Execution Version
First Amended and Restated
Agreement of Limited Partnership
Quest Midstream Partners, L.P.
December 22, 2006
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TABLE OF CONTENTS
Page
ARTICLE I.
Definitions.......................................................1
Section 1.1
Definitions...................................................1
Section 1.2
Construction.................................................23
ARTICLE II.
Organization....................................................23
Section 2.1
Formation....................................................23
Section 2.2
Name.........................................................23
Section 2.3
Registered Office; Registered Agent; Principal Office;
Other Offices................................................24
Section 2.4
Purpose and Business.........................................24
Section 2.5
Powers.......................................................24
Section 2.6
Power of Attorney............................................24
Section 2.7
Term.........................................................26
Section 2.8
Title to Partnership Assets..................................26
ARTICLE III. Rights of Limited
Partners.....................................26
Section 3.1
Limitation of Liability......................................26
Section 3.2
Management of Business.......................................27
Section 3.3
Outside Activities of the Limited Partners...................27
Section 3.4
Rights of Limited Partners...................................27
ARTICLE IV. Certificates; Record Holders; Transfer of
Partnership
Interests; Redemption of Partnership
Interests..................28
Section 4.1
Certificates.................................................28
Section 4.2
Mutilated, Destroyed, Lost or Stolen Certificates............28
Section 4.3
Record Holders...............................................29
Section 4.4
Transfer Generally...........................................30
Section 4.5
Registration and Transfer of Limited Partner Interests.......30
Section 4.6
Transfer of the General Partner's General Partner Interest...31
Section 4.7
Transfer of Incentive Distribution Rights....................31
Section 4.8
Restrictions on Transfers....................................32
Section 4.9
Citizenship Certificates; Non-citizen Assignees..............33
Section 4.10
Redemption of Partnership Interests of Non-citizen
Assignees...................................................34
ARTICLE V. Capital Contributions and Issuance of Partnership
Interests......36
Section 5.1
Organizational Contributions.................................36
Section 5.2
Contributions by QRC and the General Partner.................36
Section 5.3
Contributions by Initial Limited Partners....................37
Section 5.4
Interest and Withdrawal......................................37
Section 5.5
Capital Accounts.............................................37
Section 5.6
Issuances of Additional Partnership Securities...............40
Section 5.7
Conversion of Class A Subordinated Units.....................41
Section 5.8
Conversion of Class B Subordinated Units.....................42
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Section 5.9
Limited Preemptive
Right....................................43
Section 5.10
Splits and Combinations.....................................44
Section 5.11
Fully Paid and Non-Assessable Nature of Limited Partner
Interests...................................................45
Section 5.12
Issuance of
Class C Units in Connection with Reset
of Incentive Distribution Rights..........................45
ARTICLE VI. Allocations and
Distributions...................................46
Section 6.1
Allocations for
Capital Account Purposes....................44
Section 6.2
Allocations for Tax
Purposes................................54
Section 6.3
Requirement and
Characterization of Distributions;
Distributions to Record Holders.............................55
Section 6.4
Distributions of
Available Cash from Operating Surplus.....56
Section 6.5
Distributions of
Available Cash from Capital Surplus.......58
Section
6.6 Adjustment
of Minimum Quarterly Distribution
and Target Distribution Levels..............................58
Section 6.7
Special Provisions
Relating to the Holders of
Subordinated Units and Class C Units........................59
Section 6.8
Special Provisions
Relating to the Holders of Incentive
Distribution Rights.........................................60
Section 6.9
Entity-Level
Taxation.......................................60
ARTICLE VII. Management and Operation of
Business...........................64
Section 7.1
Management..................................................64
Section 7.2
Certificate of Limited
Partnership..........................66
Section 7.3
Restrictions on the
General Partner's Authority.............67
Section 7.4
Reimbursement of the
General Partner........................67
Section 7.5
Outside
Activities..........................................67
Section 7.6
Loans from the General
Partner; Loans or Contributions
from the Partnership or Group Members.......................69
Section 7.7
Indemnification.............................................70
Section 7.8
Liability of
Indemnitees....................................71
Section 7.9
Resolution of
Conflicts of Interest; Standards of
Conduct and Modification of Duties..........................72
Section 7.10
Other Matters Concerning the General Partner................74
Section 7.11
Purchase or Sale of Partnership Securities..................74
Section 7.12
Registration Rights of the General Partner and its
Affiliates..................................................74
Section 7.13
Reliance by Third Parties...................................78
ARTICLE VIII. Books, Records, Accounting and
Reports........................78
Section 8.1
Records and Accounting.......................................78
Section 8.2
Fiscal Year..................................................79
Section 8.3
Reports......................................................79
ARTICLE IX. Tax
Matters.....................................................79
Section 9.1 Tax
Returns and Information..................................79
Section 9.2 Tax
Elections................................................79
Section 9.3 Tax
Controversies............................................80
Section 9.4
Withholding..................................................80
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ARTICLE X. Admission of
Partners............................................80
Section 10.1
Admission of Limited Partners...............................80
Section 10.2
Admission of Successor General Partner......................81
Section 10.3
Amendment of Agreement and Certificate of Limited
Partnership..................................................81
ARTICLE XI. Withdrawal or Removal of
Partners...............................82
Section 11.1
Withdrawal of the General Partner...........................82
Section 11.2
Removal of the General Partner..............................83
Section 11.3
Interest of Departing General Partner and Successor
General Partner.............................................84
Section 11.4
Termination of Subordination Period, Conversion of
Subordinated Units and Extinguishment of Cumulative
Common Unit Arrearages......................................85
Section 11.5
Withdrawal of Limited Partners..............................86
ARTICLE XII. Dissolution and
Liquidation....................................86
Section 12.1
Dissolution.................................................86
Section 12.2
Continuation of the Business of the Partnership
After Dissolution...........................................86
Section 12.3
Liquidator..................................................87
Section 12.4
Liquidation.................................................87
Section 12.5
Cancellation of Certificate of Limited Partnership..........88
Section 12.6
Return of Contributions.....................................88
Section 12.7
Waiver of Partition.........................................88
Section 12.8
Capital Account Restoration.................................88
ARTICLE
XIII................................................................89
Amendment of Partnership Agreement; Meetings; Record
Date...................89
Section
13.1Amendments to be Adopted Solely by the General
Partner.......89
Section
13.2Amendment
Procedures.........................................90
Section 13.3
Amendment
Requirements....................................91
Section
13.4Special
Meetings.............................................91
Section
13.5Notice of a
Meeting..........................................92
Section
13.6Record
Date..................................................92
Section
13.7Adjournment..................................................92
Section
13.8Waiver of Notice; Approval of Meeting; Approval of
Minutes...92
Section
13.9Quorum and
Voting............................................92
Section 13.10
Conduct of a
Meeting......................................93
Section 13.11
Action Without a
Meeting..................................93
Section 13.12
Right to Vote and
Related Matters.........................94
ARTICLE XIV. Merger, Consolidation or
Conversion............................94
Section
14.1Authority....................................................95
Section
14.2Procedure for Merger, Consolidation or
Conversion............95
Section
14.3Approval by Limited
Partners.................................97
Section
14.4Certificate of
Merger........................................98
Section 14.5
Effect of
Merger, Consolidation or Conversion.............98
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ARTICLE XV. Right to Acquire Limited Partner
Interests......................99
Section 15.1 Right to Acquire Limited
Partner Interests................99
ARTICLE XVI. General
Provisions............................................101
Section 16.1
Addresses and
Notices....................................101
Section 16.2
Further
Action...........................................102
Section 16.3
Binding
Effect...........................................102
Section 16.4
Integration..............................................102
Section 16.5
Creditors................................................102
Section 16.6
Waiver...................................................102
Section 16.7
Third-Party
Beneficiaries................................102
Section 16.8
Counterparts.............................................102
Section 16.9
Applicable
Law...........................................102
Section 16.10
Invalidity of
Provisions.................................102
Section 16.11
Consent of
Partners......................................102
Section 16.12
Facsimile
Signatures.....................................103
iv
<PAGE>
First Amended and Restated
Agreement of Limited Partnership
of
Quest Midstream Partners, L.P.
This First
Amended and Restated Agreement of Limited Partnership of Quest
Midstream Partners,
L.P., dated as of December 22, 2006, is entered into by and
between Quest Midstream GP, LLC, a Delaware limited liability company, as the
General Partner, and Quest Resource Corporation, a Nevada corporation, as the
Organizational Limited
Partner, together with any other Persons who become
Partners in
the Partnership or parties hereto as provided herein. In
consideration of the covenants, conditions and agreements
contained herein, the
parties hereto hereby agree as follows:
ARTICLE I.
Definitions
Section 1.1 Definitions.
The
following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in
this Agreement.
"Acquisition" means
any transaction
in which any Group
Member acquires
(through an asset
acquisition,
merger, stock acquisition or other form of
investment) control over all or a portion of the assets,
properties or
business
of another Person for
the purpose of
increasing
the operating capacity or
revenues of the Partnership Group from the operating capacity or
revenues of the
Partnership Group
existing immediately
prior to such
transaction;
provided,
however, that any
acquisition of properties or assets of another Person that is
made solely
for temporary investment purposes shall not constitute an
Acquisition.
"Additional Book Basis" means the portion of any remaining Carrying
Value
of an Adjusted Property that is attributable to positive
adjustments made to
such Carrying Value as a result of Book-Up Events. For purposes of
determining
the extent that Carrying Value constitutes Additional Book
Basis:
(a) Any negative adjustment made to the Carrying Value of an
Adjusted
Property as a result of either a
Book-Down Event or a Book-Up
Event
shall first be deemed to offset or
decrease that portion of the
Carrying
Value of such Adjusted Property that is attributable to any
prior
positive
adjustments made thereto pursuant to a Book-Up Event or
Book-Down
Event.
(b) If Carrying
Value that
constitutes
Additional
Book Basis is
reduced as
a result of a Book-Down Event and the Carrying
Value of other
property
is increased as a result of such Book-Down Event, an allocable
portion
of any such
increase in Carrying Value shall be treated as
Additional
Book Basis;
provided, that the amount treated as Additional
Book Basis
pursuant hereto as a result of such Book-Down Event shall not
1
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exceed
the amount by which the Aggregate Remaining Net Positive
Adjustments after such
Book-Down Event
exceeds the remaining
Additional
Book Basis
attributable
to all of the
Partnership's
Adjusted Property
after such
Book-Down Event
(determined without
regard to the application
of this
clause (b) to such Book-Down Event).
"Additional Book Basis
Derivative Items"
means any Book Basis Derivative
Items that are computed with reference to Additional Book Basis. To the extent
that the Additional Book Basis attributable to all of the
Partnership's Adjusted
Property as of the
beginning of any taxable period exceeds the Aggregate
Remaining Net
Positive Adjustments as of the beginning of such period (the
"Excess Additional Book Basis"), the Additional Book Basis
Derivative Items for
such period
shall be reduced
by the amount that bears the same ratio to
the
amount of Additional Book Basis Derivative Items determined without regard to
this sentence as the Excess Additional Book Basis bears to the Additional
Book
Basis as of the beginning of such period.
"Adjusted Capital
Account" means the
Capital Account
maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the
standards set by
Treasury Regulation
Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions
that, as of the end
of
such fiscal year,
are reasonably expected to be allocated to such
Partner in
subsequent years under
Sections 704(e)(2) and 706(d) of the Code
and Treasury
Regulation Section
1.751-1(b)(2)(ii), and
(ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms
of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that
are reasonably
expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other
than
increases as a result of a minimum gain chargeback pursuant to
Section 6.1(d)(i)
or Section 6.1(d)(ii)). The foregoing definition of
Adjusted Capital Account is
intended to
comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith. The
"Adjusted Capital
Account" of a Partner in respect of a General Partner Unit, a
Common Unit, a
Subordinated Unit, a
Class C Unit or an Incentive Distribution
Right or any other
Partnership Interest
shall be the amount that such Adjusted
Capital Account would be if such General Partner Unit, Common Unit,
Subordinated
Unit, Class C Unit,
Incentive Distribution
Right or other Partnership Interest
were the only interest
in the Partnership
held by such Partner
from and after
the date on which such General Partner Unit, Common Unit, Subordinated Unit,
Class C Unit,
Incentive Distribution
Right or other
Partnership Interest
was
first issued.
"Adjusted Operating
Surplus" means, with respect to any period, Operating
Surplus generated
with respect to such
period (a) less (i) any net increase in
Working Capital Borrowings with respect to such period and (ii) any
net decrease
in cash reserves
for Operating Expenditures with respect to such period
not
relating to an Operating Expenditure made with respect to
such period, and
(b)
plus (i) any net
decrease in Working
Capital Borrowings
with respect to
such
period, (ii) any net
decrease made in
subsequent periods in
cash reserves for
Operating Expenditures
initially established with respect to such period to the
extent such decrease
results in a reduction
in Adjusted Operating
Surplus in
subsequent periods
under clause (a) above and (iii) any net
increase in cash
reserves for Operating
Expenditures
with respect to such
period to the extent
such reserve is required by any debt instrument for the repayment of
principal,
interest
2
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or premium.
Adjusted Operating Surplus does not include that portion of
Operating Surplus
included in clause
(a)(i) of the
definition
of Operating
Surplus.
"Adjusted Property" means any property the Carrying Value of which
has been
adjusted pursuant to Section 5.5(d)(i) or Section 5.5(d)(ii).
"Affiliate" means,
with respect to any Person, any other Person that
directly or
indirectly
through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question.
As used
herein, the term
"control" means the
possession,
direct or indirect,
of the
power to direct or cause the direction of the management and policies of a
Person, whether
through ownership of voting securities, by contract or
otherwise. For the
avoidance of doubt, as of the Closing Date, the Initial
Private Purchasers are not "Affiliates" of the Partnership
Group.
"Aggregate Remaining Net Positive Adjustments" means, as of the end
of any
taxable period,
the sum of the
Remaining Net Positive
Adjustments of all
the
Partners.
"Aggregate
Quantity of Class C Units" has the
meaning assigned to such
term in Section 5.12(a).
"Agreed Allocation" means any allocation, other than a Required
Allocation, of an item
of income,
gain, loss or deduction pursuant to the
provisions of Section 6.1, including a Curative Allocation (if appropriate to
the context in which the term "Agreed Allocation" is used).
"Agreed
Value" of any Contributed Property means the fair market
value of
such property or other
consideration at the
time of contribution as determined
by the General
Partner. The General Partner shall use such method as it
determines to
be appropriate to allocate the aggregate Agreed Value of
Contributed Properties
contributed to the Partnership in a single or integrated
transaction among each
separate property on a
basis proportional
to the fair
market value of each Contributed Property.
"Agreement" means this
First Amended and
Restated Agreement of Limited
Partnership of
Quest Midstream Partners, L.P., as it may be amended,
supplemented or restated from time to time.
"Approved
Working Capital Facility" means a credit facility or other
arrangement entered
into by one or more of the Group Members subsequent to the
Closing Date
that will provide the Partnership with an ability to make
borrowings used solely for working capital purposes or to pay distributions to
the Limited Partners;
provided that the
terms and conditions
of such facility
shall be approved by the Investor Representatives.
"Associate" means,
when used to indicate
a relationship with any Person,
(a) any corporation or organization of which such Person is a
director, officer
or partner or is, directly or indirectly, the owner of 20% or more of any
class
of voting stock or other voting interest; (b) any trust or other
estate in which
such Person has at
least a 20% beneficial
interest or as to
which such Person
serves as trustee or in a similar fiduciary capacity; and (c) any relative or
spouse of such
Person, or any relative of such spouse, who has the same
principal residence as such
3
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Person. For the
avoidance of doubt, as of the Closing Date, the Initial Private
Purchasers are not "Associates" of the Partnership Group.
"Available Cash"
means, with
respect to any Quarter
ending prior to
the
Liquidation Date:
(a) the sum of (i) all cash and cash equivalents of the Partnership
Group (or the Partnership's proportionate share of cash and cash
equivalents in the case of Subsidiaries that are not wholly owned) on
hand
at
the end of
such Quarter, and (ii) all additional cash and cash
equivalents of the Partnership Group (or the Partnership's proportionate
share of cash and cash equivalents in the case of Subsidiaries that
are not
wholly owned) on hand on the date of determination of Available Cash with
respect to such Quarter resulting from Working Capital Borrowings made
subsequent to the end of such Quarter, less
(b) the amount of any cash reserves established by the General
Partner
to
(i) provide for the proper conduct of the business of the Partnership
Group (including
reserves
for future capital expenditures and for
anticipated future
credit needs of the
Partnership Group)
subsequent to
such
Quarter, (ii) comply with applicable law or any loan agreement,
security agreement,
mortgage, debt instrument or other agreement or
obligation to which
any Group Member is a party or by which it is bound or
its
assets are
subject or (iii)
provide funds for distributions under
Section 6.4 or Section 6.5 ----------- ----------- in respect of
any one or
more
of the next four Quarters; provided, however, that the General
Partner
may
not establish cash
reserves pursuant to (iii) above if the
effect of
such
reserves would be that
the Partnership
is unable to
distribute the
Minimum Quarterly
Distribution
on all Common Units,
plus any
Cumulative
Common Unit Arrearage
on all Common Units,
with respect to such
Quarter;
and,
provided further, that
disbursements
made by a Group Member
or cash
reserves established,
increased or reduced
after the end of such
Quarter
but
on or before the date of determination of Available Cash with respect
to
such Quarter shall be deemed to have been made, established, increased
or
reduced, for purposes of determining Available Cash, within such
Quarter
if
the General Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to the
Quarter
in which the
Liquidation Date
occurs and any
subsequent Quarter
shall equal
zero.
"Board of Directors"
means, with respect to
the Board of Directors of the
General Partner,
its board of
directors or managers, as applicable, if a
corporation or limited liability company, or if a limited
partnership, the board
of directors or board of managers of the general partner of the
General Partner.
"Book Basis Derivative Items" means any item of income,
deduction, gain or
loss included in the
determination
of Net Income or Net
Loss that is computed
with reference
to the Carrying Value of an Adjusted Property (e.g.,
depreciation, depletion, or gain or loss with respect to an
Adjusted Property).
"Book-Down Event" means an event that triggers a negative
adjustment to the
Capital Accounts of the Partners pursuant to Section 5.5(d).
4
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"Book-Tax Disparity" means with respect to any item of Contributed
Property
or Adjusted
Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted
Property and
the adjusted basis
thereof for federal
income tax purposes as
of such date. A
Partner's share
of the Partnership's Book-Tax Disparities in all of its
Contributed Property
and Adjusted Property
will be reflected by the difference
between such Partner's Capital Account balance as maintained
pursuant to Section
5.5 and the hypothetical balance of such Partner's
Capital Account
computed as
if it had been
maintained strictly
in accordance with federal income tax
accounting principles.
"Book-Up Event" means
an event that triggers a positive adjustment to the
Capital Accounts of the Partners pursuant to Section 5.5(d).
"Business Day" means
Monday through Friday of each week, except that a
legal holiday
recognized
as such by the
government
of the United
States of
America or the State of Oklahoma shall not be regarded as a
Business Day.
"Capital Account"
means the capital account maintained for a Partner
pursuant to Section
5.5. The "Capital Account" of a Partner in respect
of a
General Partner
Unit, a Common Unit, a
Subordinated
Unit, a Class C Unit,
an
Incentive Distribution
Right or any
Partnership
Interest shall be the
amount
that such Capital
Account would be if such General Partner Unit, Common Unit,
Subordinated Unit,
Class C Unit, Incentive Distribution Right or other
Partnership Interest
were the only
interest in the
Partnership
held by such
Partner from and after the date on which such General Partner Unit,
Common Unit,
Subordinated Unit,
Class C Unit, Incentive Distribution Right or other
Partnership Interest was first issued.
"Capital Contribution"
means any cash, cash
equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the
Partnership.
"Capital Improvement"
means any (a) addition or improvement to the capital
assets owned
by any Group Member, (b) acquisition of existing, or the
construction of
new, capital assets (including gathering lines, treating
facilities, processing
plants, fractionation facilities, pipelines, terminals,
docks, truck racks,
tankage and other
storage, distribution
or transportation
facilities and related or similar midstream assets) or (c) capital
contributions
by a Group Member to a Person that is not a Subsidiary in which a Group Member
has an equity interest to fund such Group Member's pro rata share
of the cost of
the acquisition
of existing, or the construction of new, capital assets
(including
gathering lines,
treating
facilities,
processing
plants,
fractionation facilities, pipelines, terminals, docks, truck
racks, tankage and
other storage,
distribution or transportation facilities and related or
similar
midstream assets) by
such Person, in each
case if such addition,
improvement,
acquisition or
construction
is made to
increase the operating capacity or
revenues of the assets of the Partnership Group, in the case of clauses (a)
and
(b), or such Person,
in the case of clause (c), from the operating capacity or
revenues of the Partnership Group or such Person, as the case may be, existing
immediately prior to
such addition,
improvement,
acquisition or construction;
provided, however,
that any such addition, improvement, acquisition or
construction that is
made solely for temporary investment purposes shall not
constitute a Capital Improvement.
"Capital Surplus" has the meaning assigned to such term in Section
6.3(a).
5
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"Carrying Value" means
(a) with respect to a
Contributed
Property, the
Agreed Value of such property reduced (but not below zero) by all
depreciation,
amortization and cost
recovery deductions charged to the Partners' Capital
Accounts in respect of such Contributed Property, and (b) with respect to any
other Partnership
property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination.
The Carrying Value
of
any property
shall be adjusted
from time to time in
accordance
with Section
5.5(d)(i) and Section
5.5(d)(ii)
and to reflect
changes, additions or other
adjustments to
the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General
Partner.
"Cause" means a court
of competent jurisdiction has entered a final,
non-appealable
judgment finding the
General Partner liable for actual fraud or
willful misconduct in its capacity as a general partner of the
Partnership.
"Certificate" means
(a) a certificate
(i) substantially in the form of
Exhibit A to this
Agreement, (ii) issued
in global form in accordance with the
rules and regulations
of the Depositary or (iii) in such other
form as may be
adopted by the General Partner, issued by the Partnership
evidencing
ownership
of one or more Common Units or (b) a certificate, in such form as
may be adopted
by the General Partner, issued by the Partnership evidencing
ownership of one or
more other Partnership Securities.
"Certificate of
Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed with the Secretary of State of
the State of
Delaware as
referenced
in Section 7.2, as such Certificate of Limited
Partnership may be amended, supplemented or restated from time to
time.
"Citizenship
Certification" means a properly completed certificate in such
form as may be
specified by the
General Partner by which a Limited Partner
certifies that he (and
if he is a nominee
holding for the
account of another
Person, that to the
best of his knowledge
such other
Person) is an
Eligible
Citizen.
"claim"
(as used in Section 7.12(d)) has the meaning assigned to such
term
in Section 7.12(d).
"Class A
Subordinated Unit"
means a Partnership
Security representing
a
fractional part of the Partnership Interests of all Limited Partners
and having
the rights and obligations specified with respect to Class A
Subordinated Units
in this Agreement.
"Class B
Subordinated Unit"
means a Partnership
Security representing
a
fractional part of the Partnership Interests of all Limited Partners
and having
the rights and obligations specified with respect to Class B
Subordinated Units
in this Agreement.
"Class C
Unit" means a Partnership Security representing a fractional
part
of the Partnership
Interests of all Limited Partners and having the rights
and
obligations specified with respect to Class C Units in this
Agreement.
"Closing
Date" means the date on which the transactions contemplated by
the Purchase Agreement close.
6
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"Closing
Price" has the meaning assigned to such term in Section
15.1(a).
"Code"
means the Internal
Revenue Code of 1986,
as amended and in effect
from time to time. Any reference herein to a specific section or
sections of the
Code shall be deemed to include a reference to any corresponding provision of
any successor law.
"Combined
Interest" has the meaning assigned to such term in Section
11.3(a).
"Commences
Commercial Service" refers to the date a Capital Improvement is
first put into
commercial service
following completion of construction and
testing.
"Commission" means the United States Securities and Exchange
Commission.
"Commodity
Hedge Contract" means any commodity exchange, swap, forward,
cap, floor, collar or
other similar
agreement or arrangement entered into for
the purpose of hedging the Partnership Group's exposure to fluctuations in
the
price of hydrocarbons
(including liquefied
natural gas or liquefied petroleum
gas) in their operations and not for speculative purposes.
"Common
Unit" means a Partnership Security representing a fractional part
of the Partnership
Interests of all Limited Partners and having the rights
and
obligations specified
with respect to Common Units in this Agreement. The term
"Common Unit" does not include a Subordinated Unit or Class C Unit prior to
its
conversion into a Common Unit pursuant to the terms hereof.
"Common
Unit Arrearage" means,
with respect to any Common Unit, whenever
issued, as to any Quarter within the Subordination Period, the excess, if any,
of (a) the Minimum
Quarterly Distribution with respect to a Common Unit in
respect of such Quarter over (b) the sum of all Available Cash
distributed with
respect to a
Common Unit in respect of such Quarter pursuant to Section
6.4(a)(i).
"Conflicts
Committee"
means a committee of
the Board of Directors of the
General Partner composed entirely of two or more directors,
each of whom (a)
is
not a security holder, officer or employee of the General Partner,
(b) is not an
officer, director or
employee of any Affiliate of the General Partner, (c) is
not a holder of any
ownership interest
in the Partnership Group other than
Common Units and (d) meets the independence standards required of directors
who
serve on an
audit committee of a board of directors established by the
Securities Exchange
Act and the rules and regulations of the Commission
thereunder and by the Nasdaq Global Market.
"Contributed Property" means each property or other asset, in such
form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the
Carrying Value of a Contributed Property is adjusted
pursuant to
Section 5.5(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Contribution
Agreement" means that certain Contribution, Conveyance and
Assumption Agreement,
dated as of the
Closing Date, among the General Partner,
the Partnership,
the Operating
Company and the other
parties named
therein,
together with the
7
<PAGE>
additional conveyance
documents and instruments contemplated or referenced
thereunder, as such may be amended, supplemented or restated from
time to time.
"Converted
Common Units" has the
meaning assigned to such term in Section
6.1(d)(x)(B).
"Cumulative Common Unit Arrearage" means, with respect to any
Common Unit,
whenever issued, and
as of the end of any Quarter, the excess, if any, of (a)
the sum resulting
from adding together the Common Unit Arrearage as to an
Initial Common Unit
for each of the Quarters within the Subordination Period
ending on or
before the last day of such Quarter over (b) the sum of any
distributions
theretofore made
pursuant to Section
6.4(a)(ii) and the
second
sentence of Section 6.5 with respect to an Initial Common Unit (including any
distributions to be made in respect of the last of such
Quarters).
"Curative
Allocation"
means any allocation of an item of income,
gain,
deduction, loss or credit pursuant to the provisions of Section
6.1(d)(xi).
"Current
Market Price" has the meaning
assigned to such term
in Section
15.1(a).
"Delaware
Act" means the Delaware Revised Uniform Limited Partnership
Act,
6 Del C. Section 17-101, et seq., as amended, supplemented or
restated from time
to time, and any successor to such statute.
"Departing
General Partner" means
a former General Partner from and after
the effective date of any withdrawal or removal of such
former General
Partner
pursuant to Section 11.1 or Section 11.2.
"Depositary" means,
with respect to any
Units issued in global form, The
Depository Trust Company and its successors and permitted
assigns.
"Economic
Risk of Loss" has the
meaning set forth in Treasury Regulation
Section 1.752-2(a).
"Eligible
Citizen" means a Person qualified to own interests in real
property in jurisdictions in which any Group Member does business
or proposes to
do business from time to time, and whose status as a Limited
Partner the General
Partner determines
does not or would not subject such Group Member to a
significant risk of
cancellation or
forfeiture of any of its properties or any
interest therein.
"Estimated
Incremental
Quarterly Tax Amount"
has the meaning assigned to
such term in Section 6.9.
"Event of
Withdrawal"
has the meaning assigned to such term in
Section
11.1(a).
"Expansion
Capital Expenditures"
means cash expenditures for Acquisitions
or Capital Improvements, and shall not include Maintenance
Capital Expenditures
or Investment Capital Expenditures. Expansion Capital Expenditures
shall include
interest (and related fees) on debt incurred and distributions on
equity issued,
in each case, to finance the construction or
8
<PAGE>
development of a Capital Improvement and paid during the period
beginning on the
date that the Partnership enters into a binding commitment to commence
construction or
development of a Capital Improvement and ending on the
earlier
to occur of the date that such Capital Improvement Commences Commercial Service
or the date that such
Capital Improvement
is abandoned or disposed of. Debt
incurred or equity
issued to fund such construction or development period
interest payments
(including periodic
net payments under related interest rate
swap agreements) or
such construction or
development period
distributions on
equity paid during such period, shall also be deemed to be debt or
equity, as
the case may be, issued to finance the construction or development of a
Capital
Improvement.
"Final
Subordinated
Units" has the meaning assigned to such term in
Section 6.1(d)(x)(A).
"First
Liquidation Target Amount" has the meaning assigned to such term
in
Section 6.1(c)(i)(E).
"First
Target Distribution"
means $0.4675 per Unit
per Quarter (or, with
respect to the period
commencing on December 1, 2006 and ending on December 31,
2006, it means the
product of $0.4675
multiplied
by a fraction
of which the
numerator is the number of days in such period, and of which the denominator
is
92), subject to
adjustment in
accordance
with Section 5.12,
Section 6.6 and
Section 6.9.
"Fully
Diluted Basis" means,
when calculating
the number of
Outstanding
Units for any period,
a basis that includes,
in addition to the Outstanding
Units, all Partnership Securities and options, rights, warrants and
appreciation
rights relating
to an equity interest in the Partnership (a) that are
convertible into or
exercisable or exchangeable for Units that are senior to or
pari passu with the
Subordinated
Units, (b) whose conversion, exercise or
exchange price
is less than the Current Market Price on the date of such
calculation, (c) that
may be converted into
or exercised or exchanged for such
Units prior to or during the Quarter immediately following the end
of the period
for which the calculation is being made without the satisfaction of any
contingency beyond
the control of the holder other than the payment of
consideration and the
compliance with
administrative
mechanics applicable
to
such conversion,
exercise or exchange
and (d) that were not converted into or
exercised or
exchanged for such Units during the period for which the
calculation is being made; provided, however, that for purposes of
determining
the number of
Outstanding
Units on a Fully
Diluted Basis when calculating
whether the Subordination Period has ended or Subordinated Units
are entitled to
convert into Common Units pursuant to Section 5.8, such Partnership
Securities,
options, rights,
warrants and
appreciation rights shall be deemed to have been
Outstanding Units
only for the
four Quarters that comprise the last four
Quarters of the measurement period; provided, further, that if consideration
will be paid to any Group Member in connection with such
conversion, exercise or
exchange, the number
of Units to be included in such calculation shall be that
number equal to the
difference between (i)
the number of Units
issuable upon
such conversion,
exercise or
exchange and (ii) the number of Units that
such
consideration would purchase at the Current Market Price.
"General
Partner" means Quest Midstream GP, LLC, a Delaware limited
liability company, and its successors and permitted assigns that
are admitted to
the Partnership as general
9
<PAGE>
partner of
the Partnership, in its capacity as general partner of the
Partnership (except as the context otherwise requires).
"General
Partner Interest" means the ownership interest of the General
Partner in the
Partnership
(in its capacity as a general partner without
reference to any Limited Partner Interest held by it), which is evidenced by
General Partner
Units, and includes any and all benefits
to which the General
Partner is entitled as provided in this Agreement, together with
all obligations
of the General
Partner to comply with the terms and provisions of this
Agreement.
"General
Partner Unit" means a fractional part of the General Partner
Interest having the
rights and obligations
specified in this
Agreement with
respect to the General Partner Interest. A General Partner Unit is
not a Unit.
"Group"
means a Person
that with or
through any of its Affiliates or
Associates has any contract, arrangement, understanding or relationship for
the
purpose of acquiring,
holding, voting
(except voting
pursuant to a
revocable
proxy or consent
given to such Person in response to a proxy or consent
solicitation made
to 10 or more Persons), exercising investment power or
disposing of any Partnership Interests with any other Person
that beneficially
owns, or whose Affiliates or Associates beneficially own, directly or
indirectly, Partnership Interests.
"Group
Member" means a member of the Partnership Group.
"Group
Member Agreement" means the partnership agreement of any Group
Member, other than the
Partnership, that is a
limited or general
partnership,
the limited liability
company agreement of any Group Member that
is a limited
liability company,
the certificate of incorporation and bylaws or similar
organizational
documents of any Group Member that is a corporation, the joint
venture agreement or
similar governing
document of any Group
Member that is a
joint venture and the governing or organizational or similar documents of any
other Group Member that is a Person other than a limited or general
partnership,
limited liability company, corporation or joint venture, as such
may be amended,
supplemented or restated from time to time.
"Holder"
as used in Section 7.12, has the meaning assigned to such term
in
Section 7.12(a).
"IDR Reset
Election" has the meaning assigned to such term in Section
5.12(a).
"Incentive
Distribution Right" means a non-voting Limited Partner Interest
issued to the General
Partner in
connection
with the transfer of all of its
interests in Bluestem to the Partnership pursuant to the
Contribution Agreement,
which Limited
Partner Interest will confer upon the holder
thereof only the
rights and obligations
specifically provided
in this Agreement with respect to
Incentive Distribution
Rights (and no other
rights otherwise
available to or
other obligations
of a holder of a Partnership Interest). Notwithstanding
anything in
this Agreement to the contrary, the holder of an Incentive
Distribution Right
shall not be entitled
to vote such Incentive
Distribution
Right on any Partnership matter except as may otherwise be required
by law.
10
<PAGE>
"Incentive
Distributions"
means any amount of cash distributed to the
holders of the Incentive Distribution Rights pursuant to
Section
6.4(a)(v)(B),
Section 6.4(a)(vi)(B), Section 6.4(a)(vii)(B), Section 6.4(b)(iii)(B),
Section
6.4(b)(iv)(B), Section 6.4(b)(v)(B) and Section 6.4(c).
"Incremental Income
Tax" has the meaning assigned to such term in Section
6.9.
"Indemnified Persons"
has the meaning assigned to such term in
Section
7.12(d).
"Indemnitee" means (a)
the General Partner,
(b) any Departing General
Partner, (c) any Person who is or was an Affiliate of the General
Partner or any
Departing General
Partner, (d) any Person who is or was a member,
partner,
director, officer, fiduciary or trustee of any Group Member, the
General Partner
or any Departing
General Partner or any Affiliate of any Group
Member, the
General Partner or any Departing General Partner, (e) any Person who is or was
serving at the request of the General Partner or any Departing
General Partner
or any Affiliate of the General Partner or any Departing
General Partner as
an
officer, director,
member, partner, fiduciary or trustee of another
Person;
provided that a Person shall not be an Indemnitee by reason of providing,
on a
fee-for-services
basis, trustee,
fiduciary or custodial services, and (f) any
Person the General Partner designates as an "Indemnitee" for purposes of this
Agreement.
"Initial
Common Units" means the Common Units sold pursuant to the
Purchase Agreement.
"Initial
Limited Partner" means QRC and each of the Initial Private
Purchasers, in each
case upon being
admitted to the
Partnership in accordance
with Section 10.1
(with respect to the
Common Units,
Subordinated
Units and
Incentive Distribution
Rights, if any, received by them pursuant to Section
5.2).
"Initial
Private Purchaser" means each Person named as a purchaser in
Schedule I to the
Purchase Agreement who purchased Common Units pursuant
thereto.
"Initial
Public Offering" means the initial public offering of Common
Units by the
Partnership that
results in the Common
Units being listed for
trading on the New York Stock Exchange or the Nasdaq Global
Market.
"Initial Unit Price" means (a) with respect to the Common
Units, (i) if
the Initial Public Offering has not yet occurred, the price paid by the Initial
Private Purchasers pursuant to the Purchase Agreement, less any indemnification
proceeds received by
the Initial Private
Purchasers pursuant to
Article VI of
the Purchase Agreement, and (i) if the Initial Public Offering has
occurred, the
initial public offering price per Common Unit at which the
Underwriters
agreed
to offer such Common Units for sale to the public as set forth on
the cover page
of the final
prospectus
filed pursuant to Rule 424(b) of the rules and
regulations of the Commission with respect to such Initial Public
Offering, or
(b) with respect to
any other class or
series of Units, the
price per Unit at
which such class or series of Units is initially sold by the Partnership, as
determined by the General Partner, in each case adjusted as the
General Partner
determines to be appropriate to give effect to any distribution,
subdivision or
combination of Units.
11
<PAGE>
"Interim
Capital Transactions"
means the following
transactions if
they
occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings
of indebtedness (other
than Working Capital Borrowings and other than for items
purchased on open
account in the
ordinary course of business) by any Group
Member and sales of debt securities of any Group Member; (b) sales of equity
interests of any Group
Member; (c) sales or other voluntary or involuntary
dispositions of any
assets of any Group
Member other than (i) sales or other
dispositions of production, inventory, accounts receivable and other
assets in
the ordinary course of business, and (ii) sales or other
dispositions of assets
as part of normal retirements or replacements; (d) the termination of
Commodity
Hedge Contracts or interest rate swap agreements prior to the termination
date
otherwise specified
therein; (e) capital contributions received; or (f)
corporate reorganizations or restructurings.
"Investment
Capital Expenditures"
means capital
expenditures other
than
Maintenance Capital Expenditures and Expansion Capital
Expenditures.
"Investor
Representatives" means
the members of the Board of Directors of
GP designated by Swank and ACM or their successors pursuant to the terms of the
Investors' Rights Agreement.
"Investors' Rights Agreement" means the Investors' Rights
Agreement, dated
as of even date herewith, by and among the Partnership, the General
Partner, QRC
and the Initial Private Purchasers.
"Issue
Price" means the price at which a Unit is purchased from the
Partnership, net of any sales commission or underwriting discount
charged to the
Partnership.
"Limited
Partner" means, unless the context otherwise requires, the
Organizational Limited
Partner prior to its
withdrawal from the
Partnership,
each Initial Limited
Partner, each additional Person that becomes a Limited
Partner pursuant
to the terms of this Agreement and any Departing General
Partner upon the
change of its status from General Partner to Limited Partner
pursuant to Section 11.3, in each case, in such Person's capacity as limited
partner of the
Partnership;
provided, however, that when the term "Limited
Partner" is used herein in the context of any vote or other
approval,
including
Article XIII and
Article XIV,
such term shall not,
solely for such
purpose,
include any holder of an Incentive Distribution Right (solely with respect to
its Incentive
Distribution
Rights and not with
respect to any other
Limited
Partner Interest
held by such Person)
except as may
otherwise be required
by
law.
"Limited
Partner Interest" means the ownership interest of a Limited
Partner in the
Partnership, which may
be evidenced by Common
Units, Class C
Units, Subordinated
Units, Incentive
Distribution Rights or
other Partnership
Securities or a combination thereof or interest therein, and includes any and
all benefits
to which such
Limited Partner is entitled as provided in this
Agreement, together
with all obligations of such Limited Partner to comply with
the terms and provisions of this Agreement; provided, however, that when the
term "Limited
Partner Interest" is used herein in the context of
any vote or
other approval,
including Article XIII and Article XIV,
such term shall
not,
solely for such purpose, include any Incentive Distribution
Right except as may
otherwise be required by law.
12
<PAGE>
"Liquidation Date"
means (a) in the case
of an event giving
rise to the
dissolution of the
Partnership of the
type described in clauses (a) and (b) of
the first sentence of Section 12.2, the date on which the
applicable time period
during which
the holders of Outstanding Units have the right to elect to
continue the business of the Partnership has expired without such an election
being made,
and (b) in the case of any other event giving rise to the
dissolution of the Partnership, the date on which such event
occurs.
"Liquidator" means one
or more Persons selected by the General Partner to
perform the functions
described in Section 12.4 as liquidating trustee of the
Partnership within the meaning of the Delaware Act.
"Maintenance Capital
Expenditures"
means cash
expenditures
(including
expenditures for the
addition or improvement to the capital assets owned by any
Group Member or for the acquisition of existing,
or the construction of new,
capital assets) if such expenditures are made to maintain, including over the
long term,
the operating capacity or revenues of the Partnership Group.
Maintenance Capital
Expenditures
shall not include (a) Expansion Capital
Expenditures or (b) Investment Capital Expenditures.
"Merger
Agreement" has the meaning assigned to such term in Section
14.1.
"Midstream
Services and Gas Dedication Agreement" means that certain
Midstream Services and
Gas Dedication
Agreement dated the
Closing Date by and
between the Operating Company and QRC.
"Minimum
Quarterly Distribution" means $0.425 per Unit per Quarter
(or
with respect to the period commencing on December 1, 2006 and
ending on December
31, 2006, it means the
product of $0.425
multiplied by a fraction of which the
numerator is the number of days in such period and of which the
denominator
is
92), subject to
adjustment in
accordance
with Section 5.12,
Section 6.6 and
Section 6.9.
"National
Securities
Exchange" means the
New York Stock Exchange and the
Nasdaq Global Market.
"Net
Agreed Value" means, (a) in the case of any Contributed Property,
the
Agreed Value of such property reduced by any liabilities
either assumed by
the
Partnership upon such
contribution
or to which such
property is subject
when
contributed, (b) in
the case of any
property distributed
to a Partner by
the
Partnership, the
Partnership's
Carrying Value of such property (as adjusted
pursuant to
Section 5.5(d)(ii)) at the time such property is distributed,
reduced by
any indebtedness either assumed by such Partner upon such
distribution or to
which such property is subject at the time of distribution,
in either case, as determined under Section 752 of the Code.
"Net
Income" means, for any taxable year, the excess, if any, of the
Partnership's items of
income and gain
(other than those items taken into
account in the
computation of Net
Termination Gain, Net
Termination
Loss or
Required Sale Gain) for such taxable year over the Partnership's items of loss
and deduction (other
than those items taken into account in the computation of
Net Termination Gain
or Net Termination
Loss) for such taxable year. The items
included in the calculation of Net Income shall be determined in
accordance with
Section 5.5(b)
13
<PAGE>
and shall not include
any items specially allocated under Section 6.1(d);
provided, that the determination of the items that have been
specially allocated
under Section 6.1(d)
shall be made as if Section 6.1(d)(xii) were not in this
Agreement.
"Net Loss"
means, for any taxable year, the excess, if any, of the
Partnership's items of
loss and deduction
(other than those items taken into
account in the
computation of Net
Termination Gain, Net
Termination
Loss or
Required Sale Gain) for such taxable year over the Partnership's
items of income
and gain (other than those items taken into account in the computation of Net
Termination Gain or
Net Termination
Loss) for such
taxable year. The items
included in the
calculation of Net Loss shall be determined in accordance
with
Section 5.5(b) and shall not include any items specially allocated
under Section
6.1(d); provided,
that the determination
of the items that have been specially
allocated under Section 6.1(d) shall be made as if Section
6.1(d)(xii) were
not
in this Agreement.
"Net
Positive Adjustments" means, with respect to any Partner, the
excess,
if any, of the total positive adjustments over the total negative
adjustments
made to the Capital
Account of such
Partner pursuant to Book-Up Events and
Book-Down Events.
"Net
Termination Gain"
means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date (other than items taken into account in the
computation of Required Sale Gain). The items included in the
determination of
Net Termination
Gain shall be
determined in accordance with Section 5.5(b) and
shall not include any items of income, gain or loss specially
allocated under
Section 6.1(d).
"Net
Termination Loss"
means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date (other than items taken into account in the
computation of Required Sale Gain). The items included in the
determination of
Net Termination
Loss shall be
determined in accordance with Section 5.5(b) and
shall not include any items of income, gain or loss specially
allocated under
Section 6.1(d).
"Non-citizen Assignee"
means a Person whom the General Partner has
determined does not constitute an Eligible Citizen and as to whose
Partnership
Interest the General Partner has become the Limited Partner,
pursuant to Section
4.9.
"Nonrecourse
Built-in Gain"
means with respect to any Contributed
Properties or
Adjusted Properties that are subject to a mortgage or pledge
securing a Nonrecourse
Liability, the amount
of any taxable gain that would be
allocated to
the Partners pursuant to Section 6.2(b)(i)(A), Section
6.2(b)(ii)(A), and
Section 6.2(b)(iii) if such properties were disposed of in a
taxable transaction in
full satisfaction of
such liabilities and
for no other
consideration.
"Nonrecourse
Deductions" means any
and all items of loss,
deduction or
expenditure (including
any expenditure described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury
Regulation
Section
1.704-2(b), are attributable to a Nonrecourse Liability.
"Nonrecourse
Liability" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
14
<PAGE>
"Notice of
Election to Purchase" has the meaning assigned to such term in
Section 15.1(b).
"Omnibus
Agreement" means that certain Omnibus Agreement, dated as of the
Closing Date, among
QRC, the General Partner, the Partnership, the Operating
Company, and certain other parties thereto, as such may be amended,
supplemented
or restated from time to time.
"Operating
Company" means Bluestem Pipeline, LLC, a Delaware limited
liability company,
the membership interests of which were acquired by the
Partnership pursuant to the Contribution Agreement, and any
successors thereto.
"Operating
Expenditures" means all Partnership Group cash expenditures (or
the
Partnership's
proportionate
share of expenditures in the case of
Subsidiaries that are not wholly owned), including taxes,
reimbursements of
the
General Partner in accordance with this Agreement, interest payments, repayment
of Working Capital Borrowings, Maintenance Capital Expenditures and
non-Pro Rata
repurchases of Units
(other than those made with the
proceeds of an Interim
Capital Transaction),
payments made in the
ordinary course of
business under
Commodity Hedge
Contracts (excluding payments made in connection with any
termination of a
Commodity Hedge
Contract prior to its stated expiration or
termination date), provided that with respect to amounts paid in
connection with
the initial purchase
or placing of a Commodity Hedge Contract, such amount(s)
shall be amortized
over the expected term
of the applicable
Commodity Hedge
Contract and, if earlier, upon its termination, subject to the
following:
(a) Payments
(including prepayments
and prepayment penalties) of
principal of and
premium on indebtedness other than Working Capital
Borrowings shall not constitute Operating Expenditures.
(b) Operating
Expenditures shall not
include (i) Expansion
Capital
Expenditures (ii)
Investment
Capital Expenditures, (iii) payment of
transaction
expenses
(including taxes)
relating to Interim Capital
Transactions or (iv) distributions to Partners.
(c) Where capital
expenditures are made in part for Expansion Capital
Expenditures and in
part for other
purposes, the General
Partner, with
Special Approval,
shall determine the allocation between the amounts paid
for
each.
"Operating
Surplus" means, with
respect to any period ending prior to the
Liquidation Date, on a cumulative basis and without
duplication,
(d) the sum of (i) $8 million, (ii) all cash receipts of the
Partnership Group
(or the Partnership's proportionate share of cash
receipts in the case
of Subsidiaries
that are not wholly
owned) for the
period beginning
on the Closing Date and ending on the last day of
such
period, but
excluding cash receipts from Interim Capital Transactions
(except to the extent specified in Section 6.4), (iii) all cash
receipts of
the
Partnership Group (or
the Partnership's
proportionate
share of cash
receipts in the case of Subsidiaries that are not wholly owned) after
the
end
of such period but on or before the date of determination of Operating
Surplus with
respect to such period resulting from Working Capital
Borrowings and (iv)
the amount of
distributions paid on
equity issued in
connection with the
construction or
development of a Capital Improvement
and
paid during the period
15
<PAGE>
beginning
on the date that the Partnership enters into a binding
commitment
to commence construction or development of such Capital
Improvement and
ending on the earlier to occur of the date that such
Capital
Improvement Commences
Commercial Service and
the date that it is
abandoned
or disposed of (equity issued to fund the construction or
development period interest payments on debt incurred (including periodic
net
payments under related interest rate swap agreements), or
construction
or
development
period distributions on equity issued, to finance the
construction or development of a Capital Improvement shall also be
deemed
to be
equity issued to
finance the construction or development of a
Capital
Improvement for purposes of this clause (iv)), less
(e) the sum of (i) Operating Expenditures for the period
beginning on
the
Closing Date and ending on the last day of such
period and (ii)
the
amount of cash reserves established by the General Partner to
provide funds
for
future Operating
Expenditures;
provided, however,
that disbursements
made
(including
contributions to a Group Member or disbursements on behalf
of a
Group Member) or cash reserves established, increased or reduced
after
the
end of such period
but on or before the date of determination of
Available Cash with
respect to such
period shall be deemed to have been
made, established,
increased or reduced, for purposes of determining
Operating Surplus, within such period if the General Partner so
determines.
Notwithstanding the
foregoing,
"Operating
Surplus" with respect
to the
Quarter in which the
Liquidation Date
occurs and any subsequent Quarter shall
equal zero.
"Opinion
of Counsel" means a written opinion of counsel (who may be
regular counsel
to the Partnership or the General Partner or any of its
Affiliates) acceptable to the General Partner.
"Option
Closing Date" means the date or dates on
which any Common
Units
are sold by the Partnership to the Underwriters upon exercise of the
Over-Allotment Option.
"Organizational
Limited Partner"
means QRC in its capacity as the
organizational limited partner of the Partnership pursuant to this
Agreement.
"Outstanding"
means, with
respect to Partnership Securities, all
Partnership Securities
that are issued by the
Partnership
and reflected as
outstanding on
the Partnership's books and records as of the date of
determination; provided, however, that if at any time any Person or
Group (other
than the General Partner, QRC or their Affiliates) beneficially
owns 20% or more
of the Outstanding
Partnership Securities
of any class then
Outstanding, all
Partnership Securities
owned by such Person
or Group shall not be voted on any
matter and shall not be considered to be Outstanding when sending notices of a
meeting of Limited Partners to vote on any matter (unless otherwise
required by
law), calculating
required votes,
determining the
presence of a quorum or for
other similar purposes under this Agreement, except that Units so
owned shall be
considered to be
Outstanding for
purposes of Section
11.1(b)(iv) (such
Units
shall not, however, be treated as a separate class of Partnership
Securities for
purposes of this Agreement); provided, further, that the foregoing limitation
shall not apply to (i)
any Person
or Group who acquired 20% or more of the
Outstanding Partnership Securities of any class then
16
<PAGE>
Outstanding directly from the General Partner or its Affiliates,
(ii) any Person
or Group who acquired 20% or more of the Outstanding Partnership Securities of
any class then Outstanding directly or indirectly from a Person or Group
described in clause (i) provided that the General Partner shall have notified
such Person or Group in writing that such limitation shall not
apply, (iii) any
Person or Group who acquired 20% or more of any Partnership
Securities issued by
the Partnership
with the prior
approval of the Board
of Directors or (iv) any
Person or Group who
acquired an
aggregate of 20% or more of the Outstanding
Partnership Securities
of any class then
outstanding
by virtue of a
purchase
made from an Initial Private Purchaser or its Affiliates.
"Over-Allotment
Option" means an
over-allotment
option granted to the
Underwriters by the Partnership pursuant to an underwriting
agreement.
"Partner
Nonrecourse
Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner
Nonrecourse
Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner
Nonrecourse
Deductions"
means any and all items of loss,
deduction or
expenditure
(including
any expenditure described in Section
705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury
Regulation Section 1.704-2(i), are attributable to a Partner
Nonrecourse Debt.
"Partners"
means the General Partner and the Limited Partners.
"Partnership" means
Quest Midstream
Partners, L.P., a Delaware limited
partnership.
"Partnership Group" means the Partnership and its Subsidiaries
treated as
a single consolidated entity.
"Partnership Interest"
means an interest in the Partnership, which shall
include the General Partner Interest and Limited Partner
Interests.
"Partnership Minimum Gain" means that amount determined in
accordance with
the principles of Treasury Regulation Section 1.704-2(d).
"Partnership Security" means any class or series of equity interest
in the
Partnership (but excluding any options, rights, warrants and
appreciation rights
relating to an equity
interest in the
Partnership),
including Common
Units,
Class C Units, Subordinated Units, General Partner Units and Incentive
Distribution Rights.
"Per Unit
Capital Amount"
means, as of any date of determination, the
Capital Account,
stated on a per Unit basis, underlying any Unit held by a
Person other than the General Partner or any Affiliate of the General
Partner
who holds Units.
"Percentage Interest"
means as of any date of determination (a) as to the
General Partner with
respect to General
Partner Units and as to any Unitholder
with respect to Units,
the product obtained
by multiplying
(i) 100% less the
percentage applicable to clause (b) below by (ii) the
17
<PAGE>
quotient obtained by
dividing (A) the number of General Partner Units held by
the General Partner or the number of Units held by such Unitholder,
as the case
may be, by (B) the total number of Outstanding Units and General Partner
Units,
and (b) as to
the holders of other Partnership Securities issued by the
Partnership in accordance with Section 5.6, the percentage
established as a part
of such issuance. The Percentage Interest with respect to an Incentive
Distribution Right shall at all times be zero.
"Person"
means an individual or a corporation, firm, limited liability
company,
partnership,
joint venture,
trust, unincorporated organization,
association, government agency or political subdivision thereof or
other entity.
"Pro Rata"
means (a) when used with respect to Units or any class thereof,
apportioned equally among all designated Units in accordance with
their relative
Percentage Interests,
(b) when used with respect to Partners or Record Holders,
apportioned among all
Partners or Record Holders in accordance with their
relative Percentage
Interests and (c) when used with
respect to holders of
Incentive Distribution
Rights, apportioned equally among all holders of
Incentive Distribution
Rights in accordance with the relative number or
percentage of Incentive Distribution Rights held by each such
holder.
"Purchase
Agreement"
means that certain
Purchase Agreement dated as of
even date herewith
among the Partnership
and the Initial
Private Purchasers
providing for the purchase of Common Units from the
Partnership.
"Purchase
Date" means the date
determined by the
General Partner as
the
date for purchase of
all Outstanding
Limited Partner Interests of a certain
class (other than Limited Partner Interests owned by the General
Partner and its
Affiliates) pursuant to Article XV.
"QRC"
means Quest Resource Corporation, a Nevada corporation.
"Quarter"
means, unless the context requires otherwise, a fiscal quarter
of the Partnership,
or, with respect to the first fiscal quarter of the
Partnership after
the Closing Date, the portion of such fiscal quarter
commencing on December 1, 2006.
"Recapture
Income" means any gain recognized by the Partnership (computed
without regard to any
adjustment required by
Section 734 or Section 743 of the
Code) upon the
disposition of any property or asset of the Partnership, which
gain is characterized
as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or
asset.
"Record
Date" means the date established by the General Partner or
otherwise in accordance with this Agreement for
determining (a) the identity of
the Record Holders
entitled to notice of, or to vote at, any meeting of Limited
Partners or entitled to vote by ballot or give approval of
Partnership action in
writing without a
meeting or
entitled to exercise rights in respect of any
lawful action of Limited Partners or (b) the identity of Record
Holders entitled
to receive any report or distribution or to participate in any
offer.
"Record
Holder" means the Person in whose name a Common Unit is
registered
on the books of the Transfer Agent as of the opening of business on
a particular
Business Day, or with
18
<PAGE>
respect to other Partnership Interests, the Person in whose name any such
other
Partnership Interest
is registered
on the books that the
General Partner
has
caused to be kept as of the opening of business on such Business
Day.
"Redeemable Interests"
means any Partnership Interests for which a
redemption notice
has been given, and has not been withdrawn, pursuant to
Section 4.10.
"Registration Rights
Agreement" means that
certain Registration
Rights
Agreement dated as of
even date herewith among the Partnership and the Initial
Private Purchasers.
"Remaining
Net Positive
Adjustments"
means as of the end of
any taxable
period, (i) with respect to the Unitholders holding Common Units, Class C
Units
or Subordinated
Units, the excess of (a) the Net Positive
Adjustments of the
Unitholders holding
Common Units, Class C Units or Subordinated Units as of the
end of such period over (b) the sum of those Partners' Share of Additional
Book
Basis Derivative Items
for each prior taxable period, (ii) with respect to the
General Partner (as holder of the General Partner Units),
the excess of (a)
the
Net Positive
Adjustments
of the General
Partner as of the end
of such period
over (b) the sum of
the General
Partner's Share of Additional Book Basis
Derivative Items
with respect to the General Partner Units for each prior
taxable period, and (iii) with respect to the holders of Incentive
Distribution
Rights, the
excess of (a) the Net Positive Adjustments of the holders of
Incentive Distribution
Rights as of the end
of such period over (b) the sum of
the Share of
Additional Book
Basis Derivative Items of the holders of the
Incentive Distribution Rights for each prior taxable period.
"Required
Allocations" means (a)
any limitation imposed on any allocation
of Net Losses
or Net Termination Losses under Section 6.1(b) or Section
6.1(c)(ii) and (b) any allocation of an item of income,
gain, loss or
deduction
pursuant to Section 6.1(d)(i), Section 6.1(d)(ii), Section 6.1(d)(iv), Section
6.1(d)(v), Section 6.1(d)(vii) or Section 6.1(d)(ix).
"Required
Sale" means the right of the Initial Private Purchasers to
force
a sale of the
Partnership or its assets as more specifically described in the
Investors' Rights Agreement.
"Required
Sale Gain" means, for any taxable year, the sum, if positive,
of
all items of income,
gain, loss or deduction recognized by the Partnership upon
a sale of its assets in a Required Sale.
"Required
Sale Loss" means, for any taxable year, the sum, if negative,
of
all items of income,
gain, loss or deduction recognized by the Partnership upon
a sale of its assets in a Required Sale.
"Required
Sale Premium"
means (i) 110% if the
Required Sale is completed
within 180 days or less after the Initial Private Purchasers
provided notice of
their exercise
of their right to a Required Sale in accordance with the
Investors' Rights
Agreement,
(ii) 117.5% if the
Required Sale is completed no
less than 181 days nor more than 270 days after the Initial
Private Purchasers
provided notice
of their exercise of their right to a Required Sale in
accordance with the Investors' Rights Agreement, (iii) 125% if the
Required Sale
is completed
no less than 271 days nor more than 360
days after the
Initial
Private Purchasers
provided notice of their exercise of their right to a
Required Sale in accordance with the Investors' Rights Agreement,
(iv) 132.5% if
the Required
Sale is completed no less than 361 days nor more than 450
days
after the
19
<PAGE>
Initial Private Purchasers provided notice of their exercise of
their right to a
Required Sale in accordance with the Investors' Rights Agreement
and (v) 140% if
the Required
Sale is completed more than 450 days after the
Initial Private
Purchasers provided
notice of their
exercise of their right to a Required Sale
in accordance with the Investors' Rights Agreement.
"Reset
Notice" has the meaning assigned to such term in Section
5.12(b).
"Residual
Gain" or "Residual
Loss" means any item of gain or loss, as the
case may be, of the
Partnership recognized
for federal income tax purposes
resulting from a sale,
exchange or other disposition of a Contributed Property
or Adjusted Property,
to the extent such
item of gain or loss is not allocated
pursuant to Section
6.2(b)(i)(A) or
Section 6.2(b)(ii)(A),
respectively,
to
eliminate Book-Tax Disparities.
"Retained
Converted Subordinated Unit" has the meaning assigned to
such
term in Section 5.5(c)(ii).
"Second
Liquidation
Target Amount" has the
meaning assigned to such term
in Section 6.1(c)(i)(F).
"Second
Target Distribution"
means $0.5325 per Unit per Quarter (or, with
respect to the period
commencing on December 1, 2006 and ending on December 31,
2006, it means the
product of $0.5325
multiplied
by a fraction
of which the
numerator is equal
to the number of days in such period and of which the
denominator is 92),
subject to
adjustment
in accordance with Section 5.12,
Section 6.6 and Section 6.9.
"Securities Act"
means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to
such statute.
"Securities Exchange
Act" means the
Securities Exchange
Act of 1934, as
amended, supplemented
or restated
from time to time and
any successor to such
statute.
"Share of
Additional Book Basis Derivative Items" means in connection
with
any allocation of Additional Book Basis Derivative Items for any
taxable period,
(i) with respect to
the Unitholders
holding Common Units, Class C Units or
Subordinated Units, the amount that bears the same ratio to such
Additional Book
Basis Derivative Items as the Unitholders' Remaining Net Positive
Adjustments as
of the end of
such period bears to the Aggregate Remaining Net Positive
Adjustments as of that time, (ii) with respect to the General
Partner (as holder
of the General
Partner Units), the amount that bears the same ratio to
such
Additional Book Basis
Derivative Items as the General Partner's Remaining Net
Positive Adjustments
as of the end of such period bears to the Aggregate
Remaining Net Positive Adjustment as of that time, and (iii) with
respect to the
Partners holding Incentive Distribution Rights, the amount that bears the
same
ratio to such
Additional Book
Basis Derivative Items as the Remaining Net
Positive Adjustments
of the Partners holding the Incentive Distribution Rights
as of the end of such
period bears to the
Aggregate Remaining Net Positive
Adjustments as of that time.
"Special
Approval" means approval by a majority of the members of the
Conflicts Committee acting in good faith.
20
<PAGE>
"Subordinated Unit"
means a Class A Subordinated Unit or a Class B
Subordinated Unit. The term "Subordinated Unit" does not include a Common
Unit
or Class C Unit. A
Subordinated
Unit that is
convertible
into a Common Unit
shall not constitute a Common Unit until such conversion
occurs.
"Subordination Period" means the period commencing on the Closing
Date and
ending on the first to occur of the following dates:
(f) The first day of any Quarter beginning after the seventh
anniversary of the
Closing Date or, if
the Initial Public
Offering has
occurred, the
first day of any Quarter beginning after the fifth
anniversary of the closing of the Initial Public Offering, in either case
in
respect of which (i) (A) distributions of Available Cash
from Operating
Surplus on each of the
Outstanding Common
Units, Subordinated
Units and
General Partner Units
and any other
Outstanding Units that
are senior or
equal in right of
distribution to the
Subordinated Units
with respect to
each
of the three consecutive, non-overlapping four-Quarter periods
immediately preceding
such date equaled or exceeded the sum of the Minimum
Quarterly Distribution on all Outstanding Common Units,
Subordinated Units
and
General Partner Units and any other Outstanding Units that are senior
or
equal in right of
distribution to the
Subordinated
Units during such
periods and (B) the
Adjusted Operating Surplus for each of the three
consecutive,
non-overlapping
four-Quarter periods
immediately
preceding
such
date equaled or exceeded the sum of the Minimum Quarterly
Distribution
on
all of the Common Units, Subordinated Units and General Partner Units
and
any other Units that
are senior or equal in right of distribution to
the
Subordinated Units that were Outstanding during such periods on a
Fully
Diluted Basis and (ii) there are no Cumulative Common Unit
Arrearages; and
(g) the date on which
the General
Partner is removed as general
partner of
the Partnership upon the requisite vote by holders of
Outstanding Units under circumstances where Cause does not
exist and Units
held
by the General Partner
and its Affiliates
are not voted in favor
of
such
removal.
"Subsidiary" means, with respect to any Person, (a) a corporation
of which
more than 50% of the
voting power of shares
entitled (without regard to the
occurrence of any
contingency)
to vote in the
election of directors
or other
governing body of such corporation is owned, directly or
indirectly, at the date
of determination, by
such Person, by one or more Subsidiaries of such Person or
a combination thereof,
(b) a partnership
(whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of
determination,
a
general or limited partner of such partnership, but only if more
than 50% of the
partnership interests
of such partnership
(considering all of
the partnership
interests of
the partnership as a single class) is owned, directly or
indirectly, at the
date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority
ownership interest or
(ii) the power to elect or direct the election of a majority of the
directors or
other governing body of such Person.
"Surviving
Business Entity" has the meaning assigned to such term in
Section 14.2(b).
21
<PAGE>
"Target
Distribution" means, collectively, the First Target Distribution,
the Second Target Distribution and the Third Target
Distribution.
"Third
Liquidation
Target Amount" has the
meaning assigned to such terms
in Section 6.1(c)(1)(G).
"Third
Target Distribution"
means $0.6375 per Unit
per Quarter (or, with
respect to the period
commencing on December 1, 2006 and ending on December 31,
2006, it means the
product of $0.6375
multiplied
by a fraction
of which the
numerator is equal
to the number of days in such period and of which the
denominator is 92)
subject to adjustment
in accordance with Section 5.12,
Section 6.6 and Section 6.9.
"Trading
Day" has the meaning assigned to such term in Section 15.1(a).
"transfer"
has the meaning assigned to such term in Section 4.4(a).
"Transfer
Agent" means such bank, trust company or other Person
(including
the General Partner or one of its Affiliates) as shall be appointed
from time to
time by the General
Partner to act as
registrar and transfer agent for the
Common Units; provided, that if no Transfer Agent is specifically
designated for
any other Partnership Securities, the General Partner shall act in such
capacity.
"Underwriters" means the underwriters in the Initial Public
Offering.
"Unit"
means a Partnership
Security that is designated as a "Unit" and
shall include
Common Units, Class C Units and Subordinated Units, each a
separate class, but
shall not include (i) General Partner Units (or the General
Partner Interest represented thereby) or (ii) Incentive
Distribution Rights.
"Unit
Majority" means (i) during the Subordination Period, at least a
majority of the Outstanding Common Units (excluding Common Units owned by the
General Partner and its Affiliates), voting as a class, and at least a
majority
of the Outstanding Subordinated Units, voting as a class, and (ii)
after the end
of the Subordination Period, at least a majority of the Outstanding
Common Units
and Class C Units, if any, voting as a single class.
"Unitholders" means the holders of Units.
"Unpaid
MQD"
has the meaning assigned to such term in Section
6.4(c)(i)(2).
"Unrealized Gain" attributable to any item of Partnership
property means,
as of any date of
determination, the
excess, if any, of (a) the fair market
value of such property as of such date (as determined under Section
5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to
any adjustment
to be made pursuant to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership
property means,
as of any date of
determination, the
excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be
made pursuant to
Section 5.5(d) as of
such date) over (b) the fair market value of such property
as of such date (as determined under Section 5.5(d)).
22
<PAGE>
"Unrecovered Initial
Unit Price"
means at any time,
with respect to a
Unit, the Initial Unit Price less the sum of all
distributions
constituting
Capital Surplus
theretofore
made in respect of an
Initial Common Unit and any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the
dissolution and liquidation of the Partnership theretofore
made in respect of an Initial Common Unit, adjusted as the General Partner
determines to be appropriate to give effect to any distribution,
subdivision or
combination of such
Units. From and after
the closing of the
Initial Public
Offering, the Unrecovered Initial Unit Price shall be determined by
reference to
the Initial Unit Price per Common Unit in such Initial Public
Offering.
"U.S.
GAAP" means United States generally accepted accounting principles
consistently applied.
"Withdrawal Opinion of
Counsel" has the meaning assigned to such term in
Section 11.1(b).
"Working
Capital Borrowings" means borrowings used solely for working
capital purposes or to
pay distributions to
Partners made pursuant to a credit
facility or other
arrangement requiring
all such borrowings
thereunder to be
reduced to a relatively small amount each year for an
economically
meaningful
period of time.
Section 1.2 Construction. Unless the context requires
otherwise:
(a) any
pronoun used in this
Agreement shall include the corresponding masculine,
feminine or neuter
forms, and the
singular form of
nouns, pronouns and
verbs
shall include the plural and vice versa; (b) references to Articles
and Sections
refer to Articles and
Sections of this Agreement; (c) the terms "include",
"includes",
"including" or words
of like import shall be deemed to be followed
by the words "without
limitation";
and (d) the terms
"hereof", "herein" or
"hereunder" refer
to this Agreement as a whole and not to any particular
provision of this
Agreement. The table
of contents and
headings contained
in
this Agreement are for reference purposes only, and shall not
affect in any way
the meaning or interpretation of this Agreement.
ARTICLE II.
Organization
Section 2.1 Formation.
The General Partner and the Organizational Limited
Partner have previously formed the Partnership as a limited
partnership pursuant
to the provisions of
the Delaware Act and hereby amend and restate the original
Agreement of Limited
Partnership
of Quest Midstream Partners, L.P. in its
entirety. This
amendment and restatement shall become effective on the date
of
this Agreement. Except
as expressly provided to the contrary in this Agreement,
the rights, duties (including fiduciary duties), liabilities and obligations of
the Partners
and the administration, dissolution and termination of the
Partnership shall be
governed by the Delaware Act. All Partnership Interests
shall constitute personal property of the owner thereof for all
purposes.
Section 2.2 Name. The
name of the
Partnership shall be
"Quest Midstream
Partners, L.P." The Partnership's business may be conducted under
any other name
or names as
23
<PAGE>
determined by the General Partner, including the name of the General
Partner.
The words "Limited
Partnership,"
"L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the
purpose of
complying with the
laws of any
jurisdiction
that so requires. The General
Partner may change the name of the Partnership at any time and from
time to time
and shall notify
the Limited Partners of such change in the next regular
communication to the Limited Partners.
Section 2.3 Registered Office; Registered Agent; Principal Office; Other
Offices. Unless and
until changed by the General Partner, the registered office
of the Partnership
in the State of
Delaware shall be located at 1209
Orange
Street, Wilmington,
Delaware 19801, and the registered agent for service of
process on the
Partnership in the State of Delaware at such registered office
shall be The Corporation Trust Company. The principal office of the
Partnership
shall be located at
9520 N. May Avenue,
Suite 300,
Oklahoma City, Oklahoma
73120, or such
other place as the General Partner may from time to time
designate by notice to
the Limited
Partners. The Partnership may maintain
offices at such other place or places within or outside the State
of Delaware as
the General Partner shall determine necessary or appropriate. The
address of the
General Partner shall be 9520 N. May Avenue, Suite 300, Oklahoma City,
Oklahoma
73120, or such
other place as the General Partner may from time to time
designate by notice to the Limited Partners.
Section 2.4 Purpose and Business. The purpose and nature of the
business to
be conducted by the
Partnership
shall be to (a) engage
directly in, or
enter
into or form, hold and dispose of any corporation, partnership, joint venture,
limited liability
company or other
arrangement
to engage indirectly in, any
business activity that
is approved by the General Partner and that lawfully may
be conducted by a
limited partnership
organized pursuant to the Delaware Act
and, in connection therewith, to exercise all of the rights and
powers conferred
upon the Partnership
pursuant to the agreements relating to such business
activity, and
(b) do anything necessary or appropriate to the foregoing,
including the
making of capital contributions or loans to a Group Member;
provided, however,
that the General
Partner shall not cause the Partnership to
engage, directly
or indirectly, in any business activity that the General
Partner determines
would cause the
Partnership to be treated as an association
taxable as a corporation or otherwise taxable as an entity for federal
income
tax purposes. To the
fullest extent permitted by law, the General Partner, and,
to the extent the
approval of the Investor Representatives is required by any
provision of this Agreement, the Investor Representatives shall
have no duty or
obligation to propose
or approve, and may
decline to propose or
approve, the
conduct by the
Partnership of any
business free of any fiduciary or other duty
or obligation
whatsoever
to the Partnership or any Limited Partner and, in
declining to so
propose or approve,
shall not be required to act in good faith
or pursuant to any other standard imposed by this Agreement, any Group Member
Agreement, any other
agreement contemplated hereby or under the Delaware Act or
any other law, rule or regulation or at equity.
Section 2.5 Powers.
The Partnership
shall be empowered to
do any and all
acts and things necessary or appropriate for the furtherance and
accomplishment
of the purposes and business described in Section 2.4 and for the
protection and
benefit of the Partnership.
Section 2.6 Power of Attorney.
24
<PAGE>
(a) Each Limited
Partner hereby
constitutes and appoints the General
Partner and, if a Liquidator shall have been selected
pursuant to
Section
12.3, the Liquidator (and any successor to the Liquidator by merger,
transfer, assignment,
election or otherwise)
and each of their authorized
officers and
attorneys-in-fact,
as the case may be,
with full power of
substitution, as his true and lawful agent and attorney-in-fact,
with full
power and authority in his name, place and stead, to:
(i) execute, swear to,
acknowledge, deliver,
file and record in
the appropriate
public offices (A) all
certificates,
documents and
other instruments
(including
this Agreement and the
Certificate of
Limited Partnership
and all amendments or restatements hereof or
thereof) that the General Partner or the Liquidator
determines to be
necessary or appropriate to form, qualify or continue the existence
or
qualification of
the Partnership as a limited partnership (or a
partnership in which
the limited partners
have limited
liability) in
the State of
Delaware and in all other jurisdictions in which the
Partnership may
conduct
business
or own property; (B) all
certificates, documents and other instruments that the General
Partner
or the Liquidator determines to be necessary or appropriate to
reflect, in
accordance
with its terms, any amendment, change,
modification or restatement of this Agreement; (C) all certificates,
documents and
other instruments (including conveyances and a
certificate of
cancellation)
that
the General Partner or the
Liquidator determines
to be necessary or
appropriate to reflect
the
dissolution and
liquidation of the Partnership pursuant to the terms
of this Agreement; (D) all certificates, documents and other
instruments relating
to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described
in,
Article IV,
Article
X, Article XI or Article XII; (E) all
certificates,
documents and
other instruments relating to the
determination of the
rights, preferences
and privileges of any class
or series of Partnership Securities issued pursuant to Section 5.6;
and (F) all certificates, documents and other instruments
(including
agreements and
a certificate of merger) relating to a merger,
consolidation or
conversion of the
Partnership
pursuant to
Article
XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all
ballots, consents,
approvals, waivers,
certificates,
documents and
other
instruments that
the General Partner or the Liquidator
determines to be necessary or appropriate to make, evidence, give,
confirm or ratify any
vote, consent,
approval, agreement or other
action that
is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or effectuate the terms
or
intent of this Agreement; provided, that when required by Section
13.3
or any other provision of this Agreement that establishes a
percentage
of the Limited
Partners or of the
Limited Partners of any class or
series required
to take any
action, the General Partner and the
Liquidator may
exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the
Limited Partners or of
the Limited Partners
of such class or series,
as applicable.
Nothing contained in
this Section 2.6(a) shall be construed as authorizing the
General Partner to
amend this Agreement
except in accordance with Article XIII
or as may be otherwise expressly provided for in this
Agreement.
25
<PAGE>
(b)
The foregoing power of
attorney is hereby
declared to be
irrevocable
and a power coupled
with an interest, and
it shall survive and, to the maximum
extent permitted by law, not be affected by the subsequent death,
incompetency,
disability,
incapacity,
dissolution,
bankruptcy or termination of any Limited
Partner and
the transfer of all or any portion of such Limited Partner's
Partnership
Interest and
shall extend to such Limited Partner's heirs,
successors, assigns
and personal
representatives. Each
such Limited
Partner
hereby agrees to be bound by any representation made by the General Partner or
the Liquidator acting in good faith pursuant to such power of
attorney; and each
such Limited Partner,
to the maximum extent permitted by law, hereby waives any
and all defenses
that may be available
to contest,
negate or disaffirm the
action of the General
Partner or the Liquidator taken in good faith under such
power of attorney. Each Limited Partner shall execute and deliver
to the General
Partner or the Liquidator, within 15 days after receipt of the
request therefor,
such further
designation,
powers of attorney and other instruments as the
General Partner
or the Liquidator may request in order to effectuate this
Agreement and the purposes of the Partnership.
Section 2.7 Term. The term of the Partnership commenced upon the filing of
the Certificate of
Limited Partnership in
accordance with the Delaware Act and
shall continue
in existence until the dissolution of the Partnership in
accordance with the
provisions of Article XII. The existence of the Partnership
as a separate
legal entity shall continue until the cancellation of the
Certificate of Limited Partnership as provided in the Delaware
Act.
Section 2.8 Title to
Partnership
Assets. Title to Partnership assets,
whether real, personal
or mixed and whether
tangible or
intangible, shall
be
deemed to be owned by the Partnership as an entity, and no Partner,
individually
or collectively, shall have any ownership interest in such
Partnership assets or
any portion thereof.
Title to any or all of the Partnership assets may be held
in the name
of the Partnership, the General Partner, one or more of its
Affiliates or one or more nominees, as the General Partner may determine.
The
General Partner hereby
declares and warrants
that any Partnership
assets for
which record title is held in the name of the General Partner or one or more of
its Affiliates or one or more nominees shall be held by the General
Partner or
such Affiliate
or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner
shall use reasonable efforts to cause record title to such
assets (other
than those assets in respect of which the General Partner
determines that the
expense and difficulty
of conveyancing
makes transfer of
record title to the Partnership impracticable) to be vested in the
Partnership
as soon as
reasonably
practicable;
provided, further, that, prior to the
withdrawal or
removal of the General Partner or as soon thereafter as
practicable, the
General Partner
shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such transfer,
will provide for the use of such assets in a manner satisfactory to the General
Partner. All
Partnership
assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which record
title to such Partnership assets is held.
ARTICLE III.
Rights of Limited Partners
Section 3.1 Limitation
of Liability. The
Limited Partners
shall have no
liability under this Agreement except as expressly provided in this
Agreement or
the Delaware Act.
26
<PAGE>
Section 3.2 Management of Business. No Limited Partner, in its
capacity as
such, shall
participate
in the operation,
management or control
(within the
meaning of the
Delaware Act) of the Partnership's business, transact any
business in the
Partnership's name or
have the power to sign
documents for or
otherwise bind the Partnership. Any action taken by any Affiliate
of the General
Partner or any officer, director, employee, manager, member, general
partner,
agent or trustee of the General Partner or any of its Affiliates, or any
officer, director,
employee, manager, member, general partner, agent or trustee
of a Group
Member, in its capacity as such, shall not be deemed to be
participation in the
control of the
business of the
Partnership by a
limited
partner of the
Partnership (within
the meaning of Section 17-303(a) of the
Delaware Act) and shall not affect, impair or eliminate the
limitations on the
liability of the Limited Partners under this Agreement.
Section 3.3 Outside
Activities of the
Limited Partners. Subject to the
provisions of Section 7.5, which shall continue to be
applicable to the Persons
referred to
therein, any Limited Partner shall be entitled to and may
have
business interests
and engage in
business activities in addition to those
relating to the
Partnership, including
business interests and activities in
direct competition with the Partnership Group. Neither the Partnership nor
any
of the other Partners
shall have any rights
by virtue of this Agreement in any
business ventures of any Limited Partner.
Section 3.4 Rights of Limited Partners.
(a) In addition to
other rights
provided by this Agreement or by
applicable law,
and except as limited
by Section
3.4(b), each Limited
Partner shall have the
right, for a purpose reasonably related to such
Limited Partner's
interest as a Limited
Partner in the Partnership, upon
reasonable written
demand stating the purpose of such demand, and at such
Limited Partner's own expense:
(i) to obtain true and full information regarding the status of
the business and financial condition of the Partnership;
(ii) promptly after its becoming available, to obtain a copy of
the Partnership's federal, state and local income tax returns for
each
year;
(iii) to obtain
a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with copies
of
the executed
copies of all powers
of attorney
pursuant to which
this Agreement,
the Certificate of Limited Partnership and all
amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of
cash and a description
and statement of the Net Agreed Value
of any
other Capital
Contribution by each
Partner and that each Partner has
agreed to contribute in the future, and the date on which each
became
a Partner; and
27
<PAGE>
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) The General
Partner may keep confidential from the Limited
Partners, for such
period of time as the General Partner deems reasonable,
(i)
any information that the General Partner reasonably believes to be in
the
nature of trade
secrets or (ii) other
information the
disclosure of
which the General
Partner in good faith
believes (A) is not in the best
interests of the Partnership Group, (B) could damage the
Partnership Group
or
its business
or (C) that any
Group Member is required by law or by
agreement with any third party to keep confidential (other than agreements
with
Affiliates
of the Partnership the primary purpose of which is to
circumvent the obligations set forth in this Section 3.4).
ARTICLE IV.
Certificates; Record Holders;
Transfer of Partnership Interests;
Redemption of Partnership Interests
Section 4.1 Certificates. Upon the Partnership's issuance of Common
Units, Subordinated
Units or Class C Units
to any Person, the Partnership
shall issue, upon the
request of such Person, one or more Certificates in
the
name of such Person
evidencing
the number of such Units being so
issued. In
addition, (a) upon the General Partner's request, the
Partnership shall
issue to it one or more Certificates in the name of
the
General Partner
evidencing
its General Partner Units and (b) upon the
request of any Person
owning Incentive
Distribution
Rights or any
other
Partnership Securities other than Common Units, Subordinated Units
or Class
C
Units, the Partnership shall issue to such Person one or more
certificates
evidencing such
Incentive Distribution Rights or other
Partnership Securities other than Common Units, Subordinated Units
or Class
C
Units. Certificates shall be executed on behalf of the Partnership
by the
Chairman of the Board,
President or any Executive Vice President, Senior
Vice
President or Vice President and the Secretary or any Assistant
Secretary of the General Partner. No Common Unit Certificate shall
be valid
for
any purpose until it
has been countersigned
by the Transfer Agent;
provided, however, that if the General Partner elects to issue
Common Units
in
global form, the Common Unit Certificates shall be valid upon
receipt of
a
certificate from the Transfer Agent certifying that the Common
Units have
been
duly registered in accordance with the directions of the
Partnership.
Subject to the
requirements of
Section 6.7(c) and
Section 6.7(e), the
Partners holding
Certificates
evidencing
Subordinated Units may exchange
such
Certificates for Certificates evidencing Common Units on or
after the
date
on which such
Subordinated Units are
converted into Common Units
pursuant to the terms
of Section
5.8. Subject to the requirements of
Section 6.7(e), the Partners holding Certificates evidencing Class C Units
may
exchange such Certificates for Certificates evidencing Common Units on
or
after the period set forth in Section 5.12(f) pursuant to the terms of
Section 5.12.
Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated
Certificate is surrendered to the Transfer Agent
(for
Common Units) or the General Partner (for Partnership Securities
other
than
Common Units),
the appropriate officers of the General
Partner on
behalf of the Partnership shall execute, and the
28
<PAGE>
Transfer Agent (for
Common Units) or the General Partner (for Partnership
Securities other than
Common Units) shall
countersign and
deliver in exchange
therefor, a new
Certificate evidencing
the same number and type of Partnership
Securities as the Certificate so surrendered.
(b) The appropriate
officers of the
General Partner on behalf of the
Partnership shall
execute and deliver,
and the Transfer Agent (for Common
Units) shall
countersign, a new
Certificate in place
of any Certificate
previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory
to the General Partner, that a previously issued
Certificate has been
lost, destroyed or stolen;
(ii) requests
the issuance of a new Certificate before the
General Partner has notice that the Certificate has been acquired
by a
purchaser for value in
good faith and
without notice of an adverse
claim;
(iii) if requested by the General Partner, delivers to the
General Partner a
bond, in form and
substance satisfactory to the
General Partner,
with surety or sureties and with fixed or open
penalty as
the General Partner may direct to indemnify the
Partnership, the
Partners, the General Partner and the Transfer Agent
against any claim that
may be made on account
of the alleged
loss,
destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the
General Partner.
If a
Limited Partner fails to notify the General Partner within a
reasonable period of time after he has notice of the loss,
destruction or
theft
of a Certificate, and a transfer of the Limited Partner Interests
represented by
the Certificate is registered before the Partnership, the General
Partner or the
Transfer Agent
receives such notification, the Limited Partner shall be
precluded from making any claim against the Partnership,
the General Partner
or
the Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this
Section 4.2,
the General Partner may require the payment of a sum
sufficient to
cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Transfer Agent) reasonably connected therewith.
Section 4.3 Record Holders. The Partnership shall be entitled
to recognize
the Record Holder as the Partner with respect to any Partnership Interest and,
accordingly, shall not be bound to recognize any equitable or other
claim to, or
interest in,
such Partnership Interest on the part of any other Person,
regardless of whether the Partnership shall have actual or other
notice thereof,
except as otherwise provided by law or any applicable rule, regulation,
guideline or
requirement
of any National Securities Exchange on which such
Partnership Interests
are listed or admitted to trading. Without limiting the
foregoing, when a
Person (such as a
broker, dealer,
bank, trust company or
clearing corporation
or an agent of any of the foregoing) is acting as nominee,
agent or in some other
representative
capacity for another Person in acquiring
and/or holding
Partnership
Interests,
as between the
Partnership on the
one
hand, and such other Persons on the other, such representative Person shall be
the Record Holder of such Partnership Interest.
29
<PAGE>
Section 4.4 Transfer Generally.
(a)
The term "transfer,"
when used in this
Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction (i)
by which the
General Partner
assigns its General Partner Units to another Person or by which
a holder of Incentive
Distribution Rights
assigns its Incentive
Distribution
Rights to another
Person, and includes a sale, assignment, gift, pledge,
encumbrance,
hypothecation,
mortgage, exchange or any other disposition by law
or otherwise or (ii) by which the holder of a Limited Partner Interest (other
than an Incentive
Distribution Right)
assigns such Limited Partner Interest to
another Person
who is or becomes a Limited Partner, and includes a sale,
assignment, gift,
exchange or any other disposition by law or otherwise,
including any
transfer upon foreclosure of any pledge, encumbrance,
hypothecation or mortgage.
(b)
No Partnership
Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in
this Article IV.
Any transfer
or purported transfer of a Partnership Interest not made in
accordance with this Article IV shall be null and void.
(c)
Nothing contained
in this Agreement shall be construed to prevent
a
disposition by any
stockholder, member,
partner or other owner
of the General
Partner of any or all of the shares of stock, membership interests,
partnership
interests or other ownership interests in the General Partner.
Section 4.5 Registration and Transfer of Limited Partner
Interests.
(a)
The General
Partner shall keep or cause to be kept on behalf
of the
Partnership a register in which, subject to such reasonable regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the Partnership
will provide for the registration and transfer of Limited Partner
Interests. The
Transfer Agent is hereby appointed registrar and transfer agent for
the purpose
of registering
Common Units and transfers of such Common Units as herein
provided. The
Partnership
shall not recognize transfers of Certificates
evidencing Limited
Partner Interests
unless such transfers are effected in the
manner described in
this Section 4.5.
Upon surrender of a Certificate for
registration of
transfer of any Limited Partner Interests evidenced by a
Certificate, and
subject to the provisions of Section 4.5(b), the appropriate
officers of the General Partner on behalf of the Partnership shall execute and
deliver, and in the
case of Common Units, the Transfer Agent shall countersign
and deliver,
in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions,
one or more new
Certificates
evidencing the same aggregate number and type of Limited
Partner
Interests as was evidenced by the Certificate so surrendered.
(b)
Except as otherwise
provided in Section 4.9, the General Partner shall
not recognize any transfer of Limited Partner Interests until the Certificates
evidencing such
Limited Partner
Interests are surrendered for registration of
transfer. No charge
shall be imposed by the General Partner for such transfer;
provided, that as a
condition to the issuance of any new Certificate under this
Section 4.5, the General Partner may require the payment of
a sum sufficient to
cover any tax or other
governmental charge
that may be imposed
with respect
thereto.
30
<PAGE>
(c)
Subject to (i) the
foregoing provisions
of this Section 4.5, (ii)
Section 4.3,
(iii) Section 4.8, (iv) with respect to any class or
series of
Limited Partner Interests, the provisions of any statement of
designations or an
amendment to
this Agreement establishing such class or series, (v) any
contractual provisions
binding on any Limited
Partner and (vi)
provisions of
applicable law including the Securities Act, Limited Partner Interests (other
than the Incentive Distribution Rights) shall be freely
transferable.
(d) The General
Partner and its Affiliates and QRC and its Affiliates shall
have the right at any time to transfer their Subordinated Units, Class C Units
and Common Units (whether issued upon conversion of the
Subordinated
Units or
otherwise) to one or more Persons.
Section 4.6 Transfer of the General Partner's General Partner
Interest.
(a)
Subject to Section 4.6(c), prior to the first day of the
first Quarter
beginning after the
tenth anniversary of
the Closing Date, the General Partner
shall not transfer all or any part of its General Partner Interest
(represented
by General Partner Units) to a Person unless such transfer (i) has
been approved
by the prior written
consent or vote of the
holders of at least a
majority of
the Outstanding Common Units (excluding Common Units held by the
General Partner
and its Affiliates)
or (ii) is of all,
but not less than all,
of its General
Partner Interest
to (A) an Affiliate of the General Partner (other than an
individual) or (B) another Person (other than an individual) in
connection with
the merger or
consolidation
of the General Partner with or into such other
Person or the transfer by the General Partner of all or
substantially all of its
assets to such other Person.
(b) Subject to Section 4.6(c), on or after the first day of the first
Quarter beginning
after the tenth
anniversary of the Closing Date, the General
Partner may
transfer all or any of its General Partner Interest without
Unitholder approval.
(c)
Notwithstanding
anything herein to the contrary,
no transfer by the
General Partner of all
or any part of its General Partner Interest to another
Person shall be permitted unless (i) the transferee agrees to assume the rights
and duties of the General Partner under this Agreement and to be bound by
the
provisions of this
Agreement,
(ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited
liability of
any Limited
Partner under the Delaware Act or cause the Partnership to be
treated as an
association taxable as
a corporation or otherwise to be taxed as
an entity for federal
income tax purposes (to the extent not already so treated
or taxed) and (iii) such transferee also agrees to purchase all (or the
appropriate portion
thereof, if applicable) of the partnership or membership
interest of the General Partner as the general partner or
managing member,
if
any, of each other Group Member. In the case of a transfer
pursuant to and in
compliance with this
Section 4.6, the
transferee or successor (as the case may
be) shall, subject to
compliance with the terms of Section 10.3, be admitted to
the Partnership as the General Partner immediately prior to the transfer
of the
General Partner
Interest, and the
business of the
Partnership shall
continue
without dissolution.
Section 4.7 Transfer of Incentive Distribution Rights. Prior to the first
day of the first Quarter beginning after the tenth anniversary of the Closing
Date, a holder of Incentive Distribution Rights may transfer any or all of
the
Incentive Distribution Rights held by such
31
<PAGE>
holder without any consent of the Unitholders to (a) an Affiliate
of such holder
(other than an
individual) or (b)
another Person (other than an individual) in
connection with (i)
the merger or
consolidation of such
holder of Incentive
Distribution Rights
with or into such other Person or (ii) the transfer by such
holder of all or substantially all of its assets to such other
Person. Any other
transfer of the
Incentive Distribution Rights prior to the first day of the
first Quarter
beginning after the
tenth anniversary of
the Closing Date shall
require the prior approval of holders of at least a majority of the
Outstanding
Common Units
(excluding
Common Units held by the General Partner and its
Affiliates). On or
after the first day of the first Quarter beginning after the
tenth anniversary
of the Closing Date,
or if the Initial
Public Offering
has
occurred, on or after
the first day of the first Quarter beginning after the
tenth anniversary of
the Initial Public
Offering, the General
Partner or any
other holder of
Incentive Distribution Rights may transfer any or all of
its
Incentive Distribution
Rights without Unitholder approval. Notwithstanding
anything herein
to the contrary, (i) the transfer of Class C Units issued
pursuant to Section 5.12, or the transfer of Common Units issued
upon conversion
of the Class C Units,
shall not be treated as a transfer of all or any part of
the Incentive Distribution Rights and (ii) no transfer of Incentive
Distribution
Rights to another Person shall be permitted unless the transferee agrees to be
bound by the provisions of this Agreement.
Section 4.8 Restrictions on Transfers.
(a)
Except as provided in Section 4.8(d), but notwithstanding the other
provisions of this Article IV, no transfer of any Partnership
Interests shall be
made if such transfer
would (i) violate the
then applicable
federal or state
securities laws or rules and regulations of the Commission, any
state securities
commission or any
other governmental
authority with jurisdiction over such
transfer, (ii) terminate the existence or qualification of the
Partnership under
the laws of the jurisdiction of its formation, or (iii) cause the
Partnership to
be treated as an
association taxable as
a corporation or otherwise to be taxed
as an entity for
federal income
tax purposes (to the extent not already so
treated or taxed).
(b)
The General Partner may impose restrictions on the transfer of
Partnership
Interests if
it receives an Opinion of Counsel that such
restrictions are
necessary to avoid a significant risk of the Partnership
becoming taxable as a corporation or otherwise becoming taxable as
an entity for
federal income tax purposes. The General Partner may impose such
restrictions by
amending this Agreement; provided, however, that any amendment that
would result
in the delisting
or suspension of trading of any class of Limited Partner
Interests on the principal National Securities Exchange on which such class
of
Limited Partner
Interests is then listed or admitted to trading must be
approved, prior to
such amendment being effected, by the holders of at least a
majority of the Outstanding Limited Partner Interests of such
class.
(c)
The transfer of a
Subordinated Unit that
has converted into a
Common
Unit shall be subject to the restrictions imposed by Section
6.7(c).
(d)
The transfer of a
Class C Unit that has
converted into a
Common Unit
shall be subject to the restrictions imposed by Section 6.7(e).
(e)
Nothing contained in
this Article IV, or elsewhere in this Agreement,
shall preclude
the settlement of any transactions involving Partnership
Interests entered into through
32
<PAGE>
the facilities of any
National Securities
Exchange on which such
Partnership
Interests are listed or admitted to trading.
(f)
Each certificate evidencing Partnership Interests shall bear a
conspicuous legend in substantially the following form:
THE
HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF QUEST
MIDSTREAM
PARTNERS, L.P. THAT THIS SECURITY MAY NOT BE SOLD,
OFFERED,
RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD (A)
VIOLATE
THE THEN APPLICABLE
FEDERAL OR STATE SECURITIES LAWS OR RULES AND
REGULATIONS OF
THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES
COMMISSION
OR ANY OTHER GOVERNMENTAL AUTHORITY WITH
JURISDICTION
OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR
QUALIFICATION OF QUEST
MIDSTREAM PARTNERS, L.P. UNDER THE LAWS OF THE
STATE OF
DELAWARE, (C) CAUSE QUEST MIDSTREAM PARTNERS, L.P. TO BE TREATED
AS AN
ASSOCIATION TAXABLE AS
A CORPORATION OR OTHERWISE TO BE TAXED AS AN
ENTITY FOR
FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO
TREATED OR
TAXED), (D) VIOLATE THE TERMS AND CONDITIONS OF THE FIRST
AMENDED
AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF QUEST MIDSTREAM
PARTNERS,
L.P., DATED DECEMBER
___, 2006, AS THE SAME MAY BE AMENDED FROM
TIME TO
TIME, OR (E) VIOLATE THE TERMS AND CONDITIONS OF THE INVESTORS'
RIGHTS
AGREEMENT,
DATED DECEMBER ___, 2006, AS THE SAME MAY BE
AMENDED
FROM TIME
TO TIME, BY AND AMONG
QUEST MIDSTREAM
PARTNERS, L.P. AND ITS
GENERAL
AND LIMITED PARTNERS. QUEST MIDSTREAM GP, LLC, THE GENERAL
PARTNER
OF QUEST
MIDSTREAM PARTNERS,
L.P., MAY IMPOSE ADDITIONAL RESTRICTIONS ON
THE
TRANSFER OF THIS
SECURITY IF IT
RECEIVES AN OPINION OF COUNSEL THAT
SUCH
RESTRICTIONS
ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF QUEST
MIDSTREAM
PARTNERS, L.P. BECOMING TAXABLE AS A CORPORATION
OR OTHERWISE
BECOMING
TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE
RESTRICTIONS SET FORTH
ABOVE SHALL NOT
PRECLUDE THE
SETTLEMENT
OF ANY
TRANSACTIONS INVOLVING
THIS SECURITY ENTERED
INTO THROUGH THE FACILITIES
OF ANY
NATIONAL SECURITIES
EXCHANGE ON WHICH THIS
SECURITY IS LISTED
OR
ADMITTED
TO TRADING.
Section 4.9 Citizenship Certificates; Non-citizen Assignees.
(a)
If any Group Member is
or becomes
subject to any
federal, state or
local law or
regulation that the
General Partner
determines
would create a
substantial risk of
cancellation
or forfeiture of any property in which the
Group Member has an
interest based on the
nationality,
citizenship
or other
related status of a Limited Partner, the General Partner may
request any
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Limited Partner to furnish to the General Partner, within 30 days after receipt
of such request, an executed Citizenship Certification or such
other information
concerning his
nationality,
citizenship
or other related
status (or, if the
Limited Partner is a
nominee holding
for the account of
another Person,
the
nationality,
citizenship or other related status of such Person) as the
General
Partner may
request. If a Limited Partner fails to furnish to the General
Partner within the aforementioned 30-day period such Citizenship
Certification
or other requested information or if upon receipt of such Citizenship
Certification or other requested information the General Partner
determines that
a Limited Partner is
not an Eligible
Citizen, the Limited
Partner Interests
owned by such Limited
Partner shall be subject to redemption in accordance with
the provisions of
Section 4.10. In
addition, the General
Partner may
require
that the status of any such Limited Partner be changed to that of a
Non-citizen
Assignee and,
thereupon,
the General
Partner shall be
substituted
for such
Non-citizen Assignee
as the Limited Partner in respect of the Non-citizen
Assignee's Limited Partner Interests.
(b)
The General Partner
shall, in exercising
voting rights in
respect of
Limited Partner
Interests held by it on behalf of Non-citizen Assignees,
distribute the votes in the same ratios as the votes of Partners
(including the
General Partner) in
respect of Limited
Partner Interests
other than those
of
Non-citizen Assignees
are cast, either for, against or abstaining as to the
matter.
(c)
Upon dissolution of the Partnership, a Non-citizen Assignee shall
have
no right to receive a distribution in kind pursuant to Section 12.4
but shall be
entitled to the cash equivalent thereof, and the Partnership shall provide
cash
in exchange
for an assignment of the Non-citizen Assignee's share of any
distribution in
kind. Such payment and assignment shall be treated for
Partnership purposes
as a purchase
by the Partnership from the Non-citizen
Assignee of his Limited Partner Interest (representing his right to receive
his
share of such distribution in kind).
(d)
At any time
after he can and does certify that he has become an
Eligible Citizen,
a Non-citizen
Assignee may, upon
application to the General
Partner, request
that with respect to any Limited
Partner Interests of such
Non-citizen Assignee
not redeemed pursuant
to Section 4.10, such
Non-citizen
Assignee be
admitted as a Limited
Partner, and upon approval of the General
Partner, such
Non-citizen
Assignee shall be
admitted as a Limited Partner and
shall no longer constitute a Non-citizen Assignee and the General Partner
shall
cease to be deemed to be the Limited Partner in respect of the Non-citizen
Assignee's Limited Partner Interests.
Section 4.10 Redemption of Partnership Interests of Non-citizen
Assignees.
(a)
If at any time a
Limited Partner fails to furnish a Citizenship
Certification or other information requested within the 30-day period
specified
in Section 4.9(a), or if upon receipt of such Citizenship
Certification or other
information the General Partner determines, with the advice of counsel,
that a
Limited Partner is not
an Eligible Citizen,
the Partnership may, unless the
Limited Partner establishes to the satisfaction of the General
Partner that such
Limited Partner is an
Eligible Citizen or has transferred his Partnership
Interests to a Person who is an Eligible Citizen and who furnishes
a Citizenship
Certification to the
General Partner prior
to the date fixed for redemption as
provided below, redeem
the Limited Partner
Interest of such Limited Partner as
follows:
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<PAGE>
(i) The General Partner shall, not later than the 30th day before
the
date
fixed for redemption, give notice of redemption to the Limited
Partner, at his last
address designated on
the records of the Partnership
or
the Transfer Agent, by registered or certified mail, postage prepaid.
The
notice shall be deemed
to have been given
when so mailed. The
notice
shall specify the Redeemable Interests, the date fixed for
redemption, the
place of payment, that
payment of the
redemption price will
be made upon
surrender of the Certificate evidencing the Redeemable
Interests and that
on
and after the date
fixed for redemption no further allocations or
distributions to which
the Limited Partner
would otherwise be entitled in
respect of the Redeemable Interests will accrue or be made.
(ii) The aggregate
redemption price for Redeemable Interests shall be
an
amount equal to the Current Market Price (the date of determination of
which shall be the date fixed for redemption) of Limited Partner
Interests
of
the class to be so redeemed multiplied by the number of
Limited Partner
Interests of each such class included among the Redeemable
Interests.
The
redemption price shall
be paid, as determined by the General Partner, in
cash
or by delivery of a promissory note of the Partnership in the
principal amount of the redemption price, bearing interest at the rate
of
5%
annually and payable
in three equal annual
installments
of principal
together with accrued
interest, commencing
one year after the
redemption
date.
(iii) Upon surrender
by or on behalf of the Limited Partner, at the
place specified in the notice of redemption, of the Certificate evidencing
the
Redeemable
Interests,
duly endorsed in blank or accompanied by an
assignment duly
executed in blank, the Limited Partner or his duly
authorized
representative shall
be entitled to receive the payment
therefor.
(iv) After the redemption date, Redeemable Interests shall no longer
constitute issued and Outstanding Limited Partner Interests.
(b)
The provisions of this Section 4.10 shall also be applicable to
Limited
Partner Interests held by a Limited Partner as nominee of a Person
determined to
be other than an Eligible Citizen.
(c)
Nothing in this Section 4.10 shall prevent the recipient of a
notice of
redemption from
transferring his Limited Partner Interest before the redemption
date if such transfer is otherwise permitted under this Agreement.
Upon receipt
of notice of such a transfer, the General Partner shall withdraw the notice
of
redemption, provided
the transferee of such Limited Partner Interest certifies
to the satisfaction of
the General Partner that he is an Eligible Citizen. If
the transferee
fails to make
such certification, such redemption shall be
effected from the transferee on the original redemption date.
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<PAGE>
ARTICLE V.
Capital Contributions and
Issuance of Partnership Interests
Section 5.1 Organizational Contributions. In connection with the
formation
of the Partnership
under the Delaware
Act, the General Partner made an initial
Capital Contribution
to the Partnership in the amount of $20.00, for a 2%
General Partner Interest in the Partnership and has been admitted
as the General
Partner of the
Partnership, and the
Organizational
Limited Partner made an
initial Capital
Contribution to the
Partnership in the amount of $980.00 for a
98% Limited Partner
Interest in the Partnership and has been admitted as a
Limited Partner of the Partnership. As of the Closing Date, the
interest of the
Organizational Limited Partner shall be redeemed as provided in the
Contribution
Agreement; and the
initial Capital
Contribution of the Organizational Limited
Partner shall
thereupon be refunded.
Ninety-eight
percent of any
interest or
other profit that may have resulted from the investment or other use of such
initial Capital
Contributions
shall be allocated and distributed to the
Organizational Limited
Partner, and the
balance thereof shall be allocated and
distributed to the General Partner.
Section 5.2 Contributions by QRC and the General Partner.
(a)
On the Closing Date and pursuant to the Contribution Agreement: (i)
the
General Partner shall contribute to the Partnership, as a Capital Contribution,
2.64% of the limited
liability company
membership
interests in the
Operating
Company, in exchange
for (A) 200,000
General Partner Units representing a
continuation of its 2% General Partner Interest, subject to all of the rights,
privileges and duties
of the General Partner
under this Agreement
and (B) the
Incentive Distribution
Rights, and (ii) QRC shall contribute to the Partnership
as a Capital
Contribution, 97.36%
of the limited liability company membership
interests in the Operating Company, in exchange for an aggregate of
35,134 Class
A Subordinated Units,
4,900,000 Class B Subordinated Units and the right to
receive a cash payment of $38,807,877 million (which shall reimburse QRC for
certain capital
expenditures
made by QRC);
provided that $15
million of such
cash payment to which QRC shall be entitled shall be retained by
the Partnership
until such time as one or more Group Members enter into an Approved Working
Capital Facility. Upon
entering into an Approved Working Capital Facility, such
$15 million shall be distributed to QRC.
(b)
Upon the issuance of any additional Limited Partner Interests by the
Partnership (other
than the Common Units issued pursuant to the Purchase
Agreement, the Common
Units and Subordinated
Units issued pursuant
to Section
5.2(a), any Class C
Units issued pursuant
to Section 5.12 and any Common Units
issued upon conversion
of Subordinated Units or Class C Units),
the General
Partner may, in exchange for a proportionate number of General Partner Units,
make additional Capital Contributions in an amount equal to the
product obtained
by multiplying (i) the quotient determined by dividing (A) the
General Partner's
Percentage Interest immediately prior to the issuance of such
additional Limited
Partner Interests
by (B) 100 less the
General Partner's
Percentage
Interest
immediately prior to
the issuance of such additional Limited Partner Interests
times (ii) the amount
contributed to the Partnership by the Limited Partners in
exchange for such additional Limited Partner Interests. Except as set forth in
Article
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<PAGE>
XII, the General
Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.
Section 5.3 Contributions by Initial Limited Partners.
(a)
On the Closing
Date and pursuant to the Purchase Agreement, each
Initial Private
Purchaser shall contribute to the Partnership cash in an amount
equal to the Issue Price per Initial Common Unit, multiplied by the number of
Common Units specified in the Purchase Agreement to be purchased by
such Initial
Private
Purchaser at
the Closing Date. In exchange for such Capital
Contributions by the Initial Private Purchasers, the Partnership
shall issue the
number of Common Units
specified in the
Purchase Agreement to
be purchased by
such Initial Private Purchaser.
(b)
No Limited Partner Interests will be issued or issuable as of or at
the
Closing Date other than (i) the Common Units issuable pursuant to subparagraph
(a) hereof in
aggregate number
equal to 4,864,866, (ii) the 35,134 Class A
Subordinated Units
issuable pursuant to Section 5.2(a), (iii) the 4,900,000
Class B Subordinated
Units issuable
pursuant to Section
5.2(a), and (iv)
the
Incentive Distribution Rights.
Section 5.4 Interest
and Withdrawal. No interest shall be paid by the
Partnership on Capital
Contributions.
No Partner shall be entitled to the
withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions
made pursuant to this
Agreement or upon
termination of the
Partnership may be
considered
as such by law and then only to the extent
provided for in this Agreement. Except to the extent expressly
provided in this
Agreement, no Partner
shall have priority
over any other Partner
either as to
the return of Capital
Contributions or as to profits, losses or distributions.
Any such return shall
be a compromise to
which all Partners
agree within the
meaning of Section 17-502(b) of the Delaware Act.
Section 5.5 Capital Accounts.
(a)
The Partnership shall
maintain for each Partner (or a beneficial owner
of Partnership
Interests held by a nominee in any case in which the nominee
has
furnished the
identity of such owner
to the Partnership
in accordance with
Section 6031(c)
of the Code or any
other method acceptable to the General
Partner) owning a Partnership Interest a separate Capital Account with respect
to such Partnership Interest in accordance with the rules of
Treasury Regulation
Section
1.704-1(b)(2)(iv).
Such Capital Account
shall be increased by (i) the
amount of all Capital Contributions made to the Partnership with
respect to such
Partnership Interest
and (ii) all items of Partnership income and gain
(including income and
gain exempt from tax) computed in accordance with Section
5.5(b) and allocated
with respect to such Partnership Interest pursuant to
Section 6.1, and
decreased by (x) the amount of cash or Net Agreed Value of all
actual and deemed
distributions of cash
or property made with
respect to such
Partnership Interest
and (y) all
items of Partnership deduction and loss
computed in accordance
with Section 5.5(b)
and allocated with
respect to such
Partnership Interest pursuant to Section 6.1.
(b)
For purposes of computing the amount of any item of income,
gain, loss
or deduction
that is to be allocated pursuant to Article VI and is to be
reflected in the Partners' Capital Accounts, the determination,
recognition and
classification of any such item shall be the
37
<PAGE>
same as its determination, recognition and classification for
federal income tax
purposes (including
any method of
depreciation, cost
recovery or amortization
used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership
shall be
treated as owning
directly its
proportionate share
(as determined by the
General Partner based
upon the provisions of the applicable Group Member
Agreement) of all
property owned by (x) any other
Group Member that is
classified as a partnership or disregarded entity for federal income tax
purposes and
(y) any other partnership, limited liability company,
unincorporated
business or other entity classified as a partnership or
disregarded entity for
federal income tax purposes of which a Group Member
is,
directly or indirectly, a partner.
(ii) All fees and
other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can be
neither
deducted nor amortized
under Section 709 of the Code, if any, shall, for
purposes of Capital Account maintenance, be treated as an item of
deduction
at
the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1.
(iii) Except as
otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m),
the computation of all
items of income, gain,
loss
and
deduction shall be
made without regard to
any election under
Section
754
of the Code that may be made by the Partnership and, as to those items
described in Section
705(a)(1)(B) or
705(a)(2)(B)
of the Code,
without
regard to the fact that such items are not includable in gross income or
are
neither currently
deductible nor
capitalized
for federal income
tax
purposes. To the
extent an adjustment
to the adjusted tax basis of any
Partnership asset
pursuant to Section 734(b) or 743(b) of the Code is
required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m),
to
be
taken into account in determining Capital Accounts, the amount of such
adjustment in the Capital Accounts shall be treated as an item of
gain or
loss.
(iv) Any income, gain
or loss attributable to the taxable disposition
of
any Partnership property shall be determined as if the adjusted
basis of
such
property as of such
date of disposition
were equal in amount
to the
Partnership's Carrying Value with respect to such property as of
such date.
(v) In accordance with the requirements of Section 704(b) of the
Code,
any
deductions for depreciation, cost recovery or amortization
attributable
to
any Contributed Property shall be determined as if the adjusted
basis of
such
property on the date it was acquired by the Partnership
were equal to
the
Agreed Value of such property. Upon an adjustment pursuant to Section
5.5(d) to the
Carrying Value of any Partnership property subject to
depreciation, cost
recovery or
amortization, any
further deductions
for
such
depreciation,
cost recovery or amortization attributable to such
property shall be
determined (A) as if the adjusted basis of such property
were
equal to the Carrying
Value of such property
immediately
following
such
adjustment
and (B) using a rate
of depreciation,
cost recovery or
amortization derived
from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal
income tax
purposes;
38
<PAGE>
provided,
however, that, if the asset has a zero adjusted basis for
federal
income tax purposes,
depreciation, cost
recovery or amortization
deductions
shall be determined
using any method that
the General Partner
may
adopt.
(vi) If the
Partnership's adjusted
basis in a
depreciable
or cost
recovery property is reduced for federal
income tax purposes
pursuant to
Section 48(q)(1)
or 48(q)(3)
of the Code,
the amount of such
reduction
shall, solely
for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property
is placed
in
service and shall be allocated among the Partners pursuant to Section
6.1.
Any restoration of such basis pursuant to Section 48(q)(2) of the
Code
shall, to the extent
possible, be allocated in the same manner to the
Partners to whom such deemed deduction was allocated.
(c)
(i) A transferee of a Partnership Interest shall succeed to a pro
rata
portion of the Capital
Account of the
transferor relating to
the Partnership
Interest so transferred.
(ii) Subject to Section 6.7(c), immediately prior to the transfer
of a
Subordinated Unit or
of a Subordinated
Unit that has converted into a
Common Unit
pursuant to Section 5.8 by a holder thereof (other than a
transfer to an
Affiliate unless the
General Partner
elects to have
this
Section 5.5(c)(ii)
apply), the Capital
Account maintained for such Person
with
respect to its Subordinated Units or converted Subordinated Units
will
(A)
first, be allocated to the Subordinated Units or converted
Subordinated
Units to be transferred in an amount equal to the product of (x)
the number
of
such Subordinated Units or converted Subordinated Units to be
transferred and (y)
the Per Unit Capital Amount for a Common Unit, and (B)
second, any remaining
balance in such
Capital Account will be retained by
the
transferor,
regardless
of whether it has
retained any
Subordinated
Units or converted
Subordinated Units
("Retained Converted
Subordinated
Units"). Following any
such allocation, the
transferor's Capital Account,
if
any, maintained
with respect to the retained Subordinated Units or
Retained Converted Subordinated Units, if any, will have a balance
equal to
the
amount allocated under
clause (B)
hereinabove, and the
transferee's
Capital Account
established with
respect to the transferred Subordinated
Units or converted
Subordinated
Units will have a balance equal to the
amount allocated under clause (A) hereinabove.
(d)
(i)
In
accordance
with
Treasury
Regulation
Section
1.704-1(b)(2)(iv)(f),
on an issuance of
additional Partnership
Interests for
cash or Contributed Property, the issuance of Partnership Interests as
consideration for the
provision of services
or the conversion
of the General
Partner's Combined
Interest to Common
Units pursuant to Section 11.3(b), the
Capital Account of all
Partners and the Carrying Value of each Partnership
property immediately prior to such issuance shall be adjusted
upward or downward
to reflect
any Unrealized Gain or Unrealized Loss attributable to such
Partnership property,
as if such
Unrealized
Gain or Unrealized
Loss had been
recognized on an
actual sale of each such property immediately prior to such
issuance and had been allocated to the Partners at such time
pursuant to Section
6.1 in the same manner as any item of gain or loss actually recognized during
such period would have been allocated. In determining such Unrealized Gain or
Unrealized Loss,
the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents) immediately
prior to the
issuance of additional Partnership Interests shall be determined by
the General
39
<PAGE>
Partner using such method of valuation as it may adopt; provided,
however, that
the General Partner, in arriving at such valuation, must take fully
into account
the fair market value of the Partnership Interests of all Partners
at such time.
The General Partner
shall allocate such aggregate value among the assets of the
Partnership (in such
manner as it
determines) to arrive at a fair market value
for individual properties.
(ii) In
accordance
with
Treasury
Regulation
Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a
Partner of any Partnership property (other than a
distribution of
cash that is not in redemption or retirement of a
Partnership Interest),
the Capital Accounts of all Partners and the
Carrying
Value of all
Partnership property
shall be adjusted
upward or
downward
to reflect any Unrealized Gain or Unrealized Loss attributable
to
such
Partnership property,
as if such Unrealized
Gain or Unrealized Loss
had been
recognized in a sale of such property immediately prior to such
distribution for an
amount equal to its fair market value, and had been
allocated
to the Partners,
at such time,
pursuant to Section
6.1 in the
same
manner as any item of gain or loss actually recognized during such
period
would have been allocated. In determining such Unrealized Gain or
Unrealized
Loss the aggregate cash amount and fair market
value of all
Partnership assets (including cash or cash equivalents)
immediately prior
to a
distribution shall (A) in the case of an actual distribution that is
not made
pursuant to Section 12.4 or in the case of a deemed
distribution,
be
determined and allocated in the same manner as that provided in
Section
5.5(d)(i)
or (B) in the case of
a liquidating
distribution
pursuant to
Section
12.4, be determined
and allocated by the
Liquidator
using such
method of
valuation as it may adopt.
(e)
The Partners
acknowledge
and agree that the distribution to Quest
Cherokee, LLC pursuant to Section 3.4 of the Contribution Agreement
shall not be
deemed to be a
distribution to QRC or
any other Partner for
purposes of this
Agreement and shall not have any impact on any Partners' Capital
Account.
Section 5.6 Issuances of Additional Partnership Securities.
(a)
Subject to the provisions of Section 5.6(e), the Partnership may issue
such additional
Partnership
Securities
and options, rights, warrants and
appreciation rights
relating to the Partnership Securities for any Partnership
purpose at any time and from time to time to such Persons for such
consideration
and on such terms and
conditions as the General Partner shall determine, all
without the approval of any Limited Partners.
(b)
Each additional
Partnership
Security authorized to be issued by the
Partnership pursuant
to Section 5.6(a) may be issued in one or more classes, or
one or more series of any such classes, with such designations, preferences,
rights, powers and duties (which may be senior to existing classes
and series of
Partnership Securities), as shall be fixed by the General Partner,
including (i)
the right to share in Partnership profits and losses or items
thereof; (ii) the
right to share in Partnership distributions; (iii) the rights upon
dissolution
and liquidation of the Partnership; (iv) whether, and the terms and conditions
upon which, the
Partnership may or
shall be required to redeem the Partnership
Security; (v) whether
such Partnership Security is issued with the privilege of
conversion or exchange and, if so, the terms and conditions of such conversion
or exchange; (vi) the
terms and conditions upon which each Partnership Security
will
40
<PAGE>
be issued, evidenced
by certificates
and assigned or
transferred;
(vii) the
method for determining the Percentage Interest as to such
Partnership
Security;
and (viii) the right,
if any, of each such Partnership Security to vote on
Partnership matters,
including
matters relating to the relative rights,
preferences and privileges of such Partnership Security.
(c)
The General Partner
shall take all actions
that it determines
to be
necessary or
appropriate in
connection with (i)
each issuance of
Partnership
Securities and options, rights, warrants and appreciation rights relating to
Partnership Securities
pursuant to this Section 5.6, (ii) the conversion of the
General Partner Interest (represented by General Partner Units) or
any Incentive
Distribution Rights
into Units pursuant to the terms of this Agreement, (iii)
the issuance of Class
C Units pursuant to
Section 5.12 and
issuance of Common
Units upon the conversion of Class C Units pursuant to Section
5.12(f), (iv) the
issuance of Common Units upon the conversion of Subordinated Units pursuant to
Section 5.8, (v) reflecting admission of such additional Limited
Partners in the
books and records
of the Partnership as the Record Holder of such Limited
Partner Interests and (vi) all additional issuances of Partnership
Securities.
The General Partner
shall determine the relative rights, powers and duties of
the holders of the Units or other Partnership Securities being so issued.
The
General Partner
shall do all things
necessary to comply
with the Delaware Act
and is authorized
and directed to do all things that it determines to be
necessary or appropriate in connection with any future issuance of Partnership
Securities or in connection with the conversion of the General
Partner Interest
or any Incentive
Distribution Rights
into Units pursuant to
the terms of this
Agreement, including
compliance with any statute, rule, regulation or guideline
of any federal, state
or other governmental
agency or any National
Securities
Exchange on which
the Units or other Partnership Securities are listed or
admitted to trading.
(d)
No fractional Units shall be issued by the Partnership.
(e)
Notwithstanding
the terms of Section
5.6(a), (b), (c) and (d), the
issuance by the
Partnership
of any Partnership Securities pursuant to this
Section 5.6 shall be
subject to the
following provisions, restrictions and
limitations:
(i) before the closing of the Initial Public Offering, the
Partnership
shall not issue additional Partnership Securities having rights to
distribution or in liquidation ranking prior or senior to the
Common Units,
unless the issuance
has been approved by a majority
of the Outstanding
Common Units; and
(ii) at any time, the Partnership shall not issue additional
Partnership Securities
in violation of Section 4 of the Investors' Rights
Agreement.
Section 5.7 Conversion
of Class A Subordinated Units.
(a)
All of the Outstanding Class A Subordinated Units will convert
automatically into
Common Units on a one-for-one basis on the first trading day
following the Initial Public Offering.
(b)
A Class A Subordinated Unit that has converted into a Common Unit
shall
be subject to the provisions of Section 6.7(b) and Section
6.7(c).
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<PAGE>
Notwithstanding any
other provision of this Agreement, all the then
Outstanding Class A Subordinated Units will automatically convert into Common
Units on a one-for-one
basis as set forth in,
and pursuant to the terms of,
Section 11.4.
Section 5.8 Conversion of Class B Subordinated Units.
(a)
A total of 25% of the
Outstanding
Class B Subordinated Units will
convert automatically
into Common Units on a
one-for-one
basis on the
second
Busine
