AREA OF MUTUAL INTEREST AGREEMENT
Exhibit 10.4
Execution Version
THIS AREA OF MUTUAL INTEREST AGREEMENT, dated as of March 17, 2009 (this “Agreement”), is
entered into by and among Regency Energy Partners LP, a Delaware limited partnership (the “MLP”),
RIGS Haynesville Partnership Co., a Delaware general partnership (the “Company”), Regency
Haynesville Intrastate Gas LLC, a Delaware limited liability company (“Regency HIG”), Xxxxxx Gas
Pipeline I, L.P., a Delaware limited partnership (“Xxxxxx Investor 1”) and Xxxxxx Gas Pipeline II,
L.P., a Delaware limited partnership (“Xxxxxx Investor 2,” and collectively with Xxxxxx Investor 1,
the “Xxxxxx Investors”). The parties to this Agreement are collectively referred to as the
“Parties” and individually as a “Party.” Capitalized terms used but not defined herein have the
meanings ascribed to them in that certain Contribution Agreement, dated as of February 26, 2009, by
and among Regency HIG, the Company, General Electric Capital Corporation, a Delaware corporation,
Xxxxxx Investor 1 and Xxxxxx Investor 2 (the “Contribution Agreement”).
RECITALS:
WHEREAS, upon the Closing, (a) Regency HIG, an indirect wholly owned subsidiary of the MLP,
will contribute a 99.999% limited partnership interest in Regency Intrastate Gas LP (“RIGS”) to the
Company, (b) RIGS SPE LLC, an indirect wholly owned subsidiary of the MLP, will contribute a 0.001%
general partnership interest in RIGS to RIGS GP LLC, a wholly owned subsidiary of the Company, and
(c) the Company will issue the GP Units and pay the Regency Closing Payment to Regency HIG, in each
case as described in the Contribution Agreement; and
WHEREAS, pursuant to the Contribution Agreement, this Agreement is to be executed and
delivered at Closing.
NOW, THEREFORE, in consideration of their mutual undertakings and agreements hereunder, the
Parties undertake and agree as follows:
Section 1. Creation of AMI Opportunity.
(a) Certain Definitions.
“AMI Acquisition” means the acquisition of any AMI Acquisition Assets.
“AMI Acquisition Assets” means, with respect to any AMI Acquisition Opportunity, the assets
(including, without limitation, the Applicable Assets included within such assets) and equity or
other ownership interests subject to such AMI Acquisition Opportunity.
“AMI Acquisition Opportunity” means the opportunity to acquire either of the following:
(i) Assets (which includes Applicable Assets) from which 80% or more of the gross revenues
derived from such Assets (during the fiscal year ended immediately prior to the
year in which the acquisition in question is to occur) is derived from the following two types
of assets combined: (1) natural gas transported on such Applicable Assets that was either received
into such Applicable Assets at receipt points located within the AMI Area or delivered from such
Applicable Assets at delivery points located within the AMI Area and/or (2) natural gas storage
infrastructure assets included in such Applicable Assets; or
(ii) equity or other ownership interests of an entity which owns Applicable Assets from which
80% or more of the gross revenues derived from such entity’s Assets, on a consolidated basis
(during the fiscal year ended immediately prior to the year in which the acquisition in question is
to occur) is derived from (1) natural gas transported on such Applicable Assets that was either
received into such Applicable Assets at receipt points located within the AMI Area or delivered
from such Applicable Assets at delivery points located within the AMI Area and/or (2) natural gas
storage infrastructure assets included in such Applicable Assets.
For the avoidance of doubt, any portion of the “Assets” referred to in clause (i) above and
any subsidiary or affiliate of the “entity” referred to in clause (ii) above shall not, on a stand
alone basis, constitute an AMI Acquisition Opportunity.
“AMI Area” means that portion of the area within the State of Louisiana that is designated as
the “AMI Area” on Exhibit A hereto.
“AMI Assets” means all AMI Acquisition Assets and XXX Xxxxxxxxxx Assets.
“XXX Xxxxxxxxxx Assets” means, with respect to any XXX Xxxxxxxxxx Opportunity, the assets
subject to such XXX Xxxxxxxxxx Opportunity.
“XXX Xxxxxxxxxx Opportunity” means the opportunity to construct and develop (as opposed to an
acquisition of) additional Applicable Assets other than any Company Specific Opportunity.
“AMI Opportunity” means any AMI Acquisition Opportunity or XXX Xxxxxxxxxx Opportunity.
“Applicable Assets” means interstate and/or intrastate natural gas transportation
infrastructure assets (but specifically excluding any Natural Gas Gathering Infrastructure Assets,
natural gas treating infrastructure assets and/or natural gas processing infrastructure assets) and
natural gas storage infrastructure assets that are located within the AMI Area.
“Assets” means assets of any type or nature, including, without limitation, Applicable Assets.
“Available Capacity” means the maximum quantity of natural gas that can be transported in a
given period of time under normal operating conditions.
“Change of Control Event” means any date on which the Ultimate Parent (as defined in the
Company Partnership Agreement) of Xxxxxx Investor I Parent and of Xxxxxx Investor II Parent
collectively no longer possesses, directly or indirectly, through one or more
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intermediaries, (i) more than 25% of the outstanding voting interest in the Company and (ii)
more than 25% of the economic or beneficial interest in the Company.
“Company Specific Opportunity” means any intrastate and/or interstate natural gas
transportation infrastructure assets the sole purpose of which are to increase the Available
Capacity of the Company’s or RIGS’ existing natural gas transportation infrastructure assets.
“Management Company” means Regency Employees Management LLC.
“MC Member” shall have the meaning ascribed to such term in the Company Partnership Agreement.
“Natural Gas Gathering Infrastructure Assets” means pipelines and other facilities (including
all interconnections, laterals, storage facilities, meters, dehydration facilities, compression
facilities, junction heaters, separators, electric power lines, communication cables, roads and
other related facilities and equipment, including all easements located thereon) used to transport
gas from a current production facility to a transmission line or main line.
“RIGS System” means the gas transportation system consisting of the intrastate pipeline owned
by RIGS as of the Closing Date and as thereafter expanded from time-to-time.
“Services Agreement” means the Master Services Agreement between the Partnership and the
Management Company, as amended or modified from time to time, pursuant to which the Management
Company manages the day-to-day operations of the Company.
“Subject Person” means the MLP, any direct or indirect wholly owned subsidiary of the MLP and
any Affiliate of the MLP that is directly or indirectly controlled by the MLP; provided, that
“Subject Person” shall not include the Company, RIGS or any of their direct or indirect
subsidiaries or any Person that directly or indirectly owns any interest in the MLP.
“Termination Date” means the earlier to occur of (i) the first date on which the MLP and/or
its Affiliates, directly or indirectly, owns 75% or more of the GP Units in the Company, (ii) the
date on which the Services Agreement is terminated and (iii) the occurrence of a Change of Control
Event.
(b) Term of this Agreement. The term of this Agreement (the “Term”) shall begin on
the Closing Date and shall end on the Termination Date. During the Term, the MLP shall, and shall
cause each other Subject Person to, comply with all of the provisions of this Agreement and each
other Party shall comply with all of the provisions of this Agreement. For the avoidance of doubt,
this Agreement shall terminate for all purposes upon the expiration of the Term.
(c) AMI Acquisition Opportunities.
(i) In the event that a Subject Person identifies an AMI Acquisition Opportunity that such
Subject Person desires to pursue or reasonably believes the Company should pursue, such Subject
Person shall promptly notify the Xxxxxx Investors of such opportunity and shall, subject to the
Xxxxxx Investors executing and delivering to the Subject Person a confidentiality agreement in form
and substance reasonably satisfactory to the Subject
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Person, (A) make available to the Xxxxxx Investors all information in its possession related
to such AMI Acquisition Opportunity as may be reasonably requested by the Xxxxxx Investors from
time to time, including all information concerning and analysis of the business, operations and
finances of the applicable AMI Acquisition Assets and the terms of any proposed acquisition
agreement, (B) frequently consult with the Xxxxxx Investors in evaluating the AMI Acquisition
Opportunity and (C) keep the Xxxxxx Investors reasonably informed as to the status of the AMI
Acquisition Opportunity to the extent requested by the Xxxxxx Investors from time-to-time, in each
case, subject to any confidentiality restrictions applicable to such Subject Person. Each Subject
Person shall use commercially reasonably efforts to cause any confidentiality agreement entered
into by such Subject Person in connection with any AMI Acquisition Opportunity to allow disclosures
of confidential information to the Xxxxxx Investors.
(ii) If the Subject Person executes an acquisition agreement for any AMI Acquisition
Opportunity, it shall use commercially reasonable efforts to cause the applicable acquisition
agreement and all other related agreements and materials (including due diligence materials) (A) to
be fully assignable to the Company without the consent of any other Person and (B) to be promptly
delivered to the Xxxxxx Investors. The Xxxxxx Investors shall have the lesser of (x) 15 days
following the delivery to the Xxxxxx Investors of a complete and accurate copy of the applicable
acquisition agreement and all other related agreements in the Subject Person’s possession, or (y)
the number of days between the delivery of such agreements and the anticipated closing date
thereunder in which to cause the Company to elect to purchase the applicable AMI Acquisition Assets
in accordance with the terms of the Company Partnership Agreement (the “AMI Acquisition Election
Period”).
(iii) If the Xxxxxx Investors elect to cause the Company to acquire the AMI Acquisition
Opportunity, the Subject Person shall, to the extent permitted by the applicable acquisition
agreement and other related agreements, assign its rights thereunder and related materials
(including due diligence materials) to the Company, and the Company shall assume all of the Subject
Person’s rights and obligations thereunder and (whether or not such agreements can be assigned)
agree to protect, defend, indemnify and hold harmless such Subject Person from all liabilities
arising out of or related to such acquisition agreement and related agreements. In addition, at
the time of such assignment of the applicable acquisition agreement, the Company shall reimburse
the Subject Person for all costs and expenses incurred by such Subject Person (and its Affiliates)
in connection with such AMI Acquisition Opportunity. If the Xxxxxx Investors elect to cause the
Company to acquire the AMI Acquisition Opportunity but the Subject Person is unable to assign the
applicable acquisition agreement to the Company, then the Subject Person shall hold the applicable
acquisition and related agreements in trust for the benefit of the Company, and, at the time of
such election, the Company shall reimburse the Subject Person (and its Affiliates) for all costs
and expenses incurred by such Subject Person (and its Affiliates) in connection with such AMI
Acquisition Opportunity. In addition, the Subject Person shall use commercially reasonable efforts
to cause the AMI Acquisition Assets to be assigned to the Company at the closing or as soon as
reasonably practicable thereafter and shall (at the Company’s expense and direction) use
commercially reasonable efforts to assign to the Company (or enforce for the benefit of the
Company) all of the benefits of the applicable agreements, and, upon such assignment of AMI
Acquisition Assets, the Company shall reimburse such Subject Person for any additional costs and
expenses incurred by such Subject
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Person (and its Affiliates) in connection with the acquisition and assignment of such AMI
Acquisition Assets. If the Subject Person is unable to assign the AMI Acquisition Assets at the
closing, the Subject Person shall hold such AMI Acquisition Assets in trust for the benefit of
Company, and the Company shall reimburse the Subject Person for all costs and expenses incurred by
such Subject Person (and its Affiliates) in connection with such AMI Acquisition Assets. Any
assignment of the applicable acquisition agreement, related agreements, materials or AMI
Acquisition Assets pursuant to this Section 1(c) by a Subject Person to the Company shall
be on an “AS IS, WHERE IS” basis, without any representations, warranties, covenants,
indemnification or other agreements given by any Subject Person other than that all of the rights
of the Subject Person in the assigned agreements or AMI Acquisition Assets is free of all Liens
arising by, through or under such Subject Person but not otherwise.
(iv) With respect to any particular AMI Acquisition Assets, any Subject Person and its
Affiliates shall be free to pursue such AMI Acquisition Assets and such AMI Acquisition Assets
shall no longer be subject to this Agreement if the Xxxxxx Investors do not elect to cause the
Company to acquire the AMI Acquisition Opportunity prior to the expiration of the AMI Acquisition
Election Period.
(d) XXX Xxxxxxxxxx Opportunities.
(i) In the event a Subject Person identifies an XXX Xxxxxxxxxx Opportunity that such Subject
Person desires to pursue or reasonably believes the Company should pursue, such Subject Person
shall promptly notify the Company of such opportunity and provide the Company all information in
its possession related thereto.
(ii) The Company shall have the exclusive right to purse the XXX Xxxxxxxxxx Opportunity until
such time as there is a good faith, irreconcilable and material disagreement between the Xxxxxx
Investors and any Subject Person on the design, revenue or cost structure or risk profile for or
other material matter relating to the XXX Xxxxxxxxxx Opportunity (a “Trigger Event”). If a Trigger
Event occurs, then any Subject Person and its Affiliates shall be free to pursue such XXX
Xxxxxxxxxx Opportunity without the participation by the Company or the Xxxxxx Investors. If,
following a Trigger Event, a Subject Person pursues an XXX Xxxxxxxxxx Opportunity outside of the
Partnership, then such Subject Person and the Company (without the participation of the MC Member
designated by Regency HIG) shall negotiate in good faith to determine the amount of the costs and
expenses incurred by the Company with respect to such XXX Xxxxxxxxxx Opportunity to be reimbursed
by such Subject Person, if any, and the timing thereof. In the event that, during the continued
development of the XXX Xxxxxxxxxx Opportunity the Subject Person modifies the XXX Xxxxxxxxxx
Opportunity in such a manner consistent with the position of the Xxxxxx Investors in the dispute
between the Xxxxxx Investors and the Subject Person that resulted in the Trigger Event, then such
opportunity shall become a new XXX Xxxxxxxxxx Opportunity subject to the provisions in Section
1(d)(i) and this Section 1(d)(ii), and the Xxxxxx Investors shall have 30 days after
receipt of notice of such new XXX Xxxxxxxxxx Opportunity to (x) cause the Company to elect to
pursue such XXX Xxxxxxxxxx Opportunity, and (y) (if the Xxxxxx Investors cause the Company to so
elect) reimburse the Subject Person for all of its costs and expenses associated with such XXX
Xxxxxxxxxx Opportunity (equitability adjusted to account for any costs and expenses that would not
have been incurred with respect to such XXX Xxxxxxxxxx Opportunity but for the Subject Person’s
decision to pursue the XXX Xxxxxxxxxx
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Opportunity in a manner inconsistent with the position of the Xxxxxx Investors in the dispute
between the Xxxxxx Investors and the Subject Person that resulted in the Trigger Event); provided,
that if the Xxxxxx Investors fail to cause the Company to make such election or reimburse the
Subject Person for such costs and expenses during such 30 day period, then the Company shall be
deemed to have waived any rights under this Agreement to participate in such new XXX Xxxxxxxxxx
Opportunity and the Subject Person shall be free to pursue such XXX Xxxxxxxxxx Opportunity without
the participation by the Company or the Xxxxxx Investors.
(e) Scope of Obligation to Offer. The MLP and any other Subject Person shall only be
required to offer AMI Acquisition Assets and XXX Xxxxxxxxxx Assets to the Company for purchase or
development, as applicable, by the Company upon the terms and conditions contained in this
Section 1. Except as provided in this Section 1, each Subject Person shall be free
to engage in any business activity whatsoever, including those that may be in direct competition
with the Company. For the avoidance of doubt, the Parties hereby acknowledge and agree that the
obligations of the Parties set forth in Section 1 shall not apply to any Company Specific
Opportunity.
(f) Non-Compete.
(i) If and for so long as the Xxxxxx Investors are participating with a Subject Person in the
analysis of an identified AMI Acquisition Opportunity pursuant to Section 1(c) and
thereafter if the Xxxxxx Investors have caused the Company to acquire the AMI Acquisition Company,
then neither of the Xxxxxx Investors shall pursue such AMI Acquisition Opportunity and each of
Xxxxxx Investor 1 and Xxxxxx Investor 2 shall cause Xxxxxx Investor I Parent and Xxxxxx Investor II
Parent, respectively, to not pursue such AMI Acquisition Opportunity directly or through a Person
directly or indirectly wholly owned by Xxxxxx Investor I Parent and Xxxxxx Investor II Parent,
respectively, formed solely for the purpose of pursuing and acquiring such AMI Acquisition
Opportunity.
(ii) If the Company is pursuing an XXX Xxxxxxxxxx Opportunity, then until the occurrence of a
Trigger Event, neither of the Xxxxxx Investors shall pursue such XXX Xxxxxxxxxx Opportunity and
each of Xxxxxx Investor 1 and Xxxxxx Investor 2 shall cause Xxxxxx Investor I Parent and Xxxxxx
Investor II Parent, respectively, to not pursue such XXX Xxxxxxxxxx Opportunity directly or through
a Person directly or indirectly wholly owned by Xxxxxx Investor I Parent and Xxxxxx Investor II
Parent, respectively, formed solely for the purpose of pursuing and acquiring such XXX Xxxxxxxxxx
Opportunity.
Section 2. Confidentiality. Each Party covenants and agrees that all information submitted to
it by any Subject Person under this Agreement will be considered proprietary, confidential and the
property of the Subject Person and will be used only for the purpose of determining whether or not
to exercise its rights in Section 1 and, if such election is exercised, for use in the
development and operation of the applicable AMI Opportunity; provided, however such information
shall become the property of the Company at such time that the Company elects to pursue an AMI
Opportunity as provided in Section 1; provided, further, if a Trigger Event occurs with
respect to any XXX Xxxxxxxxxx Opportunity, any applicable information shall revert back to the
applicable Subject Person.
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Section 3. Binding Effect. This Agreement will be binding upon, and will inure to the benefit
of, the Parties and their respective successors, permitted assigns and legal representatives and
each of the Partners shall cause the obligations under this Agreement to be assumed by any its
successors or assigns of any interest in the Company.
Section 4. No Third Party Rights. The provisions of this Agreement are intended to bind the
Parties as to each other and are not intended to and do not create rights in any other person or
confer upon any other person any benefits, rights or remedies and no person is or is intended to be
a third party beneficiary of any of the provisions of this Agreement.
Section 5. No Waiver. No waiver or consent, express or implied, by any Party to or of any
breach or default by any person in the performance by such person of its obligations hereunder
shall be deemed or construed to be a consent or waiver to or of any other breach or default in the
performance by such person of the same or any other obligations of such person hereunder. Failure
on the part of a Party to complain of any act of any person or to declare any person in default,
irrespective of how long such failure continues, shall not constitute a waiver by such Party of its
rights hereunder until the applicable statute of limitations period has run.
Section 6. Applicable Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT
REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. A
PARTY MAY BRING AN ACTION ARISING UNDER OR RELATING TO THIS AGREEMENT, IF AT ALL, ONLY IN A FEDERAL
OR STATE COURT OF COMPETENT JURISDICTION IN WILMINGTON, DELAWARE. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON-CONVENIENCE, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF SUCH
ACTION OR PROCEEDING IN ANY SUCH RESPECTIVE JURISDICTION.
Section 7. Severability. If any of the provisions of this Agreement are held by any court of
competent jurisdiction to contravene, or to be invalid under, the laws of any political body having
jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate
the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the
particular provision or provisions held to be invalid and an equitable adjustment shall be made and
necessary provision added so as to give effect to the intention of the Parties as expressed in this
Agreement at the time of execution of this Agreement.
Section 8. Amendment or Modification. This Agreement may be amended, modified or supplemented
from time to time only by a written agreement executed by all Parties other than the Company.
Section 9. Assignment. No Party shall have the right to assign its rights or obligations
under this Agreement without the prior written consent of the other Parties; provided, that any
Xxxxxx Investor may assign its rights and obligations under this Agreement to any Affiliate of such
Xxxxxx Investor that is a permitted transferee of such Xxxxxx Investor’s GP
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Units (as defined in the Company Partnership Agreement) in accordance with the terms of the
Company Partnership Agreement but no such permitted assignment shall be deemed to be a limitation
on Section 1(b).
Section 10. Counterparts. This Agreement may be executed in any number of counterparts with
the same effect as if all Parties had signed the same document. All counterparts shall be
construed together and shall constitute one and the same instrument. Execution and delivery of
this Agreement by exchange of facsimile or other electronically transmitted counterparts bearing
the signature of a Party shall be equally as effective as delivery of a manually executed
counterpart by such Party.
Section 11. No Recourse. For the avoidance of doubt, except as expressly provided herein, the
provisions of this Agreement shall not give rise to any right of recourse against any directors,
members, managers, stockholders, owners, officers, partners, employees, agents, consultants,
attorneys or representatives of any Party.
Section 12. Entire Agreement; Supersedure. This Agreement and the instruments referenced
herein and therein supersede all previous understandings or agreements among the Parties, whether
oral or written, with respect to their subject matter. This Agreement and such instruments contain
the entire understanding of the Parties with respect to the subject matter hereof and thereof. No
understanding, representation, promise or agreement, whether oral or written, is intended to be or
shall be included in or form part of this Agreement unless it is contained in a written amendment
hereto executed by the Parties after the date hereof except as provided in Section 8.
Section 13. No Partnership, Agency, Etc. The relationship created hereby between the Parties
is contractual. Nothing herein shall be deemed to create a partnership, agency, independent
contractor or other relationship between the parties for any purpose.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first
above written.
| REGENCY ENERGY PARTNERS LP |
||||
| By: | Regency GP LP, its general partner | |||
| By: | Regency GP LLC, its general partner | |||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| RIGS HAYNESVILLE PARTNERSHIP CO. |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Title: | Authorized Person | |||
| REGENCY HAYNESVILLE INTRASTATE GAS LLC |
||||
| By: | Regency Gas Services LP, its sole member | |||
| By: | Regency OLP GP LLC, its general partner | |||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Title: | President | |||
| XXXXXX GAS PIPELINE I, L.P. |
||||
| By: | Xxxxxx Gas Pipeline I GP LLC, its General Partner | |||
| By: | /s/ Xxxxx Xxxxx | |||
| Name: | Xxxxx Xxxxx | |||
| Title: | President | |||
| XXXXXX GAS PIPELINE II, L.P. |
||||
| By: | Xxxxxx Gas Pipeline II GP LLC, its General Partner | |||
| By: | /s/ Xxxxx Xxxxx | |||
| Name: | Xxxxx Xxxxx | |||
| Title: | President | |||
Signature Page to AMI
Agreement
EXHIBIT A
AMI AREA
A-1
