Exhibit 10.1
Execution Version
NON-COMPETITION AGREEMENT
among
HILAND PARTNERS, LP
HILAND HOLDINGS GP, LP
and
HILAND PARTNERS GP HOLDINGS,
LLC
NON-COMPETITION
AGREEMENT
THIS NON-COMPETITION AGREEMENT
(“ Agreement ”) is entered into on, and
effective as of, the Closing Date (as defined herein), and is by
and among Hiland Partners, LP, a Delaware limited partnership (the
“ Partnership ”), Hiland Holdings GP, LP, a
Delaware limited partnership (“ Holdings ”) and
Hiland Partners GP Holdings, LLC, a Delaware limited liability
company (the “ Holdings General Partner
”). The above-named entities are sometimes referred to
in this Agreement each as a “ Party ” and
collectively as the “ Parties .”
RECITALS:
WHEREAS , the Parties desire by their execution of this
Agreement to evidence their agreement, as more fully set forth
below, with respect to those business opportunities that the
Holdings Entities (as defined herein) will not engage in during the
term of this Agreement.
NOW, THEREFORE
, in consideration of the premises
and the covenants, conditions and agreements contained herein, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto
hereby agree as follows:
ARTICLE I
Definitions
1.1
Definitions.
As used in this Agreement, the
following terms shall have the respective meanings set forth
below:
“ Agreement ” is
defined in the introduction to this Agreement.
“ Closing Date ”
means the date of the closing of Holdings’ initial public
offering of Holdings Common Units.
“ Construction Cost
” means all costs associated with developing, designing,
building and financing Subject Assets, including, without
limitation, any costs to acquire related real property or necessary
rights of way and any internal costs incurred to compensate
employees for time spent on developing, designing, building and
financing Subject Assets.
“ 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.
“ Holdings ” is
defined in the introduction to this Agreement.
“ Holdings Common Units
” means Common Units, as defined in the Holdings Partnership
Agreement.
“ Holdings Conflicts
Committee ” is the Conflicts Committee of Holdings as
defined in the Holdings Partnership Agreement.
“ Holdings Entities
” means each Holdings Party and any Person controlled,
directly or indirectly, by any Holdings Party or combination of
Holdings Parties other than the Partnership Group.
“ Holdings General
Partner ” is defined in the introduction to this
Agreement.
“ Holdings Partnership
Agreement ” means the Amended and Restated Agreement of
Limited Partnership of Holdings dated as of the Closing Date, to
which reference is hereby made for all purposes of this
Agreement. No amendment or modification to the Holdings
Partnership Agreement subsequent to the Closing Date shall be given
effect for the purposes of this Agreement unless consented to by
each of the Parties to this Agreement.
“ Holdings Party
” means each of Holdings and the Holdings General
Partner.
“ MLP Common
Units ” means Common Units, as defined in the MLP
Partnership Agreement.
“ MLP Conflicts
Committee ” is the Conflicts Committee of the Partnership
as defined in the MLP Partnership Agreement.
“ MLP General Partner
” means Hiland Partners GP, LLC, a Delaware limited liability
company.
“ MLP Partnership
Agreement ” means the First Amended and Restated
Agreement of Limited Partnership of Hiland Partners, LP, dated as
of the February 15, 2005, as such agreement is in effect on the
Closing Date, to which reference is hereby made for all purposes of
this Agreement.
“ MLP Partnership
Entities ” means the MLP General Partner and each member
of the Partnership Group.
“ Offer ” is
defined in Section 2.3(b).
“ Partnership ”
is defined in the introduction to this Agreement.
“ Partnership Group
” means the Partnership and its subsidiaries.
“ Partnership Group
Member ” means any member of the Partnership
Group.
“ Party ” and
“ Parties ” are defined in the introduction to
this Agreement.
“ Person ” means
an individual or a corporation, limited liability company,
partnership, joint venture, trust, business trust, employee benefit
plan, unincorporated organization, association, government agency
or political subdivision thereof or other entity.
“ Restricted Businesses
” is defined in Section 2.1.
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“ Subject Assets
” is defined in Section 2.2(d).
“ 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.
“ Voting Securities
” means securities of any class of a Person entitling the
holders thereof to vote on a regular basis in the election of
members of the board of directors or other governing body of such
Person.
ARTICLE II
Business Opportunities
2.1
Restricted Businesses . Subject to
Section 2.6, and except in connection with or incidental to
its performance as general partner or managing member of one or
more of the MLP Partnership Entities or the acquiring, owning or
disposing of debt or equity securities in any MLP Partnership
Entity and except as permitted by Section 2.2, each Holdings
Party shall be prohibited from engaging in, and the Holdings
Parties shall cause each Holdings Entity not to engage in, whether
by acquisition, construction, investment in debt or equity
interests of any Person or otherwise, any of the following
businesses (the “ Restricted Businesses ”):
the gathering, treating, processing and transportation of
natural gas in North America, the transportation and fractionation
of natural gas liquids (“ NGLs ”) in North
America, and constructing, buying or selling any assets related to
the foregoing businesses.
2.2
Permitted Exceptions . Notwithstanding any
provision of Section 2.1 to the contrary, the Holdings
Entities may engage in the following activities under the following
circumstances:
(a)
any business that is primarily related to the exploration for and
production of oil or natural gas and the sale and marketing of oil
and natural gas derived from such exploration and production
activities;
(b)
the purchase and ownership of not more than five percent of any
class of securities of any entity engaged in the Restricted
Business (but without otherwise participating in the activities of
such entity);
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(c)
any Restricted Business conducted by a Holdings Entity with the
approval of the MLP Conflicts Committee;
(d)
the ownership and/or operation of any asset or group of related
assets used in the activities described in Section 2.1 that
are acquired or constructed by a Holdings Entity after the Closing
Date (the “ Subject Assets ”) if, in the case of
an acquisition, the fair market value of the Subject Assets (as
determined in good faith by the board of directors or other
comparable governing body of such Holdings Entity), or, in the case
of construction, the estimated Construction Cost of the Subject
Assets (as determined in good faith by the board of directors or
other comparable governing body of such Holdings Entity), is less
than $5 million at the time of such acquisition or completion
of construction, as the case may be;
(e)
the ownership and/or operation of any Subject Assets acquired by a
Holdings Entity after the Closing Date with a fair market value (as
determined in good faith by the board of directors or other
comparable governing body of such Holdings Entity) equal to or
greater than $5 million at the time of the acquisition;
provided , the Partnership has been offered the opportunity
to purchase the Subject Assets in accordance with Section 2.3
and the Partnership (with the concurrence of the MLP Conflicts
Committee) has elected not to purchase the Subject Assets;
and
(f)
the ownership and/or operation of any Subject Assets constructed by
a Holdings Entity after the Closing Date with a Construction Cost
(as determined in good faith by the board of directors or other
comparable governing body of such Holdings Entity) equal to or
greater than $5 million at the time of completion of
construction that the Partnership has been offered the opportunity
to purchase in accordance with Section 2.3 and the Partnership
(with the concurrence of the MLP Conflicts Committee) has elected
not to purchase.
2.3
Procedures.
(a)
If a Holdings Entity becomes aware of an opportunity to acquire
Subject Assets with a fair market value (as determined in good
faith by the board of directors or other comparable governing body
of such Holdings Entity) equal to or greater than $5 million
that it is interested in pursuing, then, subject to
Section 2.3(b), as soon as practicable thereafter, such
Holdings Entity shall notify the MLP General Partner, in writing,
of such opportunity and deliver to the MLP General Partner all
information prepared by or on behalf of such Holdings Entity
relating to such opportunity. As soon as practicable, but in
any event within 30 days after receipt of such written notification
and information, the MLP General Partner, on behalf of the
Partnership, shall notify the Holdings General Partner, in writing,
that either (i) the MLP General Partner, on behalf of the
Partnership, has elected (with the concurrence of the MLP Conflicts
Committee) not to cause a Partnership Group Member to pursue the
opportunity to purchase the Subject Assets, or (ii) the MLP
General Partner, on behalf of the Partnership, has elected (with
the concurrence of the MLP Conflicts Committee) to cause a
Partnership Group Member to pursue the opportunity to purchase the
Subject Assets. If, at any time, the MLP General Partner
abandons such opportunity with the approval of the MLP Conflicts
Committee (as evidenced in writing by the MLP General Partner
following the request of the Holdings Entity), the Holdings Entity
may pursue such opportunity. Any Subject Assets that are
permitted to be acquired by a Holdings Entity must be so acquired
(i) within 12 months of the later to occur of (A) the
date that
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the Holdings Entity becomes able to
pursue such acquisition in accordance with the provisions of this
Section 2.3(a), and (B) the date upon which all required
governmental approvals to consummate such acquisition have been
obtained, and (ii) on terms not more favorable in any material
respect to the Holdings Entity than were offered to the
Partnership. If either of these conditions are not satisfied,
the opportunity must be reoffered to the Partnership in accordance
with this Section 2.3(a).
(b)
Notwithstanding Section 2.3(a), in the event that a Holdings
Entity
