Execution Version
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of December 22, 2006, by and among Quest Midstream Partners, L.P., a
Delaware limited partnership (together with any successor entity thereto, the
"Partnership"), and each of the investors listed on the signature pages hereto,
each of which is referred to in this Agreement as an "Investor".
RECITALS
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WHEREAS, the Partnership and the Investors are parties to the Purchase
Agreement of even date herewith (the "Purchase Agreement"); and
WHEREAS, in order to induce the Partnership to enter into the Purchase
Agreement and to induce the Investors to invest funds in the Partnership
pursuant to the Purchase Agreement, the Investors and the Partnership desire to
enter into an agreement regarding the rights of the Investors to cause the
Partnership to register Common Units of the Partnership issued to the Investors.
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the following
meanings:
Agreement: As defined in the preamble.
Affiliate: As to any specified Person, (i) any Person beneficially owning
ten percent or more of the outstanding voting securities of such other Person,
(ii) any Person ten percent or more of whose outstanding voting securities are
beneficially owned by such other Person, (iii) any Person directly or indirectly
controlling, controlled by or under common control with such other Person, (iv)
any executive officer, director, trustee or general partner of such Person and
(v) any legal entity for which such Person acts as an executive officer,
director, trustee or general partner.
Alerian: As defined in Section 2(a)(i) hereof.
Board of Directors of the Partnership: The Board of Directors of the
General Partner, as defined in the Partnership Agreement.
Business Day: With respect to any act to be performed hereunder, each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York or other applicable places where such
act is to occur are authorized or obligated by applicable law, regulation or
executive order to close.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Common Units: Limited partnership interests of the Partnership designated
in the limited partnership agreement of the Partnership as Common Units.
Controlling Person: As defined in Section 6(a) hereof.
Effectiveness Period: As defined in Section 2(a)(i) hereof.
End of Suspension Notice: As defined in Section 5(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission pursuant thereto.
Excluded Registrable Security: As defined in Section 2(a)(i) hereof.
Failure Date: As defined in Section 2(b)(v) hereof.
Holder: Each Investor or assignee thereof in accordance with Section 8(d)
who is a record owner of any Registrable Securities.
Indemnified Party: As defined in Section 6(c) hereof.
Indemnifying Party: As defined in Section 6(c) hereof.
Investor: As defined in the preamble.
IPO: the first Underwritten Offering by the Partnership of its Common Units
under the Securities Act that results in the Common Units being traded on the
New York Stock Exchange or the Nasdaq Stock Market.
IPO Registration Statement: As defined in Section 2(a)(i) hereof.
Issuer Free Writing Prospectus: As defined in Section 4(d) hereof.
Liabilities: As defined in Section 6(a) hereof.
Liquidated Damages Amount: An amount equal to $0.175 per Common Unit
(subject to appropriate adjustments for any subdivision or combination of Common
Units after the date hereof) for each 90-day period. The Liquidated Damages
Amount for any period of less than 90 days shall be prorated by multiplying the
Liquidated Damages Amount to be paid in a full 90-day period by a fraction, the
numerator of which is the number of days for which such liquidated damages are
owed, and the denominator of which is 90.
Liquidated Damages Cap: As defined in Section 2(b)(vi) hereof.
Notice: As defined in Section 2(a)(i) hereof.
Partnership: As defined in the preamble.
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Partnership Agreement: The Amended and Restated Agreement of Limited
Partnership of the Partnership dated the date hereof.
Person: An individual, partnership, corporation, limited liability company,
trust, unincorporated organization, government or agency or political
subdivision thereof, or any other legal entity.
Piggyback Registration Statement: As defined in Section 2(c) hereof.
Proceeding: An action, claim, suit or proceeding (including without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the knowledge of the Person subject thereto,
threatened.
Prospectus: The prospectus included in any Registration Statement,
including any preliminary prospectus, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
Purchase Agreement: As defined in the preamble.
Purchaser Indemnitee: As defined in Section 6(a) hereof.
QRC Group: Quest Resource Corporation and each direct or indirect
subsidiary of Quest Resource Corporation (other than the Partnership and its
subsidiaries).
Registrable Securities: The Common Units issued pursuant to the Purchase
Agreement and any securities issued in respect of such Registrable Securities by
reason of or in connection with any dividend, distribution, split, purchase in
any rights offering or in connection with any exchange for or replacement of
such Registrable Securities or any combination of securities, recapitalization,
merger or consolidation, or any other equity securities issued pursuant to any
other pro rata distribution with respect to the Common Units of the Partnership,
until, with respect to such Registrable Security the earliest to occur of (i)
the date on which it has been first registered effectively pursuant to the
Securities Act and disposed of in accordance with the Registration Statement
relating to it, (ii) the date on which either it is distributed to the public
pursuant to Rule 144 (or any similar provision then in effect) or is eligible
for sale without registration, pursuant to Rule 144(k) promulgated by the
Commission pursuant to the Securities Act, in the opinion of counsel to the
Partnership, or (iii) the date on which it is sold to the Partnership, any
member of the QRC Group or any subsidiary of the Partnership.
Registration Expenses: Any and all expenses incident to the performance of
or compliance by the Partnership with this Agreement, including, without
limitation: (i) all Commission, securities exchange, listing, inclusion and
filing fees, (ii) all fees and expenses incurred in connection with compliance
with international, federal or state securities or blue sky laws (including,
without limitation, any registration, listing and filing fees and reasonable
fees and disbursements of counsel in connection with blue sky qualification of
any of the Registrable Securities and the preparation of a blue sky memorandum),
(iii) all expenses in preparing or assisting in preparing, word processing,
duplicating, printing, delivering and distributing any Registration Statement,
any Prospectus, any amendments or supplements thereto, any
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underwriting agreements, securities sales agreements, certificates and any other
documents relating to the performance under and compliance with this Agreement,
(iv) all fees and expenses incurred in connection with the listing or inclusion
of any of the Registrable Securities on any securities exchange or inter-dealer
quotation system pursuant to Section 4(a)(xi) of this Agreement, and (v) the
fees and disbursements of counsel for the Partnership and of the independent
public accountants of the Partnership (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), and (vi) all "road show" expenses; provided, however, that
Registration Expenses shall exclude brokers' or underwriters' discounts and
commissions, if any, fees and expenses of counsel for the Holders, and all
transfer taxes relating to the sale or disposition of Registrable Securities by
a Holder.
Registration Statement: Any registration statement of the Partnership that
covers the resale of Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
Rule 144: Rule 144, and any of its referenced paragraphs, promulgated by
the Commission pursuant to the Securities Act, as such rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission as a replacement thereto having substantially the same effect as such
rule.
Rule 158: Rule 158 promulgated by the Commission pursuant to the Securities
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule.
Rule 415: Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule.
Rule 424: Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule.
Rule 457: Rule 457 promulgated by the Commission pursuant to the Securities
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule.
S-3 Shelf Registration Statement: As defined in Section 2(a)(ii) hereof.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations promulgated by the Commission thereunder.
Shelf Registration Statement: As defined in Section 2(a)(i) hereof.
Suspension Event: As defined in Section 5(b) hereof.
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Suspension Notice: As defined in Section 5(b) hereof.
Swank: As defined in Section 2(a)(i) hereof.
Underwritten Offering: A sale of securities of the Partnership to an
underwriter or underwriters for reoffering to the public.
2. REGISTRATION RIGHTS
(a) Mandatory Shelf Registration.
(i) At any time on or after the date that is 270 days after the
Closing Date, upon the written request (a "Notice") of any of (a) Alerian
Opportunity Partners IV, L.P. ("Alerian"), (b) Swank MLP Convergence Fund,
LP, Swank Investment Partners, LP, The Xxxxxxx MLP Opportunity Fund I, LP
and The Xxxxxxx XX Strategies Fund, LP (collectively, "Swank") or (c) the
Holders of a majority of the then outstanding Registrable Securities, the
Partnership shall file with the Commission as soon as reasonably
practicable following the Notice (but in no event later than the date that
is 90 days after the Notice) a shelf Registration Statement on Form S-1 or
such other form under the Securities Act then available to the Partnership
providing for the resale of any Registrable Securities pursuant to Rule 415
from time to time by the Holders (a "Shelf Registration Statement"),
provided that if the Partnership is working toward the filing of a
registration statement for an IPO ("IPO Registration Statement") at the
time of the receipt of the Notice and the Partnership uses its commercially
reasonable efforts to file and actively pursues the filing of the IPO
Registration Statement with the Commission, the Partnership shall not be
required to file the Shelf Registration Statement with the Commission until
the Partnership files the IPO Registration Statement. If the Partnership
abandons or fails to actively pursue the filing of the IPO Registration
Statement during this period in the reasonable judgment of Alerian and
Swank, the Partnership shall file the Shelf Registration Statement with the
Commission within 60 days after receipt of written notice from Alerian and
Swank. The Partnership shall use its commercially reasonable efforts to
cause such Shelf Registration Statement to be declared effective by the
Commission within 210 days after the initial filing of the Shelf
Registration Statement, provided that sales pursuant to the Shelf
Registration Statement shall be subject to the restrictions in Section
2(d)(iv) to the extent applicable. Any Shelf Registration Statement shall
provide for the resale from time to time, and pursuant to any method or
combination of methods legally available by the Holders of any and all
Registrable Securities. Subject to the other provisions of this Agreement,
the Partnership shall cause the Shelf Registration Statement filed pursuant
to this Section 2(a)(i) to be continuously effective, supplemented and
amended to the extent necessary to ensure that it is available for the
resale of all Registrable Securities by the Holders and that it conforms in
all material respects to the requirements of the Securities Act during the
entire period beginning on the date the Shelf Registration Statement is
first declared effective under the Securities Act and ending on the date on
which all Registrable Securities have ceased to be Registrable Securities
(the "Effectiveness Period"). The Partnership may exclude Registrable
Shares from a Shelf Registration Statement if required by the Commission in
order for the Commission to declare the Shelf
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Registration Statement effective. Each such excluded Registrable Security
shall be referred to herein as an "Excluded Registrable Security" from the
date of effectiveness of the initial Shelf Registration Statement to but
not including the earliest of the date (A) such Excluded Registrable
Security is no longer a Registrable Security as defined herein, (B) such
Excluded Registrable Security is included in an effective Shelf
Registration Statement or an effective Piggyback Registration Statement or
(C) such Excluded Registrable Security is transferred pursuant to Section
2(f) hereof. Subject to the provisions of this Agreement, the Partnership
shall use its commercially reasonable efforts to file and have declared
effective a subsequent Shelf Registration Statement that includes the
Registrable Shares excluded from the initial Shelf Registration Statement
at such time as it may do so in accordance with the Securities Act as
interpreted by the Commission. Except with respect to the time periods for
filing and effectiveness, any such subsequent Shelf Registration Statement
shall be subject to the same provisions of this Agreement as the initial
Shelf Registration Statement.
(ii) S-3 Registration Statement. The Partnership may, at any time it
is eligible to do so, file a post-effective amendment on Form S-3 to the
Shelf Registration Statement on Form S-1 (the "S-3 Shelf Registration
Statement") for the resale of any then existing Registrable Securities or
in any such other manner as is preferred or permitted by the Commission to
convert the Shelf Registration Statement to an S-3 Shelf Registration
Statement. Upon the effectiveness of the S-3 Shelf Registration Statement,
all references to the Shelf Registration Statement in this Agreement shall
then automatically be deemed to be a reference to the S-3 Shelf
Registration Statement.
(b) Delay in Effectiveness of Shelf Registration Statement; Certain
Suspensions.
(i) If the Partnership fails to file the Shelf Registration Statement
with the Commission within the period specified in Section 2(a)(i), then
each Holder will be entitled to a payment, as liquidated damages and not a
penalty, of the Liquidated Damages Amount for each Registrable Security
held by such Holder and not then included in an effective Piggyback
Registration Statement, for a period beginning on the day after the
deadline for filing the Shelf Registration Statement and lasting until such
time as the Shelf Registration Statement is filed.
(ii) If the Shelf Registration Statement does not become or is not
declared effective within the period specified in Section 2(a)(i), then
each Holder will be entitled to a payment, as liquidated damages and not a
penalty, of the Liquidated Damages Amount for each Registrable Security
held by such Holder and not then included in an effective Piggyback
Registration Statement, for the period beginning on day after such deadline
for effectiveness of the Shelf Registration Statement and lasting until
such time as the Shelf Registration Statement is declared effective.
(iii) Subject to Section 2(f), if the Partnership excludes Excluded
Registrable Securities from the initial Shelf Registration Statement as
provided in Section 2(a)(i), then each Holder of Excluded Registrable
Securities will be entitled to a payment, as liquidated damages and not a
penalty, of the Liquidated Damages Amount for each Excluded Registrable
Security held by such Holder for the period beginning on the date
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of effectiveness of the Shelf Registration Statement to but not including
the day such Excluded Registrable Security is no longer an Excluded
Registrable Security.
(iv) If the Holders shall be prohibited from selling their Registrable
Securities (excluding Excluded Registrable Securities) under the Shelf
Registration Statement as a result of a Suspension Notice given by the
Partnership in accordance with Section 5 for a period in excess of the
periods permitted therein, then each Holder will be entitled to a payment,
as liquidated damages and not as a penalty, of the Liquidated Damages
Amount for each Registrable Security (excluding each Excluded Registrable
Security) held by such Holder for a period beginning on the first date upon
which the suspension period exceeded the permitted period and lasting to
but excluding the day an End of Suspension Notice is delivered by the
Partnership in accordance with Section 5(b).
(v) If the Shelf Registration Statement is filed and declared
effective but, during the Effectiveness Period, shall thereafter cease to
be effective or fail to be usable for the resale of Registrable Securities
(excluding Excluded Registrable Securities) in accordance with this
Agreement, except as permitted in Section 5 (the "Failure Date"), then each
Holder will be entitled to a payment, as liquidated damages and not as a
penalty, of the Liquidated Damages Amount for each Registrable Security
(excluding each Excluded Registrable Security) held by such Holder for a
period beginning on the Failure Date and lasting to but excluding the day a
post-effective amendment is declared effective by the Commission or
supplement or report is filed with the Commission and the Shelf
Registration Statement is useable for the resale of Registrable Securities
in accordance with this Agreement, unless the Partnership shall cure such
failure of such Shelf Registration Statement to be effective or usable
within 10 days after such Liquidated Damages Amount begins accruing
hereunder, in which event no Liquidated Damages Amount shall be payable as
a result of such failure.
(vi) Notwithstanding any provisions of this Agreement to the contrary,
in no event will the aggregate amount of the Liquidated Damages Amount
payable to any Holder under this Agreement exceed ten percent (10%) of the
amount of the Holder's initial investment in Registrable Securities
("Liquidated Damages Cap"), provided that the Liquidated Damages Cap shall
be automatically increased or eliminated without further action by the
parties hereto to the extent that such increase or elimination does not,
under the then published statements of the Fair Accounting Standards Board
(to the extent not challenged or disputed by the Commission), result in (A)
the Liquidated Damages Amount payment obligation being accounted for as a
derivative instrument rather than a contingent payment obligation under
generally accepted accounting principles and the rules and regulations of
the Commission or (B) any of the Registrable Securities (whether or not
deemed to include the Liquidated Damages Amount payment obligation) being
accounted for as interests other than equity interests under generally
accepted accounting principles and the rules and regulations of the
Commission.
(vii) The Liquidated Damages Amount shall be paid to each Holder in
immediately available funds within 10 Business Days after the end of each
such 90-day period. Any payments pursuant to this Section 2(b)(vii) shall
constitute the Holders' exclusive remedy for such events.
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(c) Public Offering.
(i) If the Partnership proposes to file (i) a registration statement
on Form S-1 or such other form under the Securities Act providing for the
public offering of Common Units for its own account for sale to the public
in an Underwritten Offering, including an IPO, but other than the Shelf
Registration Statement, a registration statement on Form S-4 or Form S-8
promulgated under the Securities Act (or any successor forms thereto), a
registration statement for the sale of Common Units issued upon conversion
of debt securities or any other form not available for registering the
Registrable Securities for sale to the public or (ii) a prospectus
supplement to an effective shelf registration statement with respect to an
Underwritten Offering of Common Units for its own account (the "Piggyback
Registration Statement"), the Partnership will notify each Holder of the
proposed filing and afford each Holder an opportunity to include in the
Piggyback Registration Statement all or any part of the Registrable
Securities then held by such Holder. Each Holder desiring to include in the
Piggyback Registration Statement all or part of the Registrable Securities
held by such Holder shall, within ten (10) days after receipt of the
above-described notice from the Partnership in the case of a filing of a
registration statement and within two (2) Business Days after the day of
receipt of the above-described notice from the Partnership in the case of a
filing of a prospectus supplement to an effective shelf Piggyback
Registration Statement with respect to an Underwritten Offering, so notify
the Partnership in writing, and in such notice shall inform the Partnership
of the number of Registrable Securities such Holder wishes to include in
the Piggyback Registration Statement and provide the Partnership with such
information with respect to such Holder as shall be reasonably necessary in
order to assure compliance with federal and applicable state securities
laws. Any election by any Holder to include any Registrable Securities in
the Piggyback Registration Statement will not affect the inclusion of such
Registrable Securities in the Shelf Registration Statement until such
Registrable Securities have been sold under the Piggyback Registration
Statement.
(ii) Right to Terminate Registration. The Partnership shall have the
right to terminate or withdraw the Piggyback Registration Statement
initiated by it referred to in this Section 2(c) prior to the effectiveness
of such registration (or pricing in the event of an Underwritten Offering
pursuant to an effective shelf registration statement) whether or not any
Holder has elected to include Registrable Securities in such registration.
(iii) Shelf Registration not Impacted by Piggyback Registration
Statement. The Partnership's obligation to file the Shelf Registration
Statement pursuant to Section 2(a)(i) hereof shall not be affected by the
filing or effectiveness of the Piggyback Registration Statement.
(d) Underwriting.
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(i) Shelf Registration. In the event that one or more Holders elect to
dispose of Registrable Securities under the Shelf Registration Statement
pursuant to an Underwritten Offering and such Holders reasonably anticipate
gross proceeds from such Underwritten Offering of at least $20,000,000, in
the aggregate, the Partnership shall take
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all such reasonable actions as are requested by the managing underwriter in
order to expedite and facilitate the registration and disposition of the
Registrable Securities, including the Partnership causing appropriate
officers of the Partnership or its Affiliates to participate in a "road
show" or similar marketing effort being conducted by such managing
underwriter with respect to such Underwritten Offering, provided that the
Partnership shall not be required to cause appropriate officers of the
Partnership or its Affiliates to participate in a "road show" or similar
marketing effort being conducted by such managing underwriter with respect
to such Underwritten Offering unless such Holders reasonably anticipate
gross proceeds from such Underwritten Offering of at least $30,000,000, and
provided, further, that the Partnership shall not be required to cause
appropriate officers of the Partnership or its Affiliates to participate in
a "road show" with respect to Underwritten Offerings under Shelf
Registration Statements more than once in any six month period.
(ii) Piggyback Registration. If the Registration Statement (or
prospectus supplement with respect to an Underwritten Offering pursuant to
an effective shelf registration statement) under which the Partnership
gives notice under Section 2(c) is for an Underwritten Offering, the
Partnership shall so advise the Holders of Registrable Securities.
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation on the number of securities to be included, then the managing
underwriter(s) may exclude securities (including Registrable Securities)
from the Piggyback Registration Statement and Underwritten Offering, and
any securities included in such Piggyback Registration Statement and
Underwritten Offering shall be allocated first, to the Partnership, and
second, to each of the Holders requesting inclusion of their Registrable
Securities in such Piggyback Registration Statement and other holders of
securities of the Partnership other than members of the QRC Group (on a pro
rata basis based on the total number of Common Units then held by each such
Holder of Common Units who is requesting inclusion), and third, to members
of the QRC Group; provided, however, that the number of Registrable
Securities to be included in the Piggyback Registration Statement shall not
be reduced unless all other securities of the Partnership held by (i)
officers, directors (other than Affiliates of Holders), other employees of
the Partnership and consultants; and (ii) members of the QRC Group, are
first entirely excluded from the Underwritten Offering and registration.
(iii) General Procedures. The right of any such Holder's Registrable
Securities to be included in a Shelf Registration Statement pursuant to
Section 2(d)(i) or a Piggyback Registration Statement pursuant to Section
2(d)(ii) shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Securities through such underwriting shall
enter into an underwriting agreement in customary form with the managing
underwriter(s) selected for such underwriting and complete and execute any
questionnaires, powers of attorney, indemnities, securities escrow
agreements and other documents reasonably required under the terms of such
underwriting, and furnish to the Partnership such information as the
Partnership may reasonably request in writing for inclusion in the
Piggyback Registration Statement or Shelf Registration Statement, as the
case may be;
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provided, however, that no Holder shall be required to make any
representations or warranties to or agreements with the Partnership or the
underwriters other than representations, warranties or agreements regarding
such Holder, its holdings and such Holder's intended method of distribution
and any other representation required by law.
(iv) Market Stand-Off. Regardless of whether a Holder elects to
include Registrable Securities in an Underwritten Offering, each Holder of
Registrable Securities hereby agrees that it shall not, to the extent
requested by the Partnership or an underwriter of securities of the
Partnership, directly or indirectly sell, offer to sell (including without
limitation any short sale or hedging or similar transaction with the same
economic effect as a sale), grant any option or otherwise transfer or
dispose of any Registrable Securities or other securities of the
Partnership or any securities convertible into or exchangeable or
exercisable for Common Units of the Partnership then owned by such Holder
(other than to donees, partners or members of the Holder who agree to be
similarly bound) for a period not to exceed 75 days following the effective
date of a registration statement for an Underwritten Offering or the date
of a prospectus supplement filed with the Commission with respect to the
pricing of an Underwritten Offering, other than the sale or distribution of
Registrable Securities in such Underwritten Offering; provided, however,
that:
(A) the QRC Group and all executive officers and directors of the
Partnership then holding Common Units of the Partnership or securities
convertible into or exchangeable or exercisable for Common Units of
the Partnership enter into similar agreements; and
(B) the Holders shall be allowed any concession or proportionate
release allowed to the QRC Group or any officer or director that
entered into similar agreements (with such proportion being determined
by dividing the number of Common Units being released with respect to
the QRC Group or such officer or director by the total number of
issued and outstanding Common Units held by the QRC Group or such
officer or director); provided, that nothing in this Section
2(d)(iv)(B) shall be construed as a right to proportionate release for
the QRC Group or the executive officers and directors of the
Partnership upon the expiration of the period applicable to all
Holders other than the QRC Group or the executive officers and
directors of the Partnership.
In order to enforce the foregoing covenant, the Partnership shall have the right
to place restrictive legends on the certificates representing the securities
subject to this Section 2(d)(iv) and to impose stop transfer instructions with
respect to the Registrable Securities and such other securities of each Holder
(and the securities of every other Person subject to the foregoing restriction)
until the end of such period.
(v) Withdrawal. If any Holder disapproves of the terms of an
Underwritten Offering, such Holder may elect to withdraw therefrom by
written notice to the Partnership and the managing underwriter delivered
(i) prior to the commencement of any marketing efforts for the Underwritten
Offering or (ii) at any time up to and including the time of pricing of the
Underwritten Offering if the price to the public at
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which the Registrable Securities are proposed to sold is (A) less than 95%
of average closing price of the Common Units during the 10 trading days
preceding the fourth trading day prior to commencement of the marketing
efforts for the Underwritten Offering, if the Common Units are then
publicly traded or (B) less than the lowest price in the initial price
range set forth on the cover of the preliminary prospectus for the
Underwritten Offering, if the Common Units are not then publicly traded.
The Partnership will provide notice to the Holders on the second trading
day prior to the date of commencement of marketing efforts and the
applicable price or price range determined under the immediately preceding
sentence. The Holder may agree to waive this right to withdraw with the
Partnership, the underwriters or any custodial agent in any custody
agreement and/or power of attorney executed by such Holder in connection
with the underwriting. Any Registrable Securities excluded or withdrawn
from such underwriting shall be excluded and withdrawn from such
Registration Statement. No such withdrawal shall affect the Partnership's
obligation to pay all Registration Expenses, as described in Section 2(e)
below.
(vi) Selection of Underwriter. In connection with any Underwritten
Offering under Section 2(d)(i) or 2(d)(ii), the Board of Directors of the
Partnership shall have the sole right to select the managing underwriter(s)
for each Underwritten Offering, each of which shall be a nationally
recognized firm. The Partnership shall advise all Holders of the managing
underwriter(s) for each proposed Underwritten Offering.
(e) Expenses. The Partnership shall pay all Registration Expenses in
connection with the registration of the Registrable Securities pursuant to this
Agreement. Each Holder participating in a registration pursuant to this Section
2 shall pay all transfer taxes payable by such Holder and bear such Holder's
proportionate share (based on the total number of Registrable Securities sold in
such registration) of all discounts and commissions payable to underwriters or
brokers in connection with a registration of Registrable Securities pursuant to
this Agreement.
(f) Right to Purchase Excluded Registrable Securities. During the period
that any Registrable Security is an Excluded Registrable Security, the
Partnership shall have the right, upon five Business Days prior written notice
to a Holder, to purchase, or to arrange for any third party to purchase in a
transaction permitted under applicable securities laws, all or any portion of
the Excluded Registrable Securities held by such Holder for cash at a price
equal to the average closing price of the Common Units during the 10 trading
days preceding the second trading day prior to the date such written notice is
given, if the Common Units are then publicly traded, or at a price determined to
be the fair market value of the Common Units by the Conflicts Committee of the
Board of Directors of the Partnership within 60 days prior to the date such
written notice is given, if the Common Units are not then publicly traded. The
closing of the purchase and sale shall occur five Business Days after written
notice is given by the Partnership. The Holder may refuse to sell such Excluded
Registrable Securities in such transaction, in which event the Liquidated
Damages Amount shall cease to accrue on such Excluded Registrable Securities as
of the date such purchase and sale was otherwise scheduled to close hereunder.
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3. RULE 144 REPORTING.
With a view to making available the benefits of certain rules and
regulations of the Commission that may at any time permit the sale of the
Registrable Securities to the public without registration, the Partnership
agrees to:
(a) use commercially reasonable efforts to make and keep available adequate
current public information, as those terms are understood and defined in Rule
144, at all times after the effective date of the first registration filed by
the Partnership for an offering of its securities to the general public;
(b) use commercially reasonable efforts to file with the Commission in a
timely manner all reports and other documents required to be filed by the
Partnership under the Securities Act and the Exchange Act (at any time that it
is subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to furnish to the
Holder promptly upon request (i) a written statement by the Partnership as to
its compliance with the reporting requirements of Rule 144 (at any time after
ninety (90) days after the effective date of the first registration filed by the
Partnership for an offering of its securities to the general public) and of the
Securities Act and the Exchange Act (at any time that it is subject to the
reporting requirements of the Exchange Act), (ii) a copy of the most recent
annual or quarterly report of the Partnership, if any, filed with the
Commission, and (iii) such other reports and documents of the Partnership as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such Registrable Securities without
registration.
4. REGISTRATION PROCEDURES.
(a) In connection with the obligations of the Partnership with respect to
any registration pursuant to this Agreement, (x) the Partnership shall use its
commercially reasonable efforts to effect or cause to be effected the
registration of the Registrable Securities under the Securities Act to permit
the sale of such Registrable Securities by the Holder or Holders in accordance
with the Holder's or Holders' intended method or methods of distribution, and
(y) the Partnership shall:
(i) Prepare and file with the Commission a Registration Statement and
use its commercially reasonable efforts to cause such Registration
Statement to become effective as soon as practicable after filing and to
remain effective, subject to Section 2(c)(ii) and Section 5 hereof, until
the earlier of (1) such time as all Registrable Securities covered thereby
have been sold pursuant to the Registration Statement or in accordance with
Rule 144 or (2) there are no Registrable Securities outstanding;
(ii) subject to Section 4(a)(vii), and Section 5 hereof, (1) prepare
and file with the Commission such amendments and post-effective amendments
to each such Registration Statement as may be necessary to keep such
Registration Statement effective for the period described in Section
4(a)(i) hereof; (2) cause each Prospectus contained therein to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 or any similar rule that may be adopted
12
under the Securities Act; and (3) amend or supplement each such
Registration Statement to include the Partnership's quarterly and annual
financial information and other material developments (until the
Partnership is eligible to incorporate such information by reference into
the Registration Statement), during which time sales of the Registrable
Securities under the Registration Statement will be suspended until such
amendment or supplement is filed and, in the case of an amendment, is
effective;
(iii) furnish to the Holders, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, if any, and any
amendment or supplement thereto and such other documents as such Holder may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities;
(iv) use its commercially reasonable efforts to register or qualify,
or obtain exemption from registration or qualification for, all Registrable
Securities by the time the applicable Registration Statement is declared
effective by the Commission under all applicable state securities or blue
sky laws of such jurisdictions in the United States as any Holder of
Registrable Securities covered by a Registration Statement shall reasonably
request in writing, keep each such registration or qualification or
exemption effective during the period such Registration Statement is
required to be kept effective pursuant to Section 4(a)(i) and do any and
all other acts and things that may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in each such jurisdiction
of such Registrable Securities owned by such Holder; provided, however,
that the Partnership shall not be required to (1) qualify generally to do
business in any jurisdiction or to register as a broker or dealer in such
jurisdiction where it would not otherwise be required to qualify but for
this Section 4(a)(iv) and except as may be required by the Securities Act,
(2) subject itself to taxation in any such jurisdiction, or (3) submit to
the general service of process in any such jurisdiction;
(v) notify each Holder promptly and, if requested by any Holder,
confirm such advice in writing (1) when a Registration Statement has become
effective and when any post-effective amendments and supplements thereto
become effective, (2) of the issuance by the Commission or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (3) of any request by the Commission or any other federal, state
or foreign governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional information,
and (4) of the happening of any event during the period a Registration
Statement is effective as a result of which such Registration Statement or
the related Prospectus or any document incorporated by reference therein
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading (which notice may be in the form of a
Suspension Notice under Section 5(b) hereof);
(vi) except as provided in Section 5, use commercially reasonable
efforts to obtain the withdrawal of any order enjoining or suspending the
use or effectiveness of a Registration Statement or suspending of the
qualification (or exemption from
13
qualification) of any of the Registrable Securities for sale in any
jurisdiction, as promptly as reasonably practicable;
(vii) except as provided in Section 5, upon the occurrence of any
event contemplated by Section 4(a)(v)(4) hereof, use its commercially
reasonable efforts to promptly prepare a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(viii) in the case of an Underwritten Offering, use its commercially
reasonable efforts to furnish to the underwriters a signed counterpart,
addressed to the underwriters, of: (1) an opinion of counsel for the
Partnership, dated the date of each closing under the underwriting
agreement, in customary form and reasonably satisfactory to the
underwriters; and (2) a "comfort" letter, dated the effective date of such
Registration Statement and the date of each closing under the underwriting
agreement, signed by the independent registered public accounting firm that
has certified the Partnership's financial statements included in such
Registration Statement, covering substantially the same matters with
respect to such Registration Statement (and the Prospectus included
therein) and with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to underwriters in underwritten public offerings of securities
and such other financial matters as the underwriters may reasonably
request;
(ix) in the case of an Underwritten Offering, enter into an
underwriting agreement in customary form with the underwriters and take all
other action required thereunder in order to expedite or facilitate the
distribution of the Registrable Securities included in such Registration
Statement and make representations and warranties to the underwriters in
such form and scope as are customarily made by issuers to underwriters in
such underwritten offerings and confirm the same to the extent customary if
and when requested;
(x) make available for inspection by representatives of the Holders
and the representative of any underwriters participating in any disposition
pursuant to a Registration Statement and any special counsel or accountants
retained by such Holders or underwriters, all financial and other records,
pertinent corporate documents and properties of the Partnership and cause
the respective officers, directors and employees of the Partnership to
supply all information reasonably requested by any such representatives,
the representative of the underwriters, counsel thereto or accountants in
connection with a Registration Statement; provided, however, that such
records, documents or information that the Partnership determines, in good
faith, to be confidential and notifies such representatives, representative
of the underwriters, counsel thereto or accountants are confidential shall
not be disclosed by the representatives, representative of the
underwriters, counsel thereto or accountants unless (1) the
14
disclosure of such records, documents or information is necessary to avoid
or correct a misstatement or omission in a Registration Statement or
Prospectus, (2) the release of such records, documents or information is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, or (3) such records, documents or information have been
generally made available to the public;
(xi) if the Partnership is already publicly listed or traded, use its
commercially reasonable efforts to list or include all Registrable
Securities on the primary national securities exchange or inter-dealer
quotation system on which similar securities issued by the Partnership are
then listed or traded, or if the Partnership is not already publicly listed
but the Partnership meets the criteria for listing on such exchange or
market, use its commercially reasonable efforts to list or include the
Common Units on the New York Stock Exchange, The Nasdaq Global Market or
the Nasdaq Global Select Market (as soon as practicable), as selected by
the Partnership, including seeking to cure in its listing or inclusion
application any deficiencies cited by the exchange or market, and
thereafter maintain the listing on such exchange;
(xii) from and after the effective date of the first registration
filed by the Partnership for an offering of its securities to the general
public, prepare and file all documents and reports required by the Exchange
Act and, to the extent the Partnership's obligation to file such reports
pursuant to Section 15(d) of the Exchange Act expires prior to the
expiration of the effectiveness period of the Registration Statement as
required by Section 4(a)(i) hereof, the Partnership shall voluntarily file
such reports pursuant to Section 15(d) of the Exchange Act through the
effectiveness period required by Section 4(a)(i) hereof;
(xiii) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the Registration Statement;
(xiv) (1) otherwise use its commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and (2) make
generally available to its securityholders, as soon as reasonably
practicable, earnings statements covering at least 12 months that satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 (or any
similar rule promulgated under the Securities Act ) thereunder;
(xv) provide and cause to be maintained a registrar and transfer agent
for all Registrable Securities covered by any Registration Statement from
and after a date not later than the effective date of such Registration
Statement;
(xvi) in connection with any sale or transfer of the Registrable
Securities (whether or not pursuant to a Registration Statement) that will
result in the securities being delivered no longer being Registrable
Securities, cooperate with the Holders and the representative of the
underwriters, if any, to facilitate the timely preparation and delivery of
any certificates representing the Registrable Securities to be sold, which
certificates shall not bear any transfer restrictive legends (other than as
required by the Partnership's governing documents) and to enable such
Registrable Securities to be in such denominations and registered in such
names as the representative of the
15
underwriters, if any, or the Holders may request at least two (2) Business
Days prior to any sale of the Registrable Securities, provided that such
Holder shall have provided the Partnership with any documents that are
reasonably requested by the Partnership; and
(b) The Partnership may require, and it shall be a condition precedent to
the obligations of the Partnership to take any action pursuant to Section 2,
with respect to the Registrable Securities of any selling Holder, that each
selling Holder furnish to the Partnership such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of such
securities as shall be required to effect the registration of its Registrable
Securities. In addition, if requested by the Partnership or the representative
of the underwriters of securities of the Partnership, each Holder shall provide,
within ten (10) days of such request, such information as may be required by the
Partnership or such representative in connection with the completion of any
public offering of the Partnership's securities pursuant to a Registration
Statement filed under the Securities Act. Each Holder further agrees to furnish
promptly to the Partnership in writing all information required from time to
time to make the information previously furnished by such Holder not misleading.
No Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this
Agreement.
(c) Each Holder agrees that, upon receipt of any notice from the
Partnership of the happening of any event of the kind described in Sections
4(a)(v)(3) or 4(a)(v)(4) hereof, such Holder will immediately discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus.
If so directed by the Partnership, such Holder will deliver to the Partnership
(at the expense of the Partnership) all copies in its possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
(d) The Partnership agrees that, unless it obtains the prior consent of
Holders of a majority of the Registrable Securities that are registered under a
Registration Statement at such time or the consent of the managing underwriter
in connection with any Underwritten Offering of Registrable Securities, it will
not make any offer relating to the Common Units that would constitute an "issuer
free writing prospectus," as defined in Rule 433, or that would otherwise
constitute a "free writing prospectus," as defined in Rule 405 (an "Issuer Free
Writing Prospectus"), required to be filed with the Commission. Each Holder
represents and agrees that, unless it obtains the prior consent of the
Partnership and any such underwriter, it will not make any offer relating to the
Common Units that would constitute an Issuer Free Writing Prospectus.
5. BLACK-OUT PERIOD.
(a) Anything in this Agreement to the contrary notwithstanding, subject to
the provisions of this Section 5 following the effectiveness of a Registration
Statement, the Partnership may direct the Holders in accordance with Section
5(b) to suspend sales of the Registrable Securities pursuant to a Registration
Statement for such times as the Partnership reasonably may determine is
necessary and advisable (but for no more than an aggregate of one-hundred (120)
days in any rolling twelve (12)-month period commencing on the Closing Date
16
(provided that no more than sixty (60) days of such one hundred twenty (120)
days may be as a result of the following events (after excluding the days
between the filing of any post-effective amendment to a registration statement
with the Commission as a result of such events through the day such
post-effective amendment is declared effective)) or for more than sixty (60)
days in any rolling 90-day period as a result of such events (after excluding
the days between the filing of any post-effective amendment to a registration
statement with the Commission as a result of such events through the day such
post-effective amendment is declared effective), if any of the following events
shall occur: (i) a majority of the members of the Board of Directors of the
Partnership shall have determined in good faith that (1) the offer or sale of
any Registrable Securities would materially impede, delay or interfere with any
proposed acquisition, merger, tender offer, business combination, corporate
reorganization, consolidation or other significant transaction involving the
Partnership, (2) after the advice of counsel, the sale of Registrable Securities
pursuant to the Registration Statement would require disclosure of non-public
material information not otherwise required to be disclosed under applicable
law, and (3) either (x) the Partnership has a bona fide business purpose for
preserving the confidentiality of such transaction, (y) disclosure would have a
material adverse effect on the Partnership or the Partnership's ability to
consummate such transaction, or (z) the proposed transaction renders the
Partnership unable to comply with Commission requirements; (ii) a majority of
the members of the Board of Directors of the Partnership shall have determined
in good faith that (1) the Prospectus included in the Registration Statement
contains a material misstatement or omission as a result of an event that has
occurred and is continuing; and (2) the disclosure of this material non-public
information would be detrimental to the Partnership; (iii) a majority of the
members of the Board of Directors of the Partnership shall have determined in
good faith, after the advice of counsel, that it is required by law, rule or
regulation to supplement the Registration Statement or file a post-effective
amendment to the Registration Statement in order to incorporate information into
the Registration Statement for the purpose of (1) including in the Registration
Statement any Prospectus required under Section 10(a)(3) of the Securities Act;
(2) reflecting in the Prospectus included in the Registration Statement any
facts or events arising after the effective date of the Registration Statement
(or of the most-recent post-effective amendment) that, individually or in the
aggregate, represents a fundamental change in the information set forth therein;
or (3) including in the Prospectus included in the Registration Statement any
material information with respect to the plan of distribution not disclosed in
the Registration Statement or any material change to such information; or (iv) a
majority of the members of the Board of Directors of the Partnership shall have
determined to convert the Shelf Registration Statement to an S-3 Shelf
Registration Statement. In addition, the Partnership may direct the Holders in
accordance with Section 5(b) to suspend sales of the Registrable Securities
pursuant to a Registration Statement from time to time under Section 4(a)(ii)
and Section 4(c) hereof. Upon the occurrence of any such suspension under
clauses (iii) or (iv), the Partnership shall use its commercially reasonable
efforts to cause the Registration Statement to become effective or to promptly
amend or supplement the Registration Statement on a post-effective basis or to
take such action as is necessary to make resumed use of the Registration
Statement compatible with the Partnership's best interests, as applicable, so as
to permit the Holders to resume sales of the Registrable Securities as soon as
reasonably practicable.
(b) In the case of an event that causes the Partnership to suspend the use
of a Registration Statement (a "Suspension Event"), the Partnership shall give
written notice (a "Suspension Notice") to the Holders to suspend sales of the
Registrable Securities. The Holders
17
shall not effect any sales of the Registrable Securities pursuant to such
Registration Statement (or such filings) at any time after it has received a
Suspension Notice from the Partnership and prior to receipt of an End of
Suspension Notice (as defined below). If so directed by the Partnership, each
Holder will deliver to the Partnership (at the expense of the Partnership) all
copies other than permanent file copies then in such Holder's possession of the
Prospectus covering the Registrable Securities at the time of receipt of the
Suspension Notice. The Holders may recommence effecting sales of the Registrable
Securities pursuant to the Registration Statement (or such filings) following
further notice to such effect (an "End of Suspension Notice") from the
Partnership, which End of Suspension Notice shall be given by the Partnership to
the Holders in the manner described above promptly following the conclusion of
any Suspension Event and its effect. The Partnership shall not be required to
specify in the written notice to the Holders the nature of the event giving rise
to the suspension period. Holders hereby agree to hold in confidence any
communications in response to a notice of, or the existence of any fact or any
event giving rise to the suspension period.
(c) Notwithstanding any provision herein to the contrary, if the
Partnership shall give a Suspension Notice pursuant to this Section 5, the
Partnership agrees that it shall extend the period of time during which the
applicable Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from the date of receipt by
the Holders of the Suspension Notice to and including the date of receipt by the
Holders of the End of Suspension Notice and copies of the supplemented and
amended Prospectus necessary to resume sales.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Partnership agrees to indemnify and hold harmless (i) each Holder
of Registrable Securities and any underwriter (as determined in the Securities
Act) for such Holder, (ii) each Person, if any, who controls (within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act), any
such Person described in clause (i) (any of the Persons referred to in this
clause (ii) being hereinafter referred to as a "Controlling Person"), and (iii)
the respective officers, directors, partners, members, employees,
representatives and agents of any such Person or any Controlling Person (any
Person referred to in clause (i), (ii) or (iii) may hereinafter be referred to
as a "Purchaser Indemnitee"), to the fullest extent lawful, from and against any
and all losses, claims, damages, judgments, actions, reasonable out-of-pocket
expenses, and other liabilities (the "Liabilities"), including without
limitation and as incurred, reimbursement of all reasonable out-of-pocket costs
of investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Purchaser Indemnitee to the extent provided herein, joint or several, directly
or indirectly related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (as amended or supplemented if the
Partnership shall have furnished to such Purchaser Indemnitee any amendments or
supplements thereto), or any Issuer Free Writing Prospectus (or any amendment or
supplement thereto), or any preliminary Prospectus or any other document
prepared by or with the Partnership for use in selling the securities, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
18
Liabilities arise out of or are based upon (i) any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Purchaser Indemnitee furnished to the
Partnership or any underwriter in writing by such Purchaser Indemnitee expressly
for use therein, or (ii) any sales by any Holder after the delivery by the
Partnership to such Holder of a Suspension Notice and before the delivery by the
Partnership of an End of Suspension Notice. The Partnership shall notify the
Holders promptly of the institution, threat or assertion of any claim,
proceeding (including any governmental investigation), or litigation of which it
shall have become aware in connection with the matters addressed by this
Agreement which involves the Partnership or a Purchaser Indemnitee. The
indemnity provided for herein shall remain in full force and effect regardless
of any investigation made by or on behalf of any Purchaser Indemnitee.
(b) In connection with any Registration Statement in which a Holder of
Registrable Securities is participating, such Holder agrees, severally and not
jointly, to indemnify and hold harmless the Partnership, each Person who
controls the Partnership within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act and the respective officers, directors,
partners, members, employees, representatives and agents of such Person or
Controlling Person to the same extent as the foregoing indemnity from the
Partnership to each Purchaser Indemnitee, but only with reference to (i) untrue
statements or omissions or alleged untrue statements or omissions made in
reliance upon and in strict conformity with information relating to such Holder
furnished to the Partnership in writing by such Holder expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto, any
Issuer Free Writing Prospectus (or any amendment or supplement thereto) or any
preliminary Prospectus or (ii) any sales by such Holder after the delivery by
the Partnership to such Holder of a Suspension Notice and before the delivery by
the Partnership of an End of Suspension Notice. The liability of any Holder
pursuant to this subsection shall in no event exceed the gross proceeds received
by such Holder from sales of Registrable Securities giving rise to such
obligations.
(c) If any Proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to subsection (a) or (b)
above, such Person (the "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying Party"), in writing
of the commencement thereof (but the failure to so notify an Indemnifying Party
shall not relieve it from any liability which it may have under this Section 6,
except to the extent the Indemnifying Party is materially prejudiced by the
failure to give notice), and the Indemnifying Party shall be entitled to assume
the defense thereof and retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such proceeding and shall pay the
reasonable fees and expenses actually incurred by such counsel related to such
proceeding. Notwithstanding the foregoing, in any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party,
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed in writing to the contrary, (ii) the Indemnifying Party failed within a
reasonable time after notice of commencement of the action to assume the defense
and employ counsel reasonably satisfactory to the Indemnified Party, (iii) the
Indemnifying Party and its counsel do not actively and vigorously pursue the
defense of such action or (iv) the named parties to any
19
such action (including any impleaded parties), include both such Indemnified
Party and the Indemnifying Party, or any Affiliate of the Indemnifying Party,
and such Indemnified Party shall have been reasonably advised by counsel that,
either (x) there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party or
such Affiliate of the Indemnifying Party or (y) a conflict may exist between
such Indemnified Party and the Indemnifying Party or such Affiliate of the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to assume nor direct the defense of such action on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel), for
all such Indemnified Parties, which firm shall be designated in writing by those
Indemnified Parties who sold a majority of the Registrable Securities sold by
all such Indemnified Parties and any such separate firm for the Partnership, the
directors, the officers and such control Persons of the Partnership as shall be
designated in writing by the Partnership). The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there is a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify any Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in subsections (a) and (b) of this
Section 6 is for any reason held to be unavailable to an Indemnified Party in
respect of any Liabilities referred to therein (other than by reason of the
exceptions provided therein) or is insufficient to hold harmless a party
indemnified thereunder, then each Indemnifying Party under such subsections, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Liabilities
(i) in such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Party(ies) on the other
in connection with the statements or omissions that resulted in such
Liabilities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party(ies) and the Indemnified Party, as well as any
other relevant equitable considerations. The relative fault of the Partnership
on the one hand and any Purchaser Indemnitees on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Partnership or by such
Purchaser Indemnitees and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
(even if such Indemnified Parties were
20
treated as one entity for such purpose), or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 6(d) above. The amount paid or payable by an Indemnified Party as a
result of any Liabilities referred to in Section 6(d) shall be deemed to
include, subject to the limitations set forth above, any reasonable
out-of-pocket legal or other expenses actually incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, in no event shall a Purchaser
Indemnitee be required to contribute any amount in excess of the amount by which
proceeds received by such Purchaser Indemnitee from sales of Registrable
Securities exceeds the amount of any damages that such Purchaser Indemnitee has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 6, each
Person, if any, who controls (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act) a Holder of Registrable Securities
shall have the same rights to contribution as such Holder, as the case may be,
and each Person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act) the Partnership, and each
officer, director, partner, member, employee, representative and agent of the
Partnership shall have the same rights to contribution as the Partnership. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any Proceeding against such party in respect of which a claim
for contribution may be made against another party or parties, notify each party
or parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 6 or otherwise, except to the extent that any party is materially
prejudiced by the failure to give notice. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act),
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section 6
will be in addition to any liability which the Indemnifying Parties may
otherwise have to the Indemnified Parties referred to above. The Purchaser
Indemnitees' obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of securities sold by each of the Purchaser
Indemnitees hereunder and not joint.
7. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS.
From and after the date of this Agreement, the Partnership shall not,
without the prior written consent of Holders beneficially owning not less than
two-thirds (2/3) of the then outstanding Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the
Partnership that would grant such holder registration rights senior to those
granted to the Holders hereunder.
8. MISCELLANEOUS.
(a) Remedies. In the event of a breach by the Partnership of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein, or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. Subject to Section 6, the Partnership agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a
21
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof may not be
given, without the written consent of the Partnership and Holders beneficially
owning not less than two-thirds (2/3) of the then outstanding Registrable
Securities. No amendment shall be deemed effective unless it applies uniformly
to all Holders. Notwithstanding the foregoing, a waiver or consent to or
departure from the provisions hereof with respect to a matter that relates
exclusively to the rights of a Holder whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders may be given by such
Holder; provided that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(c) Notices. All notices and other communications, provided for or
permitted hereunder shall be made in writing by delivered by facsimile (with
receipt confirmed), overnight courier or registered or certified mail, return
receipt requested, or e-mail (if an e-mail address is provided by a Holder):
(i) if to a Holder, at the most current address given by the transfer
agent and registrar of the Common Units to the Partnership (or, if more
recent, at an address contained in a written notice from the Holder); and
(ii) if to the Partnership at the offices of the Partnership at:
Quest Midstream Partners, L.P.
0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: President
(facsimile: 405-840-9897)
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
hereto. The rights to cause the Partnership to register Registrable Securities
pursuant to this Agreement may be assigned by a Holder to a transferee or
assignee of Registrable Securities that (a) is a subsidiary, parent, general
partner, limited partner, retired partner, member or retired member, or
shareholder of a Holder, (b) is a Holder's family member or trust for the
benefit of an individual Holder, (c) acquires at least 175,000 Registrable
Securities (as adjusted for splits and combinations); or (d) is an Affiliate of
such Holder, provided, however, that such transfer shall not be effective for
purposes of this Agreement until (i) the transferor shall furnish to the
Partnership written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned and (ii) such transferee shall agree to be subject to all
restrictions set forth in this Agreement. Each Holder
22
agrees that any transferee of any Registrable Securities shall be bound by
Section 4(b) and Section 7, whether or not such transferee expressly agrees to
be bound.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
(h) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties hereto that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(i) Entire Agreement. This Agreement, together with the Purchase Agreement,
is intended by the parties hereto as a final expression of their agreement, and
is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.
(j) Registrable Securities Held by the Partnership or Certain Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Partnership or any subsidiary of the Partnership or any member of the QRC Group
or any of its or their Affiliates shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
(k) Adjustment for Splits, etc. Wherever in this Agreement there is a
reference to a specific number of securities with respect to any Registrable
Securities, then upon the occurrence of any subdivision, combination, or
security dividend of such securities, the specific number of securities with
respect to any Registrable Securities so referenced in this Agreement shall
automatically be proportionally adjusted to reflect the effect on the
outstanding securities of such class or series by such subdivision, combination,
or security dividend.
(l) Legend. The Partnership shall have the right to place a legend on each
certificate representing securities subject to this Agreement to the effect that
the holder thereof, by its
23
acceptance thereof, will be deemed to have agreed to be bound by the provisions
of this Agreement.
(m) Survival. This Agreement is intended to survive the consummation of the
transactions contemplated by the Purchase Agreement. The indemnification and
contribution obligations under Section 6 of this Agreement shall survive the
termination of the Partnership's obligations under Section 2 of this Agreement.
(n) Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court or arbitrator(s),
as the case may be, shall be entitled to recover its reasonable attorneys' fees
in addition to any other available remedy.
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE PARTNERSHIP:
QUEST MIDSTREAM PARTNERS, L.P.
By: QUEST RESOURCES GP, LLC,
its general partner
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Name: Xxxxx X. Xxxx
Title: Chief Executive Officer
INVESTORS:
ALERIAN OPPORTUNITY PARTNERS IV, LP
By: ALERIAN OPPORTUNITY
ADVISORS IV, LLC
its general partner
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Managing Member
Address for Notice:
Alerian Capital Management
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
SWANK MLP CONVERGENCE FUND, LP
By: SWANK ENERGY INCOME ADVISORS,
L.P.
its general partner
By: SWANK CAPITAL, LLC
its general partner
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Manager
Address for Notice:
Swank Capital, LLC
Xxx Xxxx Xxx, Xxxxx 000
Xxxxxx, XX 00000
SWANK INVESTMENT PARTNERS, LP
By: SWANK ENERGY INCOME ADVISORS,
L.P.
its general partner
By: SWANK CAPITAL, LLC
its general partner
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Manager
Address for Notice:
Swank Capital, LLC
Xxx Xxxx Xxx, Xxxxx 000
Xxxxxx, XX 00000
THE XXXXXXX MLP OPPORTUNITY FUND I,
LP
By: CARBON COUNTY PARTNERS, LP
its general partner
By: CARBON COUNTY GP I, LLC
its general partner
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Manager
Address for Notice:
Swank Capital, LLC
Xxx Xxxx Xxx, Xxxxx 000
Xxxxxx, XX 00000
THE XXXXXXX XX STRATEGIES FUND, LP
By: CARBON COUNTY PARTNERS, LP
its general partner
By: CARBON COUNTY GP I, LLC
its general partner
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Manager
Address for Notice:
Swank Capital, LLC
Xxx Xxxx Xxx, Xxxxx 000
Xxxxxx, XX 00000
TORTOISE CAPITAL RESOURCES
CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
Address for Notice:
Tortoise Capital Resources
Corporation
00000 Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
XXXXXXXX OPPORTUNITY
PARTNERS, LP
By: XXXXXXXX OPPORTUNITY PARTNERS
GP, LLC
its General Partner
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Manager
Address for Notice:
c/o Huizenga Capital Management
0000 Xxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
HCM ENERGY HOLDINGS, LLC
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Manager
Address for Notice:
c/o Huizenga Capital Management
0000 Xxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
