Common use of Tax Partnership Clause in Contracts

Tax Partnership. The Development Parties intend and expect that the transactions contemplated by this Agreement (including the Acquisition Annex) and the Associated Agreements, taken together, will be treated, for purposes of federal income taxation and for purposes of certain state income tax Laws that incorporate or follow federal income tax principles (“Tax Purposes”), as resulting in (a) a sale by SM of an undivided 12.5% interest in the Springfield Gathering Assets in exchange for the Closing Cost Reimbursement, as the same may be adjusted pursuant to Section 3.9(a) hereof, with the future activities of the Parties with respect thereto being conducted subject to the Springfield Gathering Agreement; (b) the creation of a partnership (the “Tax Partnership”) in which Mitsui and SM are treated as partners, with the Tax Partnership being treated for Tax Purposes as holding the Joint Upstream Interests (as such term is defined in the Tax Partnership Agreement) and engaging in all activities of the Development Parties with respect to the Joint Upstream Interests; (c) a contribution by SM of all of the Contributed Properties, any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) and a commitment by SM to fund the costs and expenses allocable to it under this Agreement to the Tax Partnership in exchange for a 50% interest therein; (d) a contribution by Mitsui of any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) and a commitment by Mitsui to fund to the Tax Partnership the costs and expenses allocable to it under this Agreement in exchange for a 50% interest therein, and (e) the realization by the Tax Partnership of all items of income or gain and the incurrence by the Tax Partnership of all items of costs or expenses attributable to the ownership, operation or disposition of the Joint Upstream Interests, notwithstanding that such items are realized, paid or incurred by the Development Parties individually. The governing terms and conditions of the Tax Partnership are set forth in the Tax Partnership Agreement.

Tax Partnership. The Development Parties intend and expect that the transactions contemplated by this Agreement (including the Acquisition Annex) and the Associated Agreements, taken together, will be treated, for purposes of federal income taxation and for purposes of certain state income tax Laws laws that incorporate or follow federal income tax principles (“Tax Purposes”), as resulting in (a) a sale by SM of an undivided 12.5% interest in the Springfield Gathering Assets in exchange for the Closing Cost Reimbursement, as the same may be adjusted pursuant to Section 3.9(a) hereof, with the future activities of the Parties with respect thereto being conducted subject to the Springfield Gathering Agreement; (b) the creation of a partnership (the “Tax Partnership”) in which Mitsui Gasco and SM Wapiti are treated as partners. Accordingly, with for Tax Purposes, (a) Gasco will be treated as selling the Wapiti Producing Interests, the Wapiti Non-Producing Interests and a joint ownership interest in the G&G Information that is not subject to the License Agreement in exchange for the Final Purchase Price, (b) Gasco will be treated as contributing to the Tax Partnership being treated for Tax Purposes as holding on the Joint Upstream Interests (as such term is defined Closing Date all of its interests in the Tax Partnership Agreement) Gasco Producing Interests, the Gasco Non-Producing Interests and engaging in all activities of the Development Parties with respect G&G Information that is not subject to the Joint Upstream Interests; (c) a contribution by SM of all of the Contributed PropertiesLicense Agreement and providing its undertaking to fund, any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) and a commitment by SM to fund when due, the costs and expenses allocable to it under this Agreement and the Associated Agreements in exchange for an interest in the Tax Partnership; (c) Wapiti will be treated as contributing to the Tax Partnership on the Closing Date all of its interests in exchange for a 50% interest therein; (d) a contribution by Mitsui of any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) the Wapiti Producing Interests, the Wapiti Non-Producing Interests and a commitment by Mitsui to fund the G&G Information that is not subject to the Tax Partnership License Agreement and providing its undertaking to fund, when due, the costs and expenses allocable to it under this Agreement and the Associated Agreements in exchange for a 50% an interest therein, in the Tax Partnership; and (ed) the realization by the Tax Partnership will be treated from and after the Closing as (i) holding 100% of the Parties’ interests in the Subject Interests, (ii) engaging in all activities of the Parties with respect to the Subject Interests and (iii) realizing all items of income or gain and the incurrence by the Tax Partnership of incurring all items of costs cost or expenses expense attributable to the ownership, operation or disposition of the Joint Upstream InterestsSubject Interests (and any other assets acquired or developed by the Parties jointly pursuant to the Development Agreement), notwithstanding that such items are realized, paid or incurred by the Development Parties individually. The governing terms and conditions of the Tax Partnership are set forth in the form thereof to be executed on the Closing Date, attached as Exhibit G (the “Tax Partnership Agreement”), and shall be consistent with this Section 8.1. Any Transfer (other than a Transfer of an Immaterial Interest) by any Party that is otherwise permitted pursuant to Section 6.1 shall not be effective unless the permitted transferee agrees in writing that the Joint Development Interest it is acquiring in the Transfer will be subject to the Tax Partnership Agreement.

Tax Partnership. The Development Parties intend and expect that the transactions contemplated by the Acquisition Agreement, this Agreement (including the Acquisition Annex) and the Associated Agreements, taken together, will be treated, for purposes of federal income taxation and for purposes of certain state income tax Laws laws that incorporate or follow federal income tax principles (“Tax Purposes”), as resulting in (a) a sale by SM of an undivided 12.5% interest in the Springfield Gathering Assets in exchange for the Closing Cost Reimbursement, as the same may be adjusted pursuant to Section 3.9(a) hereof, with the future activities of the Parties with respect thereto being conducted subject to the Springfield Gathering Agreement; (b) the creation of a partnership (the “Tax Partnership”) in which Mitsui Noble and SM CONSOL are treated as partners. Accordingly, with for Tax Purposes, (a) the Tax Partnership will be treated as (i) holding (A) the Parties’ interests in Oil and Gas Assets, (B) any other Subject Assets and (C) any cash held in any account identified or otherwise treated as being treated for Tax Purposes as holding the Joint Upstream Interests (as such term is defined in an asset of the Tax Partnership Agreementresulting from production or contribution pursuant to the Asset Acquisition Agreement or this Agreement and (ii) and engaging in all activities of the Development Parties with respect to the Joint Upstream Interests; Subject Assets, (cb) a contribution by SM of all of the Contributed Properties, any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) and a commitment by SM to fund the costs and expenses allocable to it under this Agreement CONSOL will be treated as contributing to the Tax Partnership in exchange for a 50% interest therein; (d) a contribution by Mitsui at Closing of any Cash Reconciliation Payment made by it pursuant the Oil and Gas Assets and its undertaking to Section 3.9(d) and a commitment by Mitsui to fund to the Tax Partnership fund, when due, the costs and expenses allocable to it under this Agreement in exchange for an interest in the Tax Partnership; (c) Noble will be treated as contributing to the Tax Partnership at Closing (by deposit into the Cost Reconciliation Account) the Closing Cash Payment (as adjusted), its undertaking to fund, when due, the Post Closing Cash Payments and the costs and expenses allocable to it under this Agreement (including the Carried Costs, any Carried Costs Amount and any Carried Costs Balance Payments) in exchange for an interest in the Tax Partnership; (d) upon any withdrawal by CONSOL (as and to the extent permitted under Section 7.6 hereof) of the Total Cost Sharing Payments from the Cost Reconciliation Account, CONSOL will be treated as receiving distributions from the Tax Partnership of the withdrawn amounts (i) as a 50% interest thereinreimbursement of CONSOL’s preformation expenditures with respect to the Oil and Gas Assets within the meaning of Treasury Regulations Section 1.707-4(d) to the extent applicable and (ii) in a transaction subject to treatment under Section 707(a) of the Internal Revenue Code of 1986, as amended, and its implementing Treasury Regulations as in part a sale, and in part a contribution, of the Oil and Gas Assets to the Tax Partnership to the extent that Treasury Regulations Section 1.707-4(d) is inapplicable, and (e) the realization by from and after its commencement, the Tax Partnership of will be treated as realizing all items of income or gain and the incurrence by the Tax Partnership of incurring all items of costs cost or expenses expense attributable to the ownership, operation or disposition of the Joint Upstream InterestsSubject Assets, notwithstanding that such items are realized, paid or incurred by the Development Parties individually. The governing terms and conditions of the Tax Partnership are set forth in the Tax Partnership AgreementExhibit G hereto.

Tax Partnership. The Development Parties intend and expect that the transactions contemplated by this Agreement (including the Acquisition Annex) and the Associated Agreements, taken together, PSA will be treated, for purposes of federal income taxation and for purposes of certain state income tax Laws laws that incorporate or follow federal income tax principles (“Tax Purposes”)principles, as resulting in (a) a sale by SM of an undivided 12.5% interest in the Springfield Gathering Assets in exchange for the Closing Cost Reimbursement, as the same may be adjusted pursuant to Section 3.9(a) hereof, with the future activities of the Parties with respect thereto being conducted subject to the Springfield Gathering Agreement; (b) the creation of a partnership (the “Tax Partnership”) in which Mitsui HESS and SM ZaZa are treated as partners, with the Tax Partnership being treated for Tax Purposes purposes as holding the Joint Upstream Interests (as such term is defined in the Tax Partnership Agreement) Subject Leases and engaging in all activities of the Development Parties with respect to the Joint Upstream Interests; (c) a contribution Subject Leases and any other assets that may subsequently be acquired by SM of all of the Contributed Properties, any Cash Reconciliation Payment made by it Parties jointly pursuant to Section 3.9(d) and a commitment by SM to fund the costs and expenses allocable to it under this Agreement to the Tax Partnership in exchange for a 50% interest thereinAgreement; (d) a contribution by Mitsui of any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) and a commitment by Mitsui to fund to the Tax Partnership the costs and expenses allocable to it under this Agreement in exchange for a 50% interest therein, and (eb) the realization by the Tax Partnership of all items of income or gain and the incurrence by the Tax Partnership Partnership, of all items of costs or expenses attributable to the ownership, operation or disposition of such assets and other assets that may subsequently be acquired by the Joint Upstream InterestsParties jointly, notwithstanding that such items are realized, paid or incurred by the Development Parties individually. The governing terms and conditions of the Tax Partnership are , all as set forth in the Tax Partnership Agreement attached as Exhibit “D” . With respect to any of the Subject Leases purchased by HESS pursuant to this Agreement (but not those purchased pursuant to the PSA)as to which HESS will be considered to own a ninety percent (90%) working interest (and regardless of how title is taken), the Parties specifically intend that (a) HESS shall be treated as having purchased such leases or other property for the Tax Partnership for an amount equal to all costs paid by HESS with respect to such property (including, but not limited to, Acquisition Costs as defined in this Agreement); (b) the Tax Partnership will be considered to have paid any amounts payable to ZaZa pursuant to Sec. 3.2 of this Agreement as amounts described in Sec. 707(a) of the Internal Revenue Code of 1986, (“Code”) for services rendered; and (c) the Reserved Interest shall also be considered amounts payable to ZaZa by the Tax Partnership as amounts described in Sec. 707(a) of the Code for services rendered.

Tax Partnership. The Development Parties intend and expect that the transactions contemplated by this Agreement, the Operating Agreement (including the Acquisition Annex) and the Associated Agreementsany associated agreements, taken together, will be treated, for purposes of federal income taxation and for purposes of certain state income tax Laws laws that incorporate or follow federal income tax principles (“Tax Purposes”)principles, as resulting in (a) a sale by SM of an undivided 12.5% interest in the Springfield Gathering Assets in exchange for the Closing Cost Reimbursement, as the same may be adjusted pursuant to Section 3.9(a) hereof, with the future activities of the Parties with respect thereto being conducted subject to the Springfield Gathering Agreement; (b) the creation of a partnership (the “Tax Partnership”) in which Mitsui Participant and SM the Owners are treated as partners, with the Tax Partnership being treated for Tax Purposes tax purposes as holding the Joint Upstream Interests (as such term is defined in the Tax Partnership Agreement) equitable title to, and engaging in all activities of the Development Parties with respect to to, the Joint Upstream Interests; Leases insofar as they cover the Initial Prospect Area and, if Participant elects Option B, the Second Prospect Area, (cb) a contribution by SM the Owners to the Tax Partnership of all of their interests in the Contributed Properties, any Cash Reconciliation Payment made by it pursuant Leases to Section 3.9(d) the extent they cover the Initial Prospect Area and a commitment by SM Participant to fund the costs and expenses allocable to it under this Agreement make capital contributions to the Tax Partnership in exchange for a 50% interest therein; (d) a contribution by Mitsui of any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) and a commitment by Mitsui order to fund to the Tax Partnership the costs and expenses allocable to it under this Section 1.2 of the Participation Agreement in exchange for a 50% interest thereinin the Tax Partnership, (c) if Participant elects Option B, a contribution by the Owners to the Tax Partnership of their interests in the Leases to the extent they cover the Second Prospect Area and a commitment by Participant to make capital contributions to the Tax Partnership in order to fund the costs allocable to it under Section 2.3 of the Participation Agreement, and (ed) the realization by the Tax Partnership of all items of income or gain and the incurrence by the Tax Partnership of all items of costs or expenses attributable to the ownership, operation or disposition of the Joint Upstream InterestsLeases insofar as they cover the Initial Prospect Area and, if Participant elects Option B, the Second Prospect Area, notwithstanding that such items are realized, paid or incurred by the Development Parties individually. The governing terms and conditions of the Tax Partnership are set forth in the Tax Partnership AgreementExhibit H hereto.

Tax Partnership. The Development Parties intend and expect that the transactions contemplated by this Agreement (including the Acquisition Annex) and the Associated Agreements, taken together, will be treated, for purposes of federal income taxation and for purposes of certain state income tax Laws laws that incorporate or follow federal income tax principles (“Tax Purposes”)principles, as resulting in (a) a sale by SM of an undivided 12.5% interest in the Springfield Gathering Assets in exchange for the Closing Cost Reimbursement, as the same may be adjusted pursuant to Section 3.9(a) hereof, with the future activities of the Parties with respect thereto being conducted subject to the Springfield Gathering Agreement; (b) the creation of a partnership (the “Tax Partnership”) in which Mitsui HESS and SM ZaZa are treated as partners, with the Tax Partnership being treated for Tax Purposes purposes as holding the Joint Upstream Interests (as such term is defined in the Tax Partnership Agreement) Subject Leases and engaging in all activities of the Development Parties with respect to the Joint Upstream Interests; (c) a contribution Subject Leases and any other assets that may subsequently be acquired by SM of all of the Contributed Properties, any Cash Reconciliation Payment made by it Parties jointly pursuant to Section 3.9(d) and a commitment by SM to fund the costs and expenses allocable to it under this Agreement to the Tax Partnership in exchange for a 50% interest thereinAgreement; (d) a contribution by Mitsui of any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) and a commitment by Mitsui to fund to the Tax Partnership the costs and expenses allocable to it under this Agreement in exchange for a 50% interest therein, and (eb) the realization by the Tax Partnership of all items of income or gain and the incurrence by the Tax Partnership of all items of costs or expenses attributable to the ownership, operation or disposition of such assets and other assets that may subsequently be acquired by the Joint Upstream InterestsParties jointly, notwithstanding that such items are realized, paid or incurred by the Development Parties individually. The governing terms and conditions of the Tax Partnership are , all as set forth in the Tax Partnership Agreement attached as Exhibit “D”. With respect to any of the Subject Leases purchased by HESS pursuant to this Agreement as to which HESS will be considered to own a ninety percent (90%) working interest (and regardless of how title is taken), the Parties specifically intend that (a) HESS shall be treated as having purchased such leases or other property for the Tax Partnership for an amount equal to all costs paid by HESS with respect to such property (including, but not limited to, Acquisition Costs as defined in this Agreement); (b) the Tax Partnership will be considered to have paid any amounts payable to ZaZa pursuant to Sec. 3.1 of this Agreement as amounts described in Sec. 707(a) of the Internal Revenue Code of 1986, (“Code”) for services rendered; and (c) the Reserved Overriding Royalty Interest shall also be considered amounts payable to ZaZa by the Tax Partnership as amounts described in Sec. 707(a) of the Code for services rendered.

Tax Partnership. The Development Parties intend and expect that the transactions contemplated by the Acquisition Agreement, this Agreement (including the Acquisition Annex) and the Associated Agreements, taken together, will be treated, for purposes of federal income taxation and for purposes of certain state income tax Laws laws that incorporate or follow federal income tax principles (“Tax Purposes”), as resulting in (a) a sale by SM of an undivided 12.5% interest in the Springfield Gathering Assets in exchange for the Closing Cost Reimbursement, as the same may be adjusted pursuant to Section 3.9(a) hereof, with the future activities of the Parties with respect thereto being conducted subject to the Springfield Gathering Agreement; (b) the creation of a partnership (the “Tax Partnership”) in which Mitsui Noble and SM CONSOL are treated as partners. Accordingly, with for Tax Purposes, (a) the Tax Partnership will be treated as (i) holding (A) the Parties' interests in Oil and Gas Assets, (B) any other Subject Assets and (C) any cash held in any account identified or otherwise treated as being treated for Tax Purposes as holding the Joint Upstream Interests (as such term is defined in an asset of the Tax Partnership Agreementresulting from production or contribution pursuant to the Asset Acquisition Agreement or this Agreement and (ii) and engaging in all activities of the Development Parties with respect to the Joint Upstream Interests; Subject Assets, (cb) a contribution by SM of all of the Contributed Properties, any Cash Reconciliation Payment made by it pursuant to Section 3.9(d) and a commitment by SM to fund the costs and expenses allocable to it under this Agreement CONSOL will be treated as contributing to the Tax Partnership in exchange for a 50% interest therein; (d) a contribution by Mitsui at Closing of any Cash Reconciliation Payment made by it pursuant the Oil and Gas Assets and its undertaking to Section 3.9(d) and a commitment by Mitsui to fund to the Tax Partnership fund, when due, the costs and expenses allocable to it under this Agreement in exchange for an interest in the Tax Partnership; (c) Noble will be treated as contributing to the Tax Partnership at Closing (by deposit into the Cost Reconciliation Account) the Closing Cash Payment (as adjusted), its undertaking to fund, when due, the Post Closing Cash Payments and the costs and expenses allocable to it under this Agreement (including the Carried Costs, any Carried Costs Amount and any Carried Costs Balance Payments) in exchange for an interest in the Tax Partnership; (d) upon any withdrawal by CONSOL (as and to the extent permitted under Section 7.6 hereof) of the Total Cost Sharing Payments from the Cost Reconciliation Account, CONSOL will be treated as receiving distributions from the Tax Partnership of the withdrawn amounts (i) as a 50% interest thereinreimbursement of CONSOL's preformation expenditures with respect to the Oil and Gas Assets within the meaning of Treasury Regulations Section 1.707-4(d) to the extent applicable and (ii) in a transaction subject to treatment under Section 707(a) of the Internal Revenue Code of 1986, as amended, and its implementing Treasury Regulations as in part a sale, and in part a contribution, of the Oil and Gas Assets to the Tax Partnership to the extent that Treasury Regulations Section 1.707-4(d) is inapplicable, and (e) the realization by from and after its commencement, the Tax Partnership of will be treated as realizing all items of income or gain and the incurrence by the Tax Partnership of incurring all items of costs cost or expenses expense attributable to the ownership, operation or disposition of the Joint Upstream InterestsSubject Assets, notwithstanding that such items are realized, paid or incurred by the Development Parties individually. The governing terms and conditions of the Tax Partnership are set forth in the Tax Partnership AgreementExhibit G hereto.