TAG ALONG AGREEMENT by and among EAGLE ROCK PIPELINE, L.P. EAGLE ROCK PIPELINE GP, LLC EAGLE ROCK HOLDINGS, L.P. AND THE PURCHASERS SET FORTH ON THE SIGNATURE PAGES HERETO
Exhibit 4.2
by and among
EAGLE ROCK PIPELINE, L.P.
EAGLE ROCK PIPELINE GP, LLC
EAGLE ROCK HOLDINGS, L.P.
AND
THE PURCHASERS SET FORTH ON THE SIGNATURE PAGES HERETO
THIS TAG ALONG AGREEMENT (this “Agreement”) is made and entered into as of March 27,
2006, by and among EAGLE ROCK PIPELINE GP, LLC, a Delaware limited liability company (the
“General Partner”), EAGLE ROCK PIPELINE, L.P., a Delaware limited partnership (the
“Company”), EAGLE ROCK HOLDINGS, L.P, a Texas limited partnership (the “Initial Limited
Partner”) and each of the parties set forth on the signature pages hereto (the
“Purchasers”). Capitalized terms used herein without definition shall have the meanings
given to them in the Purchase Agreement, as defined below.
RECITALS
WHEREAS, the Company, the Purchasers and the other parties thereto have entered into a
Purchase Agreement, dated as of March 27, 2006 (the “Purchase Agreement”);
WHEREAS, in connection with the Purchase Agreement, the Company has agreed to sell Common
Units to the Purchasers and to convert the Initial Limited Partner’s limited partner interest into
Subordinated Units;
WHEREAS, in connection with the Purchase Agreement, the Company has agreed to provide the tag
along and other rights set forth in this Agreement for the benefit of the Purchasers pursuant to
the Purchase Agreement;
WHEREAS, the Initial Limited Partner will own 33,582,918 Subordinated Units following the
execution and delivery of the Partnership 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:
ARTICLE I
DEFINITIONS
DEFINITIONS
Section 1.01 Definitions. The terms set forth below are used herein as so
defined:
“Affiliate” means, with respect to a specified Person, any other Person, directly or
indirectly controlling, controlled by or under direct or indirect common control with such
specified Person. For purposes of this definition, “control” (including, with correlative
meanings, “controlling,” “controlled by” and “under common control with”) means the power to direct
or cause the direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.
“Affiliate Transfer” means any transfer of Common Units (and/or the rights granted to
the Purchasers by the Company under this Agreement) from any Purchaser to an Affiliate of such
Purchaser and any successive Affiliate Transfers.
“Business Day” means any day other than a Saturday, Sunday, or a legal holiday for
commercial banks in New York, New York.
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“Commission” means the United States Securities and Exchange Commission.
“Common Units” shall have the meaning set forth in the Purchase Agreement.
“Company” has the meaning specified therefor in the introductory paragraph of this
Agreement.
“Drag-Along Notice” has the meaning set forth in Section 2.01(a).
“Drag-Along Right” has the meaning set forth in Section 2.01(a).
“Holder” means the record holder of any limited partner interest in the Company.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
“IPO” means the initial public offering and sale of Common Units or other equity
securities issued in exchange therefore in connection with any merger, consolidation or other
business combination involving the Company to the public pursuant to a Registration Statement on
form S-1 that has been declared effective under the Securities Act by the Securities and Exchange
Commission.
“Partnership Agreement” has the meaning set forth in the Purchase Agreement.
“Participation Offer” has the meaning set forth in Section 2.01(a).
“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated organization,
government or any agency, instrumentality or political subdivision thereof, or any other form of
entity.
“Purchase Agreement” has the meaning specified in the Recitals.
“Purchased Securities” shall have the meaning set forth in the Purchase Agreement.
“Purchasers” has the meaning specified in the introductory paragraph hereto.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
“Subordinated Units” has the meaning set forth in the Partnership Agreement.
“Tag Along Notice” has the meaning set forth in Section 2.01(a).
“Tag Along Units” has the meaning set forth in Section 2.01(a).
“Transfer” (including the correlative terms “Transfers,” “Transferring” or
“Transferred”) means any direct or indirect transfer, assignment, sale, gift, pledge, hypothecation
or other encumbrance, or any other disposition (whether voluntary or involuntary or by operation of
law), of limited partner interests in the Company, including Common Units and Subordinated Units
(or
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any interest (pecuniary or otherwise) therein or right thereto), including derivative or
similar transactions or arrangements whereby a portion or all of the economic interest in, or risk
of loss or opportunity for gain with respect to, limited partner interests are transferred or
shifted to another Person; provided, however, that (i) a Transfer by the Initial Limited Partner to
an Affiliate shall not be deemed a Transfer, (ii) an exchange, merger, recapitalization,
consolidation or reorganization involving the Company as contemplated by Article X of the
Partnership Agreement shall not be deemed a Transfer and (iii) an exchange, merger,
recapitalization, consolidation or reorganization involving the Company in which securities of the
Company or any other Person and/or cash are issued in respect of all limited partner interests
shall not be deemed a Transfer if all limited partner interests are treated identically in any such
transaction (other than (A) differences resulting from the treatment of fractional interests that
would otherwise result from such transaction, (B) the cancellation for no consideration of limited
partner interests held by any Party that has consented to such cancellation, and/or (C) differences
resulting from any election made by the Parties so long as all Parties have an equal opportunity to
make such an election).
“Units” shall have the meaning set forth in the Partnership Agreement.
ARTICLE II
TRANSFER RIGHTS
TRANSFER RIGHTS
Section 2.01 Tag Along Right.
(a) Any Transfer for value by the Initial Limited Partner of Subordinated Units (the
“Tag Along Units”) prior to an IPO shall be subject to this Section 2.01. In
connection with any proposed Transfer that is subject to this Section 2.01, the Initial
Limited Partner shall give written notice to each Purchaser (the “Tag Along
Notice”) at least fifteen (15) Business Days prior to any proposed Transfer that is
subject to this Section 2.01. The Tag Along Notice shall specify the proposed transferee,
whether such proposed transferee is willing to purchase Common Units then held by the
Purchasers and, if so, the maximum number of Common Units such proposed transferee is
willing to purchase from such Purchasers, the number of Tag Along Units to be Transferred by
the Initial Limited Partner to such proposed transferee, the amount and type of
consideration to be received therefor, and the place and date on which the Transfer is
expected to be consummated. The Tag Along Notice shall include an offer (the
“Participation Offer”) by the Initial Limited Partner to include in the proposed
Transfer on the terms described in Section 2.01(c) a number of Common Units designated by
any of the Purchasers, not to exceed, in respect of any such Purchaser, the product of (A)
the sum of the aggregate number of Tag Along Units to be sold by the Initial Limited Partner
to the proposed transferee and (B) a fraction with a numerator equal to the number of Common
Units held by such other Purchaser and a denominator equal to the number of Units held by
the Initial Limited Partner and all Purchasers on the date of the Transfer.
(b) Except as set forth herein and in Section 2.01(a) above, the per unit consideration
to be received for any Common Units included in a proposed Transfer hereunder shall be the
same per unit consideration to be received by the Initial Limited Partner as set forth in
the Participation Offer. Each Purchaser who wishes to include
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Common Units in the proposed Transfer in accordance with the terms set forth in the
Participation Offer shall so notify the Initial Limited Partner not more than ten (10)
Business Days after the date of the Tag Along Notice, failing which such Purchaser shall not
be entitled to participate in the proposed Transfer.
(c) The Participation Offer shall be conditioned upon the Initial Limited Partner’s
Transfer of Tag Along Units pursuant to the transactions contemplated in the Tag Along
Notice with the transferee named therein. If any other Purchasers have accepted the
Participation Offer, the Initial Limited Partner shall reduce to the extent necessary the
number of Tag Along Units it otherwise would have Transferred in the proposed Transfer so as
to permit the Purchasers who have accepted the Participation Offer to sell the number of
Common Units that they are entitled to sell under this Section 2.01, and the Initial Limited
Partner and such Purchasers shall sell the number of Units specified in the Participation
Offer to the proposed transferee in accordance with the terms of such sale as set forth in
the Tag Along Notice; provided, however, that if the proposed transferee deals solely with
the Initial Limited Partner and refuses to purchase from the Purchasers who have accepted
the Participation Offer the number of Units that they are entitled to sell under this
Section 2.01, then (i) the Initial Limited Partner shall be entitled to sell up to the
number of Common Units specified in the Participation Offer to the proposed transferee in
accordance with the terms of such sale as set forth in the Tag Along Notice and (ii) the
Initial Limited Partner shall then purchase from such Purchasers who have accepted the
Participation Offer, on the terms set forth in the Tag Along Notice, up to the number of
Common Units that they would have been entitled to sell under this Section 2.01 had the
proposed transferee purchased such Common Units directly from such Purchasers in accordance
with the terms of this Section 2.01. Any Purchaser who participates in a Transfer under
this Section 2.01 shall not be liable for any transaction costs associated with such a
Transfer other than the legal costs incurred by that Purchaser and, if the Initial Limited
Partner is obligated to pay selling commissions, then a pro-rata portion of such selling
commissions.
(d) The closing of such purchase by the transferee shall be on the same date that the
transferee acquires Tag Along Units from the Initial Limited Partner; provided that such
Purchaser have been given ten (10) days advance notice of such closing; provided further,
however, that any such closing shall be delayed, to the extent required, until the next
succeeding Business Day following the expiration of any required waiting periods under the
HSR Act and the obtaining of all other governmental approvals reasonably deemed necessary by
a party to the Transfer.
Section 2.02 Drag-Along Right.
(a) Prior to an IPO, in connection with any Transfer for value (whether by sale, merger
or otherwise) of all of the Subordinated Units beneficially owned by the Initial Limited
Partner to any Person, the Initial Limited Partner shall have the right to require all of
the Purchasers to sell all, but not less than all, of their Common Units on the terms
described in Section 2.02(b) below (the “Drag-Along Right”).
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(b) In connection with any proposed Transfer subject to this Section 2.02, the Initial
Limited Partner shall give written notice to each Purchaser at least twenty (20) days prior
to such Transfer, which notice shall specify the amount of consideration to be received by
the Initial Limited Partner for its Subordinated Units in connection with such Transfer and
the place and date on which the Transfer is expected to be consummated (a “Drag-Along
Notice”). Until the first anniversary of the date of this Agreement, the Drag-Along
Right shall be limited such that the amount of consideration to be received by the
Purchasers for their Common Units must be equal to or greater than $18.02 per unit.
Following the first anniversary of the date of this Agreement, the per unit consideration to
be received by Purchasers in a Transfer governed by this Section 2.02 shall be equal to the
per unit consideration to be received by the Initial Limited Partner as reflected in the
Drag-Along Notice.
(c) The closing of such purchase by the transferee shall be on the same date that the
transferee acquires securities from the Initial Limited Partner (it being acknowledged that
(i) in no event shall the Initial Limited Partner be obligated to Transfer any securities
and (ii) the Purchasers shall not be obligated to Transfer any securities unless and until
the Initial Limited Partner Transfers securities hereunder), provided that the Purchasers
have been given twenty (20) days’ advance notice of such closing; provided further, however,
that any such closing shall be delayed, to the extent required, until the next succeeding
Business Day following the expiration of any required waiting periods under the HSR Act and
the obtaining of all other governmental approvals reasonably deemed necessary by a party to
such Transfer.
(d) The Initial Limited Partner shall have the right to require the Company to
cooperate fully with potential acquirors of the Company in a prospective transaction
pursuant to this Section 2.02 by taking all customary and other actions reasonably requested
by such Persons or such potential acquirors, including without limitation, making the
Company’s properties, books and records, and other assets reasonably available for
inspection by such potential acquirors and making its employees reasonably available for
interviews.
Section 2.03 Representations and Warranties. The Initial Limited Partner and each
Purchaser who Transfers Common Units pursuant to this Agreement shall not be required to make any
representations or warranties in connection with such Transfer other than representations and
warranties as to (and the Initial Limited Partner and each such Purchaser shall execute an
agreement for the benefit of the proposed transferee providing for representations and warranties
as to) (i) such unitholder’s ownership of the Tag Along Units or Common Units, as the case may be,
to be Transferred free and clear of all liens, claims and other encumbrances other than those
arising under this Agreement, (ii) such unitholder’s power and authority to effect such Transfer,
and (iii) such matters pertaining to compliance with securities laws as are relevant to determining
whether an exemption from registration is available in connection with such Transfer; provided,
however, for the avoidance of doubt, the parties acknowledge that the consideration to be received
by the Initial Limited Partner and such Purchaser may consist of, among other things, an interest
in an escrow account, a security or other consideration, the ultimate value of which may be
dependent upon, among other things, the accuracy of representations and warranties relating to the
Company and its business or the future
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performance of the Company. Neither the Initial Limited Partner or the Purchasers shall be
required to provide any indemnification for losses or claims other than with respect to a breach of
such representations and warranties.
Section 2.04 Additional Acts. Each Purchaser who participates in a Transfer pursuant
to this Agreement shall promptly perform, at the sole cost and expense of the requesting party
(except for attorneys’ fees and expenses, which shall be borne by the party incurring such costs),
whether before or after any such closing, such additional acts (including, without limitation,
executing and delivering additional documents, the terms and conditions of which shall be no more
burdensome to such Purchaser than the terms and conditions of the documents executed by the Initial
Limited Partner in connection with such Transfer) as are reasonably required to effect more fully
the transactions contemplated by this Agreement.
ARTICLE III
MISCELLANEOUS
MISCELLANEOUS
Section 3.01 Communications. All notices and other communications provided for or
permitted hereunder shall be made in writing by facsimile, courier service or personal delivery:
(a) if to the Purchasers, at the most current address given by the Purchasers to the
Company in accordance with the provisions of this Section 3.01, which address initially is,
with respect to the Purchasers, the addresses set forth in the Purchase Agreement,
(b) if to a permitted transferee of a Purchaser, to such Holder at the address
furnished by such permitted transferee, and
(c) if to the Company, at 00000 Xxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000, notice of which is given in accordance with the provisions of this Section 3.01.
All such notices and communications shall be deemed to have been received at the time
delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or
sent via Internet electronic mail; and when actually received, if sent by any other means.
Section 3.02 Successor and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties, including subsequent Holders of
Purchased Securities to the extent permitted herein.
Section 3.03 Transfer or Assignment of Tag Along Rights. The rights granted to the
Purchasers by the Company under this Agreement may be transferred or assigned by any Purchaser to
one or more transferee(s) or assignee(s) of such Purchaser so long as: (a) following such transfer
or assignment such transferee or assignee holds Common Units representing at least $10 million of
the Purchased Securities sold pursuant to the terms of the Purchase Agreement, or (b) any
transferee or assignee of such Common Units is already a party to this Agreement; provided that in
any case, (x) the Company is given written notice prior to any said transfer or assignment, stating
the name and address of each such transferee and identifying the securities with respect to which
such tag along rights are being transferred or assigned, and
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(y) each such transferee assumes in writing responsibility for its portion of the obligations
of such Purchaser under this Agreement (unless it is already a party to this Agreement); and
provided further, that the requirements in this Section 3.03(a) and (b) shall not apply to an
Affiliate Transfer.
Section 3.04 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 such Person, in addition to and without limiting any other remedy or right it may have,
will have the right to an injunction or other equitable relief, including specific performance, 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 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
Person from pursuing any other rights and remedies at law or in equity which such Person may have.
Section 3.05 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 3.06 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 3.07 Governing Law. The laws of the State of New York shall govern this
Agreement without regard to principles of conflict of laws.
Section 3.08 Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof or affecting or impairing the validity or enforceability of such provision in any other
jurisdiction.
Section 3.09 Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the rights granted by the Company set forth herein.
This Agreement supersedes all prior agreements and understandings between the parties with respect
to such subject matter.
Section 3.10 Amendment. This Agreement may be amended only by means of a written
amendment signed by the Company and the Holders of a majority of the then outstanding Purchased
Securities; provided, however, that no such amendment shall materially and adversely affect the
rights of any Holder hereunder without the consent of such Holder.
Section 3.11 No Presumption. In the event any claim is made by a party relating to
any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or
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persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at
the request of a particular party or its counsel.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
| EAGLE ROCK PIPELINE, LP | ||||
| By: | Eagle Rock Pipeline GP, LLC | |||
| its general partner | ||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Xxxx X. Xxxxxx | ||||
| Chief Executive Officer | ||||
| EAGLE ROCK PIPELINE GP, LLC |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Xxxx X. Xxxxxx | ||||
| Chief Executive Officer | ||||
| EAGLE ROCK HOLDINGS, L.P. | ||||
| By: | Eagle Rock GP, LLC its general partner |
|||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Xxxx X. Xxxxxx | ||||
| Chief Executive Officer | ||||
[Signature Page to Tag Along Agreement]
| GSO Special Situations Fund LP |
||||
| By: | GSO Associates LLC, its general partner | |||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Xxxxxxx X. Xxxxxxx | ||||
| Senior Vice President | ||||
[Signature Page to Tag Along Agreement]
| RCH Energy Opportunity Fund I, L.P. | ||||
| By: | RCH Energy Opportunity Fund I GP,
L.P., its general partner |
|||
| By: | RR Advisors, LLC, its general partner | |||
| By: | /s/ Xxxxxx Xxxxxxx | |||
| Xxxxxx Xxxxxxx, | ||||
| its sole member | ||||
[Signature Page to Tag Along Agreement]
| HSH Nordbank AG, Cayman Islands Branch |
||||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Xxxxxx Xxxxxx | ||||
| Senior Vice President | ||||
| By: | /s/ Xxxxx Xxxxx | |||
| Xxxxx Xxxxx | ||||
| Vice President | ||||
[Signature Page to Tag Along Agreement]
| Xxxxxxxxxx Equity Company |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxxx, Xx. | |||
| Xxxxxxx X. Xxxxxxxxxx, Xx. | ||||
| Partner | ||||
[Signature Page to Tag Along Agreement]
| Swank MLP Convergence Fund, LP |
||||
| By: | /s/ Xxxxx Xxxxx | |||
| Xxxxx Xxxxx, | ||||
| Managing Partner | ||||
[Signature Page to Tag Along Agreement]
| Tortoise Capital Resources Corporation |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Xxxxx X. Xxxxxxx | ||||
| President and Chief Executive Officer | ||||
[Signature Page to Tag Along Agreement]
| Kenmont Onshore Fund, L.P. | ||||
| By | Kenmont
Investment Management, L.P., its Investment Manager |
|||
| By: | /s/ Xxxx Xxxxxxxxx | |||
| Xxxx Xxxxxxxxx Chief Financial Officer |
||||
[Signature Page to Tag Along Agreement]
| RAMOT Capital, LLC |
||||
| By: | /s/ Xxxxx Xxxxxxx | |||
| Xxxxx Xxxxxxx | ||||
| Chief Operating Officer | ||||
[Signature Page to Tag Along Agreement]
| Xxxxxx Xxxxx |
||||
| By: | /s/ Xxxxxx Xxxxx | |||
| Xxxxxx Xxxxx | ||||
[Signature Page to Tag Along Agreement]
| BBTTFM Partners |
||||
| By: | /s/ Xxxxx Xxxxx | |||
[Signature Page to Tag Along Agreement]
