Exhibit 10.2

Execution Version

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

LAUREL MOUNTAIN MIDSTREAM, LLC

DATED JUNE 1, 2009

BY AND BETWEEN

WILLIAMS LAUREL MOUNTAIN, LLC

AND

APL LAUREL MOUNTAIN, LLC

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TABLE OF CONTENTS

 

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ARTICLE 1 DEFINITIONS AND RULES OF CONSTRUCTION

   1

1.1 Definitions

   1

1.2 Rules of Construction

   15

ARTICLE 2 ORGANIZATION AND CONDUCT OF BUSINESS

   16

2.1 Name

   16

2.2 Continuation

   16

2.3 Purpose

   16

2.4 Principal Place of Business; Registered Office; Registered Agent

   16

2.5 Term

   16

2.6 No State Law Partnership

   16

2.7 Title to Company Assets

   16

2.8 Non-Competition; Growth Capital Projects

   17

ARTICLE 3 CAPITAL STRUCTURE

   20

3.1 Percentage Interests

   20

3.2 Capital Contributions

   20

3.3 No Voluntary Contributions; Interest

   21

3.4 Capital Accounts

   21

3.5 Return of Capital

   23

3.6 Loans by Members

   23

ARTICLE 4 ALLOCATIONS AND DISTRIBUTIONS

   24

4.1 Allocations for Capital Account Purposes

   24

4.2 Allocations for Tax Purposes

   26

4.3 Distributions

   27

4.4 Preferred Distribution Rights

   28

4.5 Varying Interests

   29

ARTICLE 5 MANAGEMENT

   29

5.1 The Management Committee

   29

5.2 Composition; Removal and Replacement of Representatives

   29

5.3 Officers

   29

5.4 Voting

   29

5.5 Meetings of Management Committee

   30

5.6 Remuneration

   31

5.7 Individual Action by Members

   31

5.8 Special Rights of Preferred Interest Member

   31

ARTICLE 6 INDEMNIFICATION; LIMITATIONS ON LIABILITY

   32

6.1 Indemnification by the Company

   32

6.2 Indemnification by the Members

   32

6.3 Defense of Action

   32

 

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TABLE OF CONTENTS

(continued)

 

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6.4 Limited Liability of Members

   33

6.5 Waiver of Duties

   33

ARTICLE 7 OPERATION OF COMPANY

   34

7.1 Operating Member; Authority

   34

7.2 Expenses

   35

7.3 Accounts and Other Matters

   36

7.4 Practices of the Operating Member

   37

7.5 Replacement of the Operating Member

   38

ARTICLE 8 TRANSFER AND ISSUANCE OF INTERESTS

   38

8.1 Restrictions on Transfer

   38

8.2 Possible Additional Restrictions on Transfer

   38

8.3 Restriction on Preferred Distribution Rights

   41

8.4 Documentation; Validity of Transfer

   41

8.5 Substituted Members

   41

8.6 Covenant Not to Withdraw or Dissolve

   42

ARTICLE 9 DEFAULT

   42

9.1 Events of Default

   42

9.2 Consequences of Default

   43

ARTICLE 10 DISSOLUTION AND LIQUIDATION

   45

10.1 Dissolution

   45

10.2 Liquidation

   45

ARTICLE 11 FINANCIAL MATTERS

   47

11.1 Books and Records

   47

11.2 Financial Reports; Additional Financial Statements; Operating Budget;
Annual Growth Capital Budget

   48

11.3 Tax Matters

   49

ARTICLE 12 PUT OPTION REGARDING APL OHIO

   51

12.1 Put Option

   51

12.2 Change in Area of Interest; Associated Partial Assignment of Master
Gathering Agreements

   51

12.3 Covenants Relating to Put Option

   51

12.4 Put Option Closing

   52

ARTICLE 13 MISCELLANEOUS

   52

13.1 Notices

   52

13.2 Amendment

   53

13.3 Governing Law

   53

13.4 Binding Effect

   53

 

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TABLE OF CONTENTS

(continued)

 

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13.5 No Third Party Rights

   53

13.6 Counterparts

   53

13.7 Invalidity

   53

13.8 Entire Agreement

   54

13.9 Expenses

   54

13.10 Waiver

   54

13.11 Dispute Resolution

   54

13.12 Disclosure

   55

13.13 Brokers and Finder

   56

13.14 Further Assurances

   56

13.15 Section Headings

   56

13.16 Waiver of Certain Damages

   56

13.17 Security

   56

13.18 Confidentiality

   56

 

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AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF LAUREL MOUNTAIN MIDSTREAM, LLC

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of LAUREL MOUNTAIN
MIDSTREAM, LLC (the “Agreement”), dated as of June 1, 2009, is entered into by
and between Williams Laurel Mountain, LLC (“WFSG Sub”), a Delaware limited
liability company and a direct wholly owned subsidiary of Williams Field
Services Group, LLC (“WFSG”), and APL Laurel Mountain, LLC (“APL Sub”), a
Delaware limited liability company and an indirect wholly owned subsidiary of
Atlas Pipeline Partners, L.P. (“APL”).

RECITALS

WHEREAS, WFSG, WFSG Sub, APL, Atlas Pipeline Operating Partnership, L.P. and APL
Sub entered into that certain Formation and Exchange Agreement, dated March 31,
2009, as amended by Amendment No. 1 thereto dated April 16, 2009, and Amendment
No. 2 thereto dated June 1, 2009 (the “Formation Agreement”);

WHEREAS, WFSG Sub formed the Company on the date hereof by entering into that
certain Limited Liability Company Agreement, dated April 17, 2009 (the “Initial
LLC Agreement”), and filing a Certificate of Formation (the “Certificate of
Formation”) with the Secretary of State of the State of Delaware, pursuant to
the Delaware Limited Liability Company Act, 6 Del.C. § 18-101, et seq. (as
amended from time to time, the “Delaware Act”);

WHEREAS, pursuant to the terms of the Formation Agreement, (i) APL Operating,
APL Pennsylvania and APL Sub caused the Subject Entities to be merged with and
into Merger Sub, (ii) immediately following the effectiveness of such merger,
APL Sub sold its 100% limited liability company membership interest in the
Surviving Company to the Company and concurrently received in exchange therefor
the issuance of a 49% Interest in the Company, the Preferred Distribution Rights
and certain cash consideration; and

WHEREAS, WFSG Sub and APL Sub, as the Members of the Company, each desire to
amend and restate the Initial LLC Agreement in connection with the Closing (as
defined in the Formation Agreement) of the transactions contemplated in the
Formation Agreement, and the execution and delivery of this Agreement is a
condition of the parties’ respective obligations to consummate the transactions
contemplated by the Formation Agreement.

ARTICLE 1

DEFINITIONS AND RULES OF CONSTRUCTION

1.1 Definitions. For purposes of this Agreement, including the Schedules hereto,
the terms defined in this Section 1.1 shall have the respective meanings
assigned to them herein and the capitalized terms defined elsewhere in this
Agreement, by inclusion in quotation marks and parentheses, shall have the
respective meanings so ascribed to them.

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“Adjusted Capital Account” means the Capital Account maintained for each Member
as of the end of each taxable year of the Company, (a) increased by any amounts
that such Member is obligated to restore under the standards set by Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore
pursuant to the penultimate sentences of Treasury Regulation Sections
1.704-2(g)(1) and 1.704-2(i)(5)), and (b) decreased by (i) the amount of all
losses and deductions that, as of the end of such taxable year, are reasonably
expected to be allocated to such Member in subsequent years under Section 706(d)
of the Code and Treasury Regulation Section 1.751-l(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such taxable year, are
reasonably expected to be made to such Member in subsequent years in accordance
with the terms of this Agreement or otherwise to the extent they exceed
offsetting increases to such Member’s Capital Account that are reasonably
expected to occur during (or prior to) the year in which such distributions are
reasonably expected to be made (other than increases as a result of a minimum
chargeback pursuant to Section 4.1(d) or Section 4.1(e)). The foregoing
definition of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

“Adjusted Contributions” means (a), initially, with respect to WFSG Sub,
$127.795 million, (b) with respect to APL Sub, $122.783 million, in each case
subject to proportionate adjustment to reflect any post-Closing payments in
respect of Net Accumulated Cash Flow and the following adjustments: such amounts
shall be (i) increased by the amount of additional Capital Contributions made by
such Members on or after the date of this Agreement (including Mandatory Note
Prepayments of the WFSG Sub Note that are treated as Capital Contributions by
the Preferred Interest Member pursuant to Section 3.2(c) but excluding deemed
Capital Contributions by WFSG Sub pursuant to Section 3.2(d)); (ii) with respect
to a Pursuing Member, increased by the amount of any Carrying Cost Adjustments
for purposes of adjustments in the Members’ Percentage Interests made pursuant
to Section 2.8(c)(ii); (iii) with respect to a Non-Pursuing Member that has
elected to make a Delayed Capital Contribution pursuant to Section 2.8(c)(iii),
decreased by the amount equal to 20% of such Delayed Capital Contribution;
(iv) with respect to a Non-Pursuing Member that makes a payment of the Make-up
Payment Amount to the Pursuing Member pursuant to Section 2.8(c)(iii), increased
by the amount of the Delayed Capital Contribution; and (v) with respect to a
Pursuing Member, upon payment of the Make-up Payment Amount by the Non-Pursuing
Member pursuant to Section 2.8(c)(iii), decreased by the amount of the Delayed
Capital Contribution.

“Adjusted Property” means any property of the Company, the Carrying Value of
which has been adjusted pursuant to Section 3.4(d).

“Affiliate” means with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
“control” means the ownership, directly or indirectly, of more than 50% of the
Voting Stock, of such Person or, in the case of a Person that is a limited
partnership, the general partner of such Person; and the terms “controlling” and
“controlled” shall have meanings correlative to the foregoing.

 

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“Agreed Value” of any Contributed Property or Adjusted Property means the fair
market value of such property or other consideration at the time of contribution
as determined by the Operating Member (but only in the absence of a negotiated
determination of fair market value among the Members, in which case such
negotiated value shall be accepted as the Agreed Value) using such reasonable
method of valuation as it may adopt. In the absence of a negotiated allocation
among the Members, which will be conclusive if such negotiated allocation
exists, the Operating Member shall use such method as it deems reasonable and
appropriate to allocate the aggregate Agreed Value of Contributed Properties or
Adjusted Property in a single or integrated transaction among such properties on
a basis proportional to their fair market value; provided, that the Operating
Member shall provide notice of its determination of any fair market value or
allocation with respect to the determination of Agreed Value to the other
Members within five (5) Business Days of any such determination, and each of the
other Members shall have the right to object to any such determination by
providing written notice to the Operating Member of such objection within five
(5) Business Days of having received notice of any such determination. The
Members will discuss such fair market value or allocation in good faith to
address any such objection and to resolve any differences. If the Members cannot
agree on such fair market value or allocation within 30 days of the receipt by
the Operating Member of such written notice of objection, the matter will be
referred to an independent appraiser reasonably acceptable to the Members, with
any costs required in connection with such appraisal borne by the Company. If
not objected to within the time provided for such objection hereunder, the
determination of the Operating Member shall be deemed to have been approved by
the Members.

“Agreement” shall have the meaning ascribed to such term in the preamble.

“APL” shall have the meaning ascribed to such term in the preamble.

“APL Credit Facility” shall have the meaning ascribed to such term in the
Formation Agreement.

“APL Ohio” shall initially have the meaning ascribed to such term in the
Formation Agreement, and shall include any name subsequently given to that
entity after the Closing.

“APL Operating” means Atlas Pipeline Operating, L.P., a Delaware limited
partnership.

“APL Parties” shall have the meaning ascribed to such term in the Formation
Agreement.

“APL Pennsylvania” means Atlas Pipeline Pennsylvania, LLC, a Pennsylvania
limited liability company.

“APL Sub” shall have the meaning ascribed to such term in the preamble.

“Area of Interest” shall have the meaning ascribed to such term in the Master
Gathering Agreements, plus the geographic area lying within a five-mile radius
of the Gathering Pipelines owned or operated by the Company, as such Gathering
Pipelines now or hereafter exist (including any extensions or expansions
thereof), subject to the removal of the Ohio Area of Interest from the Area of
Interest pursuant to Section 12.2.

“Atlas America” means Atlas America, Inc., a Delaware corporation.

“ATN” means Atlas Energy Resources, LLC, a Delaware limited liability company.

“ATN Assets” shall have the meaning ascribed to such term in the Formation
Agreement.

 

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“Available Cash” means, with respect to any Distribution Period ending prior to
the dissolution or liquidation of the Company, and without duplication:

(a) the sum of (i) all cash and cash equivalents of the Company and its
subsidiaries (other than Capital Contributions of the Members) on hand at the
end of such Distribution Period and (ii) all additional cash and cash
equivalents of the Company on hand on the date of determination of Available
Cash with respect to such Distribution Period, in each case, in the sole
discretion of the Management Committee, less

(b) the amount of any cash reserves that is necessary or appropriate in the
reasonable discretion of the Management Committee to (i) satisfy the Preferred
Interest Member’s Preferred Distribution Rights pursuant to Section 4.4,
(ii) provide for the proper conduct of the business of the Company consistent
with the Operating Budget (including reserves for future capital expenditures
and for the anticipated future credit needs of the Company) subsequent to such
Distribution Period, or (iii) comply with applicable Law or any loan agreement,
security agreement, mortgage, debt instrument or other agreement or obligation
to which the Company is a party or by which it is bound or its assets are
subject; provided, however, that the cash reserved shall not include amounts
required to fund Growth Capital Projects unless such funding has been approved
by the Management Committee; provided, further, that distributions made by the
Company or cash reserves established, increased or reduced after the end of such
Distribution Period, but on or before the date of determination of Available
Cash with respect to such Distribution Period, shall be deemed to have been
made, established, increased or reduced, for purposes of determining Available
Cash, within such Distribution Period, if the Management Committee so
determines.

Notwithstanding the foregoing, “Available Cash” with respect to the Distribution
Period in which a liquidation or dissolution of the Company occurs and any
subsequent Distribution Period shall equal zero.

“Available Portion” shall have the meaning ascribed to such term in
Section 3.2(c).

“Bankruptcy” means (i) the filing of any petition or the commencement of any
suit or proceeding by an individual or entity pursuant to Bankruptcy Law seeking
an order for relief, liquidation, reorganization or protection from creditors,
(ii) the entry of an order for relief against an individual or entity pursuant
to Bankruptcy Law, or (iii) the appointment of a receiver, trustee or custodian
for a substantial portion of the individual’s or entity’s assets or property;
provided, that such order for relief, liquidation, reorganization or protection
from creditors is not dismissed within 30 days after such appointment of a
receiver, trustee or custodian.

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state Law
for the relief of debtors.

“Book-Tax Disparity” means with respect to any item of Contributed Property or
Adjusted Property, as of the date of any determination, the difference between
the Carrying Value of such Contributed Property or Adjusted Property and the
adjusted basis thereof for federal income tax purposes as of such date. A
Member’s share of the Company’s Book-Tax Disparities in all Contributed Property
and Adjusted Property will be reflected by the difference between such Member’s
Capital Account balance as maintained pursuant to Section 3.4 and the
hypothetical balance of such Member’s Capital Account computed as if it had been
maintained strictly in accordance with federal income tax accounting principles.
The determination of Book-Tax Disparity and a Member’s share thereof shall be
determined consistently with Section 1.704-3(d) of the Treasury Regulations.

 

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“Business Day” means any day other than a Saturday, Sunday or other day on which
banks in the Commonwealth of Pennsylvania are permitted or required to close.

“Capital Account” means the capital account maintained for each Member for
purposes of Section 704(b) of the Code as described in Section 3.4.

“Capital Contribution” means, with respect to any Member, the amount of capital
contributed by such Member to the Company in accordance with Article 3 of this
Agreement.

“Carrying Cost Adjustment” means, with respect to a Qualified Growth Capital
Project, an amount calculated like interest for the carrying cost for capital
contributed by a Pursuing Member at a per annum rate equal to (a) 8% for the
period commencing on the date a Capital Contribution is made by a Pursuing
Member through the date one-day prior to the commercial in-service date of such
Qualified Growth Capital Project and (b) 15% for the period commencing on such
commercial in-service date and ending on the applicable date upon which the
Members’ Percentage Interests are adjusted to reflect any such Capital
Contribution.

“Carrying Value” means (a) with respect to Contributed Property, the Agreed
Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions relating to such property charged to
the Members’ Capital Accounts, and (b) with respect to any other Company
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall be
adjusted from time to time in accordance with Section 3.4(d) and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Company properties, as deemed appropriate by the Operating
Member.

“Certificate of Formation” shall have the meaning ascribed to such term in the
recitals.

“Closing” shall have the meaning ascribed to such term in the Formation
Agreement.

“Closing Date” shall have the meaning ascribed to such term in the Formation
Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” shall have the meaning ascribed to such term in Section 2.1; provided,
however, that where the context requires, “Company” shall refer to the Company
and its subsidiaries on a consolidated basis.

“Company Assets” means the assets and properties owned, leased or used or held
by the Company and each of its subsidiaries in their businesses and operations.

 

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“Company Indemnitee” shall have the meaning ascribed to such term in Section
6.1(a).

“Company Minimum Gain” means the amount determined pursuant to Treasury
Regulation Section 1.704-2(d).

“Confidential Information” means any information and data (including all copies
thereof) that is furnished or submitted by any of the Members, their Affiliates
or the Company, whether oral, written or electronic, to the other Members or
their Affiliates in connection with the business of the Company and the
resulting information and data obtained therefrom, including market evaluations,
market proposals, service designs and pricing, pipeline system design and
routing, cost estimating, rate studies, identification of permits, strategic
plans, legal documents, environmental studies and requirements, public and
governmental relations planning, identification of regulatory issues and
development of related strategies, legal analysis and documentation, financial
planning, gas reserves and deliverability data, studies of the natural gas
supplies for the Company’s gathering system, and other studies and activities to
determine the potential viability of the facilities that constitute the
Company’s gathering system and their design characteristics, and identification
of key issues. Notwithstanding the foregoing, the term “Confidential
Information” shall not include any information that: (a) is in the public domain
at the time of its disclosure or thereafter, other than as a result of a
disclosure directly or indirectly by a Member or its Affiliates in contravention
of this Agreement; (b) as to any Member or its Affiliates, was in the possession
of such Member or its Affiliates prior to the execution of the Confidentiality
Agreement (as defined in the Formation Agreement); or (c) has been independently
acquired or developed by a Member or its Affiliates without violating any of the
obligations of such Member or its Affiliates under this Agreement or any other
confidentiality agreement between or among the Members and their respective
Affiliates.

“Contributed Property” means each property or other asset, in such form as may
be permitted by the Delaware Act, but excluding cash or cash equivalents and the
WFSG Sub Note, contributed to the Company by a Member. Once the Carrying Value
of a Contributed Property is adjusted pursuant to Section 3.4(d), such property
shall no longer constitute a Contributed Property for purposes of Section 4.2,
but shall be deemed an Adjusted Property for such purposes.

“Default” shall have the meaning ascribed to such term in Section 9.1.

“Default Adjustment” shall have the meaning ascribed to such term in Section
9.2(c)(iv).

“Default Adjustment Option” shall have the meaning ascribed to such term in
Section 9.2(c)(iv).

“Default Rate” means, on an annualized basis, Prime Rate plus 2%, where “Prime
Rate” means, as of a particular date, the prime rate reported for such date in
the Money Rates section of the Eastern Edition of the Wall Street Journal or, if
such rate is not available, a comparable interest rate index that is readily
available and verifiable, but is beyond the control of any party bound by the
provisions of this Agreement.

“Defaulting Member” shall have the meaning ascribed to such term in Section 9.1.

 

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“Delaware Act” shall have the meaning ascribed to such term in the recitals.

“Delayed Capital Contribution” shall have the meaning ascribed to such term in
Section 2.8(c)(iii).

“Direct Charges” shall have the meaning ascribed to such term in Section 7.2(a).

“Distribution Period” means a period equal to a fiscal quarter of the Company or
such shorter portion thereof, as determined from time to time by the Management
Committee.

“Easement” means any easement, right of way, surface use agreement, servitude,
license, permit or other real property right or similar instrument.

“Economic Risk of Loss” shall have the meaning set forth in Treasury Regulation
Section 1.752-2(a).

“Election Notice” shall have the meaning ascribed to such term in Section
8.2(d)(i).

“Election Period” shall have the meaning ascribed to such term in Section
8.2(d)(i).

“Event of Default” shall have the meaning ascribed to such term in Section 9.1.

“Exempted Gathering Pipelines” shall have the meaning ascribed to such term in
Section 2.8(d)(i).

“External Volumes Growth Capital Project” shall have the meaning ascribed to
such term in Section 2.8(d)(i).

“FERC” means the U.S. Federal Energy Regulatory Commission.

“First-Year Available Portion” shall have the meaning ascribed to such term in
Section 3.2(c).

“Fiscal Year” means (i) the period of time commencing on the date of this
Agreement and ending on December 31, 2009, in the case of the first Fiscal Year
of the Company, or (ii) in the case of subsequent Fiscal Years of the Company,
any subsequent 12-month period commencing on January 1 and ending on
December 31.

“Formation Agreement” shall have the meaning ascribed to such term in the
recitals.

“Funding Date” means the date on which the Pursuing Member first funds a Capital
Contribution with respect to a Qualified Growth Capital Project.

“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied.

“GAAP Capital Account” means the capital account maintained in accordance with
GAAP for purposes of the annual financial statements referred to in Section
11.2.

 

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“Gathering Pipelines” means any gathering pipelines used or held for use in
connection with the gathering of natural gas or any constituents of the natural
gas stream, including flow lines and residue lines, but excluding all
non-Company owned or developed existing and future pipelines that are owned or
operated as part of a pipeline system that is now or becomes, and after any
transfer or distribution remains, regulated by the FERC.

“Governmental Authority” means any (a) national, state, county, municipal, or
local government (whether domestic or foreign) and any political subdivision
thereof, (b) any court or administrative tribunal, (c) any other governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
body, agency, bureau or entity of competent jurisdiction (including any zoning
authority, state public utility commission, FERC, or any comparable authority),
(d) any non-governmental agency, tribunal or entity that is properly vested by a
Governmental Authority with applicable jurisdiction, or (e) any arbitrator with
authority to bind a party at Law.

“GDPCP Index” means the Gross Domestic Product Chain-type Price Index.

“Growth Capital Budget” means the annual budget of the Company that identifies
specific Growth Capital Projects to be undertaken during the course of the year
and describes the means by which such Growth Capital Projects would be financed
by the Company.

“Growth Capital Expenditures” means any cash expenditures for Growth Capital
Projects.

“Growth Capital Funding Notice” shall have the meaning ascribed to such term in
Section 2.8(c)(i).

“Growth Capital Project” means any addition, expansion or improvement to the
existing capital assets of the Company or the acquisition or construction by the
Company of new capital assets, in each case, if such addition, expansion,
improvement, acquisition or construction is made to increase the long-term
operating capacity, asset base or cash flow from operations of the Company;
provided, however, that all well connections shall be deemed to be Growth
Capital Projects.

“Indemnified Party” shall have the meaning ascribed to such term in Section 6.3.

“Indemnifying Party” shall have the meaning ascribed to such term in Section
6.3.

“Indemnity Claim Amount” means the amount of any claim reimbursable or
indemnified by the APL Parties in accordance with Articles 8, 10 or 11 of the
Formation Agreement.

“Initial Capital Contribution” shall have the meaning ascribed to such term in
Section 3.2(c).

“Initial LLC Agreement” shall have the meaning ascribed to such term in the
recitals.

“Initial Operating Budget” means the initial annual operating budget of the
Company that covers the remainder of the year ended December 31, 2009 at the
time of adopting that includes reasonable detail on projections regarding
revenues, operating expenses, general and administrative expenses, debt
incurrence and interest expense and maintenance capital expenditures.

 

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“Initially Determined” means any Indemnity Claim Amount that has either been
agreed to as due and owing or for which a judgment or order has been signed by a
trial court or arbitrator disposing of such Indemnity Claim Amount and
determining that such Indemnity Claim Amount is due and owing by the APL
Parties, notwithstanding whether any party appeals all or any part of such
judgment.

“Interest” means the ownership interest of a Member in the Company (which shall
be considered intangible personal property for all purposes) consisting of
(i) such Member’s right to receive its Percentage Interest of the Company’s
profits, losses, allocations and distributions (excluding profits, losses,
allocations and distributions with respect to the Preferred Distribution
Rights), (ii) such Member’s right to vote or grant or withhold consents with
respect to matters related to the Company as provided herein or in the Delaware
Act, (iii) with respect to the Preferred Interest Member, the Preferred
Distribution Rights, and (iv) such Member’s other rights and privileges as
provided herein or in the Delaware Act.

“IPD Index” means the Implicit Price Deflator Index.

“Law” means all applicable statutes, laws, rules, regulations, orders,
ordinances, judgments and decrees of any Governmental Authority, including the
common or civil law of any Governmental Authority.

“Liabilities” shall have the meaning ascribed to such term in Section 6.1(a).

“Liquidator” shall have the meaning ascribed to such term in Section 10.2(a).

“Majority” means (i) before a Voting Change Date, more than 50%, on a per capita
basis, of the Members entitled to vote, provided that for the purposes of this
clause (i), a Member and any of its Affiliates that are also Members shall be
deemed to constitute a single Member, and (ii) after a Voting Change Date,
Members holding more than 50% of the Percentage Interests held by all of the
Members entitled to vote.

“Make-up Payment Amount” shall have the meaning ascribed to such term in
Section 2.8(c)(iii).

“Management Committee” means the committee comprised of the individuals
designated by the Members pursuant to Section 5.2 hereof and all other
individuals who may from time to time be duly appointed by the Members to serve
as representatives on such committee in accordance with the provisions hereof,
in each case so long as any such individual shall continue in such capacity in
accordance with the terms hereof. References herein to the Management Committee
shall refer to such individuals collectively in their capacity as
Representatives.

“Mandatory Note Prepayment” shall have the meaning ascribed to such term in
Section 3.2(c).

 

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“Mandatory Prepayment Notice” shall have the meaning ascribed to such term in
Section 3.2(c).

“Marketed Interest” shall have the meaning ascribed to such term in Section
8.2(d)(i).

“Master Gathering Agreements” shall have the meaning ascribed to such term in
the Formation Agreement.

“Member Indemnitee” shall have the meaning ascribed to such term in Section 6.2.

“Member” means either WFSG Sub or APL Sub or any other Person subsequently
admitted to the Company as a member as provided in this Agreement, each in such
Person’s capacity as a member of the Company, but from and after the time any
Person ceases to be a member of the Company such term does not include such
Person that has ceased to be a member in the Company. “Members” means WFSG Sub,
APL Sub and any such person admitted to the Company as a member, collectively.

“Merger Sub” shall have the meaning ascribed to such term in the Formation
Agreement.

“Minimum Gain Attributable to Member Nonrecourse Debt” means that amount
determined in accordance with the principles of Regulations
Section 1.704-2(i)(3).

“Monetary Default” shall have the meaning ascribed to such term in Section
9.1(c).

“Net Accumulated Cash Flow” shall have the meaning ascribed to such term in the
Formation Agreement.

“Net Agreed Value” means (i) in the case of any Contributed Property, the Agreed
Value of such property reduced by any liabilities either assumed by the Company
upon such contribution or to which such property is subject when contributed,
and (ii) in the case of any property distributed to a Member by the Company, the
Company’s Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Member upon such
distribution or to which such property is subject at the time of distribution as
determined under Section 752 of the Code.

“Net Income” means, for any taxable period, the excess, if any, of the Company’s
items of income and gain for such taxable period over the Company’s items of
loss and deduction for such taxable period, but excluding any items of income,
gain, loss or expense arising from (a) the WFSG Sub Note, which shall be
allocated in accordance with the Preferred Distribution Rights as set forth in
Section 4.1(k)(i) and (b) Retained Member Proceeds, which shall be allocated as
set forth in Section 4.1(k)(ii). The items included in the calculation of Net
Income shall be determined in accordance with Section 3.4(b) and shall not
include any items specifically allocated under Sections 4.1(d) through 4.1(k).
For purposes of Sections 4.1(a) and (b), in determining whether Net Income has
been allocated to any Member for any previous taxable period, any Unrealized
Gain or Unrealized Loss allocated pursuant to Section 3.4(d) shall be treated as
an item of gain or loss to be allocated pursuant to Section 4.1.

 

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“Net Loss” means, for any taxable period, the excess, if any, of the Company’s
items of loss and deduction for such taxable period over the Company’s items of
income and gain for such taxable period, but excluding any items of income,
gain, loss or deduction arising from (a) the WFSG Sub Note, which shall be
allocated in accordance with the Preferred Distribution Rights as set forth in
Section 4.1(k)(i) and (b) Retained Member Proceeds, which shall be allocated as
set forth in Section 4.1(k)(ii). The items included in the calculation of Net
Loss shall be determined in accordance with Section 3.4(b) and shall not include
any items specifically allocated under Sections 4.1(d) through 4.1(k). For
purposes of Sections 4.1(a) and (b), in determining whether Net Loss has been
allocated to any Member for any previous taxable period, any Unrealized Gain or
Unrealized Loss allocated pursuant to Section 3.4(d) shall be treated as an item
of gain or loss to be allocated pursuant to Section 4.1.

“New Volumes” shall have the meaning ascribed to such term in Section 2.8(d)(i).

“Non-Approving Member” shall have the meaning ascribed to such term in
Section 9.1(c)(i).

“Non-Consent Budget” shall have the meaning ascribed to such term in
Section 9.1(c)(i).

“Non-Defaulting Members” shall have the meaning ascribed to such term in Section
9.1.

“Non-Offering Member” shall have the meaning ascribed to such term in
Section 8.2(d)(i).

“Non-Operating Member” means the Member that is not the Operating Member, as
determined from time to time.

“Non-Pursuing Member” shall have the meaning ascribed to such term in
Section 2.8(c)(i).

“Nonrecourse Built-in Gain” means with respect to any Contributed Properties or
Adjusted Properties that are subject to a mortgage or negative pledge securing a
Nonrecourse Liability, the amount of any taxable gain that would be allocated to
the Members pursuant to Section 4.2(b)(i)(A) or Section 4.2(b)(ii)(A) if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.

“Nonrecourse Debt” shall have the meaning set forth in Regulations
Section 1.704-2(b)(4).

“Nonrecourse Deductions” means any and all items of loss, deduction, or
expenditure (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Regulations Section 1.704-2(b)(i), are attributable to a
Nonrecourse Liability.

“Nonrecourse Liability” shall have the meaning assigned to such term in
Regulations Section 1.704-2(b)(3).

“Note Income” shall have the meaning ascribed to such term in Section 4.4(a).

 

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“Notice of Dispute” shall have the meaning ascribed to such term in Section
13.11(b).

“Offer Notice” shall have the meaning ascribed to such term in Section
8.2(d)(i).

“Offering Member” shall have the meaning ascribed to such term in Section
8.2(d)(i).

“Ohio Area of Interest” shall have the meaning ascribed to such term in
Section 12.2.

“Operating Budget” means the annual operating budget with respect to the Company
that covers the upcoming four-quarter period that includes reasonable detail on
projections regarding revenues, operating expenses, general and administrative
expenses, debt incurrence and interest expense and maintenance capital
expenditures.

“Operating Expenditures” means all expenditures of the Company other than Growth
Capital Expenditures, including general and administrative expenditures,
operating expenditures and other maintenance expenditures.

“Operating Fee” shall have the meaning ascribed to such term in Section 7.2(b).

“Operating Member” means WFSG Sub, with such responsibilities, rights and
obligations as are set forth in Article 7, subject to the terms of this
Agreement.

“Parent” means, with respect to WFSG Sub, WFSG and, with respect to APL Sub,
APL, and any successor entities to WFSG and APL, respectively.

“Percentage Interest” means, subject in each case to adjustments as determined
in accordance with this Agreement or in connection with Transfers of Interests,
(a) in the case of a Member executing this Agreement as of the date of this
Agreement or a Person acquiring such Member’s Interest, the percentage specified
for that Member as its Percentage Interest on Schedule 3.1, and (b) in the case
of the issuance of additional Interests by the Company in connection with
Capital Contributions with respect to Growth Capital Projects pursuant to
Section 2.8(c), the Percentage Interests as adjusted pursuant to this Agreement;
provided, however, that any adjustments to Percentage Interests resulting from
Capital Contributions with respect to Growth Capital Projects will be
redetermined, if necessary, only on the first day after the close of each
taxable year of the Company and the total of all Percentage Interests shall
always equal 100%.

“Permitted Transfer” shall have the meaning ascribed to such term in Section
8.2(b).

“Person” means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust, estate,
unincorporated organization or Governmental Authority.

“Plant Matters Expenditure” shall have the meaning ascribed to such term in the
Formation Agreement.

“Preferred Distribution Rights” shall have the meaning ascribed to such term in
Section 4.4(a).

 

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“Preferred Interest Member” shall have the meaning ascribed to such term in
Section 4.4(a).

“Proposed Transfer Agreement” shall have the meaning ascribed to such term in
Section 8.2(d)(i).

“Pursuing Member” shall have the meaning ascribed to such term in Section
2.8(c)(i).

“Put Assignment” shall have the meaning ascribed to such term in Section 12.4.

“Put Interests” shall have the meaning ascribed to such term in Section 12.1.

“Put Notice” shall have the meaning ascribed to such term in Section 12.1.

“Put Option” shall have the meaning ascribed to such term in Section 12.1.

“Put Period” shall have the meaning ascribed to such term in Section 12.1.

“Qualified Growth Capital Project” shall have the meaning ascribed to such term
in Section 2.8(c)(i).

“Qualified Rate of Return” means an unleveraged, before tax, rate of return on
the Capital Contributions necessary to be made in connection with a Growth
Capital Project together with the Company’s associated operating costs for such
Growth Capital Project for a ten-year term, as determined in good faith by the
Pursuing Member; provided, however, that any Non-Pursuing Member shall have the
right to object to the determination of the Qualified Rate of Return by
providing written notice of such objection to the Pursuing Member within five
Business Days after such Non-Pursuing Member receives a Growth Capital Funding
Notice from the Pursuing Member under Section 2.8(c)(i) indicating the Pursuing
Member’s desire to pursue a Growth Capital Project, the funding for which is not
approved by the Management Committee. The Pursuing Member and Non-Pursuing
Member will discuss such Qualified Rate of Return in good faith to resolve any
differences. If the Members cannot agree on the determination of the Qualified
Rate of Return within 30 days of the receipt by the Pursuing Member of the
Non-Pursuing Member’s written notice of objection, the Members will refer the
dispute to an independent appraiser mutually agreed to by the Members, with any
costs required in connection with such appraisal to be borne by the Company. The
independent appraiser’s determination of the Qualified Rate of Return shall be
binding on the Members.

“Recapture Income” means any gain recognized by the Company (computed without
regard to any adjustment required by Section 734 or 743 of the Code) upon the
disposition of any property or asset of the Company, which gain is characterized
as ordinary income because it represents the recapture of deductions previously
taken with respect to such property or asset.

“Regulations” means the U.S. Treasury Regulations promulgated under the Code, as
in effect from time to time.

 

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“Related-Party Parent” means (a) with respect to WFSG Sub, WPZ and Williams, and
(b) with respect to APL Sub, APL, ATN and Atlas America, and any successor
entities to WPZ, Williams, APL, ATN and Atlas America, respectively.

“Representative” means, with respect to each Member, the representative
appointed from time to time by such Member, subject to and in accordance with
Section 5.2; provided, however, that a Member’s Representative shall be an
officer or employee of a Related-Party Parent of such Member or one of their
direct or indirect wholly owned subsidiaries.

“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case
may be, of the Company recognized for federal income tax purposes resulting from
a sale, exchange or other disposition of a Contributed Property or Adjusted
Property, to the extent such item of gain or loss is not allocated pursuant to
Section 4.2(b)(i)(A) or 4.2(b)(ii)(A), to eliminate Book Tax Disparities.

“Retained Member Proceeds” shall have the meaning ascribed to such term in
Section 4.3(b).

“Right of First Refusal” shall have the meaning ascribed to such term in Section
8.2(d)(i).

“Rules” shall have the meaning ascribed to such term in Section 13.11(d).

“Subject Entities” shall have the meaning ascribed to such term in the Formation
Agreement.

“Subject Interests” shall have the meaning ascribed to such term in the
Formation Agreement.

“Super Majority” means 75% or more of the Percentage Interests of all Members
entitled to vote.

“Surviving Company” shall have the meaning assigned to such term in the
Formation Agreement.

“Tax Matters Member” shall have the meaning ascribed to such term in Section
11.3(a).

“Third Party Action” shall have the meaning ascribed to such term in Section
6.3.

“Transaction Documents” shall have the meaning ascribed to such term in the
Formation Agreement.

“Transition Services Agreement” shall have the meaning ascribed to such term in
the Formation Agreement.

“Transfer” shall have the meaning ascribed to such term in Section 8.1(a).

“UCC” shall have the meaning ascribed to such term in Section 13.17.

 

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“Unrealized Gain” attributable to any item of Company property means, as of any
date of determination, the excess, if any, of (a) the fair market value of such
property as of such date over (b) the Carrying Value of such property as of such
date (prior to any adjustment to be made pursuant to Section 3.4(d) or 3.4(e) as
of such date). In determining such Unrealized Gain, the aggregate cash amount
and fair market value of a Company Asset (including cash or cash equivalents)
shall be determined by the Operating Member using such reasonable method of
valuation as it may adopt.

“Unrealized Loss” attributable to any item of Company property means, as of any
date of determination, the excess, if any, of (a) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant to Section
3.4(d) or 3.4(e) as of such date) over (b) the fair market value of such
property as of such date. In determining such Unrealized Loss, the aggregate
cash amount and fair market value of a Company Asset (including cash or cash
equivalents) shall be determined by the Operating Member using such reasonable
method of valuation as it may adopt.

“Voting Change Date” means a date upon which any Member holds a Percentage
Interest in excess of 66 2/3%.

“Voting Stock” means the securities or other ownership interest in any Person
which have ordinary voting power under ordinary circumstances for the election
of directors (or the equivalent) of such Person; provided, that in the case of a
Person that is a limited partnership, Voting Stock means the general partner
interests of such limited partnership.

“WFSG” shall have the meaning ascribed to such term in the preamble.

“WFSG Sub” shall have the meaning ascribed to such term in the preamble.

“WFSG Sub Note” shall have the meaning ascribed to such term in the Formation
Agreement.

“Williams” means The Williams Companies, Inc. a Delaware corporation.

“WPZ” means Williams Partners, L.P., a Delaware limited partnership.

1.2 Rules of Construction. For purposes of this Agreement, including the
Schedules hereto:

(a) General. Unless the context otherwise requires, (i) “or” is not exclusive;
(ii) an accounting term not otherwise defined shall have the meaning commonly
assigned to such term in accordance with GAAP; (iii) words in the singular
include the plural and words in the plural include the singular; (iv) words in
the masculine include the feminine and words in the feminine include the
masculine; (v) any date specified for any action that is not a Business Day
shall be deemed to mean the first Business Day after such date; (vi) whenever
this Agreement refers to a number of days, such number shall refer to calendar
days unless Business Days are specified; (vii) a reference to a Member includes
its successors and permitted assigns; and (viii) any reference to $ or dollars
shall be a reference to U.S. dollars.

 

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(b) Articles and Sections. Reference to Articles and Sections are, unless
otherwise specified, to Articles and Sections of this Agreement.

ARTICLE 2

ORGANIZATION AND CONDUCT OF BUSINESS

2.1 Name. The name of the Company shall be “LAUREL MOUNTAIN MIDSTREAM, LLC” (the
“Company”).

2.2 Continuation. The Company was previously formed by WFSG Sub at 1:20 p.m.
Eastern time on April 17, 2009 upon filing with Secretary of State of the State
of Delaware the Certificate of Formation. This amendment and restatement shall
become effective at 12:01 a.m. Eastern time on June 1, 2009. From time to time,
the Company shall file such further statements or certificates or qualifications
to do business or similar filings in such jurisdictions as may be necessary or
appropriate with the conduct of the Company’s business.

2.3 Purpose. The business and purposes of the Company shall be (i) to own and
operate the Company Assets and (ii) to engage in such other business activities
that may be undertaken by a limited liability company under the Delaware Act as
the Members may from time to time determine; provided, however, that the Members
determine, as of the date of the acquisition or commencement of such other
business activity, that such activity (a) generates “qualifying income” (as such
term is defined pursuant to Section 7704 of the Code) or (b) enhances the
operations of an activity of the Company that generates qualifying income.

2.4 Principal Place of Business; Registered Office; Registered Agent. The
principal place of business of the Company shall be Westpointe Corporate Center
One, 1550 Coraopolis Heights Road, Moon Township, Pennsylvania, 15108, or such
other place, that need not be within the State of Delaware, as the Members may
from time to time determine. The registered office of the Company in the State
of Delaware shall be 1209 Orange Street, Wilmington, New Castle County, Delaware
19801, and the registered agent for service of process on the Company shall be
The Corporation Trust Company whose business address is the same as the
Company’s registered office (or such other registered office and registered
agent as the Members may from time to time select).

2.5 Term. The Company commenced upon the filing of the Certificate of Formation
with the Secretary of State of the State of Delaware and shall continue
indefinitely unless dissolved in accordance with Section 10.1.

2.6 No State Law Partnership. The Members intend that the Company not be a
partnership (including a limited partnership) or joint venture, and that no
Member be a partner or joint venturer of any other Member, for any purposes
other than federal, state, local and foreign income tax purposes, and this
Agreement may not be construed to suggest otherwise.

2.7 Title to Company Assets. Title to Company Assets, whether real, personal or
mixed and whether tangible or intangible, shall be deemed to be owned by the
Company as an entity, and no Member shall have any ownership interest in such
Company Assets or portion thereof.

 

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2.8 Non-Competition; Growth Capital Projects.

(a) General. Except as otherwise provided in this Section 2.8 with respect to
the Area of Interest, the Members and their Affiliates may at any time, and from
time to time, directly or indirectly, engage in, and possess interests in,
without the consent of the Company or the other Member, other business ventures
and activities of any and every type and description, independently or with
others, regardless of whether such ventures are competitive with the Company or
any other Member, and regardless of whether such business ventures and
activities are located inside or outside the Area of Interest, or otherwise. In
addition, except as otherwise provided in this Section 2.8 with respect to the
Area of Interest, no Member who (directly or though an Affiliate) acquires
knowledge of a potential transaction, agreement, arrangement or other matter
that may be an opportunity for the Member shall have any duty to communicate or
offer such opportunity to the Company, and such Member (and its officers and
Representatives on the Management Committee) shall not be liable to the Company,
any Member or any other Person for breach of any fiduciary or other duty by
reason of the fact that such Member pursues or acquires such opportunity for
itself or its Affiliate, directs such opportunity to another Person or does not
communicate such opportunity or information to the Company.

(b) Non-Competition Agreement. Except as provided in Section 2.8(c), the
following assets and businesses, if located or to be located in the Area of
Interest, must be owned, developed, operated and conducted though the Company or
any of its subsidiaries and may not be owned, developed, operated or conducted
within the Area of Interest by any Members or their Affiliates during the period
that such Member (or any Affiliate thereof) remains a Member: (i) any Gathering
Pipelines; (ii) any land or other surface and subsurface estates, including
Easements, owned, leased or otherwise held that are appurtenant to and used or
held for use in connection with any Gathering Pipelines, and all appurtenances,
buildings and improvements thereto or thereon; and (iii) the treating or
processing of natural gas and the extraction or recovery of natural gas liquids;
provided, however, that any facilities that are required or otherwise permitted
to be developed, owned or operated by a shipper pursuant to the terms of any
gathering services agreement with the Company shall not be required to be
developed, owned, operated or conducted through the Company. Any Member who,
directly or through an Affiliate, acquires knowledge of a potential transaction,
agreement, arrangement or other matter located in the Area of Interest for the
Company to develop or acquire any of the types of assets described in clauses
(i), (ii) or (iii) above of this Section 2.8(b) shall (x) communicate or offer
such opportunity to the Management Committee, (y) provide the Management
Committee all information regarding the business opportunity that is obtained by
the Members or their Affiliates, and (z) offer the Company the opportunity to
pursue to the business opportunity, subject, in each case, to any third party
contractual provisions or applicable Law precluding disclosure; provided, that
such Member shall have used its commercially reasonable efforts to cause any
such confidentiality restrictions to not apply to the Company.

(c) Growth Capital Projects in Area of Interest.

 

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(i) If the Management Committee votes pursuant to Section 5.4 and does not
approve a call for the Members to make Capital Contributions with respect to a
Growth Capital Project in the Area of Interest, then a Member whose
Representative on the Management Committee voted in favor of such Growth Capital
Project (the “Pursuing Member”) may give the other Member ( the “Non-Pursuing
Member”) written notice (the “Growth Capital Funding Notice”) within 30 days
following such vote that, notwithstanding the Management Committee’s failure to
approve the call for Capital Contributions, the Pursuing Member desires to cause
the Company to pursue such Growth Capital Project by funding 100% of the Capital
Contributions necessary to be made in connection with such Growth Capital
Project; provided, however, that the Pursuing Member may not cause the Company
to pursue any Growth Capital Project in accordance with this Section 2.8(c)
unless such Growth Capital Project is reasonably expected to provide the Company
with a Qualified Rate of Return of at least 10% (a “Qualified Growth Capital
Project”).

(ii) In the event that a Pursuing Member elects to cause the Company to pursue a
Qualified Growth Capital Project in the Area of Interest pursuant to
Section 2.8(c)(i), subject to Section 2.8(c)(iii), the Capital Account of the
Pursuing Member shall be increased by any Capital Contributions made to the
Company by such Pursuing Member with respect to such Qualified Growth Capital
Project and the Percentage Interests of the Members shall be adjusted in
accordance with this Agreement to be proportionate to the amounts of their
respective Adjusted Contributions; provided, however, as provided in the
definition of “Percentage Interest,” any such adjustment will be made only on
the first day after the close of the taxable year of the Company occurring after
the commercial in-service date of the applicable Growth Capital Project.

(iii) If a Pursuing Member elects to cause the Company to pursue a Qualified
Growth Capital Project in the Area of Interest pursuant to Section 2.8(c)(i), at
any time until the third anniversary of the date of this Agreement, the
Non-Pursuing Member may, by providing written notice to the Pursuing Member
within ten days following receipt of the Growth Capital Funding Notice, elect to
fund such Non-Pursuing Member’s pro rata portion of the original call for a
Capital Contribution with respect to such Qualified Growth Capital Project on a
delayed basis (a “Delayed Capital Contribution”) in accordance with this
Section 2.8(c)(iii); provided, however, that the amount of such Delayed Capital
Contribution is at least $1 million. If the Non-Pursuing Member elects to make a
Delayed Capital Contribution, (A) the Percentage Interests of the Members shall
be adjusted in accordance with this Agreement to be proportionate to the amounts
of their respective Adjusted Contributions, provided, however, as provided in
the definition of “Percentage Interest,” any such adjustment will be made only
on the first day after the close of each taxable year of the Company, and (B) no
later than the first anniversary of the Funding Date, the Non-Pursuing Member
shall pay to the Pursuing Member an amount equal to the Delayed Capital
Contribution plus an amount equal to 20% of such Delayed Capital Contribution
(the “Make-up Payment Amount”). Upon payment of the Make-up Payment Amount, the
Non-Pursuing Member’s Capital Account shall be increased by an amount equal to
the Delayed Capital Contribution (and the Pursuing Member’s Capital Account
shall be decreased by an equal amount) and the Percentage Interests of the
Members shall be adjusted in accordance with this Agreement to be proportionate
to the amounts of their respective Adjusted Contributions.

(d) Natural Gas Volumes Sourced Outside the Area of Interest.

 

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(i) A Member may propose that the Company pursue a Growth Capital Project to
construct Gathering Pipelines and related assets that would lie both inside and
outside the Area of Interest to be used to transport natural gas volumes that
originate from wells outside the Area of Interest and connect to existing
Gathering Pipelines inside the Area of Interest owned and operated by the
Company (an “External Volumes Growth Capital Project”). If the Management
Committee votes pursuant to Section 5.4 and does not approve a call for the
Members to make Capital Contributions with respect to an External Volumes Growth
Capital Project, then a Member (for purposes of this Section 2.8(d), also a
“Pursuing Member”) may give the other Member (for purposes of this Section
2.8(d), also a “Non-Pursuing Member”) written notice within 30 days following
such vote that, notwithstanding the Management Committee’s failure to approve
the call for Capital Contributions, the Pursuing Member desires to pursue or
cause the Company to pursue such External Volumes Growth Capital Project, at the
election of such Pursuing Member, within the Company pursuant to Section 2.8(c)
or outside of the Company pursuant to this Section 2.8(d); provided, that an
External Volumes Growth Capital Project that does not meet the minimum Qualified
Rate of Return requirement under Section 2.8(c) may only be pursued outside of
the Company pursuant to this Section 2.8(d). For External Volumes Growth Capital
Project that are not pursued within the Company pursuant to Section 2.8(c), the
Pursuing Member may develop, retain 100% ownership of, and operate Gathering
Pipelines within the Area of Interest; provided, that such Gathering Pipelines
transport natural gas volumes that originate outside the Area of Interest
(“Exempted Gathering Pipelines”). At the time of any such Exempted Gathering
Pipelines becoming operational, the Member owning and operating the same shall
cause the shipper or shippers with respect to the natural gas volumes delivered
through such Exempted Gathering Pipelines to the Company’s existing Gathering
Pipelines (“New Volumes”) to pay to the Company a transportation rate at least
equal to the greater of thirty-five cents ($0.35) or six percent (6%) of the
Gross Sales Price for each Mcf of Gas (as each of the foregoing terms is defined
in the Master Gathering Agreements); provided, however, that any such New
Volumes will be subject to the existing operational and system limitations on
the Company’s existing Gathering Pipelines (taking into account Growth Capital
Projects that are being pursued by the Company but not yet completed), including
existing capacity limitations and service obligations of the Company to other
shippers; and provided, further, the Company shall have no obligation to expand
the capacity of the Gathering System to accommodate any such New Volumes.

(ii) Notwithstanding the foregoing provisions of Section 2.8, a Member may
develop, retain 100% ownership of, and operate Gathering Pipelines and related
assets within the Area of Interest without any obligation to comply with any
provision of this Section 2.8; provided, that the natural gas volumes
transported on such Gathering Pipelines originate from wells located outside of
the Area of Interest and such Gathering Pipelines do not connect to Gathering
Pipelines owned and operated by the Company.

(iii) All natural gas sourced from within the Area of Interest must, unless
otherwise unanimously agreed to by the Management Committee, be transported
exclusively on Gathering Pipelines owned and operated by the Company and not on
any Exempted Gathering Pipelines.

(e) Scope of Growth Capital Projects. Any Growth Capital Project or External
Volumes Growth Capital Project shall be pursued only on the basis of the
relevant proposal considered by the Management Committee and proposed for
Management Committee approval, including, if applicable, the gathering rate and
the material terms of any associated gathering agreement so proposed.

 

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ARTICLE 3

CAPITAL STRUCTURE

3.1 Percentage Interests. The Percentage Interests of the Members on the date
hereof are set forth on Schedule 3.1 hereto. Upon the Transfer by a Member of
all of or a portion of such Member’s Interest pursuant to Article 8, the
issuance of additional Interests by the Company, or upon the adjustment of the
Members’ Percentage Interests pursuant to Section 2.8(c), in each case in
compliance with this Agreement, Schedule 3.1 shall be updated to reflect the
respective Percentage Interests of the Members.

3.2 Capital Contributions.

(a) WFSG Sub has heretofore contributed the WFSG Sub Note and $100 million in
cash to the Company in accordance with the terms of the Formation Agreement.
Immediately after the effectiveness of such Capital Contribution by WFSG Sub,
APL Sub sold its 100% limited liability company membership interest in the
Surviving Company to, and in exchange for, $87.795 million in cash, the issuance
of a 49% Interest, and the Preferred Distribution Rights, in the Company.
Concurrently with the Closing of the transactions contemplated under the
Formation Agreement and the execution and delivery of this Agreement, WFSG Sub
shall make a Capital Contribution of $2.295 million to provide initial working
capital for the Company (the “Initial Capital Contribution”). The Parties agree
that for purposes of establishing the relative amount of Capital Contributions
of the Members as of the date hereof immediately following the Closing and the
receipt by the Company of such Initial Capital Contribution, the Net Agreed
Value of such Capital Contributions made (x) in the case of the 49% Interest
held by APL Sub shall be $122.783 million, and (y) in the case of the 51%
Interest held by WFSG Sub shall be $127.795 million, such values in each case
subject to proportionate adjustment to reflect any post-Closing payments in
respect of Net Accumulated Cash Flow.

(b) The Members shall make Capital Contributions of cash, property or services
as they determine and approve pursuant to Section 5.4. Subject to Section
2.8(c), in the event that the Members determine and approve pursuant to Section
5.4 that cash Capital Contributions should be made for any purpose, the Members
shall make such cash Capital Contributions in proportion to their respective
Percentage Interests in such amounts and on such dates as the Members may
determine. The Management Committee shall issue a written request to each Member
for payment of such cash Capital Contributions on such due dates and in such
amounts as the Members shall have determined; provided, that the due date for
any such cash Capital Contribution shall be no less than five Business Days
after the date such written request is issued to the Members. All Capital
Contributions received by the Company after the due date specified in such
written request shall be accompanied by interest on such overdue amounts, which
interest shall be payable to the Company and shall accrue from and after such
specified due dates until paid at the Default Rate.

 

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(c) At any time following a call for the Members to make a Capital Contribution,
subject to the terms of this Section 3.2(c), the Preferred Interest Member shall
have the option to cause the Company to require WFSG Sub to prepay any or all of
the Available Portion (as defined below) of the WFSG Sub Note (a “Mandatory Note
Prepayment”) in lieu of the Preferred Interest Member making all or a portion of
its pro rata portion of such Capital Contribution. The Preferred Interest Member
shall elect to cause a Mandatory Note Prepayment by providing written notice to
the Company and WFSG Sub (a “Mandatory Prepayment Notice”), no later than two
Business Days following such call for the Members to make a Capital
Contribution, specifying the amount of such Mandatory Note Prepayment to be made
from the Available Portion of the WFSG Sub Note. Upon receipt of a Mandatory
Prepayment Notice, WFSG Sub shall make a prepayment of the WFSG Sub Note in the
amount specified in the Mandatory Prepayment Notice concurrently with the
Capital Contribution that WFSG Sub makes pursuant to such capital call and, as
provided in the WSFG Sub Note, the outstanding principal balance thereunder
shall be decreased by an amount equal to such Mandatory Note Prepayment. For
purposes of maintaining the Capital Accounts, any such Mandatory Note Prepayment
shall be treated as though the proceeds received by the Company as a result of
such Mandatory Note Prepayment were distributed to the Preferred Interest Member
in respect of its Preferred Distribution Rights and then contributed by such
Preferred Interest Member to the Company as a Capital Contribution. For purposes
of this Section 3.2(c), “Available Portion” means, with respect to the WFSG Sub
Note (as provided therein), (i) at any time following the date of this Agreement
through the first anniversary thereof, one third of the original principal
amount of the WFSG Sub Note (the “First-Year Available Portion”), (ii) at any
time following the first anniversary of the date of this Agreement, one third of
the original principal amount of the WFSG Sub Note plus any of portion of the
First-Year Available Portion not prepaid previously pursuant this Section 3.2(c)
and (iii) at any time following the second anniversary of this Agreement, any
outstanding principal amount of the WFSG Sub Note, subject, in each case, to any
reductions in the outstanding principal amount of the WFSG Sub Note pursuant to
Section 9.2(c)(iii).

(d) Each payment by WFSG Sub or an Affiliate (other than the Company) of any
Plant Matters Expenditure pursuant to Section 10.3(c) of the Formation Agreement
shall be treated as a Capital Contribution by WFSG Sub in the amount of such
payment.

3.3 No Voluntary Contributions; Interest. No Member shall make any Capital
Contributions except pursuant to this Article 3. No Member shall be entitled to
interest on its Capital Contributions.

3.4 Capital Accounts. A separate Capital Account shall be established and
maintained for each Member in accordance with the rules of Regulations
Section 1.704-1(b)(2)(iv), Section 4.1 and the following terms and conditions.
The Capital Accounts of the Members on the date hereof are, with respect to the
51% Interest held by WFSG Sub, $127.795 million, and with respect to the 49%
Interest held by APL Sub, $122.783 million.

 

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(a) Increases and Decreases. Each Member’s Capital Account shall be
(i) increased by (A) the amount of cash or cash equivalent Capital Contributions
made by such Member, (B) the Net Agreed Value of non-cash assets contributed as
Capital Contributions by such Member, and (C) allocations to such Member of
Company income and gain (or items thereof), including, without limitation,
income and gain exempt from tax and income and gain described in Regulations
Section 1.704-1(b)(2)(iv)(g); and (ii) shall be decreased by (A) the amount of
cash or cash equivalents distributed (or deemed distributed) to such Member by
the Company, (B) the Net Agreed Value of any non-cash assets or other property
distributed to such Member by the Company, and (C) allocations to such Member of
Company losses and deductions (or items thereof), including losses and
deductions described in Regulations Section 1.704-1(b)(2)(iv)(g).
Notwithstanding anything to the contrary in this Section 3.4, the WFSG Sub Note
shall not be treated as an asset of the Company (or any subsidiary of the
Company) or Contributed Property for income tax or Capital Account purposes and
shall be treated as beneficially owned for such purposes by the holder of the
Preferred Distribution Rights (held as of the date of this Agreement by APL
Sub), resulting in the Company having no items of income, gain, loss, deduction
or credit attributable to the WFSG Sub Note for such purposes and no such items
shall increase or decrease the Capital Accounts of the Members.

(b) Computation of Amounts. For purposes of computing the amount of any item of
income, gain, loss or deduction to be reflected in the Members’ Capital
Accounts, the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification for
federal income tax purposes (including, without limitation, any method of
depreciation, cost recovery or amortization used for that purpose), provided
that:

(i) All fees and other expenses incurred by the Company to promote the sale of
(or to sell) any interest that can neither be deducted nor amortized under
Section 709 of the Code, if any, shall, for purposes of Capital Account
maintenance, but treated as an item of deduction at the time such fees and other
expenses are required and shall be allocated among the Members pursuant to
Sections 4.1 and 4.2.

(ii) Except as otherwise provided in Regulations Section 1.704-1(b)(2)(iv)(m),
the computation of all items of income, gain, loss and deduction shall be made
without regard to any election under Section 754 of the Code which may be made
by the Company and, as to those items described in Section 705(a)(1)(B) or
705(a)(2)(B) of the Code, without regard to the fact that such items are not
includable in gross income or are neither currently deductible nor capitalized
for federal income tax purposes.

(iii) Any income, gain or loss attributable to the taxable disposition of any
Company property shall be determined as if the adjusted basis of such property
as of such date of disposition were equal in amount to the Company’s Carrying
Value with respect to such property as of such date.

(iv) In accordance with the requirements of Section 704(b) of the Code, any
deductions for depreciation, cost recovery or amortization attributable to any
Contributed Property shall be determined as if the adjusted basis of such
property on the date it was acquired by the Company was equal to the Agreed
Value of such property on the date it was acquired by the Company. Upon an
adjustment pursuant to Section 3.4(d) or 3.4(e) to the Carrying Value of any
Company property subject to depreciation, cost recovery or amortization, any
further deductions for such depreciation, cost recovery or amortization
attributable to such property shall be determined (A) as if the adjusted basis
of such property were equal to the Carrying Value of such property immediately
following such adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if applicable,
the remaining useful life) as is applied for federal income tax purposes;
provided, however, that if the asset has a zero adjusted basis for federal
income tax purposes, depreciation, cost recovery or amortization deductions
shall be determined using any reasonable method that the Company may adopt.

 

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(c) Transferees. A transferee of all or a part of a Member’s Interest shall
succeed to all or the transferred part of the Capital Account of the
transferring Member.

(d) Contributed Unrealized Gains and Losses. Consistent with the provisions of
Regulations Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Interests
for cash or Contributed Property, the Capital Accounts of all Members and the
Carrying Value of each Company property immediately prior to such issuance shall
be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Company property, as if such Unrealized Gain or Unrealized
Loss had been recognized on an actual sale of each such property immediately
prior to such issuance and had been allocated to the Members at such time
pursuant to Section 4.1. In determining such Unrealized Gain or Unrealized Loss,
the aggregate cash amount and fair market value of all Company Assets (including
cash or cash equivalents) immediately prior to the issuance of such Interests
shall be determined by the Operating Member using such method of valuation as it
may adopt.

(e) Distributed Unrealized Gains and Losses. In accordance with Regulations
Section 1.704-1(b)(2)(iv)(f), immediately prior to any distribution to a Member
of any Company property (other than a distribution of cash or cash equivalents
that are not in redemption or retirement of a Member’s Interest), the Capital
Accounts of all Members and the Carrying Value of each Company property shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Company property, as if such Unrealized Gain or Unrealized
Loss had been recognized in a sale of such property immediately prior to such
distribution for an amount equal to its fair market value (which shall be
determined by the Operating Member using any valuation method it deems
reasonable under the circumstances), and had been allocated to the Members at
such time, pursuant to Section 4.1.

(f) Code Compliance. The parties intend that the foregoing provisions cause each
Member’s Capital Account to be maintained and adjusted in accordance with the
Code and Regulations thereunder, and such provisions shall be interpreted
consistently with such intent.

3.5 Return of Capital. No Member shall have the right to demand a return of such
Member’s Capital Contributions (or the balance of such Member’s Capital
Account). Further, no Member has the right (i) to demand and receive any
distribution from the Company in any form other than cash or (ii) to bring an
action of partition against the Company or its property. Neither the Members nor
the Management Committee shall have any personal liability for the repayment of
the Capital Contributions from Members. No Member is required to contribute or
to lend any cash or property to the Company to enable the Company to return any
other Member’s Capital Contributions.

 

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3.6 Loans by Members. The Company may incur indebtedness only upon the approval
of the Management Committee in accordance with Section 5.4. In addition, with
the consent of the other Members, any Member may lend funds to the Company for
such purposes as are specified in writing to, and approved by, the other
Members, including for purposes of funding capital expenditures or working
capital; provided, however, no Member may make such a loan as an alternative to
any Capital Contribution required under Section 3.2. A loan account shall be
established and maintained for such Member separate from such Member’s Capital
Account and any loan made to the Company shall be credited to such loan account.
Interest on all loans shall accrue at the Default Rate or at such other rate as
may be approved by the Members and all advances to the Company from such loan
account shall be repaid prior to any distributions to the Members pursuant to
Section 4.3. A credit balance in such loan account shall constitute a liability
of the Company; it shall not constitute a part of any Member’s Capital Account.

ARTICLE 4

ALLOCATIONS AND DISTRIBUTIONS

4.1 Allocations for Capital Account Purposes. For purposes of maintaining the
Capital Accounts and in determining the rights of the Members among themselves,
the Company’s items of income, gain, loss and deduction (computed in accordance
with Section 3.4(b)) shall be allocated among the Members in each taxable year
or portion thereof (an “allocation period”) as provided herein below.

(a) Net Income. All items of income, gain, loss and deduction taken into account
in computing Net Income for such allocation period shall be allocated to each of
the Members in accordance with its respective Percentage Interest.

(b) Net Losses. All items of income, gain, loss and deduction taken into account
in computing Net Losses for such allocation period shall be allocated to each
Member in accordance with its respective Percentage Interest; provided, however,
that Net Losses shall not be allocated pursuant to this Section 4.1(b) to the
extent that such allocation would cause a Member to have a deficit balance in
its Adjusted Capital Account at the end of such taxable year (or increase any
existing deficit balance in its Adjusted Capital Account).

(c) Nonrecourse Liabilities. For purposes of Regulation Section 1.752-3(a)(3),
the Members agree that Nonrecourse Liabilities of the Company in excess of the
sum of (A) the amount of Company Minimum Gain and (B) the total amount of
Nonrecourse Built-in Gain (computed without duplication of items between (A) and
(B)) shall be allocated among the Members in accordance with their respective
Percentage Interests.

(d) Company Minimum Gain Chargeback. Notwithstanding the other provisions of
this Section 4.1, except as provided in Regulations Sections 1.704-2(f)(2)
through (5), if there is a net decrease in Company Minimum Gain during any
Company taxable year, each Member shall be allocated items of Company income and
gain for such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Regulations Sections 1.704-2(f)(6) and (g)(2) and
Section 1.704-2(j)(2)(i), or any successor provisions. For purposes of this
Section 4.1(d), each Member’s Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations pursuant to this
Section 4.1 with respect to such taxable year (other than an allocation pursuant
to Section 4.1(h) or (i)).

 

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(e) Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt.
Notwithstanding the other provisions of this Section 4.1 (other than Section
4.1(d), except as provided in Regulations Section 1.704-2(i)(4)), if there is a
net decrease in Minimum Gain Attributable to Member Nonrecourse Debt during any
Company taxable period, any Member with a share of Minimum Gain Attributable to
Member Nonrecourse Debt at the beginning of such taxable period shall be
allocated items of Company income and gain for such period (and, if necessary,
subsequent periods) in the manner and amounts provided in Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For purposes
of this Section 4.1, each Member’s Adjusted Capital Account balance shall be
determined and the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations pursuant to this
Section 4.1, other than Sections 4.1(d), (h) and (i), with respect to such
taxable period.

(f) Qualified Income Offset. In the event any Member unexpectedly receives
adjustments, allocations or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4) through (6) (or any successor provisions), items of
Company income and gain shall be specifically allocated to such Member in an
amount and manner sufficient to eliminate, to the extent required by the
Regulations promulgated under Section 704(b) of the Code, the deficit balance,
if any, in its Adjusted Capital Account created by such adjustments, allocations
or distributions as quickly as possible unless such deficit balance is otherwise
eliminated pursuant to Section 4.1(d) or 4.1(e).

(g) Gross Income Allocations. In the event any Member has a deficit balance in
its Adjusted Capital Account at the end of any Company taxable period which is
in excess of the sum of (i) the amount such Member is obligated to restore
pursuant to any provisions of this Agreement and (ii) the amount such Member is
deemed obligated to restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5), such Member shall be specifically
allocated items of Company gross income and gain in the amount of such excess as
quickly as possible; provided, that an allocation pursuant to this Section
4.1(g) shall be made only if and to the extent that such Member would have a
deficit balance in its Adjusted Capital Account after all other allocations
provided in this Section 4.1 have been tentatively made as if this Section
4.1(g) was not in the Agreement.

(h) Nonrecourse Deductions. Nonrecourse Deductions for any taxable year shall be
allocated to the Members in accordance with their respective Percentage
Interests. If the Company determines in its good faith discretion that the
Company’s Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Regulations promulgated under
Section 704(b) of the Code, the Company is authorized, upon notice to the
Members, to revise the prescribed ratio to the numerically closest ratio which
does satisfy such requirements.

(i) Member Nonrecourse Deductions. Member Nonrecourse Deductions for any taxable
year shall be allocated 100% to the Member that bears the Economic Risk of Loss
for such Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i) (or any successor
provision). If more than one Member bears the Economic Risk of Loss with respect
to a Member Nonrecourse Debt, such Member Nonrecourse Deductions attributable
thereto shall be allocated between or among such Members ratably in proportion
to their respective shares of such Economic Risk of Loss.

 

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(j) Code Section 754 Adjustments. To the extent an adjustment to the adjusted
tax basis of any Company Asset pursuant to Section 734(b) or 743(b) of the Code
is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken
into account in determining Capital Accounts, the amount of such adjustment to
the Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis), and such item of gain or loss shall be specially allocated to the
Members in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such section of the Regulations.

(k) Special Allocations Regarding WFSG Sub Note and Retained Member Proceeds.
Notwithstanding any other provision to the contrary in this Agreement, any items
of income, gain, loss or expense or Unrealized Gain or Unrealized Loss related
to (i) the WFSG Sub Note shall be allocated solely to the Preferred Interest
Member, and (ii) Retained Member Proceeds shall be allocated to the Member with
respect to which the Retained Member Proceeds are retained, but shall not be
treated as items of the Company for tax or Capital Account purposes.

(l) Special Allocations Regarding Plant Matters Expenditures. Any deduction or
loss attributable to costs or depreciable expenses incurred by the Company in
connection with the payment of Plant Matters Expenditures by WFSG or an
Affiliate (other than the Company) pursuant to Section 10.3(c) of the Formation
Agreement shall be allocated solely to WFSG Sub.

4.2 Allocations for Tax Purposes. The Members agree as follows:

(a) Allocations of Gain, Loss, etc. Except as otherwise provided herein, for
federal income tax purposes, each item of income, gain, loss and deduction which
is recognized by the Company for federal income tax purposes shall be allocated
among the Members in the same manner as its correlative item of “book” income,
gain, loss or deduction is allocated pursuant to Section 4.1 hereof.

(b) Book-Tax Disparities. In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, depreciation, amortization and cost recovery deductions shall be
allocated for federal income tax purposes among the Members as follows:

(i) In the case of a Contributed Property, (A) such items of income, gain, loss,
depreciation, amortization and cost recovery deductions attributable thereto
shall be allocated among the Members in the manner provided under Section 704(c)
of the Code and Section 1.704-3(d) of the Regulations (i.e. the “remedial
method”) that takes into account the variation between the Agreed Value of such
property and its adjusted basis at the time of contribution; and (B) any item of
Residual Gain or Residual Loss attributable thereto shall be allocated among the
Members in the same manner as is correlative item of “book” gain or loss is
allocated pursuant to Section 4.1.

 

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(ii) In the case of an Adjusted Property, (A) such items of income, gain, loss,
depreciation, amortization and cost recovery deductions attributable thereto
shall be allocated among the Members in a manner consistent with the principles
of Section 704(c) of the Code and Section 1.704-3(d) of the Regulations (i.e.
the “remedial method”) to take into account the Unrealized Gain or Unrealized
Loss attributable to such property and the allocations thereof pursuant to
Section 3.4(d) or 3.4(e), unless such property was originally a Contributed
Property, in which case such items shall be allocated among the Members in a
manner consistent with Section 4.2(b)(i); and (B) any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be allocated among the
Members in the same manner as its correlative item of “book” gain or loss is
allocated pursuant to Section 4.1.

(c) Conventions/Allocations. For the proper administration of the Company, the
Company shall (i) adopt such conventions as it deems appropriate in determining
the amount of depreciation, amortization and cost recovery deductions; and
(ii) amend the provisions of this Agreement as appropriate to reflect the
proposal or promulgation of Regulations under Section 704(b) or Section 704(c)
of the Code. The Company may adopt such conventions, make such allocations and
make such amendments to this Agreement as provided in this Section 4.2(c) only
if such conventions, allocations or amendments are consistent with the
principles of Section 704 of the Code.

(d) Section 743(b). The Company may determine to depreciate the portion of an
adjustment under Section 743(b) of the Code attributable to unrealized
appreciation in any Adjusted Property (to the extent of the unamortized Book-Tax
Disparity) using a predetermined rate derived from the depreciation method and
useful life applied to the Company’s common basis of such property, despite the
inconsistency of such method with Regulations Section 1.167(c)-1(a)(6), or any
successor provisions. If the Company determines that such reporting position
cannot reasonably be taken, the Company may adopt any reasonable depreciation
convention that would not have a material adverse effect on the Members.

(e) Recapture Income. Any gain allocated to the Members upon the sale or other
taxable disposition of any Company Asset shall, to the extent possible, after
taking into account other required allocations of gain pursuant to this Section
4.2 be characterized as Recapture Income in the same proportions and the same
extent as such Members (or their predecessors in interest) have been allocated
any deductions directly or indirectly giving rise to the treatment of such gains
as Recapture Income.

(f) Section 754. All items of income, gain, loss, deduction and credit
recognized by the Company for federal income tax purposes and allocated to the
Members in accordance with the provisions hereof shall be determined without
regard to any election under Section 754 of the Code which may be made by the
Company; provided, however, that such allocations, once made, shall be adjusted
as necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.

4.3 Distributions.

(a) Subject to Section 4.3(b) and Section 9.2, within 30 days following the end
of each Distribution Period, an amount equal to 100% of Available Cash with
respect to such Distribution Period shall, subject to Section 18-607 of the
Delaware Act, be distributed in accordance with this Article 4 by the Company to
the Members in accordance with their respective Percentage Interests (at the
time the amount of such distributions are made).

 

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(b) Prior to any distribution made pursuant to Section 4.3(a), a Member shall be
entitled upon giving written notice to the Company to have such Member’s
Percentage Interest of Available Cash subject to such distribution deposited
into an interest bearing account of the Company for the benefit only of such
Member (the “Retained Member Proceeds”). Such account shall be a separate
Company account maintained for such Member and no proceeds in such account shall
be commingled with any other proceeds or accounts of the Company or of any other
Member.

(c) From time to time and at any time, upon the delivery of written notice to
the Company by the relevant Member, such Member may either (i) direct the
Company to distribute all or any portion of such Member’s Retained Member
Proceeds (and any interest with respect to such Retained Member Proceeds) to
such Member, in which event the Company shall promptly distribute such portion
of the Retained Member Proceeds (and any interest with respect to such Retained
Member Proceeds) to such Member as directed, or (ii) direct the Company to apply
all or any portion of such Member’s Retained Member Proceeds (and any interest
with respect to such Retained Member Proceeds) against any obligation of the
Member to make a Capital Contribution pursuant to the terms of this Agreement,
in which event such portion of the Retained Member Proceeds (and any interest
with respect to such Retained Member Proceeds) shall be deemed to have been made
as a Capital Contribution to the Company by such Member.

4.4 Preferred Distribution Rights.

(a) Notwithstanding any provision in this Agreement to the contrary, any
payments of principal or interest under the WFSG Sub Note (“Note Income”) shall
(unless otherwise directed pursuant to Section 3.2(c)) be distributed solely to
APL Sub (referred from time to time in this Agreement as the “Preferred Interest
Member”) in accordance with Section 4.4(b) (the “Preferred Distribution
Rights”).

(b) Notwithstanding any provision in this Agreement to the contrary, if and to
the extent that the Company receives Note Income, then the Company shall
promptly make a distribution to the Preferred Interest Member in an amount equal
to 100% of any such Note Income. Except as set forth in Section 9.2(c)(v) of
this Agreement, such distribution shall be unconditionally made without right of
recoupment or setoff.

(c) Except for distributions made in violation of the Delaware Act or other
applicable Law, the Preferred Interest Member shall not be obligated to return
any distribution of Note Income to the Company or pay the amount of any such
distribution for the account of the Company or to any creditor of the Company.
The amount of any such distribution returned to the Company by the Preferred
Interest Member or paid by the Preferred Interest Member for the account of the
Company or to a creditor of the Company shall be added to the account or
accounts from which it was subtracted when it was distributed to the Preferred
Interest Member.

 

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4.5 Varying Interests. All items of income, gain, loss, deduction or credit
shall be allocated, and all distributions shall be made, to the Persons shown on
the records of the Company to have been Members as of the last calendar day of
the period for which the allocation or distribution is to be made.
Notwithstanding the foregoing, if during any taxable year there is a change in
any Member’s Percentage Interest, the Members agree that their allocable shares
of items for the taxable year shall be determined by the Tax Matters Member
using an interim closing of the books under Code Section 706 and the related
Treasury Regulations to take account of the Members’ varying Percentage
Interests.

ARTICLE 5

MANAGEMENT

5.1 The Management Committee. The business and affairs of the Company shall be
managed under the direction of the Members acting through the Management
Committee, subject to (a) the delegation of powers and duties to the Operating
Member pursuant to Article 7 and to officers of the Company and other Persons as
provided for by resolution of the Management Committee and (b) the special
rights of the Preferred Interest Member set forth in Section 5.8.

5.2 Composition; Removal and Replacement of Representatives. The Management
Committee shall be comprised of one (1) representative designated by each
Member, provided that prior to the Voting Change Date, for the purposes of the
foregoing, a Member and any of its Affiliates that are also Members shall be
deemed to constitute a single Member. Each Member shall designate by written
notice to the other Member a Representative to serve on the Management Committee
and one alternate for each Representative to serve in such Representative’s
absence. Subject to Section 9.2(a), each Representative and alternate shall
serve at the pleasure of their appointing Member and shall represent and bind
such Member with respect to any matter. Alternates may attend all Management
Committee meetings but shall have no vote at such meetings except in the absence
of the Representative for whom the alternate is representing. Subject to Section
9.2(a), upon the death, resignation or removal for any reason of any
Representative or alternate of a Member, the appointing Member shall promptly
appoint a successor.

5.3 Officers. The Management Committee may but shall not be required to appoint
employees of Members or their Affiliates to serve as officers of the Company,
and such officers may include but not be limited to president, one or more vice
presidents, a treasurer and a secretary. The powers and authority of any officer
shall be set forth in the resolution of the Management Committee appointing such
officer.

5.4 Voting. All decisions, approvals and other actions of any Member, other than
the Operating Member acting in such capacity pursuant to Article 7 or the
Preferred Interest Member acting pursuant to Section 5.8, under this Agreement
shall be determined by vote of its Representative on the Management Committee.
The Representatives shall exercise their votes on behalf of such appointing
Member in connection with all matters under this Agreement.

(a) Prior to a Voting Change Date, all decisions and actions taken by the
Management Committee with respect to the Company and its business shall be made
and taken by the affirmative vote of a Majority of the Members acting though
their Representatives, subject to clause (c) of this Section 5.4.

 

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(b) Following a Voting Change Date, all decisions and actions taken by the
Management Committee with respect to the Company and its business shall be made
and taken by the affirmative vote of the Member or Members holding a Majority
Percentage Interest acting though their Representatives, except for those
matters set forth on Schedule 5.4(b) which require unanimous consent of the
Members or the affirmative vote of the Member or Members holding a
Super-Majority Percentage Interest, and subject to clause (c) of this Section
5.4.

(c) Notwithstanding clauses (a) and (b) of this Section 5.4, if (i) a material
default under a material agreement of the Company, (ii) a default on or failure
to make payment of an obligation of the Company or a failure to take other
action is likely to result in the imposition of a lien upon or a seizure or
other collection action against a material asset or assets of the Company or
(iii) a failure to comply with an order of a Governmental Authority having
jurisdiction over the Company or its assets, in each case, would be reasonably
likely to have a material adverse effect on the business, operations or
financial condition of the Company, any Member may, except as otherwise provided
in Section 3.2, require all of the Members to make a Capital Contribution
pursuant to Section 3.2 hereof to cure such default, pay such obligation, comply
with such order or take other action in connection therewith by delivering
written notice to the other Member of its intent to require a Capital
Contribution pursuant to this Section 5.4(c); provided, that the aggregate
amount of such required Capital Contribution may be no more than the minimum
amount necessary to prevent a default, seizure or noncompliance of the type
described in clauses (i), (ii) and (iii) of this paragraph.

5.5 Meetings of Management Committee. The Members agree as follows:

(a) Schedule. The Management Committee shall hold regular meetings no less
frequently than once every calendar quarter on such dates and at such times as
shall be agreed to in advance by the Representatives. Each Representative, or
alternate in the absence of the Representative, may call a special meeting of
the Management Committee from time to time as it deems appropriate. A Member may
call a special meeting of the Management Committee by giving written notice and
providing an agenda for such meeting to the other Members not less than five
Business Days prior to such meeting, provided that the business matters to be
acted upon at any such special meeting shall be limited to the matters included
on such agenda.

(b) Conduct of Business. The Management Committee shall conduct its meetings in
accordance with such rules as it may from time to time establish and the
secretary shall keep minutes of its meetings and issue resolutions evidencing
the actions taken by it. Upon the request of any Member, the secretary shall
provide such Member with copies of such minutes and resolutions. Representatives
or, in the absence of a Representative, their alternate, may attend meetings and
vote either in person or through duly authorized written proxies. Unless
otherwise agreed, all meetings of the Management Committee shall be held at the
principal office of the Company or by conference telephone or similar means of
communication by which all Representatives and their alternates can participate
in the meeting. Any action of the Management Committee may be taken without a
meeting by unanimous written consent of the Representatives or, in the absence
of one or more Representatives, their alternates on the Management Committee.

 

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(c) Quorum. At meetings of the Management Committee, the Representative or
alternate designated for each Member entitled to designate a Representative must
be present in person, by conference telephone or by written proxy and entitled
to vote in order to constitute a quorum for the transaction of business for
purposes of considering matters under Section 5.4; provided, however, that
following the Voting Change Date, if any Member’s Representative or alternate
fails to attend at least two consecutive attempted meetings (including special
meetings), only the Representative(s) of the Member or Members holding a
Super-Majority of Percentage Interests must be present in person, by conference
telephone or by written proxy and entitled to vote in order to constitute a
quorum for the transaction of business for purposes of considering only those
matters under Section 5.4 that were included on the agenda for the two attempted
meetings immediately preceding such meeting; provided, further, that any agenda
items requiring unanimous consent under this Agreement shall require the
presence in person, by conference telephone, or by written proxy of all
Representatives to constitute a quorum for the transaction of such business. For
the purposes of this Section 5.5(c) an “attempted meeting” means a meeting duly
called pursuant to Section 5.4(a) for which a quorum was not present.

5.6 Remuneration. Any Representative and alternate employed by a Member shall
receive no compensation from the Company for performing his/her services in such
capacity. Each Member shall be responsible for the payment of the salaries,
benefits, retirement allowances and travel and lodging expenses for its
Representative and alternate.

5.7 Individual Action by Members. No Member, solely by reason of its status as
such, has any right to transact any business for the Company or any authority or
power to sign for or bind the Company unless such power or authority has been
expressly delegated to such Member in accordance with this Agreement; provided,
however, that with respect to the enforcement of the Company’s rights under any
contract between the Company and a Member or an Affiliate of a Member, any and
all actions necessary to enforce the Company’s rights thereunder shall be taken
exclusively by the Members who are not, or whose Affiliate is not, party to such
contract. Further, each Member shall have the right to participate in audits by
the Company of the Affiliates of another Member which audits are made pursuant
to contracts between the Company and such Affiliates.

5.8 Special Rights of Preferred Interest Member. Notwithstanding any provision
in this Agreement to the contrary, for so long as any portion of the WFSG Sub
Note remains outstanding, the Preferred Interest Member shall have the right to
cause the Company to enforce any of the Company’s rights and remedies with
respect to the WFSG Sub Note (including pursuant to any guaranty thereof),
whether provided for in the WFSG Sub Note, any such guaranty or pursuant to
applicable Law.

 

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ARTICLE 6

INDEMNIFICATION; LIMITATIONS ON LIABILITY

6.1 Indemnification by the Company.

(a) Indemnification. The Company shall indemnify and hold harmless each Member,
each Representative, the alternates of each Representative, and the officers of
the Company (each individually, a “Company Indemnitee”) from and against any and
all losses, claims, demands, costs, damages, liabilities, expenses of any nature
(including reasonable attorneys’ fees and disbursements), judgments, fines,
settlements, and other amounts actually and reasonably incurred by such Company
Indemnitee and arising from any threatened, pending or completed claims,
demands, actions, suits or proceedings, whether civil, criminal, administrative
or investigative or other, including any appeals, to which a Company Indemnitee
was or is a party or is threatened to be made a party (collectively,
“Liabilities”), arising out of or incidental to the business of the Company or
such Company Indemnitee’s status as a Member, Representative or alternate of a
Representative or an officer of the Company; provided, however, that the Company
shall not indemnify and hold harmless any Company Indemnitee for any Liabilities
which are due to actual fraud or willful misconduct of such Company Indemnitee.

(b) Rights of Company Indemnitee. Reasonable expenses incurred by a Company
Indemnitee in defending any claim, demand, action, suit or proceeding subject to
this Section 6.1 shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of such Company
Indemnitee to repay such amounts if it is ultimately determined that such
Company Indemnitee is not entitled to be indemnified as authorized in this
Section 6.1. The indemnification provided by this Section 6.1 shall inure solely
to the benefit of the Company Indemnitee and his heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit of
any other Persons.

6.2 Indemnification by the Members. Each Member shall indemnify and hold
harmless the Company, the other Members and their respective Representatives and
alternates and the officers of the Company (each individually, a “Member
Indemnitee”) for any and all Liabilities actually and reasonably incurred by
such Member Indemnitee solely as a result of the actual fraud or willful
misconduct of such Member, its Representatives and alternates or any officer of
the Company employed by such Member or its Affiliates.

6.3 Defense of Action. Promptly after receipt by a Company Indemnitee or a
Member Indemnitee (either, an “Indemnified Party”) of notice of any pending or
threatened claim, demand, action, suit, proceeding or investigation made or
instituted by a Person other than another Indemnified Party (a “Third Party
Action”), such Indemnified Party shall, if a claim in respect thereof is to be
made by such Indemnified Party against a Person providing indemnification
pursuant to Sections 6.1 or 6.2 (“Indemnifying Party”), give notice thereof to
the Indemnifying Party. The Indemnifying party, at its own expense, may elect to
assume the defense of any such Third Party Action through its own counsel on
behalf of the Indemnified Party (with full right of subrogation to the
Indemnified Party’s rights and defenses). The Indemnified Party may employ
separate counsel in any such Third Party Action and participate in the defense
thereof; but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party unless the

 

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Indemnified Party shall have been advised by its counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party (in which case the Indemnifying Party
shall not have the right to assume the defense of such Third Party Action on
behalf of the Indemnified Party), it being understood, however, that the
Indemnifying Party shall not, in connection with any one 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 reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) for the Indemnified Parties, and such fees shall be designated in
writing by the Indemnified Parties. All fees and expenses for any such separate
counsel shall be paid periodically as incurred. The Indemnifying Party shall not
be liable for any settlement of any such Third Party Action effected without its
consent unless the Indemnifying Party shall elect in writing not to assume the
defense thereof or fails to prosecute diligently such defense and fails after
written notice from the Indemnified Party to promptly remedy the same, in which
case, the Indemnified Party without waiving any rights to indemnification
hereunder may defend such Third Party Action and enter into any good faith
settlement thereof without the prior written consent from the Indemnifying
Party. The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party, effect any settlement of any such Third Party Action
unless such settlement includes an unconditional release of the Indemnified
Party from all Liabilities that are the subject of such Third Party Action. The
Members agree to cooperate in any defense or settlement of any such Third Party
Action and to give each other reasonable access to all information relevant
thereto. The Members will similarly cooperate in the prosecution of any claim or
lawsuit against any third party. If, after the Indemnifying Party elects to
assume the defense of a Third Party Action, it is determined pursuant to the
dispute resolution procedures described in Section 13.11 that the Indemnified
Party is not entitled to indemnification with respect thereto, the Indemnifying
Party shall discontinue the defense thereof, and if any fees or expenses for
separate counsel to represent the Indemnified Party were paid by the
Indemnifying Party, the Indemnified Party shall promptly reimburse the
Indemnifying Party for the full amount thereof.

6.4 Limited Liability of Members. To the fullest extent permitted by applicable
Law, no Member shall be personally liable for any debts, liabilities or
obligations of the Company; provided, that each Member shall be responsible
(i) for the making of any Capital Contribution required to be made to the
Company by such Member pursuant to the terms hereof and (ii) for the amount of
any distribution made to such Member that must be returned to the Company
pursuant to the Delaware Act.

6.5 Waiver of Duties.

(a) Each Member acknowledges its express intent, and agrees with the other
Member, for the benefit of the Representatives, that to the fullest extent
permitted by applicable Law: (i) the only fiduciary or other duties or
obligations, if any, that any Representative will owe in their capacity as a
Representative will be to the Member that appointed such Representative to serve
in that capacity, and the nature and extent of those duties and obligations and
the liabilities resulting from any breach thereof constitute an internal
governance affair of Member; and (ii) no Representative will, under this
Agreement, the Delaware Act or otherwise, owe in his capacity as a
Representative, or be personally liable for monetary damages for any breach of,
any fiduciary or other duties or obligations, including any obligation of good
faith and fair dealing, to the Company, any other Member or any of their
respective Affiliates or any other Representative.

 

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(b) With respect to any vote, consent or approval (or failure to vote, consent
or approve) at any meeting of the management committee or otherwise under this
Agreement, each Representative or each Member, as the case may be, may grant or
withhold such vote, consent or approval: (i) in its sole and absolute
discretion, (ii) with or without reasonable cause, (iii) subject to such
conditions as it shall deem appropriate and (iv) without taking into account the
interests of, and without incurring liability to, the Company, any other Member
or Representative, or any officer or employee of the Company (other than, in the
case of each Representative, the Member appointing such Representative). THE
PROVISIONS OF THIS SECTION 6.5 SHALL APPLY NOTWITHSTANDING THE NEGLIGENCE, GROSS
NEGLIGENCE, WILLFUL MISCONDUCT, STRICT LIABILITY OR OTHER FAULT OR
RESPONSIBILITY OF A MEMBER OR ITS REPRESENTATIVE.

ARTICLE 7

OPERATION OF COMPANY

7.1 Operating Member; Authority. The Members hereby appoint WFSG Sub to act as
the Operating Member subject to Section 7.5, and WFSG Sub accepts such
appointment and agrees to act in such capacity subject to Section 7.5. Except
pursuant to Section 5.4 or as otherwise expressly provided in this Agreement
(with regard to those matters which must be approved by the Management Committee
or the Preferred Interest Member), all powers of the Company are vested in and
will be exercised by or under the authority of, and the business and affairs of
the Company will be managed under the direction of, the Operating Member, which
power and authority shall include the power and authority to manage and direct:

(a) the day-to-day operation of the Company and the managerial and
administrative duties relating thereto, including the operation, maintenance and
repair of the Gathering Systems;

(b) subject to Section 5.4 (including the voting requirements with respect to
certain transactions with Affiliates set out in Schedule 5.4(b)), entering into
contracts in the ordinary course of business relating to the operations of the
Company, except for (i) agreements for the Company to perform gathering services
that provide for aggregate payments to any one Person in excess of $10 million
and (ii) any other contracts that provide for aggregate payments to any one
Person in excess of $5 million;

(c) subject to Sections 11.1, 11.2(a) and 11.2(b), the preparation of financial
statements of the Company and the engagement and supervisions of external
auditors and accountants;

(d) subject to Section 11.2(c) and 11.2(d), the preparation and submission to
the Management Committee of an Operating Budget and a Growth Capital Budget for
each succeeding year;

 

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(e) subject to Section 11.2(c), causing the Company to make Operating
Expenditures during a year in aggregate amount up to 10% in excess of the
Operating Budget for such year;

(f) subject to Section 11.2(d), causing the Company to make Growth Capital
Expenditures in aggregate amount up to 10% in excess of the Growth Capital
Budget for such year, including making calls on Members for Capital
Contributions to fund such Growth Capital Expenditures, except for individual
(or a series of related) Capital Growth Expenditures in excess of $5 million;

(g) causing the Company to undertake or perform, or to engage any Person to
undertake or perform any environmental remediation or compliance activities,
except for environmental remediation or compliance activities for which APL Sub
or any of its Affiliates are responsible pursuant to their indemnification
obligations under the Formation Agreement;

(h) causing the Company to obtain and maintain insurance, as determined from
time to time, in cooperation with the other Member, to be necessary or
appropriate to insure the Company, its businesses and its Members against
Liabilities;

(i) administering the Transition Services Agreement on behalf of the Company;
and

(j) causing the Company to contribute the ATN Assets to the Surviving Company
and causing the Company to change the name of APL Ohio from “Atlas Pipeline
Ohio, LLC” to a new name and/or to cause such entity to re-domesticate from
Pennsylvania to Delaware.

Any action taken (or authorized) by the Operating Member shall not require any
further action, approval or consent of the Members or the Management Committee,
except solely to the extent provided under Section 5.4 or as otherwise expressly
provided in this Agreement. To the extent that any action requiring
authorization by the Management Committee is approved in accordance with the
provisions of Section 5.4, the Operating Member shall be deemed to be authorized
to take such actions as may be necessary (or which the Operating Member, in its
good faith believes is required) to implement or carry out the intent of the
Management Committee relative to such authorized actions. The Management
Committee may from time to time re-determine the authority delegated to the
Operating Member pursuant to this Section 7.1 by a unanimous resolution of the
Representatives, and without any further requirement to amend or modify this
Agreement.

7.2 Expenses.

(a) The Operating Member shall be reimbursed for all direct charges incurred or
payments actually made by the Operating Member, acting in such capacity
(including amounts paid to Affiliates of the Operating Member), to the extent
such charges are included in the amounts in any approved Operating Budget,
approved Growth Capital Budget or other approved Growth Capital Expenditures
(the “Direct Charges”).

 

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(b) As reimbursement for all expenses other than Direct Charges allocable to the
Company or otherwise incurred by a Member in connection with the discharge of
duties under this Agreement in connection with the operations of the Company,
the Company shall pay the Operating Member a monthly rate of $133,000 (the
“Operating Fee”) for the balance of calendar year 2009 and prorated for any
partial month, which amount shall be paid each month beginning on the first day
of the first month after the Closing Date. The Operating Fee shall be netted
against any amounts paid to Atlas America (or its Affiliate) pursuant to the
Transition Services Agreement. Unless otherwise adjusted by the Management
Committee following its evaluation of the Operating Fee in connection with the
Operating Budget approval cycle, the Operating Fee will be increased to a rate
of $2.2 million annually for the year beginning January 1, 2010, which amount
shall be paid in twelve equal monthly payments beginning on January 1, 2010.

(c) Commencing with January 1, 2012, the Operating Fee shall be adjusted every
other year as of the first day of January of such alternate year in connection
with the Operating Budget approval cycle, and such amounts shall continue to be
payable by the Company during each year in twelve equal monthly payments
beginning on January 1 of each year; provided, however, that any such adjustment
shall require the unanimous approval of the Management Committee. If the
Management Committee fails to approve an adjustment in the Operating Fee in
accordance with the terms of this Section 7.2(c), then the Operating Fee shall
be adjusted as of the first day of January of such alternate year for which the
Management Committee fails to approve any such adjustment by multiplying the
Operating Fee currently in use by the percentage increase or decrease, if any,
in the GDPCP Index over the prior year for which information is then available
by each year. This percentage adjustment shall be calculated based upon the most
recent quarterly publication of the GDPCP Index published and available and
shall be compared to the quarterly publication of the GDPCP Index for the same
quarter of the prior calendar year. If the GDPCP Index ceases to be published,
then it shall be replaced with the IPD Index. If both the GDPCP Index and the
IPD Index cease to be published, then the Management Committee shall within
thirty (30) days of written notice thereof from the Operating Member negotiate a
replacement index. The adjusted Operating Fee shall be the Operating Fee
currently in use, plus or minus the computed adjustment.

(d) In connection with the Operating Budget approval cycle, the Operating Member
shall be entitled to request an increase in the Operating Fee.

(e) In the event the Non-Operating Member becomes the Operating Member pursuant
to Section 7.5, the new Operating Member shall from that time forward be
entitled to receive the Operating Fee.

(f) All amounts due to the Operating Member under this Section 7.2 shall be paid
within 25 days of Operating Member’s monthly invoice.

7.3 Accounts and Other Matters

(a) Accounts. The Operating Member shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company’s name with such financial institutions and firms it may determine. The
Company may not commingle the Company’s funds with the funds of any Member or
any other Person. All such accounts shall be and remain the property of the
Company and all funds shall be received, held and disbursed for the purposes
specified in this Agreement.

 

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(b) Certain Additional Undertakings.

(i) Separateness Generally. The Operating Member shall cause the Company to
conduct its business and operations in accordance with this Section 7.3(b).

(ii) Separate Records. Subject to the provisions of Article 11, the Operating
Member shall cause the Company to: (A) maintain the Company’s books and records
and its accounts separate from those of any other Person, (B) maintain Company’s
financial records, which will be used by it in the ordinary course of business,
showing its assets and liabilities separate and apart from those of any other
Person, except its consolidated subsidiaries, (C) not have Company’s assets
and/or liabilities included in a consolidated financial statement of any
Affiliate of the Company unless appropriate notation shall be made on such
Affiliate’s consolidated financial statements to indicate the separateness of
the Company and its assets and liabilities from such Affiliate and the assets
and liabilities of such Affiliate, and to indicate that the assets and
liabilities of the Company are not available to satisfy the debts and other
obligations of such Affiliate, and (D) file the Company’s own tax returns
separate from those of any other Person, except (I) to the extent that the
Company (x) is treated as a “disregarded entity” for tax purposes or (y) is not
otherwise required to file tax returns under applicable Law or (II) as may
otherwise be required by applicable Law.

(iii) Separate Assets. The Operating Member shall cause the Company to not
commingle or pool the Company’s funds or other assets with those of any other
Person, and to maintain its assets in a manner that is not costly or difficult
to segregate, ascertain or otherwise identify as separate from those of any
other Person.

(iv) No Effect. Failure by the Operating Member or the Company to comply with
any of the obligations set forth above shall not affect the status of the
Company as a separate legal entity, with its separate assets and separate
liabilities or restrict or limit the Company from engaging or contracting with
any Member or any of their Affiliates for the provision of services or the
purchase or sale of products.

7.4 Practices of the Operating Member. The Operating Member shall exercise the
Operating Member’s powers and rights, and discharge the Operating Member’s
duties under this Agreement in accordance with the following: (a) the
requirements of this Agreement; (b) in accordance with practices generally
acceptable for an experienced and prudent operator engaged in a similar activity
under similar circumstances of the natural gas gathering industry; (c) all
applicable Laws and regulations, including environmental standards in effect
from time to time, and any other applicable rules and requirements of
Governmental Authorities; (d) the contractual obligations and undertakings of
the Company, as the same may be amended from time to time; and (e) honestly, in
good faith and in the reasonable interests of the Company; provided, however,
that in the event of a conflict among any of the foregoing, the most stringent
requirement on the Operating Member shall prevail; and provided, further, that
the Operating Member shall not deemed to be in breach of this Section 7.4 if,
with respect to clauses (c) and (d) only, the Operating Member commits any
nonmaterial violation or default that does not adversely affect the Company in a
material manner.

 

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7.5 Replacement of the Operating Member. If WFSG Sub (a) as Operating Member is
in Default pursuant to Section 9.1 or (b) ceases to hold a Percentage Interest
of at least 34%, then APL Sub, as long as it is not in Default under this
Agreement, shall become the Operating Member and assume all the rights and
responsibilities of the Operating Member provided for in this Agreement;
provided, however, that nothing in this Section 7.5 shall be deemed to affect
the rights of the former Operating Member as a Member under this Agreement.

ARTICLE 8

TRANSFER AND ISSUANCE OF INTERESTS

8.1 Restrictions on Transfer. The Members agree as follows:

(a) General. Except as provided in this Article 8, a Member may not sell,
assign, transfer, convey, merge, consolidate, reorganize, exchange or otherwise
dispose, directly or indirectly (through the sale of equity interests in a
direct or indirect parent entity or otherwise), whether voluntary or involuntary
or by operation of Law (“Transfer”), all or any part of such Member’s Interest;
provided, that the foregoing restriction shall not preclude or limit a Member’s
ability to mortgage, pledge, encumber or create or suffer to exist any pledge,
lien, charge or encumbrance upon, security interest or participation in, or
trust in respect of all or any part of such Member’s Interest. Any attempted
Transfer of an Interest, other than in strict accordance with this Article 8,
shall be, and is hereby declared, null and void ab initio. The rights and
obligations constituting an Interest may not be separated, divided or split from
the other attributes of an Interest except as contemplated by the express
provisions of this Agreement. The Members agree that a breach of the provisions
of this Article 8 may cause irreparable injury to the Company and to the other
Members for which monetary damages (or other remedy at law) are inadequate in
view of (i) the complexities and uncertainties in measuring the actual damages
that would be sustained by reason of the failure of a Member to comply with such
provision and (ii) the uniqueness of the Company’s business and the relationship
among the Members. Accordingly, the Members agree that the provisions of this
Article 8 may be enforced by specific performance pursuant to Section 13.11.

(b) Certain Prohibited Transfers. No Member shall Transfer all or any part of
its Interest if such Transfer (i) (either considered alone or in the aggregate
with prior Transfers by the same Member or any other Member) would result in the
termination of the Company for federal income tax purposes; (ii) would result in
a violation of the Delaware Act or any other applicable Laws; or (iii) would
result in a Default hereunder or termination of an existing financial agreement
to which the Company is a party or in the acceleration of debt thereunder.

(c) Defaulting Members. No Defaulting Member may Transfer any of its Interest
except with the consent of the Non-Defaulting Member and subject to
Section 9.2(a).

 

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8.2 Possible Additional Restrictions on Transfer

(a) General Restriction. Except as provided in Section 8.2(b) below, a Member
may not Transfer all or any part of such Member’s Interest except by complying
with all of the following requirements: (i) such Transfer occurs after the
earlier of (x) the fifth anniversary of the date of this Agreement and (y) such
time as the WFSG Sub Note is retired, subject to Section 8.1; provided, however,
that under no circumstances (other than as provided in Section 8.2(b)) may such
Transfer occur before the second anniversary of the date of this Agreement;
(ii) such Member must obtain the express written consent of the other Member,
which consent may be granted or withheld by any such other Member in its
absolute discretion, except as permitted under Section 8.2(d); and (iii) such
Member must offer such other Member the right to acquire such Interest in
accordance with Section 8.2(d).

(b) Permitted Transfers. Upon written notice to the other Member and without
triggering any rights under Section 8.2(d) or requiring the consent of such
other Member, a Member may Transfer all or any part of its respective Interest,
subject to Section 8.1(b) (other than Section 8.1(b)(i)) and Section 8.1(c), as
follows (each, a “Permitted Transfer”):

(i) any Transfer to a Related-Party Parent of such Member or one or more Persons
wholly owned or controlled directly or indirectly by such Related-Party Parent;

(ii) any Transfer to any Person that is controlled by the Member or a
Related-Party Parent of such Member; provided, however, that (A) such Transfer
may only be made indirectly to such Person, (B) neither such Person nor any
member of such Person’s consolidated group for financial accounting purposes is
primarily engaged in one or more of the following businesses, the exploration,
production, gathering and transportation of hydrocarbons or the processing of
natural gas and (C) such Person is not listed on Schedule 8.2(b) hereto;

(iii) any Transfer to one or more Persons in connection with the Transfer of any
assets, including equity securities, in which (A) the Member’s entire Interest
is being transferred and (B) such Interest does not represent more than 15% of
the fair market value of the assets being transferred concurrently by the Parent
of such Member;

(iv) any Transfer resulting from any issuance, sale or other transfer of equity
by any Related-Party Parent of a Member, whether by merger, consolidation or
otherwise; or

(v) any Transfer resulting from the sale of all or substantially all of the
assets of a Member’s Parent.

Notwithstanding the foregoing, no Transfer of WFSG Sub’s Interest to a
Related-Party Parent or wholly owned subsidiary thereof shall be a Permitted
Transfer unless WFSG Sub concurrently assigns the WFSG Sub Note to such
Related-Party Parent or subsidiary thereof.

(c) Possible Additional Restrictions on Transfer. Notwithstanding anything to
the contrary contained in this Agreement, in the event of (i) the enactment (or
imminent enactment) of any legislation, (ii) the publication of any temporary or
final Regulation, (iii) any ruling by the Internal Revenue Service or (iv) any
judicial decision that in any such case, in the opinion of counsel, would result
in the taxation of the Company for federal income tax purposes as a corporation
or would otherwise subject the Company to being taxed as an entity for federal
income tax purposes, this Agreement shall be deemed to impose such restrictions
on the Transfer

 

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of a Member’s Interest as may be required, in the opinion of counsel to the
Company, to prevent the Company from being taxed as a corporation or otherwise
being taxed as an entity for federal income tax purposes, and the Members
thereafter shall amend this Agreement as necessary or appropriate to impose such
restrictions.

(d) Right of First Refusal

(i) Procedure. If a Member at any time desires to consummate a bona fide
transaction that will result in the Transfer of all or a portion of its Interest
(whether or not the proposed Transfer is to another Member), then such Member
(the “Offering Member”) shall promptly give notice thereof (the “Offer Notice”)
to the Company and the other Members; provided, however, that this Section
8.2(d)(i) shall not apply to a Permitted Transfer. The Offer Notice shall set
forth all relevant information with respect to the proposed Transfer, including
the name and address of the prospective acquirer, the precise Interest that is
the subject of the Transfer (the “Marketed Interest”), the price to be paid for
such Marketed Interest and any other terms and conditions of the proposed
Transfer, including an execution copy of the agreement pursuant to which the
proposed Transfer is to take place (the “Proposed Transfer Agreement”). The
other Member (the “Non-Offering Member”) shall have the right of first refusal
(“Right of First Refusal”) to acquire, for the same purchase price, as set forth
in the Offer Notice, and on terms and provisions that are not less favorable to
the Offering Member than the terms and provisions contained in the Proposed
Transfer Agreement, such Marketed Interest; provided, further, that if the
purchase price to be paid to the Offering Member pursuant to the proposed
Transfer is not entirely in cash, the purchase price for the Non-Offering Member
shall be the sum of (A) the cash portion of the purchase price, (B) in the case
of any marketable securities constituting part of such purchase price, the
volume-weighted average closing price of any such marketable securities over the
20 trading days immediately preceding the date of the Offer Notice, and (C) in
the case of any part of the purchase price not constituting cash or marketable
securities, the fair market value of such part of the purchase price determined
in good faith by the Management Committee. The Non-Offering Member shall have
the right (but not the obligation) to acquire the Marketed Interest. If the
Non-Offering Member wishes to exercise the Right of First Refusal, the
Non-Offering Member must provide notice of its election (the “Election Notice”),
to the Offering Member within 30 days of receipt by the Non-Offering Member of
the Offer Notice (the “Election Period”), or the Non-Offering Member shall be
deemed to have waived its Right of First Refusal for the subject Transfer, but
not any Right of First Refusal for future Transfers. Upon receipt of the
Election Notice by the Offering Member, the Members shall negotiate in good
faith and enter into a definitive agreement with respect to the transaction
specified by the Non-Offering Member in the Election Notice and consummate such
transaction within 90 days of receipt of the Offer Notice by the Non-Offering
Member. If the Members do not consummate the transaction specified in the
Election Notice within such 90-day period, the Non-Offering Member shall be
deemed to have waived its Right of First Refusal.

(ii) Waiver of Right of First Refusal. If the Right of First Refusal is deemed
waived pursuant to Section 8.2(d)(i), the Offering Member shall have the right,
subject to compliance with the provisions of Sections 8.1 and 8.2, to market,
offer, negotiate and consummate the Transfer of the Marketed Interest described
in the Offer Notice to a third party for a period of 120 days after the
expiration of the Election Period; provided, however, that the Offering Member
may not consummate any such Transfer to a third

 

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party unless (x) the acquisition consideration to be paid by such third party is
at least equal in value to the consideration set forth in the Offer Notice and
(y) the other terms and provisions of such sale are substantially identical to,
and not more favorable to such third party than, the terms and provisions
contained in the Proposed Transfer Agreement. If, however, the Offering Member
is unable to consummate the Transfer of the Marketed Interest to a third party
within the 120-day period following expiration of the Election Period, the
proposed Transfer shall again become subject to the Right of First Refusal in
Section 8.2(d)(i).

(iii) Applicability of Transfer Restrictions. All transfers pursuant to this
Section 8.2(d) must comply with the restrictions on transfers set forth in
Section 8.1 (other than Section 8.1(b)(i)) and Section 8.2.

8.3 Restriction on Preferred Distribution Rights. Notwithstanding any provision
in this Agreement to the contrary, the Preferred Distribution Rights and any
other rights expressly designated in this Agreement as being rights of the
Preferred Interest Member shall not be Transferred by the Preferred Interest
Member.

8.4 Documentation; Validity of Transfer. No purported transfer of a Member’s
Interest shall be effective as to the Company or the other Members unless and
until the applicable provisions of Sections 8.1 and 8.2 have been satisfied and
such other Members have received a document in a form acceptable to such other
Members executed by both the transferring Member (or its legal representative)
and the transferee. Such document shall include: (i) the notice address of the
transferee, (ii) such transferee’s express agreement in writing to be bound by
all of the terms and conditions of this Agreement with respect to the Interest
being transferred, (iii) the Interests of the transferring Member and the
transferee after the transfer and (iv) representations and warranties from both
the transferring Member and the transferee that the transfer was made in
accordance with applicable Law (including state and federal securities Laws) and
the terms and conditions of this Agreement. Each transfer shall be effective
against the Company and the other Members as of the first Business Day of the
calendar month immediately succeeding the Company’s receipt of the document
required by this Section 8.4, and the applicable requirements of Sections 8.1
and 8.2 have been met. A transferee of an Interest shall only the right to
receive its Percentage Interest of the Company’s profits, losses, allocations
and distributions until such time as such transferee is admitted as a
substituted Member pursuant to Section 8.5.

8.5 Substituted Members. Upon compliance with the provisions of Section 8.4, as
of the effectiveness of any transfer of an Interest permitted under this
Agreement, (i) any transferee acquiring the Interest of a Member shall be deemed
admitted as a substituted Member with respect to the Interest transferred, and
(ii) such substituted Member shall be entitled to the rights and powers and
subject to the restrictions and liabilities of the transferring Member with
respect to the Interest so acquired; provided, that no purported transfer of an
Interest in violation of the terms of this Agreement (including any transfer
occurring by operation of Law) shall vest the transferee with any rights, powers
or privileges hereunder, and no such purported transferee shall be deemed a
Member hereunder for any purposes or have any right to vote or consent with
respect to Company matters, to inspect Company records, to maintain derivative
proceedings, to maintain any action for an accounting or to exercise any other
rights of a Member hereunder or under the Delaware Act.

 

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8.6 Covenant Not to Withdraw or Dissolve. Notwithstanding any provision of the
Delaware Act, each Member hereby agrees that it has entered into this Agreement
based on the expectation that all Members will continue as Members and carry out
the duties and obligations undertaken by them hereunder. Except as otherwise
expressly required or permitted hereby, each Member hereunder covenants and
agrees not to (i) take any action to file a certificate of dissolution or its
equivalent with respect to itself, (ii) take any action that would cause a
Bankruptcy of such Member, (iii) withdraw or attempt to withdraw from the
Company, except as otherwise expressly permitted by this Agreement or the
Delaware Act, (iv) exercise any power under the Delaware Act to dissolve the
Company, (v) transfer all or any portion of its Interest, except as expressly
provided herein, or (vi) demand a return of such Member’s Capital Contributions
or profits (or a bond or other security for the return of such contributions or
profits), in each case without the consent of the other Members.

ARTICLE 9

DEFAULT

9.1 Events of Default. If any of the following events occurs (each, an “Event of
Default”):

(a) the Bankruptcy, insolvency, dissolution, liquidation, death, retirement,
resignation, termination, expulsion of a Member or the occurrence of any other
event under the Delaware Act which terminates the continued membership of a
Member in the Company;

(b) all or any part of the Interest of a Member is seized by a creditor of such
Member, and the same is not released from seizure or bonded out within 30 days
from the date of notice of seizure;

(c) a Member (i) fails to provide any Capital Contribution as required by
Article 3; provided, however, that the failure of a Member to make any Capital
Contribution in connection with a Growth Capital Project shall not be a Monetary
Default pursuant to this Section 9.1(c)(i); provided further however, that
following the Voting Change Date, in the event the adoption or amendment of the
annual Operating Budget or the annual Growth Capital Budget is not unanimously
approved by the Management Committee (a “Non-Consent Budget”), the non-approving
Member (the “Non-Approving Member”) that fails to provide any Capital
Contribution as required by Article 3 with respect to such Non-Consent Budget
(other than Capital Contributions required in connection with an emergency)
shall not be, subject to Section 9.2, in Default for any purpose under this
Agreement, (ii) fails to indemnify or reimburse the other Member for the
liabilities and obligations as set forth in this Agreement, (iii) fails to
perform or fulfill when due any other material financial or monetary obligation
imposed on such Member in this Agreement, (iv) with respect to WFSG Sub only,
subject to Sections 9.2(c)(iii), 9.2(c)(iv) and 9.2(c)(v), any failure by WFSG
Sub to make any principal or interest payment required under the WFSG Sub Note
(each of the foregoing, a “Monetary Default”) or (v) fails to indemnify or
reimburse the other Member or a Person affiliated with such Member in accordance
with Articles 8, 10 or 11 of the Formation Agreement for the liabilities and
obligations provided therein that have been Initially Determined, and, in each
of the foregoing cases, such failure continues for 15 days;

 

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(d) a Member defaults or otherwise fails to perform or fulfill any material
covenant, provision or obligation (other than financial or monetary obligations,
which are covered in Section 9.1(c)) under this Agreement or any agreement
relating to borrowed money to which the Company is a party and such failure
continues for 30 days or such shorter period as may be specified for a default
under such agreement relating to borrowed money;

(e) a Member transfers or attempts to transfer all or any portion of its
Interest in the Company other than in accordance with the terms of this
Agreement; or

(f) with respect to the Operating Member, it is determined that the Operating
Member has engaged in fraud, willful misconduct or gross negligence in the
performance of its duties with respect to the Company or in the exercise of its
authority under Sections 7.1 and 7.4 of this Agreement, and such determination
shall have become final and nonappealable;

then a “Default” hereunder shall be deemed to have occurred and the Member with
respect to which one or more Events of Default has occurred shall be referred to
as the “Defaulting Member,” and the other Members shall be referred to as
“Non-Defaulting Members.”

9.2 Consequences of Default. The Members agree as follows:

(a) Forfeiture of Rights. Notwithstanding anything contained herein to the
contrary, a Defaulting Member who is in default pursuant to Sections 9.1(a) or
9.1(b) shall forfeit all rights as a Member, including all rights under Article
5, other than the right to receive its Percentage Interest of the Company’s
profits, losses, allocations and distributions. Any Transfer by such a
Defaulting Member of all or a portion of its Interest, whether permitted under
Article 8 or otherwise, shall be effective only with respect to the right to
receive the Percentage Interest of the Company’s profits, losses, allocation and
distribution to which such Interest or portion thereof transferred is entitled.

(b) Suspension of Distributions in the case of Monetary Default. No distribution
shall be made to any Defaulting Member who is in Monetary Default pursuant to
Sections 9.1(c)(i) through (iii). The Defaulting Member shall also compensate
the Non-Defaulting Members and/or the Company for losses, damages, costs and
expenses resulting directly or indirectly from such Monetary Default. If the
Defaulting Member shall dispute whether an Event of Default has occurred, or the
amount of the loss, damage, cost or expense incurred by the Non-Defaulting
Members and/or the Company as a consequence of a Monetary Default, the matter
shall be submitted promptly to the dispute resolution procedure provided for in
Section 13.11 hereof.

(c) Options of Non-Defaulting Members. In the event of the occurrence of an
Event of Default, the Non-Defaulting Member may take one or more of the
following actions:

(i) cure the Default and cause the cost of such cure to be charged against a
special loan account established for the Defaulting Member until the entire
amount of such cost plus interest at the Default Rate on the unpaid balance in
accordance with Section 3.2 shall have been recovered by the Non-Defaulting
Member from any subsequent distributions made pursuant to this Agreement to
which the Defaulting Member would otherwise have been entitled, which amounts
shall be paid first as interest and then principal, until the cost is paid in
full;

 

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(ii) exercise any other rights and remedies available at law or in equity,
subject to Section 13.11;

(iii) in the case of a Default under Section 9.1(c)(v), WFSG Sub shall have
(A) the option of recouping all or a portion of the amounts reimbursable or
indemnified under the Formation Agreement by reducing the principal amount on
the WFSG Sub Note pursuant to section 1.4.2 thereof or (B) the right to withhold
or deduct all or a portion of the amounts reimbursable or indemnified under the
Formation Agreement from one or more interest payments that would otherwise be
made to the payee under the WFSG Sub Note pursuant to section 1.2 thereof;
provided, that in each case, prior to exercise of such option for recoupment or
right of setoff, WFSG Sub shall deliver or cause to be delivered written notice
to APL Sub at least 15 days prior to the date on which WFSG Sub intends to
exercise such option or right; and, provided, further, that if it is later
finally determined and nonappealable that WPZ Sub (or its Affiliate) was not
entitled to any portion of the Indemnity Claim Amount subject to such recoupment
or setoff, WFSG Sub shall promptly reimburse APL Sub (or cause APL Sub to be
reimbursed) the amount of such portion to which it was not entitled plus
annualized interest on such amount at the Default Rate from the date of such
recoupment or setoff to the date of reimbursement to APL Sub; provided, further,
the Members agree that no pre-judgment interest or similar interest, which
otherwise may be available under statutory or common law, will be payable on
such reimbursed amounts.

(iv) in the case of a Default under Section 9.1(c)(v), and the amounts
reimbursable or indemnified under the Formation Agreement exceed the outstanding
principal amount on the WFSG Sub Note (as a result of reductions in such
principal amount pursuant to Section 9.2(c)(iii)) or if the remedies under
Section 9.2(c)(iii) are otherwise not available (other than as a consequence of
the repayment of the WFSG Sub Note except for mandatory pre-payments under
Section 3.2(c)), WFSG Sub shall also have the option (a “Default Adjustment
Option”) to adjust the Capital Account of APL Sub (and of any Affiliate of APL
Sub that is also a Member) downward by the amount of any such past due indemnity
or reimbursement payments (a “Default Adjustment”); provided, however, that WFSG
Sub shall only have the right to exercise the Default Adjustment Option if
(A) the relevant indemnification claim is made prior to the expiration of the
applicable survival period under the Formation Agreement and (B) WFSG Sub has
delivered written notice to APL Sub at least 15 days prior to the date upon
which WFSG Sub intends to exercise such Default Adjustment Option. The Capital
Account of APL Sub (or its Affiliate) shall be adjusted in accordance with
Section 3.4, and, following such adjustment, each Member’s Percentage Interest
shall be recalculated in accordance with this Agreement as of the first day
after the close of the taxable year in which such adjustment occurs; provided,
that if it is later finally determined and nonappealable that WPZ Sub (or its
Affiliate) was not entitled to any portion of the Indemnity Claim Amount subject
to a Default Adjustment, the Capital Account of APL Sub (or its Affiliate) shall
be adjusted back in accordance with Section 3.4, and, following such adjustment,
each Member’s Percentage Interest shall be recalculated in accordance with this
Agreement as of the first day after the close of the taxable year in which such
adjustment occurs, and WFSG Sub shall promptly reimburse APL Sub (or cause APL
Sub to be reimbursed) the amount of distributions to which it would have been
entitled through such adjustment dated plus annualized interest on such amount
at the Default Rate from the date of such recoupment or setoff to the date of
reimbursement to APL Sub; provided, further, the Members agree that no
pre-judgment interest or similar interest, which otherwise may be available
under statutory or common law, will be payable on such reimbursed amounts; or

 

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(v) in the case of a Default under Section 9.1(c)(v), the remedies under Section
9.2(c)(iii) and Section 9.2(c)(iv) are not available and the applicable
Indemnity Claim Amount has been finally determined and is nonappealable, WFSG
Sub shall have (A) the option of recouping all or a portion of the amounts
reimbursable or indemnified under the Formation Agreement by reducing the amount
that would otherwise be distributed to the Defaulting Member pursuant to this
Agreement or (B) the right to withhold or deduct all or a portion of the amounts
reimbursable or indemnified under the Formation Agreement from one or more
distributions that would otherwise be distributed to the Defaulting Member
pursuant to this Agreement; provided, that in each case, prior to exercise of
such option for recoupment or right of setoff, WFSG Sub shall deliver or cause
to be delivered written notice to APL Sub at least 15 days prior to the date on
which WFSG Sub intends to exercise such option or right.

(d) In the event that a Non-Approving Member fails to meet any call for Capital
Contributions to fund all or any portion of a Non-Consent Budget, the Capital
Account of the other Member shall be increased by any Capital Contributions made
to the Company by such other Member with respect to such call for Capital
Contributions and the Percentage Interests of the Members shall be adjusted in
accordance with this Agreement to be proportionate to the amounts of their
respective Adjusted Contributions; provided, however, as provided in the
definition of “Percentage Interest,” any such adjustment will be made, only on
the first day after the close of each taxable year of the Company.

ARTICLE 10

DISSOLUTION AND LIQUIDATION

10.1 Dissolution. The Company shall be dissolved upon the earliest to occur of
the following:

(a) all or substantially all of the Company’s assets and properties have been
sold and reduced to cash;

(b) the written consent of each Member; or

(c) entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Delaware Act.

The Members expressly recognize the right of the Company to continue in
existence upon the occurrence of an Event of Default specified in Section 9.1(a)
unless the Non-Defaulting Members elect to dissolve the Company pursuant to this
Section 10.1.

10.2 Liquidation. The Members agree as follows:

(a) Procedures. Upon dissolution of the Company, the Management Committee, or if
there are no remaining Representatives or alternates, such Person as is
designated by the Members (the remaining Management Committee or such Person
being herein

 

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referred to as the “Liquidator”) shall proceed to wind up the business and
affairs of the Company in accordance with the terms hereof and the requirements
of the Delaware Act. A reasonable amount of time shall be allowed for the period
of winding up in light of prevailing market conditions and so as to avoid undue
loss in connection with any sale of Company Assets. This Agreement shall remain
in full force and effect during the period of winding up.

(b) Distributions. In connection with the winding up of the Company, the Company
Assets or proceeds thereof shall be distributed as follows:

(i) to the Preferred Interest Member, the WFSG Sub Note (and any guaranty
thereunder) shall be distributed in-kind in satisfaction of the Preferred
Interest Member’s Preferred Distribution Rights to the extent any obligation
under the WFSG Sub Note remains unsatisfied and no adjustment to the Capital
Accounts shall result from such distribution of the WFSG Sub Note;

(ii) to creditors, including Members who are creditors, to the extent otherwise
permitted by Law, in satisfaction of liabilities of the Company (whether by
payment or the making of reasonable provision for payment thereof) other than
liabilities for which reasonable provision for payment has been made and
liabilities to Members and former Members under Sections 18-601 and 18-604 of
the Delaware Act;

(iii) to Members and former Members in satisfaction of liabilities for
distributions under Sections 18-601 and 18-604 of the Delaware Act; and

(iv) all remaining Company Assets shall be distributed to the Members as
follows:

(A) the Liquidator may sell any or all Company Assets, including to one or more
of the Members (other than any Member in Default at the time of dissolution),
and any resulting gain or loss from each sale shall be computed and allocated to
the Capital Accounts of the Members in accordance with Article 4;

(B) with respect to all Company Assets that have not been sold, the fair market
value of such Company Assets (as determined by the Liquidator using any method
of valuation as it, using its best judgment, deems reasonable) shall be
determined and the Capital Accounts of the Members shall be adjusted in
accordance with Article 4 to reflect the manner in which the unrealized income,
gain, loss, and deduction inherent in such Company Assets that have not been
reflected in the Capital Accounts previously would be allocated among the
Members if there were a taxable disposition of such Company Assets for their
fair market value on the date of distribution;

(C) Company Assets shall be distributed among the Members ratably (provided,
that Retained Member Proceeds (and any interest with respect to such Retained
Member Proceeds) shall be distributed to the Member with respect to which such
Retained Member Proceeds were retained), in proportion to each Member’s positive
Capital Account balances, as determined after taking into account all Capital
Account adjustments for the taxable year of the Company during which the
liquidation of the Company occurs (other than those made by reason of this
clause (C)); and in each case, those distributions shall be made by the end of
the taxable year of the Company during which the liquidation of the Company
occurs (or, if later, 90 days after the date of the liquidation); and

 

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(D) All distributions in kind to the Members shall be made subject to the
liability of each distributee for costs, expenses, and liabilities theretofore
incurred or for which the Company has committed prior to the date of termination
and those costs, expenses, and liabilities shall be allocated to the distributee
pursuant to this Section 10.2(b)(iv). The distribution of Company Assets to a
Member in accordance with the provisions of this Section 10.2(b)(iv) constitutes
a complete return to the Member of its Capital Contributions and a complete
distribution to the Member of its Interest and all the Company Assets.

(c) Capital Account Deficits; Termination. To the extent that any Member has a
deficit in its Capital Account, upon dissolution of the Company such deficit
shall not be an asset of the Company and such Member shall not be obligated to
contribute any amounts to the Company to bring the balance of such Member’s
Capital Account to zero. Following the completion of the winding up of the
affairs of the Company and the distribution of Company Assets, the Company shall
be deemed terminated and the Liquidator shall file a certificate of cancellation
in the Office of the Secretary of State of the State of Delaware as required by
the Delaware Act.

ARTICLE 11

FINANCIAL MATTERS

11.1 Books and Records. The Operating Member shall cause the Company to maintain
or cause to be maintained accurate and complete books and records, on the
accrual basis, in accordance with GAAP (which, having been adopted, shall not be
changed without the prior written consent of the Members), showing all costs,
expenditures, sales, receipts, assets and liabilities and profits and losses and
all other records necessary, convenient or incidental to recording the Company’s
business and affairs; provided, however, that the Members’ Capital Accounts
shall be maintained in accordance with Article 3. All of such books and records
of the Company shall be open to inspection by each Member or its Representative
at the inspecting Member’s expense at any reasonable time during business hours.
A Member may, at its option and at its own expense upon thirty (30) days’
advance written notice to the Operating Member, conduct internal audits during
reasonable business hours of the pertinent books, records and accounts of the
Company, as well as relevant books of account of contractors and Affiliates of
the Company, relating to operations performed pursuant to this Agreement or any
related agreements; provided, however, that such audit rights may not be
exercised more than once in any calendar year. The audit period may only cover
the two (2) most recent years of the Company. Any Member so requesting an audit
shall offer the other Members the opportunity to participate in such audit.
Members electing to participate shall share in the expense of the audit and
shall receive all information. Members not electing to participate may not
separately request an audit prior to the time specified herein. Audits may be
conducted by employees of the Member, or an Affiliate of the Member, or by
independent auditors retained by the Member. Any audit issues shall be addressed
within 60 days of receipt of notice and resolved within 60 days thereafter.

 

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11.2 Financial Reports; Additional Financial Statements; Operating Budget;
Annual Growth Capital Budget.

(a) Financial Reports. No later than 21 days following the last day of each
calendar month, the Operating Member shall cause the Company to furnish each
Member with a balance sheet, an income statement and a statement of cash flows
for, or as of the end of such calendar month and the year-to-date period,
including the last month of the calendar quarter. The Operating Member shall
cause the Company to furnish each Member with audited financial statements no
later than 75 days following the last day of each Fiscal Year, including a
balance sheet, an income statement, a statement of cash flows, and a statement
of changes in each Member’s Capital Account as of the end of the immediately
preceding Fiscal Year. The Management Committee also may cause to be prepared or
delivered such other reports as it may deem in its sole judgment, appropriate.
The Company shall bear the costs of the preparation of the reports and financial
statements referred to in this Section 11.2(a). Upon the reasonable request of
any Member prior to the date such financial statements are furnished to the
Members, the Operating Member shall provide such requesting Member with a
reasonably current draft of such financial statements, and the Operating Member
shall consider in good faith any comments received from such requesting Member
in respect of any such drafts of financial statements; provided, that the
Operating Member shall not be required to delay the furnishing of such financial
statements by the dates provided in this Section 11.2(a) as result of any such
requests or comments received. The Operating Member shall also cause the Company
to make available to the Members and their auditors such access to its personnel
and accounting information as may be reasonably required in connection with each
such Member’s year end audit.

(b) Additional Financial Statements. Upon request of a Member, the Company will
prepare and deliver to any such Member or its Parent all of such additional
financial statements, notes thereto and additional financial information not
prepared pursuant to Section 11.2(a) above as may be required in order for such
Member or Parent to comply with its reporting requirements under (i) the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder, (ii) the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder and (iii) any national securities
exchange or automated quotation system, in each case, on a timely basis. All of
such financial statements must be prepared in accordance with GAAP. The Company
shall bear the costs of the preparation of the reports and financial statements
referred to in this Section 11.2(b).

(c) Operating Budget. A copy of the Initial Operating Budget for the balance of
the year ended December 31, 2009 is attached hereto as Schedule 11.2(c). No
later than 60 days prior to December 31, 2009 and to the end of each subsequent
fiscal year of the Company, the Operating Member shall prepare and submit to the
Management Committee for approval an Operating Budget for the Company for the
following fiscal year. In the event the Management Committee fails to approve
any Operating Budget prior to the expiration of the preceding Operating Budget,
the Management Committee shall be deemed to have approved an Operating Budget
authorizing aggregate Operating Expenditures for the succeeding year of an
amount equal to the prior year’s Operating Budget (or in the case of the year
ended December 31, 2009, the annualized amount of the Initial Operating Budget),
adjusted for any increase in the GDPCP Index. The Operating Member may incur
Operating Expenditures on behalf of the Company in each year in an

 

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aggregate amount of up 10% in excess of the Operating Budget for such year
without further approval from the Management Committee. In addition, in
connection with any Qualified Growth Capital Project or External Volumes Growth
Capital Project that is pursued in the Company, the Members agree that, as of
the commercial in-service date of such project, the annual Operating Budget
shall be increased, to the extent not already included in the annual Operating
Budget, by the amount of the Operating Expenditures included in the calculation
of the Qualified Rate of Return for such project, including the increase of a
prorated amount for the year in which the commercial in-service date occurs.

(d) Annual Growth Capital Budget. A copy of the Initial Growth Capital Budget
for the balance of the year ended December 31, 2009 is attached hereto as
Schedule 11.2(d). No later than 60 days prior to December 31, 2009 and to the
end of each subsequent fiscal year of the Company, the Operating Member shall
prepare and submit to the Management Committee for approval a Growth Capital
Budget for the following fiscal year. In the event the Management Committee
fails to approve any Growth Capital Budget prior to the expiration of the
preceding Growth Capital Budget, the Management Committee shall be deemed to
have approved such Growth Capital Budget authorizing aggregate Growth Capital
Expenditures for the succeeding year of an amount equal to the prior year’s
Growth Capital Budget (or in the case of the year ended December 31, 2009, the
annualized amount of the Initial Growth Capital Budget), adjusted for any
increase in the GDPCP Index. The Operating Member may incur Growth Capital
Expenditures on behalf of the Company in each year in an aggregate amount of up
10% in excess of the Growth Capital Budget for such year without further
approval from the Management Committee. For the avoidance of doubt, a Member may
propose a Growth Capital Project and the related Growth Capital Expenditures to
be funded by Capital Contributions or otherwise for the approval of the
Management Committee at any regular or special meeting of the Management
Committee, whether or not such Growth Capital Expenditures were included in the
Growth Capital Budget for such fiscal year.

11.3 Tax Matters. The Members agree as follows:

(a) Tax Matters Member. WFSG Sub shall be designated as the “Tax Matters
Partner” pursuant to Code Section 6231(a)(7) and the Regulations promulgated
thereunder (the “Tax Matters Member”). The Tax Matters Member shall be
responsible for all tax compliance and audit functions related to federal,
state, and local tax returns of the Company. The Tax Matters Member is
specifically directed and authorized to take whatever steps such Member, in its
discretion, deems necessary or desirable to perfect such designation, including
filing any forms or documents with the Internal Revenue Service and taking such
other action as may be from time to time required. The Tax Matters Member shall
not be liable to the Company or the Members for any act or omission taken or
suffered by it in its capacity as Tax Matters Member in good faith in the belief
that such act or omission is in accordance with the directions of the Management
Committee; provided, that such act or omission is not in willful violation of
this Agreement and does not constitute fraud or a willful violation of law.

(b) Information Request. Upon written request of the Tax Matters Member, the
Company and each Member shall furnish to the Tax Matters Member, all pertinent
information in its possession relating to the Company operations that is
necessary to enable the Tax Matters Member to file all federal, state, and local
tax returns of the Company.

 

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(c) Tax Elections. The Company shall make the following elections on the
appropriate tax returns:

(i) to adopt the accrual method of accounting;

(ii) an election pursuant to Section 754 of the Code; and

(iii) any other election that the Management Committee may deem appropriate
subject to Section 5.4.

It is the expressed intention of the Members hereunder to be treated as a
partnership for federal and state tax purposes. Neither the Company nor any
Member may make an election for the Company to be excluded from the application
of the provisions of subchapter K of chapter 1 of subtitle A of the Code or any
similar provisions of applicable state law, and no provision of this Agreement
shall be construed to sanction or approve such an election.

(d) Notices. The Tax Matters Member shall take such action as may be necessary
to cause each Member to become a “notice partner” within the meaning of
Section 6223 of the Code and shall inform each Member of all significant matters
that may come to its attention in its capacity as Tax Matters Member by giving
notice thereof on or before the tenth Business Day after becoming aware thereof
and, within that time, shall forward to each other Member copies of all
significant written communications it may receive in that capacity. The Tax
Matters Member may not take any action contemplated by Sections 6222 through
6232 of the Code without a vote of the Management Committee in accordance with
Section 5.4.

(e) Tax Information.

(i) To permit the timely preparation of Schedule K-1s by the Related Party
Parent of any Member, (1) the Members will inform each other of the schedules
(and changes in schedules) for provision of information suggested by their tax
accountants, and consult in good faith with each other to coordinate such
schedules and (2) the Tax Matters Member will use commercially reasonable
efforts to provide information in a timeframe consistent with such schedules.

(ii) Without limiting the generality of the foregoing, the Tax Matters Member
will use commercially reasonable efforts to provide drafts of federal
partnership tax returns of the Company to the Members at least 30 days prior to
the date the electronic return filing information is required to be provided to
tax accountants with respect to the applicable Related Party Parent’s federal
partnership tax returns according to the schedule. Any comments with regard to
such drafts must be received by the Tax Matters Member within 15 days after such
draft tax return was received by the Member. The Tax Matters Member will discuss
and consider in good faith any comments by Members without regard to such
drafts.

(iii) The Tax Matters Member will use commercially reasonable efforts to provide
monthly asset additions and subtractions information for each quarter to APL Sub
on or before the tenth Business Day after the calendar quarter end, and to
accommodate other reasonable requests of APL Sub concerning tax information for
these purposes.

 

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ARTICLE 12

PUT OPTION REGARDING APL OHIO

12.1 Put Option. On or before the second anniversary of the Effective Date (the
“Put Period”), the Company shall have the right to cause APL Sub (or any
Affiliate of APL Sub designated by APL Sub following its receipt of the Put
Notice) to purchase all, but not less than all, of the issued and outstanding
membership interests of APL Ohio (the “Put Interests”) owned by the Company for
no consideration (the “Put Option”); provided, however, that the Company has
complied with the requirements of Section 12.3. The Company may exercise the Put
Option by providing written notice of such election to the APL Sub at least 30
days prior to the date the Company desires to consummate such transfer of APL
Ohio (the “Put Notice”). Upon receipt of the Put Notice, APL Sub (or its
Affiliate designee) and the Company shall negotiate in good faith and enter into
a definitive agreement to consummate such transfer of APL Ohio within 30 days of
APL Sub’s receipt of the Put Notice. WFSG Sub shall have the sole and exclusive
right to cause the Company to exercise the Put Option pursuant to this
Section 12.1, and such exercise shall not require the consent or approval of any
other Member. In the event APL Sub transfers all of its Interest pursuant to
Article 8, such transferee, as a Member of the Company, shall be subject to the
Put Option.

12.2 Change in Area of Interest; Associated Partial Assignment of Master
Gathering Agreements. Effective on the closing of the Put Option, the Company
will transfer to APL Sub or its designee that part of the Master Gathering
Agreements with respect to the Ohio Area of Interest (as defined in the Master
Gathering Agreements), including without limitation the dedication of Gas (as
defined in the Master Gathering Agreements) pursuant to Section 1.1 of the
Master Gathering Agreements with respect to the Ohio Area of Interest, and
Company shall have no further obligations or rights under the Master Gathering
Agreements with respect to the Ohio Area of Interest. Effective on the closing
of the Put Option, the Area of Interest in this Agreement and the Master
Gathering Agreements shall no longer include the Ohio Area of Interest.

12.3 Covenants Relating to Put Option. The Company covenants and agrees that,
during the Put Period, except with the prior written consent of APL Sub:

(a) the Company shall conduct the business of APL Ohio, and preserve, maintain
and protect the assets of APL Ohio, or cause such business to be conducted and
such assets to be protected, in the ordinary course of business consistent with
the past practices of the APL Parties;

(b) the Company shall not allow APL Ohio to incur or assume any liabilities or
obligations (i) unrelated to the assets or business of APL Ohio, or (ii) in a
manner that is inconsistent with the past practices of APL Ohio as conducted by
the APL Parties; and

(c) the Company shall not distribute in-kind the membership interests or assets
of APL Ohio, sell any of the membership interests of APL Ohio or any of its
material assets or engage in or enter into any contract with respect to any
similar transaction.

 

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If the Company breaches any of the foregoing covenants set forth in this
Section 12.3, the Put Option shall automatically expire and the Company shall
have no further rights pursuant to this Article 12.

12.4 Put Option Closing. The closing of the Put Option shall take place as a
single closing as soon as reasonably practicable, and in no event later than 60
days after APL Sub’s receipt of the Put Notice, at the principal office of the
Company, or at such other time and location as the parties to such transaction
may mutually determine. At the closing of the Put Option, the Company shall
deliver a duly executed assignment of membership interests transferring the Put
Interests to APL Sub or its designee, as applicable (the “Put Assignment”). The
delivery of the Put Assignment will be deemed a representation and warranty by
the Company that: (i) the Company has full right, title and interest in and to
the Put Interests; (ii) the Company has all necessary power and authority to
transfer the Put Interests; and (iii) the Put Interests are free and clear of
any and all liens or encumbrances, other than customary permitted liens.

ARTICLE 13

MISCELLANEOUS

13.1 Notices. All notices, consents, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
delivered on the date of receipt if (a) delivered personally; (b) telecopied or
telexed with transmission confirmed; (c) mailed by registered or certified mail
return receipt requested; or (d) delivered by a recognized commercial courier to
the Member as follows (or to such other address as any Member shall have last
designated by written notice to the other Members):

If to the Company:

Laurel Mountain Midstream, LLC

C/o Williams Laurel Mountain, LLC

One Williams Center

Tulsa, Oklahoma 74121

Attention: Senior Vice President

Facsimile: 918-573-9375

Telephone: 918-573-2398

With a copy to:

APL Laurel Mountain, LLC

1845 Walnut Street, Suite 1000

Philadelphia, Pennsylvania 19103

Attention: General Counsel – Lisa Washington

Facsimile: 215-761-0457

Telephone: 215-546-5005

If to WFSG Sub:

 

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Williams Laurel Mountain, LLC

One Williams Center

Tulsa, Oklahoma 74121

Attention: Senior Vice President

Facsimile: 918-573-9375

Telephone: 918-573-2398

If to APL Sub:

APL Laurel Mountain, LLC

1845 Walnut Street, Suite 1000

Philadelphia, Pennsylvania 19103

Attention: General Counsel – Lisa Washington

Facsimile: 215-761-0457

Telephone: 215-546-5005

13.2 Amendment. This Agreement, including this Section 13.2 and the Schedules
hereto, shall not be amended or modified except by an instrument in writing
signed by or on behalf of all of the Members.

13.3 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable Law of the State of Delaware without
regard to principles of conflict of Laws.

13.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Members and their respective permitted successors and assigns.

13.5 No Third Party Rights. Nothing in this Agreement shall create or be deemed
to create any third party beneficiary rights in any Person or entity not party
to this Agreement, except (i) the Company Indemnitees and Member Indemnitees are
third party beneficiaries to Article 6 of this Agreement and their rights are
subject to the terms of such Article 6 and (ii) as provided in Section 11.2(b).

13.6 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

13.7 Invalidity. If any of the provisions of this Agreement, including the
Schedules, is held invalid or unenforceable, such invalidity or unenforceability
shall not affect in any way the validity or enforceability of any other
provision of this Agreement. In the event any provision is held invalid or
unenforceable, the Members shall attempt to agree on a valid or enforceable
provision which shall be a reasonable substitute for such invalid or
unenforceable provision in light of the tenor of this Agreement and, on so
agreeing, shall incorporate such substitute provision in this Agreement;
provided, that the parties agree that any provision held to invalid or
unenforceable shall be treated for all purposes as not having been included as
part of the Agreement at and from signing.

 

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13.8 Entire Agreement. This Agreement, including the Schedules, and the
Transaction Documents constitute the entire agreement among Members with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the Members with respect to the
subject matter hereof. Each Member agrees that no other Member (including its
agents and representatives) has made any representations, warranty, covenant or
agreement to or with such party relating to this Agreement or the transactions
contemplated hereby, other than those expressly set forth in this Agreement,
including the Schedules, and in the Transaction Documents.

13.9 Expenses. Except to the extent provided for in the Formation Agreement or
as the Members may otherwise agree or as otherwise provided herein, each Member
shall bear its respective fees, costs and expenses in connection with this
Agreement and the transactions contemplated hereby.

13.10 Waiver. No waiver by any Member, whether express or implied, of any right
under any provision of this Agreement shall constitute a waiver of such Member’s
right at any other time or a waiver of such Member’s rights under any other
provision of this Agreement unless it is made in writing and signed by the
president or a vice president of the Member waiving the condition. No failure by
any Member hereto to take any action with respect to any breach of this
Agreement or Default by another Member shall constitute a waiver of the former
Member’s right to enforce any provision of this Agreement or to take action with
respect to such breach or Default or any subsequent breach or Default by such
later Member.

13.11 Dispute Resolution.

(a) Scope. Any dispute (other than voting dead-locks) arising out of or relating
to this Agreement shall be resolved in accordance with the procedures specified
in this Section 13.11, which shall be the sole and exclusive procedures for the
resolution of any such disputes.

(b) Senior Party Negotiation. The Members shall attempt in good faith to resolve
any dispute arising out of or relating to this Agreement promptly by negotiation
between management representatives who have authority to settle the dispute and
who are at least one level above the persons with direct responsibility for
administration of this Agreement and who have been unsuccessfully involved with
the dispute up to that point. Any Member may give the other Member written
notice of any dispute not resolved in the normal course of business (“Notice of
Dispute”). Within 20 days after delivery of the Notice of Dispute, the receiving
Member shall submit to the other a written response. The Notice of Dispute and
the response shall include (a) a statement of each Member’s position and a
summary of arguments supporting that position, and (b) the name and title of the
officer or executive who will represent that Member and of any other person who
will accompany such officer or executive. Within 20 days after delivery of the
receiving Member’s response to the Notice of Dispute, the representatives of
both Members shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to attempt to resolve the dispute.
All negotiations pursuant to this clause are confidential and shall be treated
as compromise and settlement negotiations for purposes of applicable rules of
evidence.

 

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(c) Resolution by Arbitration. If the dispute has not been resolved pursuant to
the procedure set forth in Section 13.11(b) within 30 days of the initial
meeting of the representatives of both Members (which period may be extended or
shortened by mutual agreement of the Members), the controversy shall be resolved
by arbitration in accordance with the procedures set forth in Section 13.11(d).
The Members shall meet within ten Business Days of the commencement of the
arbitration procedures by any Member and agree on three arbitrators to act as
the arbitration panel on such matters. If the Members are unable to agree at
such a meeting to all three arbitrators, the panel will be appointed in the
following manner. Each Member shall within two Business Days of the meetings
appoint one arbitrator, and within five Business Days of such appointment, the
arbitrators shall appoint a third arbitrator. If the two arbitrators selected by
the Members fail to agree on the third arbitrator, then the Members (or either
of them) may apply to the senior active United States District Judge for the
District of Delaware for the appointment of the third arbitrator. The third
arbitrator shall take an oath of neutrality. No arbitrator shall be an equity
holder of any arbitrating Member or their parent, subsidiary or Affiliates, nor
shall any arbitrator have been employed by, or performed services for, any of
the Members within the preceding five years, nor shall the arbitrators have any
personal or financial stake in the outcome of the resolution of the dispute.

(d) Arbitration Procedures. The arbitration will be governed by the
International Institute for Conflict Prevention and Resolution Rules (the
“Rules”) but the Members will self-administer the arbitration proceeding. The
determination of the arbitrators shall be final and binding upon the Members.
The arbitrators shall be instructed to render their decision as soon as
practical after the final arbitration hearing (and in no event later than 60
days thereafter). The judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof, and the Members consent to the
jurisdiction of any state or federal court in the State of Delaware.

(e) Injunctive Relief. The arbitrators shall also have the power to enter such
interim orders as they deem necessary, including, without limitation, orders to
preserve the subject matter of the dispute or to preserve or adjust the status
of the Members pending resolution of the dispute. The Members agree to accept
and honor any interim orders and agree that any such interim orders may be
enforced as necessary in any court having relevant jurisdiction, and the Members
consent to the jurisdiction of any state or federal court in the State of
Delaware.

(f) Sole Procedures. The procedures specified in this Section 13.11 shall be the
sole and exclusive procedures for the resolution of disputes between the parties
arising out of or relating to this Agreement. Each party is required to continue
to perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
impossible or impracticable under the circumstances. The requirements of this
Section 13.11 shall not be deemed a waiver of any right of termination under
this Agreement.

13.12 Disclosure. Each Member is acquiring its Interest in the Company based
upon its own independent investigation, and the exercise by such Member of its
rights and the performance of its obligations under this Agreement are based
upon its own investigation, analysis and expertise. Each Member’s acquisition of
its Interest in the Company is being made for its own account for investment,
and not with a view to the sale or distribution thereof.

 

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13.13 Brokers and Finder. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any Person acting on behalf of any Member in such manner as to give rise to
any valid claim against any Member for any brokerage or finder’s commission, fee
or similar compensation.

13.14 Further Assurances. The Members shall provide to each other such
information with respect to the transactions contemplated hereby as may be
reasonably requested and shall execute and deliver to each other such further
documents and take such further action as may be reasonably requested by any
Member to document, complete or give full effect to the terms and provisions of
this Agreement and the transactions contemplated herein.

13.15 Section Headings. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
interpretation of any provision hereof.

13.16 Waiver of Certain Damages. Each of the Members (individually, and on
behalf of the Company) waives any right to recover any damages, including
consequential or punitive damages, in excess of actual damages from any other
Member or the Company in connection with an Event of Default under this
Agreement.

13.17 Security. Each Interest shall constitute a “security” within the meaning
of, and shall be governed by, (i) Article 8 of the Uniform Commercial Code
(including Section 8-102(a)(15) thereof) as in effect from time to time in the
State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any
other applicable jurisdiction that now or hereafter substantially includes the
1994 revisions to Article 8 thereof as adopted by the American Law Institute and
the National Conference of Commissioners on Uniform State Laws and approved by
the American Bar Association on February 14, 1995. Notwithstanding any provision
of this Agreement to the contrary, to the extent that any provision of this
Agreement is inconsistent with any non-waivable provision of Article 8 of the
Uniform Commercial Code as in effect in the State of Delaware (6 Del. C. §
8-101, et seq.) (the “UCC”), such provision of Article 8 of the UCC shall
control.

13.18 Confidentiality.

(a) Except as permitted by Section 13.18(b), (i) each Member shall keep
confidential all Confidential Information and shall not disclose any
Confidential Information to any Person, including any of its Affiliates, and
(ii) each Member shall use the Confidential Information only in connection with
the business and operations of the Company.

(b) Notwithstanding Section 13.18(a), but subject to the other provisions of
this Section 13.18, a Member may make the following disclosures and uses of
Confidential Information: (i) disclosures to another Member in connection with
the Company; (ii) disclosures and uses that are approved by the Management
Committee; (iii) disclosures that may be required from time to time to

 

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obtain requisite authorizations or financing for the Gathering System, if such
disclosures are approved by the Management Committee; (iv) disclosures to an
Affiliate of such Member, including the directors, managers, officers,
employees, agents and advisors of such Affiliate, if such Affiliate has a “need
to know” such Confidential Information in connection with its investment in the
Company or in furtherance of the business of the Company and has agreed to abide
by the terms of this Section 13.18; (v) disclosures to a Person that is not a
Member or an Affiliate of a Member, if such Person has been retained by the
Company or a Member to provide services in connection with the Company and has
agreed to abide by the terms of this Section 13.18; (vi) disclosures to a
bona-fide potential direct or indirect purchaser of such Member’s Interest, if
such potential purchaser has agreed to abide by the terms of this Section 13.18;
disclosures required, with respect to a Member or an Affiliate of a Member,
pursuant to applicable Law (including the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended) or by any national securities
exchange or automated quotation system; and (viii) disclosures that a Member is
legally compelled to make by deposition, interrogatory, request for documents,
subpoena, civil investigative demand, order of a court of competent
jurisdiction, or similar process, or otherwise by Law; provided, that with
respect to disclosures described in Section 13.18(b)(viii), the disclosing
Member takes reasonable steps to minimize the extent of any such required
disclosure.

(c) Each Member shall take such precautionary measures as may be required to
ensure (and such Member shall be responsible for) compliance with this Section
13.18 by any of its Affiliates, and its and their directors, managers, officers,
employees and agents, and other Persons to which it may disclose Confidential
Information in accordance with this Section 13.18.

(d) Promptly after a Member ceases to be a Member pursuant to this Agreement, a
such former Member shall promptly destroy (and provide a certificate of
destruction to the Company with respect to), or return to the Company, all
Confidential Information in its possession; provided, that a former Member shall
only be required to use commercially reasonable efforts to return or destroy
Confidential Information that is stored electronically. Notwithstanding the
immediately-preceding sentence, but subject to the other provisions of this
Section 13.18, such former Member may retain and maintain the confidentiality of
such Confidential Information in accordance with the terms of this Agreement
(i) in accordance with such Member’s internal compliance procedures, (ii) for
the limited purposes of demonstrating such former Member’s compliance with any
legal, regulatory, professional or fiduciary obligation, or (ii) for the limited
purposes preparing such Member’s tax returns and defending audits,
investigations and proceedings relating thereto.

(e) The Members agree that no adequate remedy at law exists for a breach or
threatened breach of any of the provisions of this Section 13.18, the
continuation of which, if not remedied, will cause the Company and the other
Members to suffer irreparable harm. Accordingly, the Members agree that the
Company and the other Members shall be entitled, in addition to other remedies
that may be available to them, to immediate injunctive relief from any breach of
any of the provisions of this Section 13.18 and to specific performance of their
rights hereunder, as well as to any other remedies available at law or in
equity, pursuant to this Section 13.18.

(f) The obligations of the Members under this Section 13.18 (including the
obligations of any former Member) shall terminate on the second anniversary of
the end of the term of the Company set forth in Section 2.5.

 

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IN WITNESS WHEREOF, the Members hereto have executed this Agreement as of the
date first above written.

 

APL LAUREL MOUNTAIN, LLC,

a Delaware limited liability company

  By:   Atlas Pipeline Operating Partnership, LP, its sole member   By:   Atlas
Pipeline Partners GP, LLC, its general partner     By:           Name:   Jeff
Simmons       Title:   Vice President  

WILLIAMS LAUREL MOUNTAIN, LLC,

a Delaware limited liability company

  By:       Name:   Alan S. Armstrong   Title:   Senior Vice President  

Signature Page to Amended and Restated

Limited Liability Company Agreement of

Laurel Mountain Midstream, LLC

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SCHEDULE 3.1

 

Member

   Percentage Interest

WILLIAMS LAUREL MOUNTAIN, LLC

   51.0%

APL LAUREL MOUNTAIN, LLC

   49.0%

 

 

 

 

 

Schedule 3.1

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SCHEDULE 5.4(b)

Matters Requiring Unanimous Consent of the Members: Pursuant to Section 5.4(b),
after a Voting Change Date, the following is a list of matters requiring the
affirmative vote of all of the Members:

 

1. The sale, assignment, transfer, lease or other disposition of more than 50%
of the fair market value of the Company Assets, whether by merger, consolidation
or otherwise.

 

2. The purchase or other acquisition of any asset or business of, or any equity
interest or investment in, any Person for an amount in excess of $100 million.

 

3. The issuance, incurrence, guarantee or assumption of any indebtedness by the
Company.

 

4. The issuance or sale of any equity interests of the Company or any of its
subsidiaries or any option, warrant or other security convertible into or
exercisable for any equity interests of the Company or any of its subsidiaries.

 

5. The Company or any of its subsidiaries engaging in any transaction with WFSG
Sub, APL Sub or any of their respective Affiliates.

 

6. The Company merging or consolidating with another Person that is not a direct
or indirect wholly owned subsidiary of the Company.

 

7. Any amendment to or repeal of this Agreement or the Certificate of Formation.

 

8. Any liquidation, dissolution, recapitalization, bankruptcy or other winding
up of the Company or any of its subsidiaries.

 

9. Acquiring, commencing or conducting any activity or business that may
generate income for federal income tax purposes that may not be “qualifying
income” (as such term is defined pursuant to Section 7704 of the Code).

 

10. The Company making any distributions (whether in cash or otherwise) with
respect to the Interests (except as provided in Section 4.3).

 

11. Any annual adjustment to the Operating Fee pursuant to Section 7.2(c).

 

 

Schedule 5.4(b)

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Matters Requiring Super-Majority Consent: Pursuant to Section 5.4(b), after a
Voting Change Date, the following is a list of matters requiring the affirmative
vote of the Members holding a Super-Majority Percentage Interest:

 

1. The sale, assignment, transfer, lease or other disposition of any portion of
the Company Assets with a value in excess of $5 million.

 

2. The Company waiving, releasing or settling any right, claim or lawsuit for an
amount in excess of $5 million.

 

4. A call for Capital Contributions by the Members, except as provided in
Sections 2.8, 3.2 and 5.4(c).

 

5. The adoption or amendment of the annual Operating Budget and the annual
Growth Capital Budget.

 

6. Any individual or series of related Growth Capital Expenditures in excess of
$10 million.

 

7. Any agreement to perform gathering services that provide for aggregate
payments to any one Person in excess of $20 million, and any other contracts
that provide for aggregate payments to any one Person in excess of $10 million.

 

8. The purchase or other acquisition of any asset or business of, or any equity
interest or investment in, any Person for an amount in excess of $25 million.

 

 

 

Schedule 5.4(b)

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SCHEDULE 8.2(b)

NGP Energy Capital Management and its Affiliates

MarkWest Energy Partners, L.P. and its Affiliates

 

 

 

 

 

 

Schedule 8.2(b) – Page 1

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SCHEDULE 11.2(c)

[Attach Initial Operating Budget]

 

 

 

 

 

 

Schedule 11.2(c) – Page 1

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SCHEDULE 11.2(d)

[Attach Initial Growth Capital Budget]

 

 

 

 

 

 

Schedule 11.2(d) – Page 1