Execution Version
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement, dated as of December 22, 2006 (the
"Agreement"), is made and entered into by and among Quest Midstream Partners,
L.P., a Delaware limited partnership ("Company"), Quest Midstream GP, LLC, a
Delaware limited liability company ("GP"), Quest Resource Corporation, a
Nevada corporation ("QRC"), Alerian Opportunity Partners IV, L.P., a Delaware
limited partnership ("Alerian"), Swank MLP Convergence Fund, LP, a Texas
limited partnership ("Swank MLP Fund"), Swank Investment Partners, LP, a
Texas limited partnership ("SIP"), The ▇▇▇▇▇▇▇ MLP Opportunity Fund I, LP, a
Delaware limited partnership ("▇▇▇▇▇▇▇ MLP Fund"), The ▇▇▇▇▇▇▇ ▇▇ Strategies
Fund, LP, a Delaware limited partnership ("▇▇▇▇▇▇▇ ▇▇ Fund", together with
Swank MLP Fund, SIP and ▇▇▇▇▇▇▇ MLP Fund, "Swank"), Tortoise Capital
Resources Corporation, a Maryland corporation ("Tortoise"), ▇▇▇▇▇▇▇▇
Opportunity Partners, LP, a Delaware limited partnership ("HOP") and HCM
Energy Holdings, LLC, an Illinois limited liability company (together with
HOP, "▇▇▇▇▇▇▇▇"). Alerian, Swank, Tortoise and ▇▇▇▇▇▇▇▇ are sometimes
referred to herein individually as "Investor" and collectively as the
"Investors."
WHEREAS, the Company, GP, QRC and the Investors are parties to a
Purchase Agreement of even date herewith (the "Purchase Agreement") pursuant
to which the Investors acquired certain of the Company's Common Units, and
Alerian and Swank acquired certain of the GP's Member Interests.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and of other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. Definitions and Interpretations. Unless otherwise provided to the
contrary in this Agreement, capitalized terms in this Agreement have the
meanings set forth in Section 1.1 of Exhibit A. Unless expressly provided to the
contrary in this Agreement, this Agreement shall be interpreted in accordance
with the provisions set forth in Section 1.2 of Exhibit A.
2. Board Representation.
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(a) Designation of Board Member. For the period hereafter indicated,
Alerian and Swank will each have a separate and independent right to
designate one (1) natural person to serve as a member of the Board of
Directors of GP. QRC will have the right to designate the remaining
members of the Board of Directors of GP. In order to effect this right,
QRC (or its Affiliates that own Member Interests) shall vote the Member
Interests in GP owned by it in a manner so as to cause and maintain the
election of the persons so designated. Swank's right to designate a member
of the Board of Directors shall terminate upon the completion by the
Company of an IPO. In addition, such right to designate a member of the
Board of Directors shall terminate as to Alerian or Swank (or both) at
such time (either before or after completion by the Company of an IPO) as
such designating person ceases to own at least five percent (5%) of the
Common
Units (measured on a fully-diluted basis that assumes that all outstanding
warrants, options, rights and securities that are at any time exercisable
for or convertible into Common Units have been so exercised or converted)
held by Persons other that QRC or its Affiliates.
(b) Expansion of Board. The parties currently contemplate that until
the completion by the Company of an IPO, the Board of Directors of GP will
consist of six (6) persons. During the period prior to completion of an
IPO that Alerian or Swank has the right to designate a person to serve on
the Board of Directors of GP, such designating person shall have the right
to maintain its proportionate Board representation in the event of an
expansion of the number of members of the Board of Directors; provided,
however, that such right to maintain the proportionate Board
representation will terminate upon completion by the Company of an IPO.
(c) Replacement. In the event of the resignation, death, removal or
disqualification of a person designated by QRC, Alerian or Swank to serve
on the Board of Directors, as set forth above, the appropriate designating
party or parties shall promptly designate a new member of the Board of
Directors, and after written notice of the designation has been given by
such designating party or parties to the other parties, each of QRC and
the Investors shall vote its Member Interests to elect such nominee to the
Board of Directors.
(d) Removal. The appropriate designating party or parties may
specify that any person designated by it to serve on the Board of
Directors shall be removed at any time and from time to time, with or
without cause.
(e) Indemnification and Insurance. So long as either Alerian or
Swank has a right to designate a Director pursuant to this Section 2, the
GP shall maintain director and officer insurance reasonably satisfactory
to Alerian and Swank, as the case may be.
3. Obligation to Participate in Certain Sales.
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(a) Approved Sale. Subject to the provisions of subsection 3(c), if
an IPO has not been completed by the Company by the second anniversary of
the Closing Date, then until such time as an IPO is completed by the
Company, a Majority of Investors may elect by written notice (a "Required
Sale Notice") to require the GP to effect a Sale of the Company that
satisfies the conditions indicated in Section 3(b) below (an "Approved
Sale"). Upon receipt of a Required Sale Notice and if a Majority of
Investors do not accept the GP Offer Price, the GP shall undertake to
effect a Sale of the Company as promptly as commercially reasonable with a
view to maximizing the aggregate consideration to be received for such
sale; provided, however, that all parties shall work in good faith to
complete an Approved Sale within 180 days after receipt of the Required
Sale Notice by the GP. Upon receipt of a Required Sale Notice and if a
Majority of Investors do not accept the GP Offer Price, the Conflicts
Committee of the Board shall engage an investment banking firm of national
reputation to seek Qualifying Offers (as defined below) for an Approved
Sale. The Conflicts Committee of the Board shall have the primary
responsibility for negotiating the terms of any potential Qualifying Offer
and shall present to the Investors all offers received for a Sale of the
Company that satisfy the conditions for an Approved Sale (a "Qualifying
Offer"). Subject to Section 3(c), if a
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Majority of Investors agrees to accept a Qualifying Offer, then all of the
parties hereto shall (i) consent to, vote for and raise no objections
against the Qualifying Offer or the process pursuant to which the
Qualifying Offer was arranged, (ii) waive any dissenters', appraisal and
similar rights with respect thereto, and (iii) if the Qualifying Offer is
a sale of the Partnership Interests agree to sell all of their Partnership
Interests and Member Interests on the terms and conditions of the
Qualifying Offer. The parties hereto shall take all necessary and
desirable actions in connection with the consummation of any Approved
Sale, including, without limitation, the execution of such agreements and
instruments and other actions reasonably necessary to (A) provide the
representations, warranties, indemnities, covenants, conditions, escrow
agreements and provisions and agreements relating to such Approved Sale,
and (B) effectuate the allocation and distribution of the aggregate
consideration upon the Approved Sale as set forth below.
(b) Conditions. Unless otherwise agreed to by all of the Investors
and the GP, an Approved Sale must satisfy all of the following conditions:
(i) the Approved Sale must be solely for cash consideration;
(ii) no purchaser may be an Affiliate or Related Party of any
Investor unless consent thereto is given by GP, which consent shall
not be unreasonably withheld;
(iii) upon the consummation of the Approved Sale, the
aggregate net proceeds from the Approved Sale (x) if the Approved
Sale is a sale of substantially all of the assets of the Company,
shall be distributed to and among the Partners and the Members in
accordance with the provisions of Section 6.4(c) of the Partnership
Agreement and Section 15.02 of the Limited Liability Company
Agreement and (y) if the Approved Sale is a sale of all of the
Partnership Interests and Member Interests, shall be apportioned
among the Partners and the Members, in the same amounts as if the
full amount of such net proceeds are to be distributed to and among
the Partners and the Members, in accordance with the provisions of
Section 6.4(c) of the Partnership Agreement and Section 15.02 of the
Limited Liability Company Agreement (and assuming the prior
satisfaction of the debts and obligations of the Company and GP);
(iv) No party shall receive direct remuneration from the
purchaser in an Approved Sale other than the net proceeds to be
apportioned among the parties in accordance with Section 3(b)(iii),
including but not limited to remuneration for non-competition
provisions or other similar arrangements.
(v) All expenses of the Approved Sale (other than the fees and
expenses of any counsel or other advisors retained by the Investors,
which fees and expenses shall be paid by the Investors, but
including any investment banking firm fees and the fees of any
counsel retained by the Conflicts Committee in finding and
negotiating Qualifying Offers) shall be paid by the Company and
shall reduce the net proceeds distributable pursuant to Section
3(b)(iii); and
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(vi) In the event that the parties are required to make any
covenants, representations or indemnities in connection with the
Approved Sale, then, (A) each party shall severally (and not
jointly) make the Fundamental Warranties solely with respect to such
party, and (B) other than with respect to the Fundamental
Warranties, the obligations and liabilities of the Partners and
Members participating in the Approved Sale shall first be limited
solely to any escrow fund that may be established in connection with
such transaction (with the escrow funded solely from the purchase
price proceeds and which escrow fund shall not be in an amount
greater than 10% of the aggregate purchase price paid by the
purchaser(s) in such transaction), and second, if and only if the
escrow fund is for 10% of the aggregate purchase price, any
obligations and liabilities of the Partners and Members
participating in the Approved Sale (other than any claims for fraud,
willful misconduct or bad faith by a Partner or Member, which shall
be the responsibility of such Partner or Member) shall be borne
solely by QRC. The escrowed funds shall be released no later than
one (1) year following the closing of the Approved Sale, provided,
however, that to the extent there are pending claims or demands
relating to any breach, misrepresentation or indemnity against the
escrow fund, an amount of the escrowed funds equal to such aggregate
claims or demands will be retained until such claims and demands are
finally resolved. Upon distribution of the escrowed funds (or any
part thereof), each Partner and Member shall receive their "pro rata
share" of the distributed funds.
As used in this Section 3, a party's "pro rata share" shall mean the
ratio of (A) the total consideration to be received by such party in or as a
result of an Approved Sale, to (B) the total consideration to be received by
all Partners and Members as a result of such Approved Sale (including upon
dissolution of the Company and GP following an Approved Sale).
(c) GP Right of First Offer/Refusal.
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(i) Upon receipt by the GP of a Required Sale Notice, the GP
shall have the right of first offer (before the Approved Sale
process proceeds) to indicate the price, if any, that the GP (or its
designee) would pay in connection with a Sale of the Company to the
GP (or its designee) (the "GP Offer Price"). If a Majority of the
Investors agrees to accept the GP Offer price, then such offer shall
constitute an approved Qualifying Offer pursuant to Section 3(a),
and the transaction shall proceed as an Approved Sale to the GP (or
its designee) in accordance with the terms of Sections 3(a) and
3(b), it being understood that in such event QRC and its Affiliates
will not be sellers of their Partnership Interests or Member
Interests (and the purchase price paid will be net of the amount
attributable to the Partnership Interests and Member Interests held
by such Persons, based on the total GP Offer Price). The GP (or its
designee) shall have thirty (30) days after receipt of a Required
Sale Notice to indicate the applicable GP Offer Price, if any, or
such right shall be deemed to have been waived; and the Investors
shall, within fifteen days after receipt of notice of the GP Offer
Price, notify the GP ("Election to Sell Notice") of the acceptance
or rejection (by a Majority of the Investors) of the GP Offer Price.
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(ii) If a Majority of Investors accepts a Qualifying Offer
(other than an offer arising from the GP's right of first offer in
clause (i) above), the GP (or its designee) will have the right and
option (but not an obligation) (the "GP Right of First Refusal") to
purchase all of the Common Units and Member Interests then owned by
the Investors, exercisable by notice to the Investors ("Election to
Purchase Notice") given no later than ten (10) business days after
the GP is notified that a Majority of Investors has accepted a
Qualifying Offer; provide however, that the GP Right of First
Refusal shall not apply with respect to such Qualifying Offer if (A)
the GP (or its designee) did not indicate a GP Offer Price in the
allowed time period, (B) such Qualifying Offer is for a purchase
price for a Sale of the Company that is 115% or more of the GP Offer
Price, or (C) if the GP Offer Price was less than $100 million (as
an enterprise value for a Sale of the Company, including the value
of the Partnership Interests and Member Interests held by QRC and
its Affiliates) and such Qualifying Offer is for a purchase price
for a Sale of the Company that is 105% or more of the GP Offer
Price.
(iii) If GP (or its designee) purchases the Common Units and
Member Interests owned by the Investors (either pursuant to clause
(i) or (ii) above), the purchase price to be paid to the Investors
will be an amount equal to the amount each Investor would have
received in accordance with the provisions of Section 3(b) above,
had the parties completed the Qualifying Offer approved by the
Majority of Investors on the terms and at the price indicated in the
Qualifying Offer. Any Common Units and Member Interests sold
hereunder by the Investors to GP (or its designee) shall be
transferred free and clear of all liens and encumbrances (other than
encumbrances set forth in the Partnership Agreement or under
applicable securities laws). Closing of the purchase of the Common
Units and Member Interests by GP (or its designee) from the
Investors shall occur within one hundred twenty (120) days following
delivery of the Election to Sell Notice or Election to Purchase
Notice, as the case may be. Until such closing, the Investors shall
continue to receive all distributions on the Common Units and Member
Interests as provided pursuant to the Partnership Agreement and the
Limited Liability Company Agreement. At the closing of such
purchase, GP (or its designee) shall deliver the purchase price by
wire transfer of immediately available funds to an account to be
designated by each Investor, and each Investor shall execute and
deliver such assignments, bills of sale, and other documents, as
reasonably requested by an in form and substance satisfactory to, GP
(or its designee).
4. Limitations on Subsequent Sales of Common Units.
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(a) Minimum Issue Price. Without the written consent of a Majority
of Investors, the Company will not issue or sell any Common Units (or any
securities exercisable for or convertible into Common Units) at a price
less than 115% of the Issue Price except for (i) Class A Subordinated
Units issued to QRC or its Affiliates in exchange for additional asset
contributions; provided that such Class A Subordinated Units may not be
issued at a price less than the Issue Price and provided that the purchase
price for such additional asset contributions shall be approved by the
Investor
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Representatives and the Conflicts Committee, (ii) Common Units (or options
therefor) issued pursuant to the Long-Term Incentive Plan or employment
agreements to which the Company (or its controlled Affiliates) is a party,
or (iii) Common Units issued pursuant to an IPO.
(b) Adjustment to Issue Price. If the Company at any time or from
time to time after the date hereof effects a subdivision of the
outstanding Common Units, the Issue Price then in effect immediately
before the subdivision shall be proportionately decreased, and,
conversely, if the Company at any time or from time to time after the date
hereof combines the outstanding Common Units into a smaller number of
Common Units, the Issue Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
Section 4(b) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
5. Acceleration of an Approved Sale Upon a Change of Control of QRC. If a
Change of Control of QRC occurs, a Majority of Investors shall have the right to
provide the GP with a Required Sale Notice and cause the GP to effect an
Approved Sale in accordance with the provisions of Section 3 hereto (subject to
all of the terms and conditions thereof, including the GP Right of First
Refusal) if an IPO has not been completed by the Company no later than that
number of days after the Change of Control Date that is equal to one-half of the
number of days from the Change of Control Date until the second anniversary of
the Closing Date.
6. Tag-Along Rights.
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(a) If QRC and its Affiliates (the "QRC Transferors") desire to
dispose, in one or more transactions, of all or substantially all of their
collective Partnership Interests and their collective Member Interests to
a non-Affiliated third-party, then such QRC Transferors shall offer to
include in such proposed disposition a number of Partnership Interests and
Member Interests owned and designated by any Investor (each, a "Tag
Offeree"), in each case in accordance with the terms of this Section 6.
(b) The QRC Transferors shall cause the third-party offer to be
reduced to writing (which writing shall include an offer to purchase or
otherwise acquire Partnership Interests and Member Interests from the Tag
Offerees as required by this Section 6 and a time and place designated for
the closing of such purchase, which time shall not be less than twenty
(20) days after delivery of such notice and no more than ninety (90) days
after such delivery date) and shall send written notice of such
third-party offer (the "Inclusion Notice") to each of the Tag Offerees.
(c) Each Tag Offeree shall have the right (an "Inclusion Right"),
exercisable by delivery of notice to the QRC Transferors at any time
within ten days after receipt of the Inclusion Notice, together with the
QRC Transferors, to sell pursuant to such third-party offer, and upon the
terms and conditions set forth in the Inclusion Notice, the Partnership
Interests and Member Interests requested to be included by such Tag
Offeree.
(d) The Tag Offerees and the QRC Transferors shall sell to the
proposed transferee all of the Partnership Interests and Member Interests
proposed to be transferred
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by them, at not less than the price and upon terms and conditions, if any,
not more favorable, individually and in the aggregate, to the proposed
transferee than those in the Inclusion Notice at the time and place
provided for the closing in the Inclusion Notice, or at such other time
and place as the Tag Offerees, the QRC Transferors, and the proposed
transferee shall agree.
(e) The QRC Transferors and the Tag Offerees that elect to, and do,
participate in such sale to the proposed transferee (a "Participating Tag
Offeree"), shall apportion the aggregate net proceeds from the sale of the
respective Partnership Interests and Member Interests among the Partners
and Members so participating in such transaction in the same amounts as if
the full amount of the net proceeds received from the transferee are to be
distributed to and among the Partners and Members in accordance with the
provisions of Section 6.4(c) of the Partnership Agreement and Section
15.02 of the Limited Liability Company Agreement (and assuming the prior
satisfaction of the debts and obligations of the Company and GP, and
further assuming that any Partnership Interests and Member Interests that
are not included in such sale shall be treated as if they are not issued
or outstanding for purposes of determining the apportionment of net
proceeds).
7. Investors Right of First Refusal. If the QRC Transferors desire to
dispose, in one or more transactions, of all or less than all, but more than a
majority of their collective Member Interests (in a transaction or series of
transactions that would not trigger the rights of the Investors under Section 6
because the QRC Transferors are not also desiring to dispose of their
Partnership Interests) to a non-Affiliated third-party, Alerian and Swank will
have the right and option (but not an obligation) (the "Investor Right of First
Refusal") to purchase all, but not less than all, such Member Interests being
offered by the QRC Transferors, exercisable by notice to such QRC Transferors
given no later than ten (10) business days after such Investors are notified
that of the proposed sale of the Member Interests by such QRC Transferor. If
both Swank and Alerian elect to exercise their Investor Right of First Refusal,
each will purchase one-half of the Member Interests that the QRC Transferors
propose to sell. Upon exercise by either or both of Swank and Alerian of their
Investor Right of First Refusal, the purchase price to be paid to such QRC
Transferors will be an amount equal to the amount such QRC Transferors would
have received had such QRC Transferors completed the sale of such Member
Interests to the third-party. Any Member Interests sold hereunder by any QRC
Transferor to Swank and/or Alerian shall be transferred free and clear of all
liens and encumbrances (other than encumbrances set forth in the Limited
Liability Company Agreement or under applicable securities laws). Closing of the
purchase of the Member Interests by such Investors from such QRC Transferors
shall occur within one hundred twenty (120) days following delivery of the
notice of election to exercise such Investor Right of First Refusal as provided
in this Section 7. At the closing of such purchase, Swank and/or Alerian shall
deliver the purchase price by wire transfer of immediately available funds to an
account to be designated by such QRC Transferors, and such QRC Transferors shall
execute and deliver such assignments, bills of sale, and other documents
consistent with the third-party offer, as reasonably requested by and in form
and substance satisfactory to, such Investors.
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8. Obligation to Participate in Certain Sales.
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(a) If the QRC Transferors desire to dispose, in one or more
transactions, of all of their collective Partnership Interests and their
collective Member Interests to a non-Affiliated third-party in a
transaction (a "Proposed Sale"), then the QRC Transferors shall have the
right and option to require that each of the Investors participate in and
sell all of their respective Partnership Interests and Member Interests in
accordance with the terms of this Section 8.
(b) The QRC Transferors shall cause the third-party offer to be
reduced to writing (which writing shall include an offer to purchase or
otherwise acquire Partnership Interests and Member Interests from the
Investors and the QRC Transferors as required in this Section 8 at a time
and place designated for the closing of such purchase, which time shall
not be less than twenty (20) days after delivery of such notice and no
more than ninety (90) days after such delivery date) and shall send
written notice of such third-party offer (the "Drag Notice") to each of
the Investors. Notwithstanding the foregoing, unless otherwise expressly
stated in writing by the QRC Transferors, a Drag Notice will not be
effective or deemed to have been given until the period has expired for
the Tag Offerees to provide notice of election to exercise their Inclusion
Right, as provided in Section 6(c).
(c) Upon receipt of a Drag Notice, each of the Investors shall (i)
consent to, vote for and raise no objections against, the Proposed Sale or
the process to which the Proposed Sale was arranged, (ii) waive any
dissenters, appraisal and similar rights with respect thereto, and (iii)
agree to sell all of their Partnership Interests and Member Interests on
the applicable terms and conditions of the Proposed Sale.
(d) The QRC Transferors and the Investors shall sell to the proposed
transferee all of their respective Partnership Interests and Member
Interests at the price and upon the terms and conditions, if any, not more
favorable, individually and in the aggregate, to the proposed transferee
than those in the Drag Notice at the time and place provided for closing
in the Drag Notice, or at such other time and place as the Investors, the
QRC Transferors, and the proposed transferee shall agree.
(e) The QRC Transferors and the Investors shall apportion the
aggregate net proceeds from the sale of their respective Partnership
Interests and Member Interests among the Partners and Members in the same
amounts as if the full amount of the net proceeds received from the
transferee are to be distributed to and among the Partners and Members in
accordance with the provisions of Section 6.4(c) of the Partnership
Agreement and Section 15.02 of the Limited Liability Company Agreement
(and assuming the prior satisfaction of the debts and obligations of the
Company and GP, and further assuming that any Partnership Interests and
Member Interests that are not included in such sale shall be treated as if
they are not issued or outstanding for purposes of determining the
apportionment of net proceeds); provided, however, that if, but only if, a
Majority of Investors did not exercise the Inclusion Right provided in
Section 6(c), the amount of the net proceeds apportioned to and among the
Investors for their Partnership Interests and Member Interests shall not
be less than the amount required to provide each participating Investor
with an IRR of twenty-five percent (25%) with respect to the
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Partnership Interests and Member Interests that were purchased by such
Investor at the price and pursuant to the terms of the Purchase Agreement
and which Partnership Interests and Member Interests continue to be held
by such Investor and are included for sale in such transaction.
9. Miscellaneous Provisions.
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(a) Term. Unless earlier terminated by agreement of the parties,
this Agreement shall terminate and be of no further force or effect upon
the completion of an IPO by the Company, provided that the right of
Alerian to designate a member of the Board of Managers shall survive until
such right is terminated pursuant to the terms of Section 2(a).
(b) Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written
agreement of Company, GP, QRC and a Majority of Investors, provided that
any amendment of the terms of Section 2 shall also require the written
approval of Alerian and Swank, if such Person is still entitled to
designate a Board member (in accordance with the provisions of Section 2)
at the time of such amendment.
(c) Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the
party entitled to the benefits thereof only by a written instrument signed
by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
(d) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by
facsimile transmission, or mailed by a nationally recognized overnight
courier or registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof):
If to Company, GP or QRC, to:
Quest Midstream Partners, L.P.
▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
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with copies (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
If to Investors, to:
Alerian Capital Management
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: 212-332-7806
with copies (which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
First City Tower
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Swank Capital, LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with copies (which shall not constitute notice) to:
Akin Gump ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Tortoise Capital Resources Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇ Opportunity Partners, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
HCM Energy Holdings, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(e) Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any party hereto, including by operation of law, without
the prior written consent of the other party (which may be withheld in its
sole discretion).
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (regardless of the
laws that might otherwise govern under applicable Delaware principles of
conflicts of law) as to all matters, including matters of validity,
construction, effect, performance and remedies.
(g) Facsimiles; Counterparts. This Agreement may be executed by
facsimile signatures by any party and such signature shall be deemed
binding for all purposes hereof, without delivery of an original signature
being thereafter required. This Agreement may be executed in one or more
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
(h) Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(i) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to
be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or portion of any provision in such
jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such
11
invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
(j) Third-party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
successors and assigns. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any third-party, including any
creditor of any party or any of their Affiliates. No such third-party
shall obtain any right under any provision of this Agreement or shall by
reasons of any such provision make any claim in respect of any liability
(or otherwise) against either party hereto.
[signature page follows ]
12
IN WITNESS WHEREOF, Company, GP and the Investors have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
QUEST MIDSTREAM PARTNERS, L.P.
By: Quest Midstream GP, LLC,
Its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
QUEST MIDSTREAM GP, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
QUEST RESOURCE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
ALERIAN OPPORTUNITY PARTNERS IV, LP
By: Alerian Opportunity Partners IV, LLC,
Its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Member
SWANK MLP CONVERGENCE FUND, LP
By: SWANK ENERGY INCOME ADVISORS, L.P.
its general partner
By: SWANK CAPITAL, LLC,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
13
SWANK INVESTMENT PARTNERS, LP
By: SWANK ENERGY INCOME ADVISORS, L.P.,
its general partner
By: SWANK CAPITAL, LLC,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
THE ▇▇▇▇▇▇▇ MLP OPPORTUNITY FUND I, LP
By: CARBON COUNTY PARTNERS I, LP,
its general partner
By: CARBON COUNTY GP I, LLC
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
THE ▇▇▇▇▇▇▇ ▇▇ STRATEGIES FUND, LP
By: CARBON COUNTY PARTNERS I, LP
its general partner
By: CARBON COUNTY GP I, LLC
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
TORTOISE CAPITAL RESOURCES CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
14
▇▇▇▇▇▇▇▇ OPPORTUNITY PARTNERS, LP
By: ▇▇▇▇▇▇▇▇ Opportunity Partners GP, LLC,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
HCM ENERGY HOLDINGS, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager
15
EXHIBIT A
---------
1.1 Definitions. As used in this Agreement, the following terms have
the meanings specified or referred to in this Section 1.1:
(1) "Affiliate" means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person. A Person shall be deemed to control another
Person if such first Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of such other
Person, whether through the ownership of voting securities or other similar
interests, by contract or otherwise. For purposes of this Agreement, in no event
shall any of the Investors be considered an Affiliate of the Company, GP or QRC.
(2) "Agreement" shall have the meaning set forth in the preamble.
(3) "Alerian" shall have the meaning set forth in the preamble.
(4) "Approved Sale" shall have the meaning set forth in Section 3(a).
(5) "Board" shall mean the board of directors of the GP.
(6) "Change of Control Date" shall mean the date that a Change of
Control of QRC occurs.
(7) "Change of Control of QRC" shall be deemed to have occurred upon,
one or both of the following events: (a) any "person" or "group" within the
meaning of those terms as used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended, other than an Affiliate of QRC, becomes the
beneficial owner, by way of merger, consolidation, recapitalization,
reorganization or otherwise, of 50% or more of the voting power or the
outstanding equity interests of QRC or (b) the sale or other disposition,
including by liquidation or dissolution, of all or substantially all of the
assets of QRC in one or more transactions to any Person other than an Affiliate.
(8) "Class A Subordinated Units" shall have the meaning assigned to
such term in the Partnership Agreement.
(9) "Closing Date" shall mean the date of this Agreement.
(10) "Common Unit" shall have the meaning assigned to such term in
the Partnership Agreement.
(11) "Conflicts Committee" shall have the meaning assigned to such
term in the Partnership Agreement.
(12) "▇▇▇▇▇▇▇ ▇▇ Fund" shall have the meaning set forth in the
preamble.
(13) "▇▇▇▇▇▇▇ MLP Fund" shall have the meaning set forth in the
preamble.
(14) "Drag Notice" shall have the meaning set forth in Section 8(c).
(15) "Election to Purchase Notice" shall have the meaning set forth
in Section 3(c).
(16) "Election to Sell Notice" shall have the meaning set forth in
Section 3(c).
(17) "Fundamental Warranties" shall mean the covenants,
representations and indemnities made by a party in connection with an Approved
Sale with respect to such party's delivery and valid ownership of its
Partnership Interests and Member Interests, free of all liens and encumbrances
(other than those arising under applicable securities laws), and such party's
authority, power and right to enter into and consummate such Approved Sale
without violating any other agreements.
(18) "GP Offer Price" shall have the meaning set forth in Section
3(c).
(19) "GP Right of First Refusal" shall have the meaning set forth in
Section 3(c).
(20) "HOP" shall have the meaning set forth in the preamble.
(21) "▇▇▇▇▇▇▇▇" shall have the meaning set forth in the preamble.
(22) "Inclusion Notice" shall have the meaning set forth in Section
6(b).
(23) "Inclusion Right" shall have the meaning set forth in Section
6(c).
(24) "Investor" and "Investors" shall have the meaning set forth in
the preamble.
(25) "Investor Representatives" shall mean Alerian and Swank;
provided however, that if either Investor Representative, together with its
Affiliates no longer holds at least 500,000 Common Units, such Investor
Representative shall cease to be an Investor Representative; and provided,
further, however, that if both Investor Representatives, together with their
respective Affiliates, no longer hold at least 500,000 Common Units, replacement
Investor Representative shall be chosen by a Majority of Investors.
(26) "Investor Right of First Refusal" shall have the meaning set
forth in Section 7.
(27) "IPO" shall have the meaning assigned to such term in the
Partnership Agreement.
(28) "IRR" means, as of any date of determination, the per annum
discount rate at which the sum of the following cash flows is equal to zero
(assuming discounting on the basis of a year of 365 days and actual days
elapsed): (i) the aggregate amount paid by an Investor to the Company pursuant
to the terms of the Purchase Agreement for Partnership Interests and Member
Interests that continue to be held (the "retained interests") by such Investor
and will be
included in a Proposed Sale transaction (which amount will be deemed to be
negative for purposes of this calculation), and (ii) the aggregate amount of
distributions and payments made by the Company and GP to such Investor and its
Affiliates with respect to such retained interests.
(29) "Issue Price" shall mean $18.50 per Common Unit, subject to
adjustment as provided in Section 4(b).
(30) "Limited Liability Company Agreement" shall mean the Amended and
Restated Limited Liability Company Agreement of GP, dated as of the date hereof.
(31) "Long Term Incentive Plan" means any long term incentive plan
adopted by the Board of Directors of the GP and prior to an IPO, with the
approval of the Investor Representatives.
(32) "Majority of Investors" shall mean the holders of a majority of
the Common Units owned by the Investors.
(33) "Member Interests" shall mean a unit of Member Interest in GP,
having the rights and privileges indicated in the Limited Liability Company
Agreement
(34) "Members" shall mean the Members of GP.
(35) "Participating Tag Offeree" shall have the meaning set forth in
Section 6(e).
(36) "Partners" shall have the meaning assigned to such term in the
Partnership Agreement.
(37) "Partnership Agreement" shall mean the First Amended and
Restated Limited Partnership Agreement of Quest Midstream Partners, L.P. dated
as of the date hereof.
(38) "Partnership Interest" shall have the meaning assigned to such
term in the Partnership Agreement.
(39) "Person" means any individual, partnership, joint venture,
corporation, limited liability company, limited liability partnership, trust,
unincorporated organization or Governmental Authority or any department or
agency thereof.
(40) "pro rata share" shall have the meaning set forth in Section
3(b).
(41) "Proposed Sale" shall have the meaning set forth in Section
8(a).
(42) "Purchase Agreement" shall have the meaning set forth in the
recitals.
(43) "QRC" shall have the meaning set forth in the preamble.
(44) "QRC Transferors" shall have the meaning set forth in Section
6(a).
(45) "Related Party" shall mean as to any specified Person, (i) any
Person beneficially owning, directly or indirectly, ten percent (10%) or more of
the outstanding voting securities or similar interests of such Person, or (ii)
any Person ten percent (10%) or more of whose outstanding voting securities or
similar interests are beneficially owned by such other Person. For purposes of
this Agreement, in no event shall any of the Investors be deemed a Related Party
of QRC, the Company or GP.
(46) "Required Sale Notice" shall have the meaning set forth in
Section 3(a).
(47) "Sale of the Company" means a sale of the Company pursuant to
which any third-party or parties will acquire, directly or indirectly (including
through acquisition of the Member Interests or the assets of GP) (i) all or
substantially all of the Partnership Interests, whether by merger, consolidation
or sale or transfer of the Partnership Interests, or (ii) all or substantially
all of the Company's assets.
(48) "SIP" shall have the meaning set forth in the preamble.
(49) "Swank" shall have the meaning set forth in the preamble.
(50) "Tag Offeree" shall have the meaning set forth in Section 6(a).
1.2 Interpretations. Unless expressly provided for elsewhere in this
Agreement, this Agreement shall be interpreted in accordance with the
following provisions:
(1) no consideration may be given to the captions of the articles,
sections or subsections, all of which are inserted for convenience in locating
the provisions of this Agreement and not as an aid in its construction;
(2) no consideration may be given to the fact or presumption that one
party had a greater or lesser hand in drafting this Agreement;
(3) examples are not to be construed to limit, expressly or by
implication, the matter they illustrate;
(4) the word "includes" and its derivatives means "includes, but is
not limited to," and corresponding derivative expressions;
(5) a defined term has its defined meaning throughout this Agreement
and each exhibit and schedule to this Agreement, regardless of whether it
appears before or after the place where it is defined;
(6) the meanings of the defined terms are applicable to both the
singular and plural forms thereof;
(7) all references to prices, values or monetary amounts refer to
United States dollars;
(8) all references to articles, sections, subsections, paragraphs,
clauses, exhibits or schedules refer to articles, sections, subsections,
paragraphs and clauses of this Agreement, and to exhibits or schedules attached
to this Agreement, unless expressly provided otherwise;
(9) each exhibit and schedule to this Agreement is a part of this
Agreement and references to the term "Agreement" are deemed to include each such
exhibit and schedule to this Agreement except to the extent that the context
indicates otherwise, but if there is any conflict or inconsistency between the
main body of this Agreement and any exhibit or schedule, the provisions of the
main body of this Agreement will prevail;
(10) the words "this Agreement," "herein," "hereby," "hereunder," 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;
(11) the word "or" is disjunctive but not necessarily exclusive; and
(12) all references to agreements or Laws are deemed to refer to such
agreements or Laws as amended or as in effect at the applicable time.
