Joint Ownership Agreement Example

Exhibit 10.2

JOINT OWNERSHIP AGREEMENT

     THIS JOINT OWNERSHIP AGREEMENT (this “ Agreement ”), entered into this 15 ^th day of July, 2009, by and between Seminole Gas Company, L.L.C. (“ Seminole ”) and NGAS Gathering II, LLC , a Kentucky limited liability company (“ NNG ”), also hereinafter referred to individually or collectively as “ Owner ” or “ Owners ” or “ Party ” or “ Parties ”, respectively.

RECITALS :

     WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of May 11, 2009, by and among Daugherty Petroleum, Inc. (“ DPI ”), NGAS Gathering, L.L.C. (“ Old NGAS ”), NNG, and Seminole (as the same was or may be amended, the “APA” or “Asset Purchase Agreement” ): (i) Seminole acquired from DPI and Old NGAS as undivided 50% interest in the Gathering System (as defined in the APA) and certain other interests described in the APA as the “Purchased Assets” ; (ii) DPI and Old NGAS contributed and conveyed the remaining undivided 50% interest in and to such interests to NNG (referred to in the APA as the “Retained Gathering Assets” );

     WHEREAS, the Parties desire to set forth the terms and provisions of their agreement to jointly own, operate, maintain, extend or expand the Gathering System (as hereinafter defined), and the other Purchased Assets and Retained Gathering Assets, and address the same with regard to certain other interests and properties, acquired or developed in accordance with the terms hereof;

     NOW THEREFORE, in consideration of the mutual terms, conditions, and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

      1.1 Defined Terms . As used in this Agreement, the following words and terms shall have the meanings here ascribed to them:

     “ AFE ” (or “ Authority for Expenditure ”) shall mean an Authority for Expenditure prepared by the Manager or any Owner for the purpose of estimating the costs to be incurred in accordance with this Agreement.

     “ Affiliate ” means, as to any Person, any other Person or entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, whether by contract, voting power or otherwise. As used in this definition, the term “control,” including the correlative terms “controlling,” “controlled by” and “under common control with,” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity, whether through ownership of voting securities, by contract or otherwise.

     “ Applicable Law ” means any applicable law, statute, rule, regulation, ordinance order or other pronouncements, actions or requirements of any Governmental Authorities, including, without limitation, Environmental Laws or those relating to safety or welfare of humans or the environment.

     “ Approval Budget ” means with regard to the Gathering System, any Budget approved (or deemed approved) by the Committee in accordance with Section 2.3(d) .

     “ Asset Purchase Agreement ” or “ APA” shall have the meaning set forth in the Recitals.

     “ Bankruptcy ” means, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (vii) if one hundred twenty (120) days after the commencement of any proceeding against the Person seeking reorganization, arrangement,

composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within ninety (90) days after the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within ninety (90) days after the expiration of any such stay, the appointment is not vacated.

     “ Budgets ” (or singular, a “ Budget ”) shall mean any Capital Budget or Operating Budget contemplated under this Agreement, including, without limitation, the Initial Approved Budget and any subsequent Approved Budget.

     “ Calendar Year ” means a year beginning on the first day of January and ending on the last day of December.

     “ Capital Budget ” means an annual budget covering all Capital Projects which Manager deems it advisable and proposes to the Committee, with regard to the Gathering System.

     “ Capital Project ” means a capital project or Extension Proposal or more for the purpose of expanding the Gathering System (in a manner that would increase the capacity of the Gathering System and allow the Gathering System to gather greater volumes of gas than the current Gathering System would gather) or extending the Gathering System (whether through acquisition of additional properties or constructing and developing additional natural gas pipeline systems to be connected to the Gathering System, wherein the expanded or extended portions, if approved by the Committee and funded by the Owner’s in accordance with their Ownership Interests, would be owned by both Owners in accordance with their Ownership Interests; provided, however, that “ Capital Projects ” shall not include any costs relating to Emergencies, nor to operating costs, to projects relating to the repair or replacement of all or a portion of the Gathering System (insofar as replacement involves comparable quality and capacity).

     “ Change of Control ” means when applied to an entity (“Private Entity”), such time as any of the following occur after the date of this Agreement: (i) a tender offer or exchange offer is made and consummated for the ownership of 50 percent (50%) or more of the outstanding voting securities of the Private Entity, (ii) the Private Entity is merged or consolidated with another entity (“Constituent Party”) and as a result of such merger or consolidation 50 percent (50%) or less of the outstanding voting securities of the surviving or resulting entity is owned directly or indirectly in the aggregate by the Persons formerly owning such voting securities of the Private Entity or their Affiliates, other than Affiliates of the Constituent Party, as the same existed immediately prior to such merger or consolidation, (iii) the Private Entity sells or otherwise transfers substantially all of its assets to another entity which is not wholly-owned, directly or indirectly, by the Private Entity, one of its Subsidiaries or its Parent, (iv) a Person (which is not wholly-owned, directly or indirectly, by such Person or one of its Subsidiaries or its Parent), within the meaning of section 3(a)(9) or of section 13(d)(3) of the Exchange Act, acquires 50 percent (50%) or more of the outstanding voting securities of the Private Entity (whether directly, indirectly, beneficially or of record) or (v) a distribution or sale of voting securities of the Private Entity is consummated and as a result of such distribution 50 percent (50%) or less of the outstanding voting securities of the Private Entity is owned directly or indirectly in the aggregate by the former stockholder(s) of the Private Entity or their Affiliates.

     “ Committee ” is defined in Section 2.3(a) hereto.

      “Contract Operating Agreement” is defined in Section 3.1(a) .

     “ Contract Operator ” shall mean the Initial Contract Operator, and any successor to the Initial Contract Operator.

     “ Defaulting Owner ” is defined in Section 6.4 .

     “ Direct Parent ” means, with respect to an Owner, the Person that directly owns or holds the limited liability company interests, membership interests or other equity interests of such Owner, but shall not include any Affiliates, who may own or control such Person or who may indirectly own such Owner indirectly by virtues of its direct or indirect ownership of such Person.

     “ DPI ” means Daugherty Petroleum, Inc., a Kentucky corporation.

     “ DPI Contract Operating Agreement ” is defined in Section 3.1 .

     “ Emergenc y ” means a sudden or unexpected event which causes, or creates an imminent risk of causing, material damage to the Gathering System, or imminent injury, illness or death to individuals and is of such a nature that responding to the event cannot, in the good faith opinion of the Manager, await the decision of the Committee.

     “ Environmental Laws ” means any and all local, state or federal laws, rules, regulations, orders, or judgments relating to the prevention of pollution, the preservation and restoration of environmental quality, or the protection of human health, wildlife or environmentally sensitive areas, the remediation of contamination or the handling, transportation, disposal or release into the environment of Hazardous Materials, including, without limitation, those arising under or by virtue of any lease, contract, agreement, document, permit, applicable statute or rule or regulation or order of any governmental authority, specifically including, without limitation, any governmental request or requirement to take any clean-up or other action with respect to any of the Gathering System or any Solely Owned Segments or premises, including hazardous waste cleanup costs under the Solid Waste Disposal Act, 42 U.S.C. 6901, et seq., the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. 6901, et seq., the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. 9601, et seq., the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Act, the Oil Pollution Act of 1990.

     “ Extension Proposa l ” is defined in Section 2.2(a) .

     “ Event of Force Majeure ” is defined in Section 10.1(a) .

     “ FERC ” means the Federal Energy Regulatory Commission.

     “ Gathering System ” shall mean the (i) Gathering System, as defined in the APA, including, without limitation, those interests and properties described in Schedule A , Schedule B, Schedule F , Schedule G , Exhibit G and Exhibit O attached to the APA, together with any modifications, alterations, replacements, extensions or expansions of such Gathering System approved by the Parties in accordance with this Agreement; provided, however, that the term “ Gathering System ” shall not include any Solely Owned Segments or NNG SOS Segments or any modifications, alterations, replacements, extensions or expansions of such Solely Owned Segments or NNG SOS Segments.

     “ Governmental Authorities ” means any court, government (federal, state, local or foreign), department, political subdivision, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority, including but not limited to the FERC, the Federal Trade Commission, the Securities and Exchange Commission, any state public service or public utility or similar commission, any other governmental, quasi-governmental or nongovernmental body administering, regulating or having general oversight over natural gas, or other markets or transmission systems.

      “Governing Documents ” means, with respect to an entity, (a) in the case of a corporation, the applicable articles of incorporation, by-laws, or charter documents, of such corporation, (b) in the case of a limited liability company, the applicable certificate of formation, limited liability company agreement, operating agreement, or similar agreement for such company, (c) in the case of a partnership, the applicable certificate of limited partnership, partnership agreement or limited partnership agreement, as the case may be, or (d) any other instrument, document or agreement relating to the formation, ownership, management, voting rights, or operation of such entity.

     “ Hazardous Materials ” means any substance or material that is designated, classified, characterized or regulated as a “hazardous substance”, “hazardous waste”, “hazardous material”, “toxic substance”, “pollutant” or “contaminant” under Environmental Laws.

      “Initial Contract Operator” is defined in Section 3.1(a) .

      “IRR ” means shall be the cumulative internal rate of return determined for an Owner or an SOS Owner, as the case may be, as of the applicable IRR Calculation Date to determine whether the following annually compounded rate of return which results in the following amount having a net present value equal to zero: (i) first, determine the date and amount of all IRR Funded Capital made by such Owner or SOS Owner hereunder on or prior to the applicable IRR Calculation Date; (ii) second, determine the date and amount of all payments to such Owner or SOS Owner of all IRR Paid Proceeds received on or prior to such IRR Calculation Date; then (iii) apply the IRR Specified Discount Rate to determine whether an IRR has been met; with such IRR, using the IRR Specified Discount Rate, being deemed met, as of an applicable IRR Calculation Date, if and when the present value (calculated on a pre-tax, cash-on-cash, un-levered basis) of the aggregate IRR Funded Capital, minus the aggregate IRR Paid Proceeds equals zero (0). An example of an IRR calculation is set forth on Exhibit D attached hereto.

     “ IRR Calculation Date ” means as of 11:59 p.m., Eastern Time, on December 31 of each Calendar Year during the term of this Agreement.

     “ IRR Default Funding Date ” means (i) with respect to any IRR Funded Capital in respect of the Gathering System the first date that a Non-Defaulting Owner paid or funded IRR Funded Capital relative to the Gathering System and for which an IRR calculation will be made, and (ii) with respect to any IRR Funded Capital in respect of

a Solely Owned Segment, the first date that a Non-Defaulting Owner (in such case, a non-defaulting SOS Owner) paid or funded IRR Funded Capital relative to the Solely Owned Segment and for which an IRR calculation will be made.

     “ IRR Funded Capital ” means (i) with regard to the Gathering System, the term “ IRR Funded Capital ” means the aggregate amount that a Non-Defaulting Owner paid on behalf of a Defaulting Owner under the terms of this Agreement relating to the Gathering System or otherwise to the ownership, use, expansion, extension, operation, maintenance, repair, replacement, marketing, abandonment or other disposition of the Gathering System, whether required under Applicable Law, under contract, under this Agreement or otherwise, including, without limitation, amounts that a Non-Defaulting Owner may pay but for which the Defaulting Owner fails to reimburse the Non-Defaulting Owner as contemplated herein (whether paid under the SES Contract Operating Agreement, to Governmental Authorities or to Third Parties), and any internal and personnel costs or expenses incurred by the Manager or its Affiliates (assuming the Manager is not the Non-Defaulting Owner) (and (ii) with regard to a Solely Owned Segment, all costs, expenses, taxes, assessments, liabilities of any kind whatsoever, paid by an SOS Owner relating to such Solely Owned Segment, including, without limitation, any costs, expenses taxes, assessments, or liabilities relating to acquisition, construction, installation, ownership, use, expansion, extension, operation, maintenance, repair, replacement, marketing, abandonment or other disposition of the Solely Owned Segment, whether required under Applicable Law, under contract, under this Agreement or otherwise, including, without limitation, any internal and personnel costs or expenses incurred by the Manager or its Affiliates (assuming the Manager is the Non-Defaulting Owner).

     “ IRR Paid Proceeds ” means (i) with regard to the Gathering System: any payments/fees received by Manager under the SES Gathering Agreement that are allocable to Ownership Interest of the Non-Defaulting Owner attributable to periods from and after the applicable IRR Default Funding Date, and (ii) with regard to a Solely Owned Segment: any payments received by the SOS Owner thereof under the SOS SES Gathering Agreement (to the extent a Solely Owned Segment relates to an expansion of the capacity of the then existing Gathering System (as opposed to the IRR Funded Capital for repair, replacement, maintenance, operation, or other costs relative to the Gathering System) and if a separate SOS SES Gathering Agreement is not warranted or practicable, then the IRR Paid Proceeds shall be deemed, as much as is practicable, to include the payments/fees received under the SES Gathering Agreement attributable to the incremental expansion).

     “ IRR Specified Discount Rate ” means the per annum discount rate compounded quarterly, expressed as a percentage and applied on a pre-tax, cash-on-cash, and un-levered basis.

      “Manager” is defined in Section 3.1(a) .

     “ Major Decisions ” is defined in Section 2.3(d) .

     “ Master Netting Agreement ” shall have the meaning assigned to such term in the Asset Purchase Agreement.

     “ NAESB Purchase Agreement” shall have the meaning attributed to it in the Asset Purchase Agreement.

     “ Net Profits ” means, with respect to a Solely Owned Segment, the excess, if any (as calculated in good faith by the SOS Owners, each as of 11:59 p.m. Eastern Time, on December 31 with respect to such Calendar Year), following the Net Profits Trigger Date of the applicable Net Profits Proceeds over the applicable Net Profits Costs attributable to such Solely Owned Segment.

     “ Net Profits Costs ” means, with respect to a Solely Owned Segment, all costs, expenses, taxes, assessments, and liabilities of any kind whatsoever, paid by an SOS Owner in respect of such Solely Owned Segment, including, without limitation, any costs, expenses taxes, assessments, or liabilities relating to acquisition, construction, installation, ownership, use, expansion, extension, operation, maintenance, repair, replacement, marketing, abandonment or other disposition of the Solely Owned Segment, whether required under Applicable Law, under contract, under this Agreement or otherwise, including, without limitation, internal and personnel costs or expenses incurred by the SOS Owners related to any of the same. To the extent that the SOS Owners, in good faith, believe that the Net Profits Costs for the current or the next Calendar Year are expected to exceed the Net Profits Proceeds due to the need for repairs, maintenance, abandonment or compliance with Applicable Law, then such SOS Owners may include in the calculation of Net Profits Costs for the current Calendar Year certain reserves calculated as an estimate of the amount by which such Net Profits Costs are expected to exceed such Net Profits Proceeds.

     “ Net Profits Interest ” means, with respect to a Solely Owned Segment or NNG SOS Segments, a contractual net profits interest equal to an amount, expressed as a percentage of the Net Profits, if any, of such

Solely Owned Segment or NNG SOS Segments, calculated with regard to any such Net Profits attributable to periods on or after the Net Profits Trigger Date; provided, however, that notwithstanding anything stated herein to the contrary, a “Net Profits Interest” shall neither create nor be deemed to establish any direct right, title or ownership or other interest in and to any Solely Owned Segment or NNG SOS Segments.

     “ Net Profits Proceeds ” means, with regard to a Solely Owned Segment, any payments received by the SOS Owner in respect of such Solely Owned Segment or NNG SOS Segments under the SOS SES Gathering Agreements (to the extent a Solely Owned Segment in question relates to an expansion of the capacity of the then existing Gathering System (as opposed to the Net Profits Costs for repair, replacement, maintenance, operation, or other costs relative to the Gathering System) and if a separate SOS SES Gathering Agreement is not warranted or practicable, then the Net Profits Proceeds shall be deemed, as much as is practicable, to include the payments/fees received under the SES Gathering Agreement attributable to the incremental expansion).

     “ Net Profits Trigger Date ” shall mean as of 12:01 a.m., Eastern Time, on January 1 of this next Calendar Year immediately following the applicable IRR Calculation Date, after the commencement of commercial operations of a Solely Owned Segment or NNG SOS Segments, on which the SOS Owner(s) of such Solely Owned Segment or NNG SOS Segments have achieved at least a 25% IRR (being an IRR using an IRR Specified Discount Rate of 25%) with respect thereto.

     “ NGAS Capital Project ” means any Capital Project (whether conducted by both Owners in accordance with their respective Ownership Interests in the Gathering System, or whether conducted on a Solely Owned Segment) which is intended to service, directly or indirectly, any DPI Producers (as defined under the APA) in connection with the NAESB Purchase Agreement.

     “ NGAS Mortgages ” shall have the meaning set forth in the Asset Purchase Agreement, provided, however, that the NGAS Mortgages shall also include any amendments or supplements to include any modifications, amendments, expansions or extensions of the Gathering System, as well as any rights (whether as an SOS Owner or with regard to any Net Profits as a Non-Participating Owner) that NNG may have in any Solely Owned Segments.

     “ NNG Group ” means NNG, NGAS Resources, Inc., Daugherty Petroleum, Inc., and any subsidiary or Affiliate of NNG, NGAS Resources, Inc. or Daugherty Petroleum, Inc., respectively.

     “ NNG Option Interests ” means and includes an undivided 100% of all of the limited liability company interests, membership interests or any other equity interests of NNG.

     “ NNG SOS Segments ” is defined in Section 2.2(b) .

     “ Non-Defaulting Owner ” is defined in Section 6.4 .

     “ Non-Participating Owner(s) ” shall have the meaning assigned to such term in Section 2.2(c) .

     “ Operating Budget ” means a budget covering all expenditures chargeable to operating expense which Manager deems advisable to make during a Calendar Year, together with any other costs, expenses, liabilities relating to the ownership, use, operation, maintenance, repair, replacement, abandonment or other disposition of the Gathering System, other than for Capital Projects.

      “Owner Representative” shall have the meaning assigned to such term in Section 2.3(a) .

     “ Ownership Interest ” shall mean the undivided ownership interest, usually expressed as a percentage, in and to the assets comprising the Gathering System or any Solely Owned Segment (but such term shall not apply to the membership interests or other equity interests held in and to NNG or Seminole, respectively). As of the date of this Agreement, the Ownership Interests of NNG and Seminole in and to the Gathering System is 50% each. With regard to any Solely Owned Segment, the Ownership Interests of the SOS Owner(s) thereof shall correspond to the proportionate share that such SOS Owner(s) thereof actually funded with respect to the acquisition, construction or installation and the commencement of commercial operations of such Solely Owned Segment, and the Ownership Interests therein of the Non-Participating Owners is limited to the back-in rights described in Section 2.2(c) below.

     “ Ownership Ratio ” shall refer to the relative ratio that the Owners’ Ownership Interest bear to each other. For example, as of the date of this Agreement, with regard to the Gathering System, the initial Ownership Ratio shall be 50:50 (corresponding to NNG’s fifty percent (50%) undivided ownership interest in the Gathering System and Seminole’s fifty percent (50%) undivided ownership interest in the Gathering System). Except as otherwise set forth in this Agreement, all revenues, income, costs, expenses and liabilities shall be allocated, paid and borne in accordance with the Ownership Ratio.

      “Permitted Transfer” means, with respect to the “ROFR Interests,” the following: (i) exercise of either of the NNG Options described in the Asset Purchase Agreement (whether by Seminole or in accordance with the put options described therein), (ii) any Transfer by Seminole to any Affiliate of either (which may be a master limited partnership controlled by Seminole or an Affiliate), (iii) any Transfer by Seminole in connection with any loan, credit agreement or other financing transaction involving Seminole or an Affiliate or (iv) any Transfer by NNG or any of its Affiliates of the Seminole Mortgages and any other collateral pledged as security for the obligations of Seminole or any of its Affiliates to any member of the NNG Group in connection with NNG’s obligations as a guarantor under the NGAS Credit Agreement (as such term is defined in the APA); provided that such obligations of NNG do not exceed in the aggregate $7,500,000, and provided further that upon the exercise of the NGAS Option (as defined in the APA) and payment by Seminole pursuant to the terms thereunder, such collateral assignment shall be released.

     “ Person ” means any individual, corporation, partnership, joint venture, limited liability company, association (whether incorporated or unincorporated), joint-stock company, trust, Governmental Authorities, unincorporated organization or other entity.

     “ Rights of Way ” mean easements, rights-of-way, servitudes, fee lands, surface and subsurface lease agreements, surface use agreements and other rights and agreements related to the use of the surface and subsurface.

     “ ROFR Interests ” means and includes any direct or indirect interests, claims or rights in, to or under (i) either of the Gathering System or any Solely Owned Segment or any NNG SOS Segments, as well as any real, personal or mixed property interests related thereto or used in connection with the Gathering System or the Solely Owned Segment, respectively, including, without limitation, spare parts, inventories, and equipment used solely for the Gathering System or the Solely Owned Segment or any NNG SOS Segments, as the case may be as well as any corresponding rights, interests and obligations under this Agreement, the SES Gathering Agreement or the SOS SES Gathering Agreement, as the case may be, or and (ii) any issued or outstanding or newly issued membership interests, stock, partnership interests or other equity interests of any kind of an Owner (or any successor to an Owner).

     “ SES ” means Seminole Energy Services, LLC.

     “ SES Contract Operating Agreement ” is defined in Section 3.1 .

     “ SES Gathering Agreement ” means the Gathering Agreement, dated as of the same date as this Agreement, by and among each of the Owners and SES, pursuant to which the Owners shall agree and commit to SES an undivided 100% of the capacity of the Gathering System (as the Gathering System and its capacity may hereafter be modified, extended or increased), in substantially the form attached as an exhibit to the Asset Purchase Agreement.

     “ Solely Owned Segments ” is defined in Section 2.2(b) , and this term shall include, when applicable, any NNG SOS Segments.

      “SOS Owner” is defined in Section 2.2(b) ; and with regard to any NNG SOS Segments, SOS Owner shall include the permitted NNG Affiliate contemplated under Section 2.3(b) .

     “ SOS SES Gathering Agreement ” means with regard to any Solely Owned Segment, the Gathering Agreement to be entered into by and among each SOS Owner thereof and SES, pursuant to which such SOS Owner(s) shall agree and commit to SES an undivided 100% of the capacity of such Solely Owned Segment (as such Solely Owned Segment and its capacity may hereafter be modified, extended or increased), in substantially the form attached hereto as Exhibit F .

     “ Third Parties ” means any Person who is not either a Party, an Affiliate of any Party, nor an employee, agent or representative of any Party or any Party’s Affiliate.

      “Voting Interests” shall have the meaning assigned to such term in Section 2.3(a) .

     If any provision of any Exhibit is inconsistent with any provision contained in the body of this Agreement, then the provisions in the body of this Agreement shall prevail.

      1.2 Construction .

     Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural, and vice-versa, (b) the gender (or lack of gender) of all words used in this Agreement includes the masculine, feminine and neuter; (c) references to Articles and Sections refer to Articles and Sections of this

Agreement; (d) references to Exhibits or Schedules refer to the Exhibits or Schedules attached to this Agreement, each of which is made a part hereof for all purposes; (e) references to Applicable Laws refer to such Applicable Laws as they may be amended from time to time, and references to particular provisions of a Applicable Law include any corresponding provisions of any succeeding Applicable Law; (f) the term “include”, “includes”, “including” or words of like report shall be deemed to be followed by the words “without limitation”; (g) the terms “hereof”, “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement; (h) references to money refer to legal currency of the United States of America; and (i) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.

ARTICLE II

INTERESTS OF PARTIES; SOLELY OWNED SEGMENTS; OWNERS’ COMMITTEE;
RIGHTS OF FIRST REFUSAL; BUSINESS

      2.1 Ownership Ratio. Unless changed by written agreement of the Owners, all revenues, income, costs, expenses and liabilities incurred in and related to the operation or ownership of the Gathering System under this Agreement shall be allocated among the Owners severally, not jointly, in accordance with their respective Ownership Interests and the Ownership Ratio. All equipment, materials and supplies acquired related to the operation and ownership of the Gathering System shall be paid for and owned in accordance with the Ownership Ratio.

      2.2 Solely Owned Segments .

     (a) Proposal of Expansion/Extension . Any Owner, via its designated representative or the Committee, may propose a capital expansion or extension of the Gathering System not already covered by an Approved Budget or an approved AFE (an “ Extension Proposal ”). If all Owners approve the Extension Proposal (via a unanimous approval of the Committee), then each Owner shall fund, and such Owners shall own, the expanded or extended Gathering System in accordance with its then current, respective Ownership Ratio, and the Parties shall make any conveyance or cross-conveyances necessary to cause record title to the expanded or extended portion of the Gathering System to be so owned by each Owner as provided herein. If less than all Owners, via its designated Owner Representatives on the Committee, vote to approve an Extension Proposal, the provisions of Section 2.2(b) below shall apply.

     (b) Solely Owned Segments . If less than all Owners approve any Extension Proposal on or before the close of business on the ten (10) day after such Extension Proposal is submitted to the Committee for approval, then all of the Owners hereby agree that the Owner(s) whose Owner Representatives voted for the Extension Proposal shall thereafter be free to pursue the acquisition, construction, installation, operation and marketing of capacity for the extended/expanded portion of the Gathering System comprising such Extension Proposal (in each case, the portion of such extended/expanded facilities, together with any modifications, alterations, replacements, extensions or expansions thereof, and all Rights of Way attributable to, used solely in connection with, or relating to the above, and all permits and authorizations of any kind held by such pursuing Owners in respect thereof that are necessary for or incident to the use and operation of such extended or expanded portion, and all land or other real property interests underlying the compressors attributable solely to such extended or expanded portion, and all inventories of pipe, materials and supplies used solely for such extended or expanded segment, is collectively herein referred to as a “ Solely Owned Segment ”). Any Owner(s), whose Owner Representative did not vote in favor of such Extension Proposal shall not (nor shall their Affiliates), directly or indirectly, pursue such project for its own account. Notwithstanding anything stated in this Agreement to the contrary, to the extent NNG’s Owner Representatives vote in favor of an Extension Proposal but Seminole’s Owner Representations do not, then to the extent NNG desires to pursue such Extension Proposal project as a Solely Owned Segment, such project may not be pursued or owned (legally or beneficially) by NNG (or any direct or indirect subsidiary of NNG, but must be pursued only by another Affiliate of NNG which is not a direct or indirect subsidiary of NNG (in such case, an “NNG SOS Segment ”). Each Solely Owned Segment shall be owned (and title shall solely be held) by the Owner(s) (or in the case of NNG SOS Segment, by the permitted Affiliate of NNG) who fund the acquisition, construction and installation of such Solely Owned Segment (collectively with regard to such applicable Solely Owned Segment, the “ SOS Owners ”, and individually, an “ SOS Owner ”); such ownership interests of each such SOS Owner in such Solely Owned Segment to be based on the ratio that the costs of

acquiring, constructing, installing and commencing commercial operations of such Solely Owned Segment funded by such SOS Owner bears to the total amount of such costs funded by all the SOS Owners thereof; and the SOS Owner(s) of such Solely Owned Segment shall enter into a separate SOS SES Gathering Agreement with SES pursuant to which SES shall be granted an undivided 100% of the capacity of the Solely Owned Segment. Subject to the provisions hereof regarding Net Profits and of Section 3.5 below, the SOS Owners shall be entitled to retain all benefits attributable to their Solely Owner Segment, including all payments received under the SOS SES Gathering Agreement attributable thereto; and the SOS Owners shall be responsible for all costs, expenses, liabilities and operations attributable to the Solely Owned Segments.

     (c) Back-In-Rights . With regard to each Solely Owned Segment, from and after the applicable Net Profits Trigger Date for such Solely Owned Segment, the SOS Owners shall be deemed to have granted to those remaining Owners who did not participate in the funding of such Solely Owned Segment (collectively, the “Non-Participating Owners” and, individually, a “ Non-Participating Owner ” ) a contractual Net Profits Interest in the Solely Owned Segment, such that the SOS Owners and each Non-Participating Owners shall thereafter receive future cash payments from the SOS Owners of such Solely Owned Segment equal to the product of the future Net Profits, if any, attributable to such Solely Owned Segment times such Non-Participating Owner’s then current Ownership Interest in the Gathering System (expressed as a percentage); provided, however, that such Net Profits Interest shall (i) constitute only a contractual right to the Non-Participating Owner(s) to receive payment of the Net Profits from such Solely Owned Segment, and (ii) neither constitute, nor shall any such Non-Participating Owner be entitled to seek or claim, any record or beneficial right, title or other ownership interest in or to such Solely Owned Segment; and (iii) to the extent an IRR calculation must be done hereunder, the SOS Owners shall make such IRR calculation on or before each May 1 following an IRR Calculation Date (even though the calculation, itself, will be to determine whether such applicable IRR has been achieved by the prior December 31st IRR Calculation Date), and to the extent the IRR calculation results in a determination that the 25% IRR target has been achieved and, therefore, the Net Profits Trigger Date (being the January 1 of the same Calendar Year) had occurred, then such SOS Owner shall pay, within ten (10) business days thereafter, to the Non-Defaulting Owners. Thereafter, the SOS Owner shall make a calculation of Net Profits with regard to such Solely Owned Segments annually (“ Net Profits Calculation Date ”) and pay any Net Profits due to the Non-Participating Owners within ten (10) business days after such Net Profits Calculation Date. Notwithstanding the above, if after the Net Profits Trigger Date for a Solely Owned Segment the SOS Owners thereof pay additional capital relative to the Solely Owned Segment, no further Net Profits will be due or accrue until the SOS Owners achieve a 25% IRR with regarding thereto. To the extent that the SOS Owners pay to the Non-Participating Owners more in Net Profits than they are entitled, then any over-payments shall be applied and deducted from any subsequent Net Profits payments such Non-Participating Owners would otherwise be entitled to from such SOS Owners under this Agreement.

     (d) Termination of Section 2.2 Provisions. Notwithstanding the above, to the extent that an NGAS Options (as defined in the APA) is exercised (whether by Seminole or in accordance with the put options described therein), the obligation set forth in this Section 2.2 shall automatically terminate upon the closing and consummation of such NGAS Option, and the Parties shall execute such further amendments to this Agreement or other instruments as may be necessary or appropriate to reflect the termination thereof.

      2.3 Owners’ Committee .

     (a) Establishment of the Committee; Representatives; Voting Rights . Each of the Owners shall appoint two (2) representatives (each an “Owner Representative” ) to a committee of the Owners (collectively, the “Committee” ). The Owner Representatives appointed by the Owners shall vote the interests of, and at the direction of, the Owners. An Owner Representative shall not owe any duty, fiduciary or otherwise, to any Owner who did not appoint such person as its Owner Representative. The Owners may replace or substitute any alternative representative as its appointee(s) to the Committee (with or without cause, in its sole discretion), upon written notice to the other Owners and may fill any vacancy in the event that one of the Owner Representatives it appointed either resigns, dies or becomes incapacitated. Any one or more Owner Representatives appointed by an Owner shall vote as a block with an aggregate voting power equal to the then current Ownership Interest of the Owner who appointed them (collectively, the “Voting Interests” ) and to the extent that less than all of the Owner Representatives appointed by an Owner are present at a duly called meeting of the Committee, at which a quorum is present, then those one or more Owner Representatives appointed by such Owner who are present at such meeting, nonetheless, shall continue to vote as a block and shall continue to have the same aggregate voting

power (being the then existing Ownership Interest of the Owner who appointed them) as if all such Owner Representatives were present. Any vote or approval of an Owners’ Committee representative with regard to a Budget, an AFE, an expenditure, or other matter shall bind (and be deemed a commitment of) the Owner who appointed such representative.

     (b) Committee Meetings . The Committee shall meet (whether in person or by telephone) at such times as the members of the Committee deem necessary or appropriate, but no less than every once each calendar quarter (on December 1st, March 1st, July 1st and September 1st) and shall exchange, review, consider and approve such written materials and reports that are considered to be relevant or useful to the conduct of the Committee’s work. Not less than one Owner Representative appointed by each Owner shall be required in order for there to be a quorum. A quorum must be present at any regular or special meeting in order for the Committee to conduct business, and the concurrence of those Owner Representatives who are present at a meeting at which a quorum is present and who, in the aggregate have a sufficient Voting Interest to approve a particular matter shall be required for any act of the Committee.

     (c) General Duties of the Committee . Unless otherwise agreed to by the Owners, the Committee shall serve as a liaison between the Owners and the Manager, and shall do the following:

     (i) review on an ongoing basis the operational results of the Gathering System and make recommendations concerning the configuration and future operational status of the Gathering System, including recommendations concerning day to day operations, modifications, alterations, or expansions of the Gathering System requiring either capital contributions by the Owners or the purchase of gas compression or treating facilities;

     (ii) prepare and evaluate initial and revised drafts of budgets required by Section 3(a)(8) of this Agreement, including amendments thereto requested by any Owners or the Manager;

     (iii) develop and approve operational guidelines, policies and directives concerning the Gathering System and work with the Manager to insure compliance therewith;

     (iv) undertake such other matters or special projects that the Owners request in writing be addressed by the Committee; and

     (v) Vote on any Major Decisions, Budgets, Capital Projects (including, without limitation, any Extension Proposals) AFE’s or other matters presented to the Committee.

     (d) Major Decisions of Committee . Except to extent the same is already covered in an Approved Budget, an approved AFE, or is otherwise an expense or liability authorized or permitted under Section 3.1(i) or under Article IV , Article VI or Article IX , neither the Manager, nor any Owners shall have any right or authorization to take or to cause to be taken any of the following actions (each a “ Major Decision ”, and collectively, the “ Major Decisions ”) without the unanimous vote of the Committee ( i.e. , approval of such Owner Representatives who, in the aggregate hold 100% of the Voting Interests), excluding any approval required relative to any costs, expenses or liabilities relating to a Solely Owned Segment (which shall be subject to the agreement or approval of the SOS Owners thereof):

     (i) Any amendment to this Agreement;

     (ii) Approval of the annual budget contemplated under Section 3.1(c) below, subject to the other provisions of Article III and Article VI below;

     (iii) Filing, consenting to, or acquiescing in any act or event that would constitute an event of bankruptcy with respect to a Party;

     (iv) Acquiring by lease, purchase, or otherwise any real or personal property or fixture in an amount greater than $50,000;

     (v) Amending the Budget in an amount, individually or in any series of related transactions, greater than $50,000, except in response to an emergency;

     (vi) Entering into any contract or arrangement that requires any payments in an amount, individually or in any series of related transactions, greater than $25,000 to an Affiliate of a Party, except with regard to the SES Gathering Agreement, any SOS SES Gathering Agreement, the initial Contract Operator Agreement, or the NAESB Purchase Agreement or as otherwise expressly authorized by this Agreement;

     (vii) Capital expenditures in an amount, individually or in a series of related transactions, greater than $50,000;

     (viii) The lease, sale, exchange, transfer, or other disposition of any material assets of the Gathering System in an amount, individually or in any series of related transactions, greater than $50,000;

     (ix) The incurrence of any liens, burdens, or encumbrances against any assets of the Gathering System;

     (x) Any contracting out of an integral portion of the business or operations of Manager, except as otherwise set forth in an Approved Budget;

     (xi) Any material change in the amounts of and risks to be covered by insurance as set forth on Exhibit H attached hereto;

     (xii) any amendments to, pursuit of any remedies for allegation of breach under, the SES Gathering Agreement; or

     (xiii) Any other action that is not in the ordinary course of business as Manager of the Gathering System.

     (e) Failure to Approve Certain Budgets . If the Committee fails to approve by December 15th of any calendar year the Operating Budget that will be applicable for the immediately succeeding calendar year, then the current year’s Operating Budget, plus ten percent (10%), shall be deemed to apply to the next, succeeding calendar year until an alternative or Amended Operating Budget is approved with regard thereto.

     (f) Conference Telephone Meetings . Meetings of the Committee or the Owners may be held by means of conference telephone, video or similar communications equipment so long as all Persons participating in the meeting can hear each other. Participation in a meeting by means of conference telephone or video shall constitute presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business thereat on the ground that the meeting is not lawfully called or convened.

     (g) Termination of Section 2.3 Provisions. Notwithstanding the above, to the extent that an NGAS Options (as defined in the APA) is exercised (whether by Seminole or in accordance with the put options described therein), the obligation set forth in this Section 2.3 shall automatically terminate upon the closing and consummation of such NGAS Option, and the Parties shall execute such further amendments to this Agreement or other instruments as may be necessary or appropriate to reflect the termination thereof.

      2.4 Transfer Restrictions; Right of First Refusal.

     (a) Transfers of Ownership Interests . An Owner shall not (and any Direct Parent of an Owner shall not, nor permit its directly owned Owner to), directly or indirectly, voluntarily or involuntarily, by operation of Applicable Law or otherwise sell, assign, distribute (whether in liquidation or otherwise), pledge, mortgage, exchange, encumber, hypothecate, donate, gift, exchange or otherwise transfer or dispose (“ Transfer ”) of any interest in the ROFR Interests, except for (i) a Transfer effected in accordance with the terms of this Section 2.4 or (ii) a Permitted Transfer. Any other Transfer or attempted Transfer (whether by operation of Applicable Law or otherwise) shall be null and void. Any Transfer made in accordance with the terms of this Section 2.4 , as well as any Permitted Transfer shall be made expressly subject to the terms and provisions of this Agreement (and any Transfer of an undivided interest in the Gathering System shall be deemed to Transfer a corresponding undivided interest (and Ownership Interest) under this Agreement, the SES Gathering Agreement and, with regard to any continuing obligations, covenants or options thereunder, the APA (and, likewise, any Transfer of an undivided interest in the Solely Owned Segments shall be deemed to Transfer a corresponding undivided interest (and Ownership Interest) under this Agreement, the applicable SOS SES Gathering Agreement, or with regard to any back-in rights pursuant to Section 2.2(c) with respect thereto, and with regard to any continuing obligations, covenants or options thereunder, the APA). If an Owner desires to Transfer all or part of such Owner’s Ownership Interest or any interest portion thereof, such Owner will be responsible for compliance with all conditions of Transfer imposed by this Agreement and under Applicable Law and for any expenses incurred by the other Owners or the Undivided Interest Property for legal and/or accounting services in connection with reviewing any proposed Transfer or issuing opinions in connection therewith. Notwithstanding the above, any transfer of an interest in the Gathering System or any Solely Owned Segments shall not relieve the transferor from any

liability or obligation hereunder, or under the SES Gathering Agreement or any SOS SES Gathering Agreement or under the APA, as the case may be; nor shall the non-Transferring Owners be required to recognize such Transfer until: (x) the transferee has executed an agreement, in form and substance satisfactory to the Manager, assuming and agreeing to be bound by the terms and provisions of this Agreement relative to the interest acquired, and (y) copies of such agreement, as well as copies of the applicable conveyance instruments (executed and delivered in accordance with the provisions and limitations of this agreement) have been provided to Manager, the transferor Owner shall continue for all purposes of this Agreement to constitute the Owner of the ROFR Interest to be Transferred and to be entitled to exercise any rights or powers of a Owner with respect to the Ownership Interest transferred review on an ongoing basis the operational results of the Gathering System and make recommendations concerning the configuration and future operational status of the Gathering System, including recommendations concerning day to day operations, modifications, alterations, or expansions of the Gathering System requiring either capital contributions by the Owners or the purchase of gas compression or treating facilities; and (z) such transferor has otherwise complied with the other provisions of this Section 2.4