the cost of such electricity in accordance with Section  1.8 of Exhibit A .

ARTICLE 6

QUALITY, NO WAIVER AND PRESSURE

Section 6.1 Quality Specifications . The weighted average quality of all Gas and Liquid Condensate delivered by Shipper to Gatherer cumulatively at all Receipt Points of an Individual System shall meet the applicable quality specifications set forth in Section  1.1 of the Operating Terms and Conditions; provided, however, Shipper shall not deliver, to any Receipt Point, Liquid Condensate having a density that is not within the applicable range specified on Exhibit L . Shipper shall indemnify and hold Gatherer harmless from and against all Claims arising out of or relating to any failure of Shipper to comply with its obligations under the immediately preceding sentence. Provided that the weighted average quality of Shipper’s Gas and Liquid Condensate delivered cumulatively at all Receipt Points of an Individual System complies with such quality specifications, or complies with such quality specifications when blended with other Gas and Liquid Condensate in such Individual System as provided in Section  6.2 , and Shipper otherwise complies with the first sentence of this Section  6.1 , all Gas and Condensate re-delivered at the Delivery Points for such Individual System by Gatherer to Shipper shall meet the quality specifications applicable at such relevant Delivery Points. Subject to Shipper’s compliance with its obligations under the first sentence of this Section  6.1 , Gatherer shall indemnify and hold Shipper harmless from and against all Claims arising out of or relating to any failure of the Gas or Liquid Condensate delivered to or for the account of Shipper at the

 

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Delivery Points of the applicable Individual System, to conform to the quality specifications applicable to such Delivery Points. The Parties recognize and agree that all Gas and Liquid Condensate gathered by Gatherer hereunder through an Individual System will be commingled with other Gas and Liquid Condensate shipments (including in connection with Shipper’s exercise of its blending rights hereunder) and, subject to Gatherer’s obligation under this Section (as qualified by the first sentence of this Section  6.1 ) to re-deliver to Shipper, at the Delivery Points of such Individual System, Gas and Condensate that satisfies the applicable quality specifications of such Delivery Points, (a) such Gas and Liquid Condensate shall be subject to such changes in quality, composition and other characteristics as may result from such commingling, and (b) Gatherer shall have no other obligation to Shipper associated with changes in quality of Gas and Liquid Condensate as the result of such commingling.

Section 6.2 Failure to Meet Specifications . If the weighted average quality of all Gas and Liquid Condensate Tendered by Shipper cumulatively at all Receipt Points on an Individual System fails at any time to conform to the applicable specifications, then Gatherer will have the right to immediately discontinue receipt of non-conforming Gas and Liquid Condensate at the applicable Receipt Points in an amount sufficient to cause the weighted average quality of all Gas and Liquid Condensate Tendered by Shipper cumulatively at all Receipt Points to meet the applicable specifications. Gatherer shall (a) use commercially reasonable efforts to blend and commingle such non-conforming Gas and Liquid Condensate with other Gas and Liquid Condensate in such Individual System so that it meets the applicable quality specifications and (b) if such Gas and Liquid Condensate cannot be brought into compliance with such blending, continue to accept and re-deliver such Gas and Liquid Condensate to the Delivery Points that will accept such non-conforming Gas and Liquid Condensate as long as (i) no harm is done to the applicable Individual System and/or any Downstream Pipeline, or any portion thereof, (ii) no harm is done to other shippers or their Gas and Liquid Condensate, and (iii) other shippers are not prevented from nominating all of their Gas and Liquid Condensate to their preferred Delivery Point. Notwithstanding the foregoing, Shipper will undertake commercially reasonable efforts to eliminate the cause of such non-conformance as soon as reasonably practicable. However, notwithstanding anything to the contrary herein, in the event that (A)(1) Gas and/or Liquid Condensate delivered by Shipper to Gatherer at any Receipt Point on an Individual System does not meet the applicable quality specifications, and (2) Gatherer is unable to blend such Gas and/or Liquid Condensate with other Gas and/or Liquid Condensate in such Individual System in accordance with this Section  6.2 so that it meets the applicable quality specifications, or (B) Liquid Condensate delivered by Shipper to Gatherer at any Receipt Point on an Individual System has a density that is not within the applicable range specified on Exhibit L , then Gatherer shall have the right to refuse receipt of such non-conforming Gas and/or Liquid Condensate.

Section 6.3 No Waiver . Gatherer’s acceptance of Gas that does not conform to quality specifications set forth herein shall not constitute a waiver of (i) Shipper’s indemnity obligations under Section  6.1 above, (ii) Shipper’s obligation to conform Gas to such specifications in the future, or (iii) a waiver of Gatherer’s right to refuse receipt of such nonconforming Gas at any time in accordance with Section  6.2 above.

Section 6.4 Pressure .

 

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(a) Except for Execution Date Compression Receipt Points and Receipt Points on the McQuay System and on the Wadestown System for which Gatherer is obligated hereunder to provide Compression Services, Gatherer shall receive Gas at each Receipt Point on each Individual System at Free Flow Pressure.

(b) Gatherer agrees that it shall continue to provide Existing Pressure Service for the Execution Date Compression Receipt Points until such time that, with respect to any particular Execution Date Compression Receipt Point, Gatherer begins providing Tier 1 Pressure Service or Tier 2 Pressure Service, as applicable, at such Execution Date Compression Receipt Point under other provisions of this Section  6.4 ; provided, however, that the Fee Adjustment provisions of Section  5.2(c) shall not apply to an Execution Date Compression Receipt Point on an Individual System if:

(i) Shipper does not drill and complete the Planned Wells identified on the Exhibit M , with respect to such Individual System, in the sequence described on Exhibit M ;

(ii) one or more Execution Date Wells connected to such Individual System are reworked after the Execution Date or any Well, other than the Execution Date Wells, delivers Gas to such Execution Date Compression Receipt Point, and the additional Gas delivered from such Wells adversely affects Gatherer’s ability to comply with its compression and/or pressure obligations under this Agreement for such Individual System;

(iii) Shipper’s production is in excess of the production forecast set forth in the applicable Tie-In Request, Supplemental Notice or Development Report on which the Gathering System or Individual System, as applicable, was based; or

(iv) any Downstream Pipeline increases its normal operating pressure from that in effect on the Execution Date, and such increase adversely affects Gatherer’s ability to comply with its compression and/or pressure obligations under this Agreement for such Individual System.

Notwithstanding anything to the contrary herein, Gatherer shall nonetheless use reasonable efforts to continue to provide Existing Pressure Service at such Execution Date Compression Receipt Point. Further, notwithstanding anything to the contrary herein, Shipper shall not be entitled to any temporary or permanent release, or any Gas Gathering Fee reduction under Section  5.2(c) , with respect to an Execution Date Compression Receipt Point to the extent Gatherer fails to take Dedicated Production at such Execution Date Compression Receipt Point due to circumstances described under subsections (i) through (iv) above.

(c) Shipper shall Tender, or cause to be Tendered, Dedicated Production to each Receipt Point at sufficient pressure to enter the applicable Individual System; provided, however, that Shipper shall not be obligated to Tender, or cause to be Tendered, Dedicated Production at:

(i) any Free Flow Receipt Point at a pressure in excess of the Free Flow Target Pressure for such Free Flow Receipt Point;

 

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(ii) any Execution Date Compression Receipt Point at a pressure in excess of the Existing Required Pressure for such Execution Date Compression Receipt Point, unless Gatherer is excused from providing Existing Pressure Service for such Execution Date Compression Receipt Point under Section  6.4(b) ;

(iii) any Receipt Point at which Gatherer is obligated under Section  6.4(f) to provide Tier 1 Pressure Service, from and after the Target Compression Date for such Tier 1 Pressure Service, at a pressure in excess of 600 Psig;

(iv) any Receipt Point at which Gatherer is obligated under Section  6.4(f) to provide Tier 2 Pressure Service, from and after the Target Compression Date for such Tier 2 Pressure Service, at a pressure in excess of 300 Psig; or

(v) any Non-Compression Request Receipt Point at which Gatherer, under Section  6.4(g) , is providing Tier 1 Pressure Service or Tier 2 Pressure Service with respect to such Non-Compression Request Receipt Point, at a pressure in excess of 600 Psig (where Gatherer is providing, pursuant to Section  6.4(g) , Tier 1 Pressure Service with respect to such Non-Compression Request Receipt Point) or 300 Psig (where Gatherer is providing, pursuant to Section  6.4(g) , Tier 2 Pressure Service with respect to such Non-Compression Request Receipt Point).

(d) Shipper shall not Tender, or cause to be Tendered, Dedicated Production at any Receipt Point in excess of the MAOP of the segment of the Individual System into which such Dedicated Production is delivered. The MAOP for the Receipt Point for each Execution Date Well is identified on Exhibit B-2 , the MAOP for the Receipt Point for each Planned Well which is the subject of a Deemed Tie-In Request is identified on Exhibit M , and, for any other Existing Well or Planned Well that is the subject of a Tie-In Obligation, Gatherer shall give Shipper notice of the MAOP for the Receipt Point for such Well prior to the On-Line Date for such Well. Gatherer shall provide Shipper not less than 60 Days’ prior written notice of any change to any such MAOP. Shipper shall have the obligation to ensure that Gas and Dedicated Liquid Condensate is prevented from entering such segment of such Individual System at pressures in excess of such MAOP, and Gatherer shall have the right to restrict or relieve the flow of Gas and Dedicated Liquid Condensate into such Individual System to protect such Individual System from over pressuring.

(e) For the Receipt Points on the McQuay System and the Wadestown System identified on Exhibit B-2 or Exhibit M as requiring Tier 1 Pressure Service or Tier 2 Pressure Service, Gatherer shall commence Tier 1 Pressure Service or Tier 2 Pressure Service, as applicable, by the Target Compression Date for such Compression Services as provided in such Exhibit. Notwithstanding anything to the contrary herein, in the event Shipper desires to accelerate the Target Compression Date for any such Receipt Point, the process identified in Section  3.2(d) shall apply mutatis mutandis to such request, except that, for the limited purpose of this subsection (c), “Connection Costs,” as used in Section  3.2(d) , will mean all Capital Expenses incurred by Gatherer in connection with constructing and installing facilities and equipment (including purchasing compressor units, constructing a compression station (including a discharge line for delivery of Gas to a Delivery Point), if necessary, and acquiring easements, surface sites and other real property interests or rights, and acquiring all necessary associated

 

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permits and authorizations from Governmental Authorities) as well as any expansions (including looping of lines) or modifications to the applicable Individual System in order to provide the applicable Compression Services to the relevant Receipt Point (all such Capital Expenses herein, the “ Compression Costs ”), and there shall be no reference to any Third Party Adverse Pressure Issues or Shipper Adverse Pressure Issues.

(f) With respect to the McQuay System or Wadestown System, for any (I) Receipt Point not identified on Exhibit B-2 or Exhibit M as requiring Tier 1 Pressure Service or Tier 2 Pressure Service, including Receipt Points for Wells connected (or to be connected) pursuant to a Tie-In Request under Section  3.2(a)(iv) , but located upstream of a compressor station on the McQuay System or Wadestown System, as applicable, and (II) Receipt Point for a Planned Well not identified on Exhibit M as requiring Tier 1 Pressure Service or Tier 2 Pressure Service, but that will be located on a Well Pad that is identified on Exhibit M as requiring Tier 1 Pressure Service or Tier 2 Pressure Service (each such Receipt Point described in (I) or (II) with respect to which Shipper has not submitted a Compression Request, a “ Non-Compression Request Receipt Point ”), Shipper shall, if Shipper desires for Gatherer to provide Compression Services at such Receipt Point, provide Gatherer a written request (the “ Compression Request ”) to provide Compression Services at the applicable Receipt Point, which request will identify whether Shipper desires Tier 1 Pressure Service or Tier 2 Pressure Service at such Receipt Point, and the Target Compression Date for such Compression Services, and Gatherer shall provide such Compression Services. Notwithstanding anything to the contrary herein:

(i) in the case of a Receipt Point identified in clause (I) of subsection (f) above, Gatherer shall not be obligated to provide Tier 1 Pressure Service at such Receipt Point prior to (and the Target Compression Date for such Tier 1 Pressure Service will not be any earlier than) the Day after expiration of the Scheduled Tier 1 Period for such Individual System, and Gatherer shall not be obligated to provide Tier 2 Pressure Service at such Receipt Point prior to (and the Target Compression Date for such Tier 2 Pressure Service will not be any earlier than) the Day after expiration of the Scheduled Tier 2 Period for such Individual System;

(ii) in the case of a Planned Well identified in clause (II) of subsection (f) above, with respect to each such Receipt Point on the McQuay System or the Wadestown System for a Planned Well that is not identified on Exhibit M but will be located on a Planned Well Pad that is identified on Exhibit M , Gatherer shall not be obligated to provide Tier 1 Pressure Service at such Receipt Point prior to (and the Target Compression Date for such Tier 1 Pressure Service will not be any earlier than) the Day after the Scheduled Tier 1 Start Date for such Planned Well Pad, and Gatherer shall not be obligated to provide Tier 2 Pressure Service at such Receipt Point prior to (and the Target Compression Date for such Tier 2 Pressure Service will not be any earlier than) the Day after the Scheduled Tier 2 Start Date for such Planned Well Pad; and

(iii) Gatherer shall not be obligated to provide Tier 2 Pressure Service at such Receipt Point prior to (and the Target Compression Date for such Tier 2 Pressure Service will not be any earlier than) one year after the Compression Date for provision of Tier 1 Pressure Service at such Receipt Point.

 

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(g) For the Receipt Points for (1) any Planned Well on any Individual System other than the ACAA System, the Crawford System, the Fallowfield System, the McQuay System and the Wadestown System or (2) any Receipt Point for Existing Wells (including Execution Date Wells) on any Individual System other than the ACAA System, the Crawford System, the Fallowfield System and the Marchand System, Shipper may provide Gatherer a Compression Request to provide Compression Services at any such Receipt Point, which request will identify whether Shipper desires Tier 1 Pressure Service and/or Tier 2 Pressure Service at such Receipt Point and the Target Compression Date for such Compression Services at such Receipt Point, in which case the following shall apply:

(i) The Parties shall negotiate in good faith in an effort to agree a Compression Fee for the requested Compression Services for such Receipt Point that would allow Gatherer to achieve an internal rate of return of 15% on the Compression Costs estimated to be required in connection with the provision of such Compression Services by the 10th anniversary of the expenditure of such Compression Costs. If the Parties are able to agree on such Compression Fee, Gatherer shall proceed with the activities required to accommodate such Compression Request. If the Parties are unable to agree upon such Compression Fee within 30 Days after the delivery of the applicable Compression Request by Shipper to Gatherer, either Party may refer such dispute to Section  6.4(g)(ii) for final resolution.

(ii) Any dispute referred to this Section  6.4(g)(ii) shall be exclusively and finally resolved pursuant to the procedure set forth herein. There shall be a single disinterested arbitrator, who meets the criteria of an Expert, as selected by mutual agreement of the Parties within 15 Days after the referral of such dispute to this Section  6.4(g)(ii) . In the event the Parties are unable to mutually agree upon the Expert within such time period, then each Party will nominate an individual who meets the criteria of an Expert within 10 Days after such time period, and such individuals so nominated by the Parties shall together determine the Expert within 15 Days after such 10-Day period. In the event only one Party nominates such an individual within such 10-Day period, that individual will be deemed appointed as the Expert. Within 15 Business Days after the appointment of the Expert, each Party shall submit to the Expert a written proposal, that is not more than 15 pages, for the proposed Compression Fee, explaining such Party’s position, and the Expert shall select which Party’s proposal, as a whole, is the most accurate. The Expert’s determination shall be made within 15 Business Days after the foregoing 15-Business Day period and shall be final and binding upon both Parties, without right of appeal. The Expert shall act as an expert for the limited purpose of determining the specific dispute hereunder in accordance with the above, and may not determine any Compression Fee except one of the two proposals so submitted by the Parties and by selecting one Party’s proposal for the Compression Fee, and may not award damages, interest or penalties to either Party with respect to any matter. Each Party shall bear its own legal fees and other costs of presenting its case. Each Party shall bear one-half of the costs and expenses of the Expert.

(iii) Within 30 Days after a decision of the Expert pursuant to Section  6.4(g)(ii) , Shipper shall notify Gatherer in writing of one of the following elections:

 

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(A) Shipper withdraws the relevant Compression Request; or

(B) Shipper desires that Gatherer proceed with the activities described in the Compression Request, and Shipper agrees to pay Gatherer the Compression Fee, in which case Gatherer shall proceed with the activities required to accommodate such Compression Request.

Failure of Shipper to so notify Gatherer in writing within 30 Days after a decision of the Expert pursuant to Section  6.4(g)(ii) shall be deemed to be an election by Shipper under subsection (A) with respect to such Compression Request.

(h) Commencing with the Execution Date, for the provision of Existing Pressure Service at an Execution Date Compression Receipt Point, and commencing with the Compression Date, for the provision of Tier 1 Pressure Service or Tier 2 Pressure Service, as applicable, at a Receipt Point, Gatherer shall, subject to the other provisions of this Agreement, provide such Compression Services at such Receipt Point.

(i) Notwithstanding any language to the contrary in this Agreement, at no time shall Gatherer be required to provide more than two types of Pressure Service at any Well Pad or on any Individual System; provided that, for the avoidance of doubt, Gatherer shall, at all times, be capable of providing no less than two types of Pressure Service at each Receipt Point as required or requested in accordance with this Agreement. In the event that Shipper has requested and Gatherer is providing both Tier 1 Pressure Service and Tier 2 Pressure Service at any Well Pad and there are Non-Compression Request Receipt Points on such Well Pad, such Non-Compression Request Receipt Points shall, from and after such time as Tier 2 Pressure Service commences at such Well Pad, automatically receive Tier 1 Pressure Service despite Shipper’s having not made a Compression Request for Tier 1 Pressure Service with respect to such Receipt Point and Shipper shall be obligated to pay the applicable Compression Fee on all Dedicated Production delivered hereunder at such Non-Compression Request Receipt Point. For the avoidance of doubt, the foregoing shall not preclude Shipper from subsequently requesting that Gatherer provide Tier 2 Pressure Service with respect to such Non-Compression Request Receipt Point.

(j) In the event Gatherer has not commenced Tier 1 Pressure Service or Tier 2 Pressure Service, as applicable, for a specific Compression Obligation Receipt Point (excluding the Execution Date Compression Receipt Points) by the nine month anniversary of the Target Compression Date for such Receipt Point, Shipper may send Gatherer written notice of such situation, which notice shall specifically reference this Section  6.4(j) and identify the specific Compression Obligation Receipt Point and the pressure service (i.e., Tier 1 Pressure Service or Tier 2 Pressure Service) to which such notice applies. Gatherer shall have three Months following receipt of such written notice to commence the applicable Tier 1 Pressure Service or Tier 2 Pressure Service.

(k) Re-deliveries of Gas and Dedicated Liquid Condensate by Gatherer to or for the account of Shipper at the applicable Delivery Points of an Individual System shall be at such pressures as may exist from time to time in such Individual System at the applicable Delivery Point. Gatherer’s obligation to re-deliver Gas and Dedicated Liquid Condensate to a given

 

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Delivery Point on an Individual System shall be subject to the operational and contractual limitations of the Processing Plant or Downstream Pipelines (as applicable) receiving such Gas or Dedicated Liquid Condensate (as applicable), including the Processing Plant’s or Downstream Pipeline’s capacity, Gas measurement capability, operating pressures and any operational balancing agreements as may be applicable.

ARTICLE 7

TERM

Section 7.1 Term . This Agreement shall remain in effect through December 31, 2037 (the “ Initial Term ”) and thereafter on a year to year basis until terminated by either Party effective upon the expiration of the Initial Term or the expiration of any year thereafter upon written notice no less than 180 Days prior to the expiration of the Initial Term or the expiration of any year thereafter (such period of time, the “ Term ”).

Section 7.2 Effect of Termination or Expiration of the Term . Upon the end of the Term, this Agreement shall forthwith become void and the Parties shall have no liability or obligation under this Agreement, except that (a) the termination of this Agreement shall not relieve any Party from any expense, liability or other obligation or remedy therefor which has accrued or attached prior to the date of such termination, and (b) the provisions of Section  13.1 through Section  13.4 shall survive such termination and remain in full force and effect indefinitely.

ARTICLE 8

TITLE AND CUSTODY

Section 8.1 Title . A nomination of Gas by Shipper shall be deemed a warranty of title to such Gas (including any Drip Condensate attributable to such Gas) by Shipper, or a warranty of the good right in Shipper to deliver such Gas for gathering under this Agreement. Dedicated Liquid Condensate injected by Shipper at the applicable Receipt Point(s) of the applicable Individual Systems shall be deemed a warranty of title to such injected Dedicated Liquid Condensate by Shipper, or a warranty of the right in Shipper to deliver such injected Dedicated Liquid Condensate for gathering under this Agreement. By nominating Gas (including any Drip Condensate attributable to such Gas) and/or by injecting Dedicated Liquid Condensate at Receipt Point(s) of the applicable Individual Systems, Shipper also agrees to indemnify, defend and hold Gatherer harmless from any and all Claims resulting from any claims by a Third Party regarding title or rights to such Gas or Dedicated Liquid Condensate and Shipper’s right to deliver such Gas or Liquid Condensate under this Agreement, other than any claims arising out of Gatherer’s breach of its warranty made in the succeeding sentence of this Section  8.1 . By receiving Gas from Shipper at the Receipt Points or receiving Dedicated Liquid Condensate injected by Shipper at Receipt Point(s), Gatherer (a) warrants to Shipper that Gatherer has the right to accept and re-deliver such Gas and/or Dedicated Liquid Condensate received from Shipper under this Agreement free and clear of any title disputes, liens or encumbrances arising by, through or under Gatherer but not otherwise, and (b) agrees to indemnify, defend and hold Shipper harmless from any and all Claims resulting from claims by any Third Party resulting from title disputes, liens or encumbrances arising by, through or under Gatherer but not otherwise.

 

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Section 8.2 Custody . From and after Shipper’s delivery of Dedicated Gas to Gatherer at the Receipt Point(s) of an Individual System or injection of Dedicated Liquid Condensate at the Receipt Point(s) of an applicable Individual System, and, subject to Section  3.6 , until Gatherer’s re-delivery of such Gas and/or such Liquid Condensate to or for Shipper’s account at the applicable Delivery Point(s) on such Individual System, as between the Parties, Gatherer shall have custody and control of such Gas and/or Liquid Condensate. In all other circumstances, as between the Parties, Shipper shall be deemed to have custody and control of such Gas and/or Liquid Condensate.

ARTICLE 9

BILLING AND PAYMENT

Section 9.1 Statements . As soon as practicable after the end of each Month but in no event later than 10 Business Days following the end of such Month (the “ Statement Deadline ”), Gatherer will render to Shipper an invoice for all amounts owed for Gathering Services and any other amounts as may be due under this Agreement during the preceding Month, net of the amounts payable by Gatherer in respect of (a) excess Gathering System L&U in accordance with Section  5.3 , and (b) any other amounts as may be due by Gatherer to Shipper under this Agreement. Such invoice will include: (i) for Gas, the product of (A) the measured volumes of Gas (other than Drip Condensate) in MSCF multiplied by (B) the Gross Heating Value of such Gas and expressed in MMBtus, in each case, at each Receipt Point and at each Delivery Point, as applicable; and (ii) for Liquid Condensate and Drip Condensate (if applicable), the measured volumes stated in Barrels, in each case, delivered by Gatherer at each location on the Individual System at which such Liquid Condensate or Drip Condensate is stored and picked up by truck, including Shipper’s allocated share of such Condensate, allocated to Shipper in accordance with Section  1.8 of Exhibit A . Each invoice will be in detail sufficient for Shipper to identify the particular services rendered and the basis for the applicable charges. All information on such statements shall be provided on an Individual System basis. If actual measurements of volumes of Liquid Condensate are not available in time for Gatherer to render an invoice based on such actual measurements by the Statement Deadline, then, Gatherer may prepare and submit its invoice based on Gatherer’s good faith estimate of the volumes of Liquid Condensate received in such Month. If Gatherer submits an invoice based on estimated volumes of Liquid Condensate, Gatherer’s invoice for the subsequent Month shall include any necessary adjustments to correct for differences between such estimated volumes and actual volumes. Gatherer’s invoices shall include information reasonably sufficient to explain any permitted estimates and charges reflected therein, the reconciliation of any such permitted estimates made in a prior Month to any actual measurements, and any adjustments to prior period volumes and quantities.

Section 9.2 Payments .

(a) Unless otherwise agreed by the Parties, all invoices under this Agreement shall be due and payable in accordance with each invoice’s instructions on or before the later of the 25th Day of each Month or the 10th Day after receipt of the invoice or, if such Day is not a Business Day, then on the next Business Day. All payments by Shipper under this Agreement shall be made by electronic funds transfer to the account designated by Gatherer. Any amounts not paid by the due date that are not disputed in accordance with Section  9.2(b) will be deemed delinquent and will accrue interest at the Interest Rate, such interest to be calculated from and

 

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including the due date but excluding the date the undisputed delinquent amount is paid in full. In addition to Section  9.2(b) , Shipper may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice rendered under this Agreement or request an adjustment of any invoice for any arithmetic or computational error within 24 Months following the end of the Year of the date the invoice, or adjustment to an invoice, was rendered and previous payment of any such amounts shall not be deemed to be a waiver of the payor’s right to later dispute the invoice in accordance with this Section  9.2(a) . Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment.

(b) If Shipper, in good faith, disputes the amount of any invoice of Gatherer, Shipper will pay Gatherer such amount, if any, that is not in dispute and shall provide Gatherer notice, no later than within 30 Days after the date that payment of such invoice would be due under Section  9.2(a) , of the disputed amount accompanied by documentation to support the disputed amount. If the Parties are unable to resolve such dispute, such dispute shall be resolved in accordance with Article 10 of this Agreement. Upon resolution of the dispute, any required payment shall be made within 15 Days of such resolution, along with interest accrued at the Interest Rate from and including the due date but excluding the date paid.

(c) If Shipper fails to pay, when due, any invoice rendered by Gatherer under Section  9.1 (other than amounts disputed in accordance with Section  9.2(b) ) and such failure is not remedied within five Business Days after receipt of written notice of such failure to Shipper by Gatherer, Gatherer shall have the right to suspend performance under this Agreement until such amount, including interest at the Interest Rate, is paid.

Section 9.3 Audit . Each Party or any Third Party representative of a Party has the right, at its sole expense and during normal working hours, to examine the records of the other Party (including, in the case of Gatherer, Third Party shipper records to the extent reasonably available to Gatherer and subject to the last sentence of this Section  9.3 relating to Liquid Condensate measurements and allocations on the Individual Systems to the extent relevant to such audit) to the extent reasonably necessary to verify the accuracy of any statement, charge or computation made pursuant to the provisions of this Agreement. The scope of such examination will be limited to the previous 24 Months following the end of the Year in which such notice of audit, statement, charge or computation was presented. No more than one audit shall take place during any Year. If any such examination reveals any inaccuracy in any statement or charge, the necessary adjustments in such statement or charge and the payments necessitated thereby shall be made within 60 Days of resolution of the inaccuracy. This provision of this Agreement will survive any termination of this Agreement for the later of (a) a period of 24 Months from the end of the Year in which the date of such termination occurred or (b) until a dispute initiated within the 24 Month period is finally resolved, in each case for the purpose of such statement and payment objections. For the avoidance of doubt, such audit rights include the right to audit Gatherer’s records relating to the measurement and allocation of Liquid Condensate of Third Party shippers on any Individual System on which Liquid Condensate is gathered to the extent relevant to such audit and to the extent that Gatherer is permitted to do so pursuant to the applicable Third Party gas gathering agreement; provided that, if Gatherer is not permitted to do so under such agreement, Gatherer shall be obligated to use commercially reasonable efforts to obtain the right to disclose such information as required pursuant to such agreement (provided that Gatherer shall not be required to make any payments to any third party in the pursuit of the satisfaction of such obligation).

 

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ARTICLE 10

DISPUTE RESOLUTION

Section 10.1 Negotiation and Arbitration . Except as otherwise provided in Sections 2.5(d) , 3.2(a)(viii) and (ix) , 3.2(c) , 3.2(d) and 6.4(g) , any dispute arising out of or relating to this Agreement shall be resolved in accordance with the procedures specified in this Section  10.1 , which shall be the sole and exclusive procedure for the resolution of any such disputes. The cost of conducting the dispute resolution process, including the fees and expenses of any arbitrators as well as any expenses from the AAA, shall be shared equally by the Parties, and each Party shall bear its own costs, including any attorneys’ fees or other expenses incurred in the process. All applicable statutes of limitation and defenses based upon the passage of time shall be tolled from the date written notice of a dispute is sent pursuant to Section  10.1 while the procedures specified in this Article 10 are pending. All arbitrators shall be neutral, not have a financial interest in the dispute, not have worked for either Party, and have at least ten Years’ experience in the natural gas gathering and processing business. The Parties agree that dispute resolution hereunder (including any arbitration) shall be treated as confidential in accordance with Section  16.12 , and the Parties understand and agree that this confidentiality obligation extends to information concerning the fact of any request for negotiation or arbitration, any ongoing arbitration, as well as all matters discussed, discovered, or divulged during the course of negotiation or arbitration.

(a) Negotiation . Any Party may give the other Party written notice of any dispute not resolved in the normal course of business. The Parties shall attempt in good faith, for 30 Days after receipt of such written notice, to resolve any dispute arising out of or relating to this Agreement promptly by negotiation between representatives who have authority to settle the controversy.

(b) Arbitration . Any dispute between the Parties arising under this Agreement that is not resolved under Section  10.1(a) shall be resolved through final and binding arbitration as follows:

(i) Any dispute which arises between the Parties out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the American Arbitration Association’s (“ AAA ”) Commercial Arbitration Rules, which rules are deemed to be incorporated herein.

(ii) The seat (or legal place) of arbitration shall be Pittsburgh, Pennsylvania. The language of the arbitration shall be English. The tribunal shall consist of three arbitrators (the “ Tribunal ”), one to be nominated by the Party requesting arbitration (the “ Claimant ”) and one by the Party named as respondent by the Claimant (the “ Respondent ”), within 14 Days of the Claimant’s nomination. The third shall be nominated by agreement between the two arbitrators nominated by the Parties. If the two arbitrators so appointed fail to agree on the nomination of the third arbitrator within ten Days of the nomination of the Respondent’s arbitrator, or if either the Claimant or the Respondent fails to nominate its own arbitrator, the AAA shall make such appointment.

 

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(iii) Any award shall be final and binding on the Parties and may be confirmed in, and judgment upon the award entered by, any court having jurisdiction.

(iv) The Tribunal shall render a final award in any arbitration within two Months of the appointment of the third arbitrator, which final award (x) may, in the discretion of the Tribunal, include attorneys’ fees, witness fees and/or other costs and expenses incurred in the prosecution or defense of the applicable dispute and (y) shall be confined to the recovery of damages that are permitted pursuant to the terms of this Agreement and shall, for the avoidance of doubt, shall not include damages of the types waived pursuant to Section  13.4 . This time limit may only be extended with the consent of the Parties or by the Tribunal for good cause shown, provided that no award shall be invalid for the sole reason that it is not rendered within the time period herein specified, or not rendered within any extended period. At the earliest opportunity, the Tribunal shall, in consultation with the Parties, set out a procedural timetable for the service of pleadings and evidence. Any pleading or evidence served otherwise than in compliance with such timetable will be struck out by the Tribunal, unless the submitting Party shows good cause for the deviation and has been granted an appropriate extension by the Tribunal (ahead of the expiration of the relevant deadline), bearing in mind the effect such extension will have on the case timetable.

(c) Notwithstanding anything contained in this Section  10.1 to the contrary, each Party shall be entitled to seek and obtain by the filing of an action in any court of competent jurisdiction injunctive or other similar emergency equitable relief with respect to any breach of this Agreement by any other Party.

ARTICLE 11

FORCE MAJEURE

Section 11.1 Force Majeure . If Gatherer or Shipper is rendered unable, wholly or in part, by reason of Force Majeure, from carrying out its obligations under this Agreement (other than the obligation to make payment of amounts due hereunder or indemnification obligations hereunder of either Party), then upon said Party’s giving prompt written notice and reasonably full particulars (as then known) of such Force Majeure to the other Party, the obligations of the Party giving such notice, so far as they are affected by such Force Majeure, shall be suspended during the inability so caused, but for no longer period, and such cause shall be remedied with all commercially reasonable dispatch by the Party claiming Force Majeure.

Section 11.2 Definition of Force Majeure . The term “ Force  Majeure ,” as used herein, shall mean an event not within the reasonable control of the Party claiming suspension that cannot be overcome by the exercise of commercially reasonable diligence, and, to the extent satisfying the above criteria, shall include the following: acts of God; acts of federal, state, or local government, or any agencies thereof; compliance with rules, regulations, permits, or orders of any governmental authority, or any office, department, agency, or instrumentality thereof; strikes, lockouts, or other industrial disturbances; acts of the public enemy, wars, blockades,

 

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insurrections, riots, and epidemics; landslides, lightning, earthquakes, fires, storms, floods, and washouts; arrests and restraint of people; civil disturbances; explosions, leakage, breakage, or accident to equipment or pipes; freezing of Well(s), pipes or other facilities; weather-related shutdowns due to adverse weather affecting a general geographic area; inability or delay in securing rights of way or surface sites at reasonable cost; inability or delay in obtaining equipment, supplies, materials, permits or labor at a reasonable cost; the inability or delay in obtaining permits or other authorizations from Governmental Authorities; failures or delays in transportation; insufficient capacity on an Individual System, but only to the extent the deliveries of Dedicated Production from Planned Wells on such Individual System exceed the production forecasts for such Planned Wells set forth in Shipper’s Supplemental Notices for such Planned Wells and/or as set forth in the Tie-In Requests for such Planned Wells; receipt of non-specification or unmerchantable Gas; the failure or delay of any downstream pipeline or other Person with which an Individual System is to interconnect in taking actions required to interconnect the facilities of such downstream pipeline or other Person with such Individual System; and, in the case of Gatherer, the inability of Gatherer to access, or Shipper’s or its Affiliate(s)’ restrictions of Gatherer’s access to, in a timely manner, any facility site owned or controlled by Shipper or its Affiliate(s) where Gatherer’s facilities are to be located; and any other causes, whether of the kind herein enumerated or otherwise, not within the reasonable control of the Party claiming suspension. The settlement of strikes or lockouts shall be entirely within the discretion of the Party having the difficulty. Notwithstanding anything to the contrary, Force Majeure does not include the insolvency or change in economic circumstances of the affected Party or changes in market conditions (including the price for Gas and/or Liquid Condensate). The requirement that any Force Majeure shall be remedied with all commercially reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of the opposing party, when such is deemed inadvisable by the Party involved.

Section 11.3 A lterations, Maintenance and Repairs . Gatherer shall have the right to curtail or interrupt receipts and deliveries of Gas and Liquid Condensate to perform necessary maintenance of and repairs or modifications (including modifications required to perform its obligations under this Agreement) to the Individual Systems; provided, however, that Gatherer shall schedule maintenance, repair and modification operations so as to avoid or minimize to the greatest extent practical service curtailments or interruptions of Dedicated Gas, and as applicable, Dedicated Liquid Condensate. All such curtailments or interruptions shall be deemed events of Force Majeure. Gatherer shall provide Shipper (i) with at least 30 Days’ prior notice of any upcoming normal and routine maintenance, repair and modification projects that Gatherer has planned that would result in any material curtailment or interruption of Shipper’s deliveries (such maintenance, repair and modification projects, “ Scheduled Maintenance ”) and the estimated time period for such curtailment or interruption and (ii) with at least sixty Days’ prior notice of any Scheduled Maintenance (A) of which Gatherer has knowledge at least 60 Days in advance and (B) that is anticipated to result in an interruption or material curtailment of Shipper’s deliveries for 120 or more consecutive hours. Notwithstanding the foregoing or anything else to the contrary herein, Gatherer shall not be entitled to claim an event of Force Majeure with respect to any Scheduled Maintenance in excess of five Days of lost volume based on the five Day normalized field estimates average for the final five Days at the end of the applicable Quarter, in the aggregate, on any Individual System in any Quarter; provided, however, this sentence will not apply to repairs relating to subsidence or slips of any part of an Individual System (provided that Gatherer will use commercially reasonable efforts to complete all such repairs as soon as reasonably practicable).

 

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Section 11.4 Rights of Way and Surface Sites . In the event that either Party reasonably believes, after exercising commercially reasonable efforts to obtain any rights of way or surface sites required in connection with any Tie-In Request or Deemed Tie-In Request, that it will be unable to obtain any such rights of way or surface sites at or below a reasonable cost considering all of the applicable circumstances then, in order to be entitled to claim an event of Force Majeure with respect to such failure, such Party must provide notice of such failure and evidence of the reasonable efforts expended by such Party to obtain such rights of way or surface sites, as applicable, and, in the event of such a failure by Gatherer, evidence that Gatherer has made reasonable attempts to re-route the path of the applicable segment of the applicable Individual System as reasonably practicable so as to avoid the necessity of obtaining such right of way or surface site, in each case, on or before the twelve month anniversary of the date on which Gatherer first received the applicable Tie-In Request or Deemed Tie-In Request requiring such rights of way or surface sites (such notice, an “ ROW Notice ”). Thereafter, the Parties shall work together in good faith to obtain such rights of way or surface sites as soon as practicable for a cost at or below a reasonable cost considering all of the applicable circumstances. In addition, in the event that Gatherer provides any ROW Notice to Shipper, then, in addition to cooperating with Gatherer, Shipper may independently obtain the relevant right of way or surface site, in which case Shipper will be entitled to reimbursement from Gatherer for the cost of obtaining such right of way or surface site; provided that such reimbursement shall be capped at a reasonable cost considering all of the applicable circumstances. If, following cooperation by the Parties to obtain any right of way or surface site in accordance with this Section  11.4 , the Parties are unable to acquire such right of way or surface site within 90 Days after the date of the applicable ROW Notice and the failing Party has otherwise complied with its obligations relating to the acquisition of such right of way or surface site, then such failing Party may declare an event of Force Majeure. If Force Majeure is declared by Gatherer in accordance with this Section  11.4 with respect to a particular right of way or surface site, then, (a) if requested by Shipper, Gatherer shall use commercially reasonable efforts to accelerate the connection of other Wells not affected by such Force Majeure at no cost to Shipper to the extent that Shipper allows the resources that would otherwise be utilized with respect to the connection subject to the Force Majeure to be reallocated elsewhere and (b) with respect to and for purposes of Shipper’s obligations pursuant to Section  3.2(c)(v) , Shipper shall be treated as having drilled, in the Year in which the affected Planned Well was scheduled to be connected to the applicable Individual System (as set forth in the applicable Tie-In Request or Deemed Tie-In Request), such Planned Well.

ARTICLE 12

REGULATORY STATUS

Section 12.1 Non-Jurisdictional Gathering System . This Agreement is subject to all valid present and future Laws, regulations, rules and orders of Governmental Authorities now or hereafter having jurisdiction over the Parties, this Agreement or the services performed or the facilities utilized under this Agreement. Neither Party shall file or support any application to have any of the Individual Systems to become subject to the jurisdiction of any Governmental Authority that may at any time take any action whereby the Gathering Services will be subject to

 

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terms, conditions, restraints or regulations, including taxes, rate or price control, or ceilings or open access requirements that materially differ from the terms and conditions set forth in this Agreement. It is the intent of the Parties that the rates and terms and conditions established by any Governmental Authority having jurisdiction shall not alter the rates or terms and conditions set forth in this Agreement, and the Parties agree to vigorously defend and support in good faith the enforceability of the rates and terms and conditions of this Agreement.

Section 12.2 Government Authority Modification . Notwithstanding the provisions of Section  12.1 , if any Governmental Authority having jurisdiction modifies the rates, or terms and conditions set forth in this Agreement with respect to the priority of shippers on any Individual System, then (in addition to any other remedy available to either Party at Law or in equity):

(a) the Parties hereby agree to negotiate in good faith to enter into such amendments to this Agreement and/or a separate arrangement in order to give effect, to the greatest extent possible, to the rates and other terms and conditions set forth in this Agreement; and

(b) in the event that the Parties are not successful in accomplishing the objectives set forth in (a) above, then the resolution of such matter shall be determined in accordance with the provisions of Article 10 above.

ARTICLE 13

INDEMNIFICATION AND INSURANCE

Section 13.1 Custody and Control Indemnity . EXCEPT FOR LOSSES COVERED BY THE INDEMNITIES IN SECTION  8.1 , THE PARTY HAVING CUSTODY AND CONTROL OF GAS AND LIQUID CONDENSATE UNDER THE TERMS OF SECTION  8.2 SHALL BE RESPONSIBLE FOR AND SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS THE OTHER PARTY AND SUCH OTHER PARTY’S GROUP FROM AND AGAINST EACH OF THE FOLLOWING: (A) ANY LOSSES ASSOCIATED WITH ANY PHYSICAL LOSS OF SUCH GAS AND LIQUID CONDENSATE (OTHER THAN, SUBJECT TO SECTION 5.3 AND SECTION 5.4 , GATHERING SYSTEM L&U AND GATHERING SYSTEM FUEL), INCLUDING, THE VALUE OF SUCH LOST GAS AND LIQUID CONDENSATE, AND (B) ANY DAMAGES RESULTING FROM THE RELEASE OF ANY SUCH GAS OR LIQUID CONDENSATE, IN EACH CASE, EVEN IF SUCH LOSSES OR DAMAGES ARISE AS A RESULT OF THE STRICT LIABILITY OR NEGLIGENCE (JOINT, SEVERAL, ACTIVE, PASSIVE, SOLE, OR CONCURRENT) OF THE INDEMNIFIED PERSON OR A MEMBER OF SUCH INDEMNIFIED PERSON’S GROUP, EXCEPT TO THE EXTENT THAT SUCH LOSSES OR DAMAGES ARE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PERSON OR A MEMBER OF SUCH INDEMNIFIED PERSON’S GROUP.

Section 13.2 Shipper Indemnification . SUBJECT TO SECTION 13.1 , SHIPPER AGREES TO AND SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS GATHERER, AND GATHERER’S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, PARENT, AFFILIATES AND SUBSIDIARIES, (ALL OF THE FOREGOING, THE “ GATHERER GROUP ”) FROM AND AGAINST ALL LOSSES WHICH IN ANY WAY RESULT FROM ANY OF THE FOLLOWING: (A) THE OWNERSHIP, DESIGN,

 

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CONSTRUCTION, MAINTENANCE OR OPERATION OF SHIPPER’S FACILITIES, EVEN IF SUCH LOSSES ARISE AS A RESULT OF THE STRICT LIABILITY OR NEGLIGENCE (JOINT, SEVERAL, ACTIVE, PASSIVE, SOLE, OR CONCURRENT) OF GATHERER OR A MEMBER OF GATHERER’S GROUP, EXCEPT TO THE EXTENT THAT SUCH LOSSES OR DAMAGES ARE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF GATHERER OR A MEMBER OF GATHERER’S GROUP OR (B) ANY MATERIAL BREACH OF THIS AGREEMENT BY SHIPPER.

Section 13.3 Gatherer Indemnification . SUBJECT TO SECTION 13.1 , GATHERER AGREES TO AND SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS SHIPPER, AND SHIPPER’S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, PARENT, AFFILIATES AND SUBSIDIARIES, (ALL OF THE FOREGOING, THE “ SHIPPER GROUP ”) FROM AND AGAINST ALL LOSSES WHICH IN ANY WAY RESULT FROM ANY OF THE FOLLOWING: (A) THE OWNERSHIP, DESIGN, CONSTRUCTION, MAINTENANCE OR OPERATION OF THE GATHERING SYSTEM, EVEN IF SUCH LOSSES ARISE AS A RESULT OF THE STRICT LIABILITY OR NEGLIGENCE (JOINT, SEVERAL, ACTIVE, PASSIVE, SOLE, OR CONCURRENT) OF SHIPPER OR A MEMBER OF SHIPPER’S GROUP, EXCEPT TO THE EXTENT THAT SUCH LOSSES OR DAMAGES ARE CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SHIPPER OR A MEMBER OF SHIPPER’S GROUP OR (B) ANY MATERIAL BREACH OF THIS AGREEMENT BY GATHERER.

Section 13.4 Actual Direct Damages . A PARTY’S DAMAGES RESULTING FROM A BREACH OR VIOLATION OF ANY REPRESENTATION, WARRANTY, COVENANT, AGREEMENT OR CONDITION CONTAINED IN THIS AGREEMENT OR ANY ACT OR OMISSION ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE LIMITED TO ACTUAL DIRECT DAMAGES AND SHALL NOT INCLUDE ANY OTHER LOSS OR DAMAGE, INCLUDING INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, INCLUDING LOST PROFITS, PRODUCTION, OR REVENUES, AND EACH PARTY EXPRESSLY RELEASES THE OTHER PARTY FROM ALL SUCH CLAIMS FOR LOSS OR DAMAGE OTHER THAN ACTUAL DIRECT DAMAGES; PROVIDED THAT LIMITATION TO DIRECT DAMAGES ONLY SHALL NOT APPLY TO ANY DAMAGE, CLAIM OR LOSS ASSERTED BY OR AWARDED TO ANY THIRD PARTY AGAINST A PARTY AND FOR WHICH THE OTHER PARTY WOULD OTHERWISE BE RESPONSIBLE UNDER SECTIONS 6.1 , 8.1 AND/OR THIS ARTICLE 13 , BUT IN NO EVENT SHALL THE EXCLUSIONS HEREUNDER SUBJECT EITHER PARTY OR ITS AFFILIATES TO LIABILITY FOR PUNITIVE DAMAGES.

Section 13.5 Penalties . EXCEPT FOR INSTANCES OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT BY GATHERER, SHIPPER SHALL RELEASE, INDEMNIFY, DEFEND AND HOLD GATHERER HARMLESS FROM ANY SCHEDULING PENALTIES OR MONTHLY BALANCING PROVISIONS IMPOSED BY A PROCESSING PLANT, DOWNSTREAM PIPELINE OR THIRD PARTY DOWNSTREAM CONDENSATE STORAGE TANK IN ANY PURCHASE CONTRACTS, TRANSPORTATION CONTRACTS OR SERVICE AGREEMENTS ASSOCIATED WITH, OR RELATED TO, SHIPPER’S OWNED OR CONTROLLED GAS, INCLUDING ANY PENALTIES IMPOSED PURSUANT TO THE DOWNSTREAM PIPELINE’S TARIFF, OR WHICH MAY BE CAUSED BY OFO’S, OR BY PDA’S OR OTHER PIPELINE ALLOCATION METHODS, OR BY UNSCHEDULED PRODUCTION, OR BY UNAUTHORIZED PRODUCTION.

 

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Section 13.6 Insurance . The Parties shall carry and maintain no less than the insurance coverage set forth in Exhibit E .

ARTICLE 14

TAXES

Section 14.1 Taxes . Shipper shall pay all Taxes imposed on or with respect to Shipper’s Facilities and/or with respect to the Dedicated Production, including Taxes (including ad valorem taxes) assessed against Shipper based on Shipper’s income, revenues, gross receipts, net worth or ownership of Shipper’s Facilities or any equipment or facilities related thereto and/or the Dedicated Production. Gatherer shall pay all Taxes on or with respect to the Individual Systems and/or with respect to the Gathering Services provided by Gatherer on the Individual Systems under this Agreement, including Taxes (including ad valorem taxes) assessed against Gatherer based on Gatherer’s income, revenues, gross receipts, net worth or ownership of the Individual Systems or any equipment or facilities related thereto.

ARTICLE 15

ASSIGNMENT

Section 15.1 Assignment .

(a) Except as specifically otherwise provided in this Agreement, neither Party shall have the right to assign its rights and obligations under this Agreement (in whole or in part) to another Person except with the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing:

(i) Shipper may assign its rights and obligations under this Agreement to any Person to whom Shipper assigns or transfers an interest in any of the Dedicated Properties (excluding, however, Dedicated Properties in the Wadestown Area and Dedicated Properties in the McQuay Area, with respect to which, assignment of Shipper’s rights and obligations under this Agreement shall require the consent of Gatherer to assign, which consent shall not be unreasonably withheld, conditioned or delayed), insofar as this Agreement relates to such Dedicated Properties (i.e., those that are not in the Wadestown Area or the McQuay Area), without the consent of Gatherer; provided that (A) such Person assumes the obligations of Shipper under this Agreement insofar as it relates to such Dedicated Properties, (B) if such assignment or transfer is made to an Affiliate of Shipper, Shipper shall not be released from any of its obligations under this Agreement, and (C) if such transfer or assignment is to a Person that is not an Affiliate of Shipper, Shipper shall be released from its obligations under this Agreement with respect to the Dedicated Properties so assigned;

(ii) a Party may assign this Agreement without the consent of the other Party to a Person that purchases all or substantially all of such Party’s assets;

 

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(iii) Gatherer may assign its rights to any payments hereunder to one or more Affiliates of Gatherer, but no such assignment shall relieve Gatherer of any of its obligations hereunder; and

(iv) Gatherer may assign its rights and obligations under this Agreement to any Person to whom Gatherer assigns, transfers or conveys any Individual System(s) (excluding, however, the Wadestown System and the McQuay System, with respect to which the assignment of Gatherer’s rights and obligations under this Agreement shall require the consent of Shipper, which consent shall not be unreasonably withheld, conditioned or delayed), insofar as this Agreement relates to such Individual System(s), without the consent of Shipper; provided that, (A) such Person assumes the obligations of Gatherer under this Agreement insofar as it relates to such Individual System(s), (B) if such assignment or transfer is made to an Affiliate of Gatherer, Gatherer shall not be released from any of its obligations under this Agreement, and (C) if such transfer or assignment is to a Person that is not an Affiliate of Gatherer, Gatherer shall be released from its obligations under this Agreement with respect to such Individual System(s).

(b) Notwithstanding anything in this Agreement to the contrary, Shipper may assign ROFO Properties that are not Dedicated ROFO Properties free of the terms, conditions and obligations of this Agreement.

(c) Subject to the other provisions of this Section  15.1 and Section  15.2 , this Agreement, including any and all renewals, extensions, amendments and/or supplements hereto, and all rights, title and interests contained herein, shall be binding upon and inure to the benefit of the Parties hereto, and their respective heirs, successors, and permitted assigns. Any assignment, transfer or conveyance by Shipper or any of its Affiliates of any interests in Wells, Planned Wells, in the Dedicated Properties, the Dedicated Gas and/or the Dedicated Condensate shall be subject to dedication under this Agreement and Shipper shall expressly require that the assignee of any such interests assume and agree to discharge the duties and obligations of Shipper under this Agreement with respect to such interests acquired from Shipper or any of its Affiliates; and such assigned interests shall be Dedicated Properties, Dedicated Gas and/or Dedicated Condensate of the assignee. Shipper will provide Gatherer with prior written notice of any such assignment, transfer or conveyance, which notice shall include sufficient information for Gatherer to determine whether such assignee will need to provide Adequate Assurance of Performance under Section  16.13 .

(d) No assignment, transfer or conveyance by Shipper shall require the applicable assignee to dedicate to this Agreement any other interest in any lands, leases, wells or other interests owned (or subsequently acquired) by such assignee (or any Gas attributable to such interests) other than the Dedicated Properties so acquired; provided, however, if such assignment, transfer or conveyance involves in a single transaction or a series of related transactions, a majority (in Net Acres) of the Dedicated Properties in the Wadestown Area or the McQuay Area, any interest acquired in such System Area (with respect to such acquisition or series of related acquisitions involving Dedicated Properties in such System Area) by such assignee or any of its Affiliates after the date of such assignment, transfer or conveyance (and any Gas attributable thereto) shall be dedicated under (as to that System Area only), and subject to the terms of, this Agreement.

 

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(e) Any Party which shall succeed by purchase, merger or consolidation with Gatherer or Shipper or their respective successors in interest shall be subject to the obligations of its predecessor under this Agreement.

(f) Any release of any of the Dedicated Properties from dedication under this Agreement pursuant to the terms of this Agreement shall not constitute an assignment or transfer of such Dedicated Properties for the purposes of this Article 15 .

(g) Any assignment or transfer in violation of this Section  15.1 shall be, and is hereby declared, null and void ab initio.

Section 15.2 Notice . No assignment, transfer or conveyance of this Agreement, or of any interest of Gatherer or Shipper in this Agreement, shall be binding upon the other Party until such Party has been notified, in writing, of such assignment, transfer or conveyance, and furnished with a copy of same, and if required under Section  15.1 , consented to such assignment, transfer or conveyance.

Section 15.3 Pre-Approved Assignment . Either Party shall have the right without the prior consent of the other to (a) mortgage, pledge, encumber or otherwise impress a lien or security interest upon its rights and interest in and to this Agreement and (b) make a transfer pursuant to any security interest arrangement described in (a) above, including any judicial or non-judicial foreclosure and any assignment from the holder of such security interest to another Person.

ARTICLE 16

MISCELLANEOUS

Section 16.1 Relationship of the Parties . The rights, duties, obligations and liabilities of the Parties under this Agreement shall be individual, not joint or collective. It is not the intention of the Parties to create, nor shall this Agreement be deemed or construed to create, a partnership, joint venture or association or a trust. This Agreement shall not be deemed or construed to authorize any Party to act as an agent, servant or employee for any other Party for any purpose whatsoever except as explicitly set forth in this Agreement. In their relations with each other under this Agreement, the Parties shall not be considered fiduciaries.

Section 16.2 Notices . All notices and communications required or permitted to be given under this Agreement shall be sufficient in all respects if given in writing and delivered personally, or sent by bonded overnight courier, or mailed by U.S. Express Mail or by certified or registered United States Mail with all postage fully prepaid or by electronic mail with a PDF of the notice or other communication attached (provided that any such electronic mail is confirmed either by written confirmation or U.S. Express Mail), in each case, addressed to the appropriate Person at the address for such Person shown in Exhibit C . Any notice given in accordance herewith shall be deemed to have been given when (a) delivered to the addressee in person or by courier, (b) transmitted by electronic communications during normal business hours, or if transmitted after normal business hours, on the next Business Day, or (c) upon actual receipt by the addressee after such notice has either been delivered to an overnight courier or deposited in the United States Mail if received during normal business hours, or if not received during normal business hours, then on the next Business Day, as the case may be. Any Person may change their contact information for notice by giving notice to the other Parties in the manner provided in this Section  16.2 .

 

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Section 16.3 Expenses . All fees, costs and expenses incurred by the Parties in negotiating this Agreement shall be paid by the Party incurring the same, including legal and accounting fees, costs and expenses.

Section 16.4 Waivers; Rights Cumulative . Any of the terms, covenants, or conditions hereof may be waived only by a written instrument executed by or on behalf of the Party waiving compliance. No course of dealing on the part of any Party, or their respective officers, employees, agents, or representatives, nor any failure by a Party to exercise any of its rights under this Agreement shall operate as a waiver thereof or affect in any way the right of such Party at a later time to enforce the performance of such provision. No waiver by any Party of any condition, or any breach of any term or covenant contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of any breach of any other term or covenant. The rights of the Parties under this Agreement shall be cumulative, and the exercise or partial exercise of any such right shall not preclude the exercise of any other right.

Section 16.5 Entire Agreement; Conflicts . THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES PERTAINING TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS, AND DISCUSSIONS, WHETHER ORAL OR WRITTEN, OF THE PARTIES PERTAINING TO THE SUBJECT MATTER HEREOF. THERE ARE NO WARRANTIES, REPRESENTATIONS, OR OTHER AGREEMENTS AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, INCLUDING THE EXHIBITS HERETO, AND NO PARTY SHALL BE BOUND BY OR LIABLE FOR ANY ALLEGED REPRESENTATION, PROMISE, INDUCEMENT, OR STATEMENTS OF INTENTION NOT SO SET FORTH.

Section 16.6 Amendment . This Agreement may be amended only by an instrument in writing executed by the Parties and expressly identified as an amendment or modification.

Section 16.7 Governing Law . THIS AGREEMENT AND THE LEGAL RELATIONS AMONG THE PARTIES SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION.

Section 16.8 Parties in Interest . Nothing in this Agreement shall entitle any Person other than the Parties to any claim, cause of action, remedy or right of any kind.

Section 16.9 Preparation of Agreement . Both Parties and their respective counsel participated in the preparation of this Agreement. In the event of any ambiguity in this Agreement, no presumption shall arise based on the identity of the draftsman of this Agreement.

 

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Section 16.10 Severability . If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

Section 16.11 Counterparts . This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a Party by electronic mail shall be deemed an original signature hereto.

Section 16.12 Confidentiality .

(a) EACH PARTY ACKNOWLEDGES AND AGREES THAT THE TERMS AND CONDITIONS OF THIS AGREEMENT AND ANY INFORMATION DISCLOSED OR PROVIDED TO IT WITH RESPECT TO THE OTHER PARTY (AND/OR ITS ASSETS AND BUSINESS) IN RELATION TO THIS AGREEMENT SHALL BE HELD IN STRICT CONFIDENCE BY IT AND SHALL NOT BE DISCLOSED TO ANY OTHER PERSON EXCEPT EACH PARTY MAY DISCLOSE ANY SUCH INFORMATION WITHOUT CONSENT OF THE OTHER PARTY TO:

(i) ITS (AND ITS AFFILIATES’) RESPECTIVE LEGAL AND FINANCIAL ADVISORS, FINANCIAL INVESTORS, EQUITY HOLDERS, OFFICERS, DIRECTORS, MEMBERS, EMPLOYEES, AGENTS AND OTHER REPRESENTATIVES WHO HAVE A NEED TO KNOW THE TERMS AND CONDITIONS OF THIS AGREEMENT AND/OR SUCH INFORMATION IN CONNECTION WITH SUCH PARTY’S PERFORMANCE OF THIS AGREEMENT AND WHO HAVE AGREED TO MAINTAIN, OR OTHERWISE HAVE A DUTY TO MAINTAIN, THE CONFIDENTIALITY THEREOF,

(ii) EXISTING AND POTENTIAL LENDERS OF GATHERER, AND PROSPECTIVE PURCHASERS OF GATHERER OR OF ANY OF THE INDIVIDUAL SYSTEMS OR SUBSTANTIALLY ALL OF GATHERER’S ASSETS, AND SUCH LENDERS OR PURCHASERS HAVE AGREED TO MAINTAIN THE CONFIDENTIALITY OF THE TERMS AND CONDITIONS OF THIS AGREEMENT AND SUCH INFORMATION AND NOT TO USE SAME FOR ANY PURPOSE OTHER THAN THE EVALUATION OF THE LOAN, POTENTIAL LOAN OR POTENTIAL PURCHASE, AND

(iii) EXISTING AND POTENTIAL LENDERS OF SHIPPER AND ANY PROSPECTIVE PURCHASER OF AN INTEREST IN ANY LAND, WELL OR LEASE SUBJECT HERETO OR OF SHIPPER AND SUCH LENDERS OR PURCHASER HAVE AGREED TO MAINTAIN THE CONFIDENTIALITY OF THE TERMS AND CONDITIONS OF THIS AGREEMENT AND SUCH INFORMATION AND NOT TO USE THE SAME FOR ANY PURPOSE OTHER THAN THE LOAN, POTENTIAL LOAN OR EVALUATION OF THE POTENTIAL PURCHASE.

 

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(b) EACH PARTY MAY ALSO DISCLOSE SUCH INFORMATION WITHOUT CONSENT OF THE OTHER PARTY TO THE EXTENT THAT DISCLOSURE IS REQUIRED BY FEDERAL OR STATE LAW, OR AGENCY, OR ANY EXCHANGE ON WHICH SUCH PARTY’S (OR ITS AFFILIATES’) EQUITY IS TRADED.

(c) THE FOREGOING OBLIGATION OF CONFIDENTIALITY SHALL NOT APPLY TO ANY INFORMATION THAT: (I) COMES INTO THE POSSESSION OF THE RECEIVING PARTY ON A NON-CONFIDENTIAL BASIS FROM A THIRD PARTY WHO IS NOT UNDER AN OBLIGATION OR DUTY TO MAINTAIN THE CONFIDENTIALITY OF SUCH INFORMATION, (II) BECOMES PART OF THE PUBLIC DOMAIN OTHER THAN THROUGH BREACH OF THE CONFIDENTIALITY OBLIGATIONS HEREUNDER, OR (III) DEVELOPED BY THE RECEIVING PARTY OR ITS AFFILIATES INDEPENDENTLY WITHOUT THE USE OF ANY INFORMATION RECEIVED HEREUNDER. EACH PARTY (THE “ FIRST PARTY ”) SHALL BE LIABLE TO THE OTHER PARTY FOR ANY BREACH OF THIS SECTION 16.12 BY ANY PERSON UNDER ITEM (i) OF THE FIRST SENTENCE OF THIS SECTION 16.12 TO WHICH THE FIRST PARTY IS PERMITTED TO DISCLOSE INFORMATION.

Section 16.13 Adequate Assurances . If Shipper makes an assignment to a Third Party (herein, the “ Assignee ”) pursuant to Section  15.1 and Gatherer has reasonable grounds for insecurity regarding the performance by such Assignee (including insecurity arising from the credit rating of such Assignee), then Gatherer may, singularly or in combination with any other rights it may have, demand Adequate Assurance of Performance from such Assignee as a condition to providing Gathering Services hereunder to such Assignee. “ Adequate Assurance of Performance ” means the Assignee’s delivery to Gatherer of an advance payment in cash, an irrevocable standby letter of credit or a performance bond, in each case, in an amount determined to be commercially reasonable based on the creditworthiness of the Assignee (such cash, letter of credit or bond to be received substantially concurrently with the closing of the applicable assignment). Promptly following the termination of the condition giving rise to Gatherer’s reasonable grounds for insecurity or payment in full of amounts outstanding, as applicable, Gatherer shall release to such Assignee the cash, letter of credit, bond or other assurance provided by such Assignee (including any accumulated interest, if applicable, and less any amounts actually applied to cover Assignee’s obligations hereunder).

Section 16.14 Amendment and Restatement of First Amended and Restated Agreement . Shipper, Gatherer and DevCo II LP and DevCo III LP (the “ Prior Signatories ”) agree and acknowledge that the First Amended and Restated Agreement is hereby amended and restated in its entirety and replaced and superseded by this Agreement effective for all purposes as of the Execution Date. Each of Shipper, Gatherer and the Prior Signatories hereby waive any and all Claims arising out of or relating to any breach of the First Amended and Restated Agreement occurring prior to the Execution Date (whether known or unknown) except for any amounts owed by Shipper to Gatherer and/or the Prior Signatories, by Gatherer and/or the Prior Signatories to Shipper, by any of Gatherer to any of Gatherer (as defined in the First Amended

 

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and Restated Agreement) or by any of Gatherer (as defined in the First Amended and Restated Agreement) to any of Gatherer, for (i) amounts previously invoiced under such agreement, but not yet paid and (ii) amounts owed under such agreement (whether or not yet invoiced) with respect to the Gas and/or Liquid Condensate delivered or redelivered and Gas Services provided (as all such terms are defined in the First Amended and Restated Agreement) during the two Months immediately preceding the Execution Date, but not yet received.

Section 16.15 Joint and Several Liability . Each of the Persons comprising Gatherer under this Agreement shall be severally and not jointly liable for all obligations of Gatherer under and pursuant to this Agreement (a) with respect to each Person other than OpCo, as to their specific Individual System(s) and System Area(s) and (b) with respect to OpCo, as to the ROFO Area and any areas outside of the System Areas.

Section 16.16 Headings . The topical headings and index used herein are inserted for convenience only and shall not be construed as having any substantive significance or meaning whatsoever, or as indicating that all of the provisions of this Agreement relating to any particular topic are to be found in any particular article or section.

Section 16.17 No Election . In the event of a default by a Party under this Agreement, except where the specific language of this Agreement provides that the specific remedy stated is the sole remedy of a Party, the other Party shall be entitled in its sole discretion to pursue one or more of the remedies set forth in this Agreement, or such other remedy as may be available to it under this Agreement, at Law or in equity, subject, however, to the limitations set forth in Article 13 . No election of remedies shall be required or implied as the result of a Party’s decision to avail itself of a remedy under this Agreement, except as specifically stated otherwise in this Agreement.

Section 16.18 Exhibits . All exhibits referenced in this Agreement are attached hereto and made a part of this Agreement.

Section 16.19 Time is of the Essence . With respect to all dates and time periods in this Agreement, time is of the essence.

Section 16.20 Agreement Regarding Certain Remedies . It is expressly stipulated by the Parties that the actual amount of damages resulting from the conditions described in Sections 3.2(e)(ii) , 5.2(b) and 5.2(c) would be difficult if not impossible to determine accurately because of the unique nature of this Agreement and the unique nature of the performance obligation of Gatherer, the uncertainties of applicable commodity markets and differences of opinion with respect to such matters, and that the remedy provided for in such Section is a reasonable estimate by the Parties of such damages under the circumstances and does not constitute a penalty. Notwithstanding anything contained herein to the contrary and for the avoidance of doubt, Shipper shall not be entitled to any credits or liquidated damages pursuant to this Agreement with respect to any Well from and after the date upon which such Well is permanently released from dedication pursuant to any provision of this Agreement.

 

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Section 16.21 Change of Control . In the event that, at any time during the Term, neither Shipper nor any of its Affiliates, directly or indirectly, Controls the general partner of CONE Midstream Partners LP, then the provisions set forth in Exhibit S shall apply.

ARTICLE 17

OPERATING TERMS AND CONDITIONS

Section 17.1 Terms and Conditions . Gatherer’s Operating Terms and Conditions, a copy of which is attached hereto as Exhibit A , are for all purposes incorporated in this Agreement.

[signature page follows]

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be effective as of the Execution Date.

 

“Gatherer”
CONE MIDSTREAM DEVCO I LP

By: CONE MIDSTREAM DEVCO I GP LLC,

its general partner

By:  

/s/ Stephen W. Johnson

Name:   Stephen W. Johnson
Title:   Authorized Signatory
CONE MIDSTREAM DEVCO II LP

By: CONE MIDSTREAM DEVCO II GP LLC,

its general partner

By:  

/s/ Stephen W. Johnson

Name:   Stephen W. Johnson
Title:   Authorized Signatory
CONE MIDSTREAM DEVCO III LP

By: CONE MIDSTREAM DEVCO III GP LLC,

its general partner

By:  

/s/ Stephen W. Johnson

Name:   Stephen W. Johnson
Title:   Authorized Signatory
CONE MIDSTREAM OPERATING COMPANY, LLC
By:  

/s/ Stephen W. Johnson

Name:   Stephen W. Johnson
Title:   Authorized Signatory

Signature Page – CNX-CNNX

Second Amended and Restated Gathering Agreement


“Shipper”

 

CNX GAS COMPANY LLC

By:  

/s/ Stephen W. Johnson

Name:   Stephen W. Johnson
Title:   Executive Vice President & Chief Administrative Officer

Signature Page – CNX-CNNX

Second Amended and Restated Gathering Agreement

Exhibit 99.1

 

LOGO         LOGO

CNX Resources Corporation Acquires Noble Energy’s General

Partner Interest in CONE Midstream Partners LP;

Board Approves Amended Gas Gathering Agreement with CNX;

CONE Midstream Partners LP Renamed CNX Midstream Partners

LP (NYSE: CNXM);

CNXM Will Host Conference Call Tomorrow at 10:00 a.m. ET

PITTSBURGH (January 3, 2018) – CNX Resources Corporation (NYSE: CNX) (“CNX”) and CNX Midstream Partners LP (NYSE: CNXM) (“CNXM”) jointly announced today that CNX has closed its previously announced acquisition of Noble Energy, Inc.’s (NYSE: NBL) (“Noble”) 50% membership interest in CONE Gathering LLC, which holds the general partner interest and incentive distribution rights in CONE Midstream Partners LP. In conjunction with the closing, CONE Midstream Partners LP was renamed CNX Midstream Partners LP and will commence trading on the New York Stock Exchange under the ticker “CNXM” effective January 4, 2018.

Separately, CNXM announced today that its board of directors, following prior approval by the Board of Director’s Conflicts Committee, which consists entirely of independent directors, has authorized CNXM to enter into an amendment to its gas gathering agreement (the “GGA”) with CNX Gas Company LLC, a wholly-owned subsidiary of CNX. As part of the amendment to the GGA:

 

    CNX will dedicate approximately 63,000 dry Utica acres to CNXM, of which approximately 51,000 will be located in the development company I, or DevCo I, area, which is 100% owned by CNXM.

 

    CNX has committed to drilling a minimum of 140 wells over the next four years in the DevCo I area.

 

    CNXM has agreed to a major system expansion to support production from the newly dedicated Utica areas.

This amendment is expected to help CNX unlock the stacked pay potential of the core of southwest Pennsylvania and capitalize on economies of scale, which would support accelerating drilling activity and production moving forward. CNXM believes this will result in a higher level of confidence to support sustainable distribution growth into the future, which in turn will benefit CNX, which owns 21.7 million common units, the general partner interest, and the incentive distribution rights in CNXM. In addition, CNX and Noble have agreed to divide equitably their jointly owned water assets so that either CNX or Noble will own all of the formerly jointly owned water assets within agreed upon areas.


“Owning 100% of the general partner of CNXM, while simultaneously amending the existing GGA, is very significant for CNX,” commented Nicholas J. DeIuliis, president and CEO. “CNX will benefit from increased control and flexibility with respect to the scope and timing of midstream development, which in turn will give CNX a greater level of optionality in its development plans and future drop opportunities. Ultimately, this GGA allows CNX to lock in our multi-year development plan under mutually beneficial terms for both CNX and CNXM. The single sponsor MLP model is the first key step in unlocking the value potential of CNX Midstream.”

“For CNXM,” Mr. DeIuliis said, “the amended GGA is expected to lock in throughput and revenue growth, enabling CNXM to maintain its strong distribution growth policy for the next several years.”

As part of the change in ownership, effective immediately, Nicholas J. DeIuliis will serve as the chief executive officer (CEO) of CNXM, in addition to his current role as president and CEO of CNX. Also, effective immediately, Donald W. Rush will serve as the chief financial officer (CFO) of CNXM in addition to his current role as CFO of CNX.

Following the closing of the acquisition, Nicholas J. DeIuliis, Donald W. Rush, and Timothy C. Dugan will join Stephen W. Johnson and the three existing independent directors to constitute the board of directors of CNXM.

The changes to CNXM’s management team and board of directors illustrate CNX’s intent to better align the strategic initiatives of CNX and CNXM to unlock the growth potential for both companies.

Goldman Sachs & Co. LLC served as the financial advisor and Latham & Watkins LLP served as the legal advisor to CNX. The conflicts committee was advised by Evercore on financial matters and Baker Botts L.L.P. on legal matters.

Conference Call

A conference call and webcast, during which management will discuss these announcements, is scheduled for January 4, 2018 at 10:00 a.m. Eastern Time. Reference material for the call will be available on the “Events” page of the new CNX Midstream website, www.cnxmidstream.com, shortly before the start of the call. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast by using the link posted on the “Events” page of our website or at https://services.choruscall.com/links/cnxm180104.html . Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CNX Midstream call). An on-demand replay of the webcast will be also be available at https://services.choruscall.com/ccforms/replay.html shortly after the conclusion of the conference call. A telephonic replay will be available through January 18, 2018 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10115469.


About CNX Resources

CNX Resources Corporation (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. The company deploys an organic growth strategy focused on responsibly developing its resource base. As of December 31, 2016, CNX had 6.3 trillion cubic feet equivalent of proved natural gas reserves. The company is a member of the Standard & Poor’s Midcap 400 Index. Additional information may be found at www.cnx.com .

About CNX Midstream Partners

CNX Midstream Partners LP (NYSE: CNXM) is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.cnxmidstream.com .

* * * * *

This press release serves a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Nominees should treat one hundred percent (100.0%) of CNX Midstream’s distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CNX Midstream’s distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CNX Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of non-U.S. investors.

Important Information about Company Names and Stock Trading Symbols

Effective November 28, 2017, the company known as CONSOL Energy Inc. (NYSE: CNX) separated its gas business (GasCo or RemainCo) and its coal business (CoalCo or SpinCo) into two independent, publicly traded companies by means of a separation of CoalCo from RemainCo.

 

    The gas business, CNX Resources Corporation (RemainCo, GasCo or CNX), continues to be listed on the NYSE, retaining the ticker symbol “CNX”. Information regarding CNX and its natural gas business is available at www.cnx.com .

 

    The coal business, CONSOL Energy Inc. (SpinCo, CoalCo or CONSOL), is listed on the NYSE under the ticker symbol: “CEIX”. CoalCo owns, operates and develops coal assets, including the Pennsylvania Mining Complex, the Baltimore Marine Terminal, and approximately one billion tons of greenfield coal reserves. Information regarding the new CONSOL Energy and its coal business is available at www.consolenergy.com .


    The master limited partnership that was named CNX Coal Resources LP (NYSE: CNXC) has changed its name to CONSOL Coal Resources LP and trades on the NYSE under a new ticker symbol: “CCR”. CONSOL owns 100% of the general partner of CONSOL Coal Resources LP (representing a 1.7% general partner interest), as well as all of the incentive distribution rights and the common and subordinated interests in CNX Coal Resources LP that were owned by CNX prior to the spin-off. Information regarding CONSOL Coal Resources LP is available at www.ccrlp.com

 

    Following the closing of CNX’s purchase of Noble Energy’s 50% interest in CNX Gathering LLC, the master limited partnership that was named CONE Midstream Partners, LP has changed its name to CNX Midstream Partners LP and will trade under a new ticker symbol: “CNXM”. CNX indirectly owns 100% of the general partnership interests of CNX Midstream Partners LP as well as all of its incentive distribution rights. Information regarding CNX Midstream Partners LP will be available at www.cnxmidstream.com.

Cautionary Statements

We are including the following cautionary statement in this press release to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of us. With the exception of historical matters, the matters discussed in this press release are forward-looking statements (as defined in 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include statements regarding benefits of the acquisition and the plans, objectives, and strategies of CNX and CNXM following the acquisition, projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words “believe,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “estimate,” “plan,” “predict,” “project,” “will,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release; we disclaim any obligation to update these statements. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: the impact of the separation of the natural gas exploration and production company from the coal company on our business; the expected tax treatment of the separation; competitive responses to the separation; deterioration in economic conditions in any of the industries in which our customers operate which may decrease demand for our products, impair our ability to collect customer receivables and impair our ability to access capital; prices for natural gas and natural gas liquids are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand available for our products, weather and the price and availability of alternative fuels; an extended decline in the prices we receive for our natural gas and natural gas liquids affecting our operating results and cash flows; foreign currency


fluctuations could adversely affect the competitiveness of our natural gas liquids abroad; our reliance on major customers; our inability to collect payments from customers if their creditworthiness declines or if they fail to honor their contracts; the disruption of gathering, processing and transportation facilities and other systems that deliver our natural gas and natural gas liquids to market; a loss of our competitive position because of the competitive nature of the natural gas industry overcapacity in this industry impairing our profitability; the impact of potential, as well as any adopted environmental regulations including any relating to greenhouse gas emissions on our operating costs as well as on the market for natural gas and for our securities; the risks inherent in natural gas operations, including our reliance upon third party contractors, being subject to unexpected disruptions, including geological conditions, equipment failure, timing of completion of significant construction or repair of equipment, fires, explosions, accidents and weather conditions that could impact financial results; decreases in the availability of, or increases in, the price of commodities or capital equipment used in our natural gas operations; obtaining and renewing governmental permits and approvals for our natural gas; the effects of government regulation on the discharge into the water or air, and the disposal and clean-up of, hazardous substances and wastes generated during our natural gas operations; our ability to find adequate water sources for our use in natural gas drilling, or our ability to dispose of water used or removed from strata in connection with our gas operations at a reasonable cost and within applicable environmental rules; the effects of stringent federal and state employee health and safety regulations, including the ability of regulators to shut down our operations; the potential for liabilities arising from environmental contamination or alleged environmental contamination in connection with our past or current gas operations; the effects gas well closing and certain other liabilities; uncertainties in estimating our economically recoverable natural gas and oil reserves; defects may exist in our chain of title and we may incur additional costs associated with perfecting title for natural gas rights on some of our properties or failing to acquire these additional rights may result in a reduction of our estimated reserves; the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act; exposure to employee-related long-term liabilities; acquisitions and divestitures we anticipate may not occur or produce anticipated benefits; our participation in joint ventures may restrict our operational and corporate flexibility, and actions taken by a joint venture partner may impact our financial position and operational results; risks associated with our debt; replacing our natural gas and oil reserves, which if not replaced, will cause our natural gas and oil reserves and production to decline; declines in our borrowing base could occur for a variety of reasons, including lower natural gas or oil prices, declines in natural gas and oil proved reserves, and lending regulations requirements or regulations; our hedging activities may prevent us from benefiting from near-term price increases and may expose us to other risks; changes in federal or state income tax laws, particularly in the area of percentage depletion and intangible drilling costs, could cause our financial position and profitability to deteriorate; failure to appropriately allocate capital and other resources among our strategic opportunities may adversely affect our financial condition; failure by CONSOL Energy to satisfy liabilities it acquired from us in connection with the separation, or failure to perform its obligations under various arrangements, which we guaranteed, could materially or adversely affect our results of operations, financial position, and cash flows; information theft, data corruption, operational disruption and/or financial loss resulting from a terrorist attack or cyber incident; operating in a single geographic area; with respect to the termination of the joint venture with Noble - disruption to our business, including customer and supplier relationships resulting from this


transaction, and the impact of the transaction on our future operating and financial results and liquidity; and, with respect to our acquisition of the 50% interest in CONE Gathering LLC from Noble, disruption to our business, including customer, employee and supplier relationships resulting from this transaction, risks that the conditions to closing may not be satisfied and the purchase may not occur, and the impact of the transaction on our future operating and financial results. Additional factors are described in detail under the captions “Forward Looking Statements” and “Risk Factors” in CNX’s and CNXM’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission, as supplemented by their respective Quarterly Reports on Form 10-Q.

CNX Resources Corporation Contacts :

Investor: Tyler Lewis at (724) 485-3157

Media: Brian Aiello at (724) 485-3078

CNX Midstream Partners LP Contacts :

Investor: Steve Milbourne at (724) 485-4408

Media: Brian Aiello at (724) 485-3078