Exhibit 10.1

 

 

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

STAGECOACH GAS SERVICES LLC

A Delaware Limited Liability Company

June 3, 2016

 

 

The holders of the Membership Interests represented by this Agreement
acknowledge for the benefit of Stagecoach Gas Services LLC that the Membership
Interests may not be sold, offered, resold, pledged or otherwise transferred if
such transfer would (a) violate the then applicable federal or state securities
laws or rules and regulations of the Securities and Exchange Commission, any
state securities commission or any other governmental authority with
jurisdiction over such transfer, (b) terminate the existence or qualification of
Stagecoach Gas Services LLC under the laws of the State of Delaware, (c) cause
Stagecoach Gas Services LLC to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not already so treated or taxed) or (d) violate the
other restrictions on transfer set forth herein.

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TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

     2   

Section 1.01

  Definitions      2   

Section 1.02

  Construction      19   

ARTICLE II ORGANIZATION

     20   

Section 2.01

  Continuation of the Company      20   

Section 2.02

  Name      20   

Section 2.03

  Registered Office; Registered Agent; Principal Office; Other Offices      20
  

Section 2.04

  Purposes      21   

Section 2.05

  Powers      21   

Section 2.06

  Term      21   

Section 2.07

  Title to Company Assets      21   

Section 2.08

  No State Law Partnership      21   

ARTICLE III MEMBERSHIP INTERESTS

     22   

Section 3.01

  Membership Interests; Additional Members      22   

Section 3.02

  No Liability of Members      23   

Section 3.03

  Withdrawal of Members      23   

Section 3.04

  Record Holders      24   

Section 3.05

  No Appraisal Rights      24   

Section 3.06

  Representations and Warranties      24   

Section 3.07

  Access to Information      25   

Section 3.08

  Confidential Information      26   

Section 3.09

  Security      28   

Section 3.10

  Grant of Security Interest      28   

ARTICLE IV TRANSFERS OF MEMBERSHIP INTERESTS

     29   

Section 4.01

  Transfers Generally      29   

Section 4.02

  Conditions to Transfers      30   

Section 4.03

  Effect of Non-Compliance      32   

 

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ARTICLE V RIGHTS UPON A PROPOSED TRANSFER OR CHANGE IN CONTROL

     33   

Section 5.01

  Right of First Offer      33   

Section 5.02

  Right of First Refusal      34   

Section 5.03

  Change in Control      35   

ARTICLE VI CAPITAL CONTRIBUTIONS

     37   

Section 6.01

  Initial Capital Contributions      37   

Section 6.02

  Additional Contributions      37   

Section 6.03

  Default      38   

Section 6.04

  Preemptive Rights      39   

Section 6.05

  Loans      40   

Section 6.06

  Return of Contributions      41   

Section 6.07

  Capital Accounts      41   

Section 6.08

  Approved Credit Support      41   

ARTICLE VII DISTRIBUTIONS AND ALLOCATIONS

     42   

Section 7.01

  Distributions      42   

Section 7.02

  Allocations      44   

Section 7.03

  Special Allocations      44   

Section 7.04

  Section 704(c)      46   

Section 7.05

  Varying Interests      46   

Section 7.06

  Withheld Taxes      47   

Section 7.07

  Required Payments      47   

Section 7.08

  Limitations on Distributions      48   

Section 7.09

  Growth Project True-Up Payments      48   

ARTICLE VIII BOARD OF DIRECTORS

     51   

Section 8.01

  Management by Board of Directors      51   

Section 8.02

  Board Composition      51   

Section 8.03

  Board Meetings; Quorum      52   

Section 8.04

  Board Voting      53   

Section 8.05

  Notice      58   

Section 8.06

  Action by Written Consent of Board      58   

Section 8.07

  Conference Telephone Meetings      58   

Section 8.08

  Minutes      58   

Section 8.09

  Management Committee; Other Board Committees      59   

Section 8.10

  Operations      60   

 

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ARTICLE IX OFFICERS

     60   

Section 9.01

  Elected Officers      60   

Section 9.02

  Term of Office      61   

Section 9.07

  Removal      61   

Section 9.08

  Vacancies      61   

ARTICLE X BUDGET, MANAGEMENT AGREEMENT, NEWCO SERVICE COMPANY

     61   

Section 10.01

  Budget      61   

Section 10.02

  Management Agreement      61   

Section 10.03

  Newco Service Company      62   

ARTICLE XI CERTAIN DUTIES

     62   

Section 11.01

  Corporate Opportunities      64   

Section 11.02

  Duties      65   

ARTICLE XII EXCULPATION AND INDEMNIFICATION

     66   

Section 12.01

  Indemnification      66   

Section 12.02

  Liability of Indemnitees      68   

Section 12.03

  Other Matters Concerning the Directors      69   

Section 12.04

  Priority      69   

Section 12.05

  Savings Clause      70   

Section 12.06

  Survival      70   

ARTICLE XIII TAXES

     70   

Section 13.01

  Tax Returns      70   

Section 13.02

  Tax Elections      71   

Section 13.03

  Tax Matters Member      71   

Section 13.04

  Tax Sharing Agreements      73   

ARTICLE XIV BOOKS, RECORDS, REPORTS, BANK ACCOUNTS, AND BUDGETS

     73   

Section 14.01

  Maintenance of Books      73   

Section 14.02

  Reports      74   

Section 14.03

  Bank Accounts      75   

Section 14.04

  Emergencies      75   

ARTICLE XV DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION

     76   

Section 15.01

  Dissolution      76   

Section 15.02

  Liquidator      76   

Section 15.03

  Liquidation      76   

 

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Section 15.04

  Certificate of Cancellation of Formation      77   

Section 15.05

  Return of Contributions      77   

Section 15.06

  Waiver of Partition      77   

Section 15.07

  Capital Account Restoration      77   

ARTICLE XVI GENERAL PROVISIONS

     77   

Section 16.01

  Offset      77   

Section 16.02

  Amendment      77   

Section 16.03

  Addresses and Notices; Written Communications      78   

Section 16.04

  Further Action      78   

Section 16.05

  Binding Effect      78   

Section 16.06

  Entire Agreement; Integration      79   

Section 16.07

  Waivers      80   

Section 16.08

  Third-Party Beneficiaries      80   

Section 16.09

  Counterparts      80   

Section 16.10

  Governing Law, Forum, Jurisdiction; Waiver of Jury Trial      80   

Section 16.11

  Invalidity of Provisions      82   

Section 16.12

  Creditors      82   

Section 16.13

  Member Governance Provisions      82   

Section 16.14

  Specific Performance      83   

 

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AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

STAGECOACH GAS SERVICES LLC

A Delaware Limited Liability Company

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”)
of STAGECOACH GAS SERVICES LLC (the “Company”), dated as of June 3, 2016 (the
“Effective Date”), is adopted, executed and agreed to, for good and valuable
consideration, by Crestwood Pipeline and Storage Northeast LLC, a Delaware
limited liability company, and its successors and permitted assigns
(“Crestwood”), and Con Edison Gas Pipeline and Storage Northeast, LLC, a New
York limited liability company, and its successors and permitted assigns
(“CEGPS”). Crestwood and CEGPS are hereinafter collectively referred to as the
“Parties” and each individually as a “Party.”

RECITALS

WHEREAS, the name of the Company is “STAGECOACH GAS SERVICES LLC”;

WHEREAS, the Company was formed as a Delaware limited liability company by the
filing of a Certificate of Formation (as it may be amended or restated from time
to time, the “Certificate of Formation”) on April 14, 2016, with the Secretary
of State of the State of Delaware pursuant to the Delaware Act (as defined
herein);

WHEREAS, on April 14, 2016 Crestwood entered into the Limited Liability Company
Agreement of the Company (the “Prior Agreement”);

WHEREAS, on April 20, 2016, CEGPS and Crestwood entered into that certain
Contribution Agreement (the “Contribution Agreement”) relating to the formation
and capitalization of the Company; and

WHEREAS, the Initial Closing under the Contribution Agreement is occurring
concurrently with the execution and delivery hereof, and the Parties desire to
amend and restate the Prior Agreement in its entirety as set forth herein.

NOW, THEREFORE, in consideration of the covenants, conditions and agreements
contained herein, the Parties agree as follows:

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ARTICLE I

DEFINITIONS

Section 1.01 Definitions.

As used in this Agreement, the following terms have the respective meanings set
forth below or set forth in the Sections referred to below:

“Additional Contribution” means any Expansion Contribution, Ordinary Course
Contribution, or Extraordinary Contribution.

“Additional Contribution Loan” has the meaning given such term in
Section 6.03(a).

“Adjusted Capital Account Deficit” means, with respect to any Member, the
deficit balance, if any, in such Member’s Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:

(a) Credit to such Capital Account any amounts which such Member is obligated to
restore pursuant to any provision of this Agreement or pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b) Debit to such Capital Account the items described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).

The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.

“Affected Member” has the meaning given such term in Section 5.03(a).

“Affected Interest” has the meaning given such term in Section 5.03(a).

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries Controls, is Controlled by or is
under common Control with, the Person in question; provided, however, that for
purposes of this Agreement, (a) neither Member (nor any of its other Affiliates)
shall be deemed to be an Affiliate of the Company and its Subsidiaries, and
(b) neither Company nor any of its Subsidiaries shall be deemed to be an
Affiliate of either Member (or any of its other Affiliates).

“Affiliate Transaction” has the meaning given such term in Section 8.04(c)(i).

“Aggregate Tax Rate” has the meaning given such term in
Section 4.01(b)(i)(A)(2).

“Agreement” has the meaning given such term in the introductory paragraph, as
the same may be amended from time to time.

 

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“Allocation Year” means (a) the Company’s taxable year for U.S. federal income
tax purposes, or (b) any portion of the period described in clause (a) for which
the Company is required to allocate Profits, Losses, and other items of Company
income, gain, loss or deduction for U.S. federal income tax purposes.

“Alternate Director” means any person designated by a Member to act in place of
one or more such Member’s designated Directors.

“Annual Budget” means a budget covering the operations of the Company and its
Subsidiaries for a calendar year, setting forth reasonable line item detail
regarding anticipated revenues and expenditures, including: (a) forecasted
revenues; (b) estimated operating expenditures; (c) estimated capital
expenditures; (d) proposed financing plans for such expenditures; and (e) such
other items as the Board may deem appropriate.

“Appraisal Notice” has the meaning given such term in Section 5.03(b).

“Appraised Value” has the meaning given such term in Section 5.03(b).

“Approved Credit Support” means each guarantee, letter of credit, surety,
performance or other bond, cash or other collateral or similar credit support
arrangement issued or posted by or for the account of a Member or any of its
Affiliates to support the operations and obligations of the Company or any of
its Subsidiaries, to the extent such credit support arrangement is (a) set forth
on Exhibit G attached hereto or (b) approved by the Board.

“Available Cash” means, with respect to any Quarter ending prior to a
Dissolution Event:

(a) the sum of all cash and cash equivalents of the Company and its Subsidiaries
on hand on the date of the determination of Available Cash for such Quarter,
less

(b) the amount of any cash reserves that are established by the Board for
(i) the proper conduct of the business of the Company through the following
Quarter (excluding reserves for future capital expenditures, other than
maintenance capital expenditures), as set forth in the then-effective Initial
Budget or Annual Budget, and (ii) Emergency Expenditures for Emergencies which
have occurred.

Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in
which a Dissolution Event occurs and any subsequent Quarter shall equal zero.

“Bankrupt” or “Bankruptcy Event” means with respect to any Person, that (a) such
Person (i) makes a general assignment for the benefit of creditors; (ii) files a
voluntary bankruptcy petition; (iii) becomes the subject of an order for relief
or is declared insolvent in any federal or state bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any applicable law; (v) files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Person in a proceeding of the type described in
subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or
acquiesces in the appointment of a trustee, receiver, or liquidator of such
Person or of all or any substantial part of such Person’s properties; or
(b) against such Person, a proceeding seeking

 

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reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any applicable law has been commenced and
120 days have expired without dismissal thereof or with respect to which,
without such Person’s consent or acquiescence, a trustee, receiver, or
liquidator of such Person or of all or any substantial part of such Person’s
properties has been appointed and ninety (90) days have expired without the
appointment’s having been vacated or stayed, or ninety (90) days have expired
after the date of expiration of a stay, if the appointment has not previously
been vacated.

“Baseline Ownership Percentages” means the Ownership Percentages of the Members,
determined prior to giving effect to Section 7.01(c).

“Board” means the board of directors of the Company.

“Budget Act” means Section 1101 of the Bipartisan Budget Act of 2015.

“Business Day” means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States of America or
the State of New York shall not be regarded as a Business Day.

“Calculation Period” means the period beginning on the Effective Date and ending
on December 31, 2020.

“Call Exercise Notice” has the meaning given such term in Section 10.03(c).

“Capital Account” means the capital account determined and maintained for each
Member in accordance with Sections 6.06, 7.02 and 7.03.

“Capital Call” has the meaning given such term in Section 6.02(d).

“Capital Contribution” means any cash, cash equivalents or the net fair market
value of contributed property that a Member contributes to the Company or that
is contributed or deemed contributed to the Company on behalf of a Member.

“CEGPS” has the meaning given such term in the introductory paragraph.

“CEGPS Growth Project EBITDA” means the sum of the following monthly
calculations for all months during the Calculation Period: Growth Project EBITDA
for the month multiplied by the Ownership Percentage of CEGPS for such month,
after giving effect to any adjustments to Ownership Percentages set forth in
Section 7.01(c).

“CEGPS Indemnified Party” has the meaning given such term in the Contribution
Agreement.

“CEGPS Required Payment” has the meaning given such term in Section 7.07(b).

“CEQP” means Crestwood Equity Partners LP, a Delaware limited partnership.

 

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“CEQP Entity” means any Affiliate of CEQP (which shall in any event, subject to
the following exception, include Crestwood and its Affiliates), except for the
Company and any of the Contributed Entities.

“Certificate of Formation” has the meaning given such term in the Recitals.

“Certified Public Accountants” means an independent public accounting firm
registered with the Public Company Accounting Oversight Board selected from time
to time by the Board.

“Change in Control” means, with respect to any Member, (a) any event or
occurrence following which the Member Parent of such Member (determined
immediately prior to such event or occurrence) either (or both) no longer
(i) owns, directly or indirectly, at least twenty percent (20%) of the Economic
Interests of such Member or (ii) Controls such Member; provided, that for
purposes of this clause (a) only, a registered initial public offering on Form
S-1 (or any successor form) under the Securities Act following the date an
applicable Member becomes a Member, and any subsequent registered public
offering under the Securities Act, of the Equity Interests of an Intermediate
Member Parent that results in an Intermediate Member Parent of a Member becoming
the Member Parent of such Member shall not constitute a Change in Control of
such Member; or (b) a Foreclosure Transfer. For the avoidance of doubt, a
Transfer or other disposition of Equity Interests in ConEdison, CEQP, or any
other Member Parent, in each case other than pursuant to a Foreclosure Transfer,
shall not constitute a Change in Control of any Member.

“Change in Control Notice” has the meaning given such term in Section 5.03(a).

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

“Commercial Affairs Committee” has the meaning given such term in
Section 8.09(a).

“Committee” has the meaning given such term in Section 8.09(a).

“Company” has the meaning given such term in the introductory paragraph.

“Company Support Instruments” has the meaning given such term in
Section 6.08(b).

“Company Minimum Gain” means the amount of “partnership minimum gain” determined
in accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2)
and 1.704-2(d).

“ConEdison” means Consolidated Edison, Inc., a New York corporation.

“Confidential Information” means information and data (including all copies
thereof) that (a) is furnished or submitted by any of the Members, their
Affiliates, the Operator, or the Company or any of its Subsidiaries, whether
oral, written, or electronic, to the Board, the other Members, their Affiliates,
or the Operator in connection with this Agreement, or (b) relates to the
properties, facilities, equipment, agreements, business or affairs of the
Company or any of its Subsidiaries, including in each case (but without
limitation) market evaluations, market proposals, service designs and pricing,
system design, cost estimating, identification of permits,

 

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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, and natural gas reserves and deliverability data. 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) is made available to a Member or its Affiliates from a source, which, to
such Member’s or its Affiliate’s knowledge, is not prohibited from disclosing
such information to such Member or its Affiliates by a legal, contractual or
fiduciary obligation owed to the Company or any of its Subsidiaries;

(c) as to any Member or its Affiliates, was in the possession of such Member or
its Affiliates (as evidenced by its written records) prior to the time of its
disclosure and not subject to a separate confidentiality restriction or other
legal, contractual or fiduciary obligation; or

(d) has been independently acquired or developed by a Member or its Affiliates
without use of any Confidential Information.

“Continuing Support Obligation” has the meaning given such term in
Section 6.08(c).

“Contributed Entities” means (a) prior to the Second Closing, the Initial
Contributed Entities, and (b) from and after the Second Closing, the Initial
Contributed Entities and Crestwood Pipeline East.

“Contributing Member” has the meaning given such term in Section 6.03(a).

“Contribution Agreement” has the meaning given such term in the Recitals.

“Contribution Date” has the meaning given such term in Section 6.02(d).

“Control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of Voting Securities, by contract or otherwise. Without limiting the
foregoing:

(a) the right to exercise fifty percent (50%) or more of the voting power of the
Voting Securities of a Person shall be deemed to constitute Control of such
Person;

(b) with respect to any Person the Voting Securities of which are publicly
traded, the right to exercise twenty percent (20%) or more of the voting power
of such Voting Securities shall be deemed to constitute Control of such Person
unless (i) the holder of such voting power disclaims, in any filing with the
Securities and Exchange Commission, an intent to influence control of such
Person, or (ii) any other Person (collectively with its Affiliates) that is not
Controlled by the holder of such voting power holds the right to exercise a
higher percentage of the voting power of such Voting Securities, unless such
other Person disclaims, in any filing with the Securities and Exchange
Commission, an intent to influence control of the issuer; and

 

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(c) legal or beneficial ownership of fifty percent (50%) or more of the general
partnership interests of a partnership (whether general or limited) shall
constitute Control of such partnership.

“Crestwood” has the meaning given such term in the introductory paragraph.

“Crestwood Midstream” means Crestwood Midstream Operations LLC, a Delaware
limited liability company.

“Crestwood Pipeline East” means Crestwood Pipeline East LLC, a Delaware limited
liability company.

“Crestwood Required Payment” has the meaning given such term in Section 7.07(a).

“Damage Amount” has the meaning given such term in Section 4.01(b)(i)(A).

“Deadlock” has the meaning given such term in Section 8.04(d)(i).

“Deadlock Notice” has the meaning given such term in Section 8.04(d)(i).

“Default Rate” means a rate per annum equal to the Prime Rate as set forth in
the Wall Street Journal from time to time, plus four percent (4%).

“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del C.
Section 18-101, et seq., as amended, supplemented or restated from time to time,
and any successor to such statute.

“Delaware Courts” has the meaning given such term in Section 16.10(b).

“Depreciation” means, for each Allocation Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Allocation Year, except (i) if the Gross Asset
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such Allocation Year and such difference is being
eliminated by use of the “remedial allocation method” as defined in Regulations
Section 1.704-3(d), Depreciation for such period shall be the amount of book
basis recovered for such period under the rules prescribed in Regulations
Section 1.704-3(d) and (ii) with respect to any other asset whose Gross Asset
Value differs from its adjusted basis for federal income tax purposes at the
beginning of such Allocation Year, Depreciation shall be an amount that bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such Allocation
Year bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization, or other cost recovery deduction
for such Allocation Year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable method
selected by the Board.

 

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“Director” or “Directors” has the meaning given such term in Section 8.02(a).

“Dispute Response” has the meaning given such term in Section 8.04(d)(i).

“Disputed Amounts” has the meaning given such term in Section 7.09(d).

“Dissolution Event” means an event of dissolution of the Company pursuant to
Section 15.01.

“Economic Interest” means a Member’s right to share in the profits, losses or
similar items of, and to receive distributions from, the Company, but does not
include any other rights of a Member including, without limitation, the right to
vote, consent or otherwise participate in the management of the Company, the
right to designate Directors or attend (or be counted for purposes of a quorum
at) meetings of the Board (including through its designees) or Members, or,
except as specifically provided in this Agreement or required under the Delaware
Act, any right to information concerning the business and affairs of the
Company.

“Effective Date” has the meaning given such term in the introductory paragraph.

“Emergency” means a sudden and unexpected event that (a) causes, or risks
causing, damage or injury to any Person, property or the environment or material
violation of applicable law in respect of health, safety or the environment and
(b) is of such a nature that (i) responding through normal operation and
maintenance procedures would be insufficient to address the potential harm
caused by such an event and (ii) obtaining the decision of the Board with
respect thereto prior to the time by which a response prudently should be
commenced would be impracticable.

“Emergency Expenditures” means expenditures which are reasonably necessary to be
expended in order to mitigate or remedy an Emergency.

“Encumbrances” means pledges, restrictions on transfer, proxies and voting or
other agreements, liens, claims, charges, mortgages, leases, easements,
covenants, options, rights of first refusal or offer, security interests or
other legal or equitable encumbrances, limitations or restrictions of any nature
whatsoever.

“Equity Interests” means all shares, participations, capital stock, partnership
or limited liability company interests, units, participations or similar equity
interests issued by any Person (including the right to participate in the
management and business and affairs or otherwise control such Person), however
designated.

“Excess Additional Contribution” has the meaning given such term in
Section 6.03(a).

“Excess Distributions” means, with respect to CEGPS, an amount equal to the
product of (a) two (2) times (b) the cumulative distributions received by CEGPS
pursuant to Section 7.01(b) in excess of its Baseline Ownership Percentage of
the aggregate distributions made to the Members pursuant to Section 7.01(b).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

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“Expansion Contributions” has the meaning given such term in Section 6.02(a).

“Extraordinary Contributions” has the meaning given such term in
Section 6.02(b).

“Fair Market Value” means, with respect to the Affected Interest or any New
Interests to be sold in accordance with Section 6.03(e), the fair market value
that a willing buyer would pay a willing seller for such Affected Interest or
New Interests, as applicable, with neither such buyer nor such seller under any
compulsion to transact, using an appropriate and generally accepted valuation
method.

“FERC” means the United States Federal Energy Regulatory Commission.

“Finalization Date” has the meaning given such term in Section 7.09(e)(i)(A).

“Foreclosure Transfer” means, with respect to any Member, (a) any direct
Transfer of Equity Interests of such Member or the Membership Interests held by
such Member or (b) any event or occurrence that causes the Member Parent
(determined immediately prior to such event or occurrence) of such Member to
cease being the Member Parent of such Member as a result of any direct or
indirect Transfer of Equity Interests, or (c) any direct Transfer of Equity
Interests in such Member’s Member Parent, in each case of the foregoing (a),
(b) or (c), to one or more lenders or other creditors in connection with, or in
lieu of, the foreclosure by any such lender or other creditor of an Encumbrance
on such Equity Interests or any Bankruptcy Event.

“Foreclosure Transferee” has the meaning given such term in Section 4.02(f).

“Foreclosure Transferor” has the meaning given such term in Section 4.02(f).

“Former Member” has the meaning given such term in Section 6.08(b).

“GAAP” means United States generally accepted accounting principles, as amended
from time to time.

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis
for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by a Member to the
Company shall be the gross fair market value of the asset, as determined by the
contributing Member and the Board, in a manner that is consistent with
Section 7701(g) of the Code; provided that the initial Gross Asset Value of the
Initial Contributed Entities and 20% of the membership interest Newco Service
Company shall be equal to the product of (i) two (2) times (ii) the amount of
the Initial CEGPS Contribution, as such amount may be adjusted pursuant to the
Contribution Agreement, and the initial Gross Asset Value of the membership
interests in Crestwood Pipeline East shall be equal to the product of (i) two
(2) times (ii) the amount of the Second CEGPS Contribution, as such amount may
be adjusted pursuant to the Contribution Agreement;

 

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(b) The Gross Asset Values of all Company assets shall be adjusted to equal
their respective gross fair market values, as determined by the Board, in a
manner that is consistent with Section 7701(g) of the Code, as of the following
times: (i) the acquisition of additional Membership Interests by any new or
existing Member in exchange for more than a de minimis Capital Contribution or
for the provision of services; (ii) the distribution by the Company to a Member
of more than a de minimis amount of property other than money as consideration
for Membership Interests; and (iii) the liquidation of the Company within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); provided, however,
that adjustments pursuant to clauses (i) and (ii) above shall be made only if
the Board reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Members in the
Company;

(c) The Gross Asset Value of any Company asset distributed to any Member shall
be the gross fair market value (taking Section 7701(g) of the Code into account)
of such asset on the date of distribution; and

(d) The Gross Asset Values of any Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Section 734(b) of the Code or Section 743(b) of the Code, but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)
and the definition of Capital Account hereof; provided, however, that Gross
Asset Values shall not be adjusted pursuant to this subparagraph (d) to the
extent the Board determines that an adjustment pursuant to the foregoing
subparagraph (b) of this definition is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment pursuant to this
subparagraph (d).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
the foregoing subparagraphs (a), (b) or (d), such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.

“Growth Project” means (a) any capital asset expansion or capital asset
enhancement which increases the commercial operating capacity of the Company’s
or its Subsidiaries’ pre-existing operations (measured immediately prior to
completion of such expansion or enhancement), (b) any greenfield project of the
Company or its Subsidiaries, or (c) any Identified Growth Project, in each case,
that (i) is approved by the Board, (ii) has not previously reached the point of
commercial operation as of the Initial Closing, (iii) is made to increase the
long-term operating capacity or asset base of the Company and its Subsidiaries,
(iv) for which the Company or its Subsidiaries initially enter into only
fee-based contracts with customers for terms approved by the Board, and (v) has
an approved budget of $5 million or more. For the avoidance of doubt and
notwithstanding anything in the foregoing to the contrary, in no event shall
operating or maintenance expenditures (including capital expenditures in
connection therewith) or any assets acquired or built with such expenditures be
considered as Growth Projects.

“Growth Project EBITDA” means, for the Calculation Period, and to the extent
solely attributable to Growth Projects:

(a) the Net Income;

 

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(b) increased (without duplication) by the following items to the extent
deducted in calculating such Net Income:

(i) interest expense; plus

(ii) income taxes; plus

(iii) depreciation expense; plus

(iv) amortization expense; plus

(v) non-cash expenses, charges and losses, including, without limitation,
(A) non-cash compensation charges or expenses, (B) non-cash losses incurred on
hedging agreements, (C) non-cash foreign currency losses and (D) non-cash lease
accretion expenses; plus

(vi) any other extraordinary or non-recurring charges, expenses and losses
(including, without limitation, arising on account of changes in accounting
principles); plus

(vii) any non-recurring cash expenses relating to investments (excluding, for
the avoidance of doubt, the principal amount or purchase price thereof) to the
extent funded by a designated equity contribution from a member of Newco; and

(c) decreased (without duplication) by the following items to the extent
included in calculating Net Income:

(i) non-cash income and gains, including, without limitation, (A) non-cash
compensation gains, (B) non-cash gains incurred on hedging agreements and
(C) non-cash foreign currency gains; plus

(ii) any other extraordinary or non-recurring income and gains (including,
without limitation, arising on account of changes in accounting principles).

“Growth Project EBITDA Dispute Notice” has the meaning given such term in
Section 7.09(c).

“Growth Project EBITDA Incentive Amount” has the meaning given such term in
Section 7.09(e)(ii).

“Growth Project EBITDA Shortfall Amount” has the meaning given such term in
Section 7.09(e)(i).

“Growth Project EBITDA Statement” has the meaning given such term in
Section 7.09(a).

“Growth Project EBITDA Target” means $57,000,000 of Growth Project EBITDA.

“Growth Project EBITDA Threshold” means $171,000,000 of Growth Project EBITDA.

 

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“Hedge Contract” means any (a) interest, commodity or currency rate or exchange
protection contracts or transactions, (b) hedges, futures, swaps, collars, puts,
calls, floors, caps, options or similar derivative products or instruments or
(c) other contracts or transactions that are intended to benefit from or reduce
or eliminate the risk of fluctuations in interest rates, currencies or the price
of commodities or any derivatives thereof, in each case, in any form (financial
or physical).

“Identified Growth Project” means the potential projects listed on Exhibit F.

“Included Return” has the meaning given such term in Section 13.04.

“Including Member” has the meaning given such term in Section 13.04.

“Indebtedness” means, with respect to any Person, (a) all liabilities and
obligations of such Person for borrowed money, including the face amount of any
letter of credit supporting the repayment of indebtedness for borrowed money
issued for the account of such Person and obligations under letters of credit
and agreements relating to the issuance of letters of credit or acceptance
financing; (b) all obligations of such Person evidenced by bonds, debentures,
notes or other instruments or debt securities, or by warrants or other rights to
acquire any debt instruments or debt securities of such Person (other than
surety, appeal, or performance bonds issued by third parties to the extent that
such bonds do not constitute or result in the incurrence of reimbursement or
indemnity obligations payable by such Person); (c) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services
(other than trade payables or accruals incurred in the ordinary course of
business); (d) all capitalized lease, leveraged lease, or synthetic lease
obligations of such Person; (e) obligations of such Person under any Hedge
Contract; (f) obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) of such Person to purchase
or otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clauses
(a) through (e) above; and (g) indebtedness or obligations of others of the
kinds referred to in clauses (a) through (f) secured by any Encumbrance on or in
respect of any property of such Person.

“Indemnitee” means (a) any Member, in its capacity as a member of the Company
(and, in relation to the foregoing, any Affiliate of such Member), (b) any
Person who is or was a director, officer, fiduciary, trustee, manager or
managing member of the Company or any Subsidiary of the Company, or of any
employee benefit plan of the Company or of any of its Subsidiaries, or (c) any
Person the Board designates as an “Indemnitee” for purposes of this Agreement.

“Independent Accountants” has the meaning given such term in Section 7.09(d).

“Initial Budget” has the meaning given such term in Section 10.01.

“Initial CEGPS Contribution” means CEGPS’s cash contribution to the Company upon
the Initial Closing, as such amount may be adjusted pursuant to the Contribution
Agreement.

“Initial Closing” has the meaning given such term in the Contribution Agreement.

 

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“Initial Contributed Entities” means (a) Stagecoach Pipeline & Storage Company,
LLC, a New York limited liability company, (b) Arlington Storage Company, LLC, a
Delaware limited liability company, (c) Crestwood Gas Marketing LLC, a Delaware
limited liability company, and (d) Crestwood Storage Inc., a Delaware
corporation.

“Initial Crestwood Contribution” means Crestwood’s contribution to the Company
of the Equity Interests in the Initial Contributed Entities and 20% of the
Equity Interests in Newco Service Company upon the Initial Closing, which
contribution will be deemed to have a fair market value equal to the amount of
the Initial CEGPS Contribution, as such amount may be adjusted pursuant to the
Contribution Agreement.

“Initial Operator” means Crestwood Midstream.

“Interested Member” has the meaning given such term in Section 8.04(c)(i).

“Intermediate Member Parent” means, with respect to any Member, any Person that
Controls such Member and is Controlled by such Member’s Member Parent.

“Key Employees” has the meaning given such term in Section 10.03(e).

“Liquidator” has the meaning given such term in Section 15.02.

“Majority Interest” means, at any given time, Membership Interests representing
more than 50% of the Ownership Percentages then outstanding.

“Management Agreement” has the meaning given such term in Section 10.02(a).

“Management Committee” has the meaning given such term in Section 8.09(a).

“Member” means any Person executing this Agreement as of the Effective Date as a
member of the Company or hereafter admitted to the Company as a member as
provided in this Agreement, but such term does not include any Person who has
ceased to be a member of the Company.

“Member Governance Provisions” has the meaning given such term in
Section 16.13(a).

“Member Indemnitee” has the meaning given such term in Section 12.04.

“Member Nonrecourse Debt” has the meaning of “partner nonrecourse debt” set
forth in Treasury Regulation Section 1.704-2(b)(4).

“Member Nonrecourse Debt Minimum Gain” has the meaning of “partner nonrecourse
debt minimum gain” set forth in Treasury Regulation Section 1.704-2(i)(2).

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

 

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“Member Parent” means (a) in the case of Crestwood, CEQP, unless and until CEQP
either (or both) no longer (i) owns, directly or indirectly, at least twenty
percent (20%) of the Economic Interests of Crestwood or (ii) Controls Crestwood;
(b) in the case of CEGPS, ConEdison, unless and until ConEdison either (or both)
no longer (i) owns, directly or indirectly, at least twenty percent (20%) of the
Economic Interests of CEGPS or (ii) Controls CEGPS; and (c) in the case of any
Member (including Crestwood, but only if CEQP is no longer Crestwood’s Member
Parent, and including CEGPS, but only if ConEdison is no longer CEGPS’s Member
Parent), the Person that (i) owns, directly or indirectly, at least twenty
percent (20%) of the Economic Interests of such Member, (ii) Controls such
Member, and (iii) is not Controlled by any other Person that also owns, directly
or indirectly, at least twenty percent (20%) of the Economic Interests of such
Person. For the avoidance of doubt if no Person satisfies (a), (b) or (c) of
this definition, with respect to ownership and Control of a Member, such Member
shall be its own Member Parent.

“Membership Interest” means the ownership interest of a Member in the Company,
and includes any and all benefits to which such Member is entitled as provided
in this Agreement, together with all obligations of such Member to comply with
the terms and provisions of this Agreement.

“Midstream Activities” means the gathering, compression, transportation,
storage, or transmission of natural gas, including constructing, owning,
maintaining, and operating gathering systems, pipelines, storage facilities and
other assets related thereto.

“Net Income” means, for any period, the net income (or loss) attributable to the
Growth Projects on a consolidated basis determined in conformity with GAAP.

“Net Present Value” means, as of the date of determination, an amount
calculated, taking into account the timing of any payments and the applicable
discount rate set forth in the applicable provision of this Agreement, using the
“XNPV” function in Microsoft Office Excel version 10 or the same function in any
subsequent version of Microsoft Office Excel.

“New Interests” means any (a) Membership Interests issued or to be issued by the
Company after the Effective Date or (b) any other Equity Interests issued or to
be issued by the Company or any of its Subsidiaries after the Effective Date;
provided, that the term “New Interests” shall not include any such Membership
Interests issued or to be issued (v) in connection with any merger,
consolidation, acquisition or any similar transaction or any reorganization or
recapitalization in each case when Membership Interests are issued for or in
respect of previously outstanding Membership Interests, (w) to the selling
Persons in connection with the acquisition by the Company of a Person; provided,
that such Membership Interests or other Equity Interests are issued as
consideration for such acquisition (including issuances to management or
employees of such Person in connection with such acquisition), (x) in any public
offering, (y) as compensation to employees, officers or consultants of the
Company or any Subsidiary of the Company, (z) in connection with the exercise of
any options, rights, or warrants to acquire Membership Interests, or any
appreciation rights relating to Membership Interests; provided that any such
transaction described in the foregoing clauses (v) through (z) is approved in
accordance with this Agreement.

 

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“New Interests Notice” has the meaning set forth in Section 6.04(b).

“Newco Employees” means employees of Newco Service Company.

“Newco Service Company” means Stagecoach Operating Services LLC, a Delaware
limited liability company.

“Newco Service Company LLC Agreement” has the meaning given such term in
Section 10.03(a).

“Non-Contributing Member” has the meaning given such term in Section 6.03(a).

“Non-Subscribing Member” has the meaning given such term in Section 6.04(d).

“Non-Terminating Member” has the meaning given such term in Section 4.01(b)(i).

“Nonincluding Member” has the meaning given such term in Section 13.04.

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

“Nonrecourse Liability” has the meaning set forth in Treasury Regulation
Section 1.7521(a)(2).

“Operating Committee” has the meaning given such term in Section 8.09(a).

“Operator” means the Initial Operator or a replacement Operator that is approved
under the terms hereof.

“Ordinary Course Contributions” has the meaning given such term in
Section 6.02(a).

“Ownership Percentage” shall mean, with respect to a Member, the percentage set
forth on Exhibit A hereto, as such percentage is adjusted from time to time as
required or permitted by the provisions of this Agreement.

“Permitted Transfer” means:

(a) With respect to any Member, a direct or indirect Transfer by such Member of
all of its Membership Interest to its Member Parent or to a Subsidiary of its
Member Parent; provided that the foregoing shall not limit any provisions hereof
relating to a Change in Control of a Member;

(b) any direct or indirect Transfer consented to by all of the Members,
including any written waiver of any transfer restrictions which would otherwise
be applicable thereto, which consent may be granted or withheld in the sole
discretion of each Member; or

 

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(c) with respect to any Member, any Foreclosure Transfer; provided that the
foregoing shall not limit the other Members’ right to elect to exercise their
rights under Section 5.03 upon a Foreclosure Transfer.

“Person” means an individual or a corporation, firm, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.

“Preemptive Rights” has the meaning given such term in Section 6.04(a).

“Price Determination Notice” has the meaning given such term in Section 5.03(a).

“Prior Agreement” has the meaning given such term in the Recitals.

“Profits” and “Losses” means, for each fiscal year or other period, an amount
equal to the Company’s taxable income or loss for such year or period,
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss, or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:

(a) Any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition shall be added to such taxable income or loss;

(b) Any expenditures of the Company described in Section 705(a)(2)(B) of the
Code, and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be subtracted from such taxable income or
loss;

(c) In the event the Gross Asset Value of any Company asset is adjusted pursuant
to subparagraph (b) or (d) of the definition of Gross Asset Value hereof, the
amount of such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or Losses;

(d) Gain or loss resulting from any disposition of property (other than money)
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of notwithstanding that the adjusted tax basis of such property differs from its
Gross Asset Value;

(e) In lieu of the depreciation, amortization and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be
taken into account Depreciation for such fiscal year or other period, computed
in accordance with the definition of Depreciation hereof; and

(f) Notwithstanding any other provision of this definition of “Profits” and
“Losses,” any items which are specially allocated pursuant to Section 7.03 shall
not be taken into account in computing Profits or Losses.

“Proposed Transferee” has the meaning given such term in Section 5.02(b).

 

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“Proposing Member” has the meaning given such term in Section 4.01(b)(ii).

“Purchase Notice” has the meaning given such term in Section 5.03(c).

“Purchase Price” has the meaning given such term in Section 5.03(a).

“Put Exercise Notice” has the meaning given such term in Section 10.03(d).

“Quarter” means, unless the context requires otherwise, a fiscal quarter of the
Company, or, with respect to the first fiscal quarter of the Company after the
Effective Date, the portion of such fiscal quarter commencing after the
Effective Date.

“Quorum Failure Meeting” has the meaning give such term in Section 8.03(b).

“Remaining New Interests” has the meaning given such term in Section 6.04(d).

“Representative” means, with respect to any Member, any Director or Alternate
Director designated by such Member in accordance with the terms hereof.

“Required Accounting Practices” means the accounting rules and regulations, if
any, at the time prescribed by the governmental authorities under the
jurisdiction of which the Company is at the time operating and, to the extent of
matters are not covered by such rules and regulations, GAAP.

“Required Allocations” has the meaning given such term in Section 7.03(j).

“Resolution Period” has the meaning given such term in Section 7.09(c).

“Review Period” has the meaning given such term in Section 7.09(b).

“ROFO Acceptance Notice” has the meaning given such term in Section 5.01(c).

“ROFO Interest” has the meaning given such term in Section 5.01(b).

“ROFO Notice” has the meaning given such term in Section 5.01(b).

“ROFO Offer Notice” has the meaning given such term in Section 5.01(c).

“ROFO Price” has the meaning given such term in Section 5.01(c).

“ROFO Seller” has the meaning given such term in Section 5.01(b).

“ROFR Acceptance Notice” has the meaning given such term in Section 5.02(d).

“ROFR Interest” has the meaning given such term in Section 5.02(b).

“ROFR Notice” has the meaning given such term in Section 5.02(b).

“ROFR Offer” has the meaning given such term in Section 5.02(c).

 

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“ROFR Price” has the meaning given such term in Section 5.02(b).

“ROFR Seller” has the meaning given such term in Section 5.02(b).

“SEC” means the Securities and Exchange Commission.

“Second CEGPS Contribution” means CEGPS’s contribution to the Company upon the
Second Closing under the Contribution Agreement, as such amount may be adjusted
pursuant to the Contribution Agreement.

“Second Closing” has the meaning given such term in the Contribution Agreement.

“Second Crestwood Contribution” means Crestwood’s contribution to the Company of
the Equity Interests in Crestwood Pipeline East, which contribution will be
deemed to have a fair market value equal to the amount of the Second CEGPS
Contribution, as such amount may be adjusted pursuant to the Contribution
Agreement.

“Securities Act” means the Securities Act of 1933, as amended.

“Standalone Return” has the meaning given such term in Section 13.04.

“Subscribing Member” has the meaning given such term in Section 6.04(d).

“Subsidiary” means, with respect to any Person, any other Person that is
Controlled by such first Person, directly or indirectly through one or more
other Subsidiaries.

“Tax Matters Member” has the meaning given such term in Section 13.03(a).

“Tax Termination” has the meaning given such term in Section 4.01(b).

“Tax Termination Amount” has the meaning given such term in Section 4.01(b)(i).

“Tax Termination Calculation” has the meaning given such term in
Section 4.01(b)(ii).

“Third Anniversary End of the Initial Closing” has the meaning given such term
in Section 7.01(c)(iii).

“Transaction Documents” means this Agreement, the Contribution Agreement, the
Management Agreement, and each other contract, document, certificate or
instrument executed and delivered by the Parties or their respective Affiliates
in connection with the consummation of the transactions contemplated hereby or
therewith.

“Transfer” means, with respect to any asset (including a Membership Interest or
any portion thereof), any transfer, sale, assignment, conveyance, gift,
Encumbrance (other than pursuant to Section 3.10), hypothecation, exchange or
any other disposition by law or otherwise; provided, however, that (a) without
limiting any Change in Control provisions hereof, a Transfer or Encumbrance of
any Equity Interest in any Member or in any Affiliate thereof shall not
constitute a Transfer of the Membership Interest of such Member, and (b) the
granting to a lender that is a financial institution of an Encumbrance on a
Membership Interest or any portion thereof shall not constitute a Transfer.

 

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“Transferee” means a Person who has received Equity Interests by means of a
direct or, if applicable, indirect Transfer, or by means of a Foreclosure
Transfer; provided, that a Person who receives such Equity Interests through a
Foreclosure Transfer shall be considered a Transferee only to the extent
provided in Section 4.02(f).

“Treasury Regulations” means the regulations (including temporary regulations)
promulgated by the United States Department of the Treasury pursuant to and in
respect of provisions of the Code. All references herein to sections of the
Treasury Regulations shall include any corresponding provision or provisions of
succeeding, similar or substitute, temporary or final Treasury Regulations.

“UCC” has the meaning given such term in Section 3.09.

“Unfunded Additional Contribution” has the meaning given such term in
Section 6.03(a).

“Voting Securities” of a Person shall mean securities of any class of such
Person entitling the holders thereof (without regard to the occurrence of any
contingency) to vote in the election of, or to appoint, members of the board of
directors or other similar governing body of the Person; provided, that if such
Person is a partnership, Voting Securities of such Person shall be the general
partner interests in such Person.

Section 1.02 Construction.

(a) Unless the context requires otherwise: (i) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (ii) references to Articles and Sections refer to Articles and
Sections of this Agreement; (iii) the terms “include,” “includes,” “including”
or words of like import shall be deemed to be followed by the words “without
limitation”; (iv) the terms “hereof,” “herein” or “hereunder” refer to this
Agreement as a whole and not to any particular provision of this Agreement,
(v) the word “or” shall be disjunctive but not exclusive, and (vi) the phrases
“directly or indirectly” or “direct or indirect”, when used in the context of
ownership, holdings, Control, Transfer or the taking of any action, includes
ownership, holdings, Control, Transfer or the taking of such action, as
applicable, through a chain of direct or indirect ownership of Equity Interests
or Control of one or more Persons. The table of contents and headings contained
in this Agreement are for reference purposes only, and shall not affect in any
way the meaning or interpretation of this Agreement. The Board has the power to
construe and interpret this Agreement and to act upon any such construction or
interpretation. Any construction or interpretation of this Agreement by the
Board and any action taken pursuant thereto and any determination made by the
Board in good faith shall, in each case, be conclusive and binding on all
Parties and all other Persons for all purposes.

 

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(b) The Parties hereto have participated jointly in the negotiation and drafting
of this Agreement. No provision of this Agreement will be interpreted in favor
of, or against, any of the Parties to this Agreement by reason of the extent to
which any such Party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any prior
draft of this Agreement, and no rule of strict construction will be applied
against any Party hereto. This Agreement will not be interpreted or construed to
require any Person to take any action, or fail to take any action, if to do so
would violate any applicable law.

ARTICLE II

ORGANIZATION

Section 2.01 Continuation of the Company.

Crestwood formed the Company as a Delaware limited liability company by the
filing of the Certificate of Formation in the office of the Secretary of State
of the State of Delaware pursuant to the provisions of the Delaware Act. The
Members desire to continue the Company for the purposes and upon the terms and
conditions set forth herein. This Agreement amends and restates in its entirety
and supersedes the Prior Agreement, which shall have no further force and
effect. This Agreement shall become effective on the Effective Date, and, as of
such date, CEGPS is admitted to the Company as a Member and, together with
Crestwood, constitute the Company’s sole Members. The rights, duties,
liabilities and obligations of each Member in its capacity as such shall be as
set forth in this Agreement. All Membership Interests shall constitute personal
property of the owner thereof for all purposes.

Section 2.02 Name.

The name of the Company shall be “STAGECOACH GAS SERVICES LLC.” The Company’s
business may be conducted under any other name or names as determined by the
Board. The words “limited liability company,” “LLC,” or similar words or letters
shall be included in the Company’s name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. The Board may
change the name of the Company at any time and from time to time.

Section 2.03 Registered Office; Registered Agent; Principal Office; Other
Offices.

Unless and until changed by the Board, the registered office of the Company in
the State of Delaware shall be located at 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801, and the registered agent for service of process
on the Company in the State of Delaware at such registered office shall be The
Corporation Trust Company. The principal office of the Company shall be located
at such place as the Board may from time to time designate by notice to the
Members. The Company may maintain offices at such other place or places within
or outside the State of Delaware as the Board determines to be necessary or
appropriate.

 

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Section 2.04 Purposes.

The purposes of the Company are (a) to engage in Midstream Activities, including
without limitation, to own and operate the natural gas storage and
transportation operations of the Contributed Entities and (b) to engage in any
lawful business or activity for which limited liability companies may be formed
under the Delaware Act.

Section 2.05 Powers.

The Company shall be empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described in Section 2.04 and
for the protection and benefit of the Company.

Section 2.06 Term.

The term of the Company commenced upon the filing of the Certificate of
Formation in accordance with the Delaware Act and shall continue in existence
until the dissolution of the Company in accordance with the provisions of
Article XV. The existence of the Company as a separate legal entity shall
continue until the cancellation of the Certificate of Formation as provided in
the Delaware Act.

Section 2.07 Title to Company Assets.

Title to the Company’s 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, individually or collectively, shall have any ownership interest
in such Company assets or any portion thereof. Each Member irrevocably waives
any right it may have to maintain any action for partition of the property of
the Company.

Section 2.08 No State Law Partnership.

Except to the extent provided in the next sentence, the Members intend that the
Company shall not be a partnership (including, without limitation, a limited
partnership) or joint venture, and that no Member or officer of the Company
shall be a partner or joint venturer of any other Member or officer of the
Company, for any purposes, and this Agreement shall not be construed to the
contrary. Notwithstanding the foregoing, the Members intend the Company to be
taxed as a partnership under the Code, and under applicable state and local tax
laws. Except to the extent otherwise provided herein, each Member and the
Company shall file all tax returns and shall otherwise take all tax and
financial reporting positions in a manner consistent with such treatment unless
otherwise required by law.

 

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ARTICLE III

MEMBERSHIP INTERESTS

Section 3.01 Membership Interests; Additional Members.

(a) The Members own Membership Interests in the Company. In exchange for each
Member’s Capital Contribution to the Company referred to in Section 6.01, the
Company shall issue to each Member the Membership Interest with the Ownership
Percentage set forth opposite such Member’s name on Exhibit A. All membership
interests in the Company shall be certificated in the form attached hereto as
Exhibit E or such other form as the Board may elect. Each certificate evidencing
Membership Interests in the Company shall bear the following legend: “This
Certificate evidences a Membership Interest in the Company and shall be a
security governed by Article 8 of the Uniform Commercial Code as in effect in
the State of Delaware and, to the extent permitted by applicable law, each other
applicable jurisdiction.” Such certificates, if any, may set forth designations
with regard to class of interest, capital contribution, voting rights, and any
other matter that the Board deems appropriate. No amendment to this provision
shall be effective until all outstanding Membership Interest certificates have
been surrendered to the Company for cancellation.

(b) The Board shall direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Company
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the party claiming the certificate of Membership Interests to be
lost, stolen or destroyed; provided that, as a condition precedent to the
issuance thereof, the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, shall give the Company an indemnity
against any claim that may be made against the Company with respect to the
certificate alleged to have been lost, stolen or destroyed.

(c) A Membership Interest shall represent a Member’s (i) interest in items of
income, gain, loss and deduction of the Company and a right to receive
distributions of the Company’s assets in accordance with the provisions of this
Agreement and (ii) right to vote on Company matters in accordance with the
provisions of the Agreement and designate Representatives.

(d) The Company may issue additional Membership Interests and options, rights,
warrants and appreciation rights relating to the Membership Interests for any
Company purpose at any time and from time to time to such Persons for such
consideration and on such terms and conditions as the Board shall determine in
accordance with Section 8.04.

(e) Each additional Membership Interest authorized to be issued by the Company
pursuant to Section 3.01(c) may be issued in one or more classes, or one or more
series of any such classes, with such designations, preferences, rights, powers
and duties (which may be senior to existing classes and series of Membership
Interests), as shall be fixed by the Board in accordance with Section 8.04,
including (i) the right to share in Company profits and losses or items thereof;
(ii) the right to share in Company distributions; (iii) the rights upon
dissolution

 

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and liquidation of the Company; (iv) whether, and the terms and conditions upon
which, the Company may, or shall be required to, redeem the Membership Interest
(including sinking fund provisions); (v) whether such Membership Interest is
issued with the privilege of conversion or exchange and, if so, the terms and
conditions of such conversion or exchange; (vi) the terms and conditions upon
which each Membership Interest will be issued, evidenced by certificates and
assigned or transferred; and (vii) the right, if any, of each such Membership
Interest to vote on Company matters, including matters relating to the relative
rights, preferences and privileges of such Membership Interest.

(f) The Board shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Membership Interests and
options, rights, warrants and appreciation rights relating to Membership
Interests pursuant to this Section 3.01, (ii) reflecting the admission of such
additional Members in the books and records of the Company as the record holder
of such Membership Interest and (iii) all additional issuances of Membership
Interests, in each case including amending this Agreement and Exhibit A hereof
as necessary to reflect any such issuance. The Board, acting pursuant to
Section 8.04, shall determine the relative rights, powers and duties of the
holders of the Membership Interests being so issued. The Board shall do all
things necessary to comply with the Delaware Act and is authorized and directed
to do all things that it determines to be necessary or appropriate in connection
with any future issuance of Membership Interests pursuant to the terms of this
Agreement, including compliance with any statute, rule, regulation or guideline
of any governmental agency.

Section 3.02 No Liability of Members.

Except as required by applicable law or the following sentence, the Members or
any Representatives thereof, in their capacity as such, shall not be personally
liable (whether to the Company, to any of the other Members, to the creditors of
the Company or to any other third Person) for the debts, obligations or
liabilities of the Company. The Members, in their capacity as such, shall be
liable hereunder only to the Company and the other Members and then only for the
express representations, warranties, covenants and agreements of such Member
provided herein. In no case shall the Company or any of its Subsidiaries enter
into any contract or agreement that purports to impose any obligations,
liabilities or restrictions on any Member or any Affiliate thereof, without the
prior, express and written consent or agreement of the Member or of such
Affiliate.

Section 3.03 Withdrawal of Members.

No Member shall have any right to withdraw from the Company; provided, however,
that when a Transferee of a direct Transfer of Membership Interests becomes
registered on the books and records of the Company as the Member with respect to
the Membership Interest so transferred, the Transferring Member shall cease to
be a Member with respect to the Membership Interest so Transferred.

 

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Section 3.04 Record Holders.

The Company shall be entitled to recognize the Person in whose name any
Membership Interest is registered on the books and records of the Company as the
Member with respect to any Membership Interest and, accordingly, shall not be
bound to recognize any equitable or other claim to, or interest in, such
Membership Interest on the part of any other Person, regardless of whether the
Company shall have actual or other notice thereof, except as otherwise provided
by law or any applicable rule, regulation or guideline of any governmental
agency.

Section 3.05 No Appraisal Rights.

No Member shall be entitled to any valuation, appraisal or similar rights with
respect to such Member’s Membership Interest, whether individually or as part of
any class or group of Members, in the event of a merger, consolidation, sale of
the Company or other transaction involving the Company or its securities unless
such rights are expressly provided by the agreement of merger, agreement of
consolidation or other document effectuating such transaction.

Section 3.06 Representations and Warranties.

Each Member hereby represents and warrants to the Company and each other Member
that:

(a) Power and Authority. Such Member has all requisite power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance by such Member of this Agreement have been
duly authorized by all requisite action on the part of such Member, and no other
action or proceeding on the part of such Member or any Affiliate thereof is
necessary to consummate the transactions contemplated by this Agreement.

(b) No Conflicts. Neither the execution and delivery by such Member of this
Agreement, nor the performance by such Member under this Agreement will
(i) violate, conflict with or result in a breach of any provision of the
governing documents of such Member; (ii) require any consent or approval of any
counterparty to, or violate or result in any breach of or constitute a default
(or an event that, with notice or lapse of time or both, would become a default)
under, or give to others any right of termination, cancellation, amendment or
acceleration of any obligation or the loss of any benefit under, any material
agreement or arrangement to which it is a party or by which it is, or its assets
are, bound; (iii) result in the creation of an Encumbrance (other than pursuant
to Section 3.10) upon or require the sale or give any Person the right to
acquire any of the assets of such Member; or (iv) violate or conflict with any
law applicable to such Member.

 

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(c) Investment Intent. Such Member is acquiring its Membership Interest for
investment for its own account and not with a view to, or for sale in connection
with, any distribution thereof. Such Member (either alone or together with its
advisors) has sufficient knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its investment
in the Membership Interests and is capable of bearing the economic risks of such
investment. Such Member is aware that the Membership Interests have not been
registered, and will not be registered, under the Securities Act or under any
state or foreign securities laws.

(d) No Registration Rights. Such Member is aware that only the Company can take
action to register the Membership Interests in the Company under the Securities
Act, and that the Company is under no such obligation and does not propose or
intend to do so.

(e) Transfer Restrictions. Such Member is aware that this Agreement provides
restrictions on the ability of a Member to directly or indirectly Transfer its
Membership Interest, and such Member will not seek to effect any direct or
indirect Transfer of its Membership Interest or any portion thereof other than
in accordance with such restrictions.

(f) Qualified Investor. Such Member and its Affiliates, taken as a whole, are
able to bear the economic risk of the Member’s investment in the Membership
Interests and have sufficient net worth to sustain a loss of the Member’s entire
investment in the Company without economic hardship if such loss should occur.

(g) Access to Information. Such Member has had an opportunity to ask questions
and discuss the Company’s business, management and financial affairs with the
Company, and such questions were answered to its satisfaction. Such Member
acknowledges that it is familiar with all aspects of the Company’s business.

Section 3.07 Access to Information.

Each Member shall be entitled to receive any information that it may request
concerning the Company and its Subsidiaries; provided, this Section 3.07 shall
not obligate the Company to create any information that does not already exist
at the time of such request (other than to convert existing information from one
medium to another, such as providing a printout of information that is stored in
a computer database), except as otherwise provided in Section 14.02. Each Member
shall also have the right, upon reasonable notice, and at all reasonable times
during usual business hours, to inspect the properties of the Company and its
Subsidiaries (subject to the Company’s, any of its Subsidiary’s, or the
Operator’s reasonable rules governing health, safety, and security), and to
audit, examine and make copies of the books of account and other records of the
Company and its Subsidiaries. Such right may be exercised through any agent or
employee of such Member designated in writing by it or by an independent public
accountant, engineer, attorney, or other consultant so designated. The Member
making the request shall bear all costs and expenses (including the Company’s,
its Subsidiaries, and any other Member’s costs and expenses) incurred in any
inspection, examination or audit made on such Member’s behalf. The Members agree
to reasonably cooperate, and to cause their respective independent public
accountants, engineers, attorneys and other consultants to reasonably cooperate,
in connection with any such request. Confidential Information obtained pursuant
to this Section 3.07 shall be subject to the provisions of Section 3.08.

 

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Section 3.08 Confidential Information.

(a) Except as permitted by Section 3.08(b), each Member shall (i) keep
confidential all Confidential Information and shall not disclose any
Confidential Information to any Person, including any of its Affiliates, and
(ii) use the Confidential Information only in connection with Company matters or
the internal affairs of such Member.

(b) Notwithstanding Section 3.08(a), but subject to the other provisions of this
Section 3.08, a Member, its Representatives, its Affiliates, and its and their
directors, officers, employees, agents and advisors may make the following
disclosures and uses of Confidential Information:

(i) disclosures to another Member, its Representatives, the Operator or any of
their directors, officers, employees, agents and advisors, in connection with
the business and affairs of the Company or any of its Subsidiaries;

(ii) disclosures in connection with any financing for the Company or any of its
Subsidiaries approved by the Board;

(iii) disclosures to an Affiliate of such Member, and such Affiliate’s
directors, officers, employees, agents and advisors, if such Affiliate,
directors, officers, employees, agents and advisors are informed of the
confidential nature of the Confidential Information and instructed to comply
with Section 3.08(a) hereof with respect to such Confidential Information;

(iv) disclosures to a Person (other than such Persons addressed in (iii) above),
if such Person has been retained by the Company, any of its Subsidiaries, or the
Operator to provide services to or for the Company or any of its Subsidiaries
and is subject to a confidentiality obligation with the Company, any of its
Subsidiaries, or the Operator, as applicable, obligating such Person to keep
such Confidential Information confidential;

(v) disclosures to (i) a bona-fide potential purchaser of such Member’s
Membership Interest, or (ii) any lender or potential lender to such Member or
its Affiliates, in each case, if such potential purchaser or lender is subject
to a confidentiality agreement with the disclosing Member obligating such
potential purchaser or lender to keep such Confidential Information confidential
and to use such information only in connection with its consideration,
negotiation and execution of such potential acquisition or financing;

(vi) disclosures required, with respect to a Member or an Affiliate of a Member,
pursuant to (i) the Securities Act, and the rules and regulations promulgated
thereunder, (ii) the Exchange Act, and the rules and regulations promulgated
thereunder, (iii) any state securities laws, (iv) any national securities
exchange or automated quotation system, or (v) pursuant to a routine audit or
examination by any regulator or self-regulatory organization that does not
specifically target the Company or any of its Subsidiaries;

 

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(vii) disclosures that a Member is, in the reasonable judgment of such Member’s
counsel, 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 applicable law; provided that,
prior to any such disclosure, such Member shall, to the extent legally
permissible:

(A) provide the Company with prompt notice of such requirements so that one or
more of the Members may seek a protective order or other appropriate remedy or
waive compliance with the terms of this Section 3.08(b)(vii);

(B) consult with Company on the advisability of taking steps to resist or narrow
such disclosure; and

(C) cooperate with the Company and with the other Members in any attempt one or
more of them may make to obtain a protective order or other appropriate remedy
or assurance that confidential treatment will be afforded the Confidential
Information; and in the event such protective order or other remedy is not
obtained, or the other Members waive compliance with the provisions hereof, such
Member agrees (1) to furnish only that portion of the Confidential Information
that, in the advice of such Member’s counsel, such Member is legally required to
disclose, and (2) to exercise reasonable efforts to obtain assurance that
confidential treatment will be accorded such Confidential Information; and

(viii) disclosures otherwise consented to in writing by each Member.

(c) Each Member shall take such precautionary measures as may be reasonably
required to ensure (and such Member shall be responsible for) compliance with
this Section 3.08 by any of its Representatives, any of its Affiliates, its and
their directors, officers, employees and agents, and any other Persons to which
it may disclose Confidential Information in accordance with this Section 3.08.

(d) At the request of the Company, a Transferring Member who has ceased to be a
Member shall promptly destroy (and provide written confirmation of destruction
to the Company signed by an authorized representative of the former Member
supervising such destruction), or, at the former Member’s option, return to the
Company, all Confidential Information in its possession. Notwithstanding the
immediately-preceding sentence, but subject to the other provisions of this
Section 3.08, a former Member may retain, but not disclose to any other Person,
Confidential Information for the limited purposes of (i) explaining such former
Member’s corporate decisions with respect to the Company, (ii) preparing such
former Member’s financial statements and tax returns (and defending audits,
investigations and proceedings relating thereto) or (iii) complying with
applicable law, regulation, professional standards or document retention
policies; provided, the former Member must keep such retained Confidential
Information confidential in accordance with the terms of this Section 3.08. The
parties hereto understand and agree that the former Member’s computer systems
may automatically back up Confidential Information, and to the extent that such
computer back-up procedures create copies of the Confidential Information, the
former Member may retain such copies in its archival or back-up computer storage
for the period it normally archives backed-up computer records. All Confidential
Information retained pursuant to this Section 3.08 shall remain subject to the
provisions of this Agreement until the same are destroyed, and shall not be
accessed by the former Member during such period of retention other than as
permitted under this Section 3.08.

 

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(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 3.08, the
continuation of which unremedied 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 at law or in equity, to seek injunctive relief from any breach
or threatened breach of any of the provisions of this Section 3.08 and to
specific performance of their rights hereunder.

(f) The obligations of the Members under this Section 3.08 (including the
obligations of any former Member) shall terminate on the second anniversary of
the end of the term of the Company.

Section 3.09 Security.

For purposes of providing for Transfer of, perfecting an Encumbrance in, and
other relevant matters related to, a Membership Interest, the Membership
Interests will be deemed to be a “security” within the meaning of, and shall be
governed by, (a) Articles 8 and 9 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 (b) 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.

Section 3.10 Grant of Security Interest

(a) To secure the Crestwood Required Payment, Crestwood grants, as of the date
hereof, to CEGPS a present and continuing first priority Encumbrance in its
Membership Interest and all proceeds, rights and revenues thereof, under the UCC
of the State of Delaware. CEGPS shall be entitled to all the rights and remedies
of a secured party under the UCC of the State of Delaware with respect to the
security interest granted in this Section 3.10(a). Crestwood authorizes CEGPS to
file, and shall cooperate with, all financing statements and other instruments
that CEGPS may request to effectuate and carry out the preceding provisions of
this Section 3.10(a) and ensure that a perfected, first priority Encumbrance is
in effect as of the date hereof. Crestwood shall indemnify, defend and hold
harmless CEGPS from any liens, claims and encumbrances created or permitted by
Crestwood in respect of Crestwood’s Membership Interest.

 

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(b) To secure the CEGPS Required Payment, CEGPS grants, as of the date hereof,
to Crestwood a present and continuing first priority Encumbrance in its
Membership Interest and all proceeds, rights and revenues thereof, under the UCC
of the State of Delaware. Crestwood shall be entitled to all the rights and
remedies of a secured party under the UCC of the State of Delaware with respect
to the security interest granted in this Section 3.10(b). CEGPS authorizes
Crestwood to file, and shall cooperate with, all financing statements and other
instruments that Crestwood may request to effectuate and carry out the preceding
provisions of this Section 3.10(b) and ensure that a perfected, first priority
Encumbrance is in effect as of the date hereof. CEGPS shall indemnify, defend
and hold harmless Crestwood from any liens, claims and encumbrances created or
permitted by CEGPS in respect of CEGPS’s Membership Interest.

ARTICLE IV

TRANSFERS OF MEMBERSHIP INTERESTS

Section 4.01 Transfers Generally.

(a) No Membership Interest shall be directly or indirectly Transferred, in whole
or in part, unless (i) such direct or indirect Transfer complies with all terms
and conditions of this Article IV, and (ii) such direct or indirect Transfer is
either a Permitted Transfer, or is not prohibited by Article V and is otherwise
is in accordance with Article V.

(b) In the event that a direct Transfer of a Membership Interest or of any
direct or indirect ownership of a Member results or would result in the
Company’s termination within the meaning of Section 708 of the Code (a “Tax
Termination”):

(i) The Member subject to such Transfer (and the Transferee thereof) or with
respect to which such change of direct or indirect ownership has occurred shall
indemnify and hold harmless each other Member (each a “Non-Terminating Member”)
in an amount (with respect to each Member, the “Tax Termination Amount”) equal
to the sum of:

(A) the product of:

(1) the difference between (x) the net present value as of the date of such Tax
Termination, using a discount rate equivalent to the Default Rate, of the amount
of tax depreciation allocable to such Non-Terminating Member from the Company
for each future taxable period calculated as if such Tax Termination had not
occurred but with all other facts unchanged, minus (y) the net present value as
of the date of such Tax Termination, using a discount rate equivalent to the
Default Rate, of the amount of tax depreciation allocable to such
Non-Terminating Member from the Company for each future taxable period
calculated taking into account such Tax Termination, multiplied by

(2) the sum of the highest marginal federal income tax rate as a percentage of
taxable income applicable to a U.S. corporation for the taxable year in which
the Tax Termination occurs, and four percent (4%) (as a proxy for applicable
state income taxes) (collectively, the “Aggregate Tax Rate”);

 

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(such product of clause (A)(1) and clause (A)(2) the “Damage Amount”),

plus

(B) a gross-up amount calculated as:

(1) (x) the Damage Amount divided by (y)(I) 1.0 minus (II) the Aggregate Tax
Rate, minus

(2) the Damage Amount,

(ii) Not fewer than thirty (30) days prior to a proposed direct or indirect
Transfer that would result in a Tax Termination, the Member subject to such
Transfer (the “Proposing Member”) shall deliver to the Non-Terminating Members a
schedule (the “Tax Termination Calculation”) setting forth the Proposing
Member’s calculation of any amounts to be paid to the Non-Terminating Members
pursuant to Section 4.01(b)(i), and shall make such reasonable changes to the
Tax Termination Calculation as each Non-Terminating Member reasonably requests.
The Members shall work in good faith to resolve any disputes relating to the
schedule delivered herein within ten (10) days. If the Members are unable to
resolve any such dispute, such dispute shall be resolved promptly by a national
accounting firm acceptable to the Members, the costs of which shall be borne
equally by the Members. Upon agreement by the Members as to the Tax Termination
Calculation, or resolution by such national accounting firm of any disputes
thereto, and not later than ten (10) days following the Transfer to which the
Tax Termination Calculation relates, the Proposing Member shall pay to each
Non-Terminating Member such Member’s Tax Termination Amount.

(iii) Notwithstanding the provisions of Section 4.01(b)(i), no payments shall be
due from one Member to another if a Tax Termination results (A) from a
transaction, or a series of related transactions, where all of the selling
Members collectively are selling 100% of the Member Interests in the Company and
all of the buying parties are not already Members at the time of the sale and
not Affiliates of any of the selling Members, or (B) from a termination of CEQP
within the meaning of Section 708 of the Code.

(c) Any direct or indirect Transfer or purported direct or indirect Transfer of
a Membership Interest not made in accordance with this Article IV and Article V
shall be, to the fullest extent permitted by law, null and void, and the Company
shall have no obligation to recognize any such direct or indirect Transfer or
purported direct or indirect Transfer.

Section 4.02 Conditions to Transfers.

(a) No direct or indirect Transfer of any Membership Interest shall be made if
such direct or indirect Transfer would (i) violate any laws, rules or
regulations applicable to the Company or any of its Subsidiaries (including the
then-applicable federal or state securities laws or rules and regulations of the
SEC, any state securities commission or any other governmental authority with
jurisdiction over such direct or indirect Transfer), (ii) terminate the
existence or qualification of the Company under the laws of the jurisdiction of
its formation, (iii) cause the Company to be treated as an association taxable
as a corporation or otherwise to be taxed as an

 

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entity for federal income tax purposes (to the extent not already so treated or
taxed) or (iv) constitute a breach or violation of, or an event of default
under, or give rise to any right of termination, acceleration or redemption
under, or require any consent from any third Person under (A) any credit
agreement, loan agreement, indenture, mortgage, deed of trust or other similar
instrument or document governing Indebtedness of the Company or any of its
Subsidiaries or (B) any other material contract, instrument, permit,
authorization, license, easement, variance, exemption or approval of the Company
or any of its Subsidiaries, but only if, in either case (A) or (B), such
agreement, indenture, mortgage, deed of trust, instrument, document, contract,
instrument, permit, authorization, license easement, variance, exemption, or
approval was either in place as of the Effective Date or approved by a Director
designated by the Member whose Membership Interest is subject to such direct or
indirect Transfer, and unless, in either case (A) or (B), either (x) a waiver of
such breach, violation, event of default or right, or such consent, as the case
may be, has been obtained prior to such direct or indirect Transfer or (y) if
such waiver or consent has not been obtained prior to such direct or indirect
Transfer, the Transferor and the Transferee jointly and severally agree to
indemnify the Company and its Subsidiaries for any consequences relating
thereto, in form and substance reasonably satisfactory to the Company.

(b) No direct Transfer shall be made unless and until the proposed Transferee
shall have agreed in writing to be bound by the terms of this Agreement as a
Member and provided to the Board (i) its name, address, taxpayer identification
number and any other information reasonably necessary to permit the Company to
file all required federal and state tax returns or reasonably requested by the
Board and (ii) a properly executed IRS Form W-9.

(c) Each Member making or subject to a direct or indirect Transfer and each
Transferee thereof shall be obligated to pay his or its own expenses incurred in
connection with such direct or indirect Transfer, and the Company shall not have
any obligation with respect thereto. Each Member making or subject to a direct
or indirect Transfer and the Transferee thereof shall be jointly and severally
obligated to pay or reimburse the Company for all reasonable costs and expenses
(including attorneys’ fees and expenses) incurred by the Company in connection
with such direct or indirect Transfer or proposed direct or indirect Transfer
and the admission of the Transferee as a Member, including the legal fees
incurred in connection therewith, whether or not such direct or indirect
Transfer is consummated.

(d) For the avoidance of doubt, each Member making a direct Transfer and each
Transferee thereof (i) may, subject to Section 4.02(f), Transfer to its
Transferee, as applicable, its right to designate Directors pursuant to Article
VIII, its consent rights under this Agreement and its Preemptive Rights under
this Agreement, (ii) must Transfer to its Transferee its obligation to fund
additional capital contributions in accordance with Article VI, and (iii) must
Transfer to its Transferee its liabilities and obligations under Section 7.07.

(e) No Member shall directly Transfer less than 100% of its Membership Interest.

 

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(f) Any Transferee of a Membership Interest pursuant to a Foreclosure Transfer
(the holder of the Membership Interest subject thereto, a “Foreclosure
Transferee”) shall be a Transferee only, and shall only be entitled to receive,
to the extent Transferred (directly or indirectly) in such Foreclosure Transfer,
the Economic Interest associated with the Membership Interest Transferred
(directly or indirectly) in the Foreclosure Transfer, and such Foreclosure
Transferee shall not be entitled or enabled to exercise, directly or indirectly,
any other rights or powers of a Member (except for any action requiring approval
thereof by the Board in accordance with Section 8.04(b)(i) or
Section 8.04(b)(ix), for which such Foreclosure Transferee shall have the right
to vote with respect to the Membership Interest Transferred (directly or
indirectly) to such Foreclosure Transferee), such other rights, and all
obligations relating to, or in connection with, such Membership Interest
(including, without limitation, the obligation to make Capital Contributions) to
remain with the Transferring Member (a “Foreclosure Transferor”); provided, that
no Foreclosure Transferor (or any Affiliate of a Foreclosure Transferor) nor any
Director appointed by a Foreclosure Transferor (or such an Affiliate of such
Foreclosure Transferor) shall be entitled to vote on, consent to, call for or
approve any matters under this Agreement or in its capacity as a Member, nor be
included in determining whether there is Board approval; provided further, that
a Foreclosure Transferee (i) may become a Member with respect to the Membership
Interest Transferred (directly or indirectly) in the Foreclosure Transfer if
such Foreclosure Transferee is admitted to the Company as a Member pursuant to
the unanimous written consent of the other Members and (ii) may directly
Transfer its Membership Interest to a Transferee that is not a Foreclosure
Transferee or an Affiliate of a Foreclosure Transferee pursuant to and in
accordance with the terms of this Agreement, in which case such Transferee shall
not be subject to the restrictions of this Section 4.02(f). Any Foreclosure
Transfer shall be subject to, and any Membership Interests Transferred (directly
or indirectly) pursuant to a Foreclosure Transfer shall continue to be subject
to, as applicable, this Section 4.02(f), except as otherwise expressly provided
in this Section 4.02(f). For the avoidance of doubt, notwithstanding any other
provision set forth in this Agreement, no pledgee or secured party with respect
to a Membership Interest shall be entitled to vote, consent to or approve any
matters under this Agreement, or appoint (or direct the vote, consent or
approval of) any Director.

Section 4.03 Effect of Non-Compliance

In addition to the restrictions contained in Section 4.01(b), (a) the Members
acknowledge and agree that (i) an award of money damages would be inadequate for
any breach of the provisions of this Article IV and Article V, (ii) any such
breach would cause the non-breaching parties irreparable harm, (iii) in the
event of any breach or threatened breach of this Article IV or Article V by a
Member, the Members, to the fullest extent permitted by law, will also be
entitled, without the requirement of posting a bond or other security, to seek
equitable relief, including injunctive relief and specific performance and
(iv) such remedies will not be the exclusive remedies for any breach of this
Article IV or Article V but will be in addition to all other remedies available
at law or equity to each of the Members, (b) if a Membership Interest is
purported to be directly or indirectly Transferred in whole or in part in
contravention of Article IV and Article V, the Person to whom such purported
direct or indirect Transfer was made shall not be entitled to any rights as a
Member whatsoever, including, without limitation, any of the following rights:
(i) to participate in the management, business or affairs of the Company,
(ii) to receive any reports or other information from the Company or any of its
Subsidiaries pursuant to this Agreement, (iii) to inspect the Company’s books or
records, (iv) to receive any Membership Interest in the Company, (v) to receive
distributions pursuant to

 

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Section 7.01 and (vi) to receive upon the dissolution and winding up of the
Company the net amount otherwise distributable to the Transferor pursuant to
Section 15.03(b) hereof and (c) if an Affected Member breaches its obligations
pursuant to Section 5.03 (including by failing to consummate a direct Transfer
of the Affected Interest), from and after the date of such breach, such Affected
Member shall not be entitled to any rights as a Member whatsoever, including,
without limitation, any of the following rights: (i) to participate in the
management, business or affairs of the Company, (ii) to receive any reports or
other information from the Company or any of its Subsidiaries pursuant to this
Agreement, (iii) to inspect the Company’s books or records, (iv) to receive any
Membership Interest in the Company, (v) to receive distributions pursuant to
Section 7.01 and (vi) to receive upon the dissolution and winding up of the
Company the net amount otherwise distributable to the Transferor pursuant to
Section 15.03(b) hereof, until (x) such Affected Member satisfies its
obligations under Section 5.03 and (y) (1) no Member delivers a Price
Determination Notice in accordance with Section 5.03(a), (2) no Member delivers
a Purchase Notice in accordance with Section 5.03(c) or (3) the direct Transfer
of the Affected Interest is consummated or the agreement regarding the direct
Transfer of the Affected Interest is terminated without fault of the Affected
Member.

ARTICLE V

RIGHTS UPON A PROPOSED TRANSFER OR CHANGE IN CONTROL

Section 5.01 Right of First Offer.

(a) Except for a Permitted Transfer, no Member shall directly Transfer any
Membership Interest unless such Member first complies with the provisions of
Section 5.02, except for a direct Transfer of such Member’s entire Membership
Interest to the extent expressly permitted by this Section 5.01 following
compliance with the terms of this Section 5.01.

(b) A Member (the “ROFO Seller”) shall at any time have the right, by delivery
of written notice (a “ROFO Notice”) to each other Members, to request that the
other Members specify the purchase price (which must be in cash), and other
terms and conditions on which such other Member is willing to purchase all, but
not less than all, of the ROFO Seller’s Membership Interest (the “ROFO
Interest”).

(c) Within thirty (30) days following delivery of a ROFO Notice, any such other
Member may offer to purchase all, but not less than all, of the ROFO Interest by
providing written notice to the ROFO Seller (a “ROFO Offer Notice”), specifying
the purchase price, in cash (the “ROFO Price”), and other terms and conditions
on which such other Member is willing to purchase the ROFO Interest. The ROFO
Seller shall have thirty (30) days following the delivery of a ROFO Offer Notice
to elect to accept any such offer by delivery of written notice of such
acceptance to the applicable Member (a “ROFO Acceptance Notice”).

(d) If the ROFO Seller delivers a ROFO Acceptance Notice within thirty (30) days
following delivery of the ROFO Offer Notice, each such party and the Company
shall use its commercially reasonable efforts to obtain, as promptly as possible
thereafter, any and all consents, approvals and authorizations of any
governmental authority required to be obtained in order to consummate such sale
and purchase. A sale and purchase of the ROFO Interest to a

 

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Member pursuant to this Section 5.01 shall be made at the offices of the Company
on or before the later of (i) the date that is one hundred and twenty (120) days
following delivery of the ROFO Acceptance Notice or (ii) the date that is five
(5) Business Days following receipt of all consents, approvals, and
authorizations of any governmental authority required to be obtained in order to
consummate such sale and purchase.

(e) If no Member delivers a ROFO Offer Notice within thirty (30) days after
receiving the ROFO Notice, or if the ROFO Seller does not accept an offer from
any Member within thirty (30) days after receiving the ROFO Offer Notice, the
ROFO Seller may, during the next 180 days, directly Transfer the ROFO Interest
to a third party Transferee for an all cash purchase price not less than the
highest ROFO Price offered by any other Member, and upon material terms no more
favorable in the aggregate to the proposed transferee than those specified in
the ROFO Offer Notice, provided that such direct Transfer complies with all
other applicable terms and restrictions of this Agreement, including Article IV.
For the avoidance of doubt, Section 5.02 shall not apply to such direct
Transfer.

Section 5.02 Right of First Refusal.

(a) Except for a Permitted Transfer or a Transfer of a ROFO Interest permitted
by Section 5.01, no Member shall directly Transfer any Membership Interest
unless such Member first complies with the provisions of this Section 5.02.

(b) Except for a Permitted Transfer or a Transfer of a ROFO Interest permitted
by Section 5.01, in the event that a Member (a “ROFR Seller”) receives a bona
fide offer from a third party (a “Proposed Transferee”) for a direct Transfer of
all of the ROFR Seller’s Membership Interest (the “ROFR Interest”), and the ROFR
Seller desires to accept such offer, the ROFR Seller shall first provide a
notice (a “ROFR Notice”) to the other Members, specifying the identity of the
Proposed Transferee, the purchase price proposed by such third party for the
ROFR Interest (the “ROFR Price”), and the material terms and conditions of such
proposed direct Transfer; provided, however, that notwithstanding anything in
this Section 5.02 to the contrary, (i) the ROFR Seller shall not be permitted to
directly Transfer the ROFR Interest to the Proposed Transferee if the ROFR Price
includes any consideration other than cash and (ii) the terms of such direct
Transfer shall otherwise be in accordance with Article IV hereof.

(c) Delivery of the ROFR Notice to the other Members shall constitute an offer
(a “ROFR Offer”) by the ROFR Seller to sell the ROFR Interest to the other
Members at the ROFR Price, in cash, and upon the other material terms and
conditions of the proposed direct Transfer to the Proposed Transferee; provided,
however, that the ROFR Offer (i) shall not include any terms or conditions that
do not directly relate to a sale and direct Transfer of the Membership
Interests, (ii) shall not include any terms or conditions the performance or
satisfaction of which are dependent upon the identity or status of, or other
circumstances specific to, the Proposed Transferee, (iii) shall be deemed to
include, as a condition to the consummation of such direct Transfer, receipt of
such approvals of governmental authorities as may be required by law for a
direct Transfer of the Membership Interests by the ROFR Seller to the applicable
Member and (iv) shall otherwise be in accordance with Article IV hereof. The
ROFR Offer shall remain outstanding for a period of thirty (30) days after the
delivery of the ROFR Notice.

 

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(d) Each Member (other than the ROFR Seller) shall have thirty (30) days
following delivery of a ROFR Notice to elect to accept such ROFR Offer by
delivery of written notice of such acceptance to the ROFR Seller (a “ROFR
Acceptance Notice”). In the event that more than one such Member delivers a ROFR
Acceptance Notice and satisfies the conditions to closing thereunder, the rights
to purchase the ROFR Interest shall be allocated among such Members upon the
closing of such sale in proportion to their then-existing Ownership Percentages
or in such other proportion as such Members may agree.

(e) If one or more such Members delivers a ROFR Acceptance Notice within thirty
(30) days following delivery of the ROFR Notice, each such party and the Company
shall use its commercially reasonable efforts to obtain, as promptly as possible
thereafter, any and all consents, approvals and authorizations of any
governmental authority required to be obtained in order to consummate such sale
and purchase. A sale and purchase of the ROFR Interest to one or more Members
pursuant to this Section 5.02 shall be made at the offices of the Company on or
before the later of (i) the date that is one hundred and twenty (120) days
following delivery of the ROFR Acceptance Notice or (ii) the date that is five
(5) Business Days following receipt of all consents, approvals, and
authorizations of any governmental authority required to be obtained in order to
consummate such sale and purchase.

(f) If no Member delivers a ROFR Acceptance Notice within thirty (30) days after
receiving the ROFR Notice, the ROFR Seller shall be permitted to directly
Transfer the ROFR Interest to the Proposed Transferee upon the terms in the ROFR
Notice, provided, that (i) such direct Transfer complies with all other
applicable terms and restrictions of this Agreement, including Article IV, and
(ii) such direct Transfer occurs on or before the later of (i) the date that is
one hundred and fifty (150) days following delivery of the ROFR Acceptance
Notice or (ii) the date that is five (5) Business Days following receipt of all
consents, approvals, and authorizations of any governmental authority required
to be obtained in order to consummate such sale and purchase.

Section 5.03 Change in Control

(a) In the event of any Change in Control with respect to a Member (the
“Affected Member”), the Affected Member shall promptly notify the other Members
in writing of such Change in Control (a “Change in Control Notice”). At any time
following a Change in Control of a Member, and prior to the date that is ten
(10) days following delivery by the Affected Member of a Change in Control
Notice, any other Member shall have the right to deliver to the Affected Member
and all other Members written notice of its election (a “Price Determination
Notice”) to require determination of the price (the “Purchase Price”) at which
each other Member shall have the right (exercisable at its sole option and
discretion) to purchase (i) all of the Membership Interest held by the Affected
Member or (ii) if such Change in Control is attributable to a Foreclosure
Transfer, up to all of, but not less than 50% of, the Membership Interest held
by the Affected Member (in each case, the “Affected Interest”) pursuant to this
Section 5.03.

 

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(b) If the Members are unable to agree in writing upon the Purchase Price for
the Affected Interest within thirty (30) days following delivery of a Price
Determination Notice, then either party may deliver written notice to the other
of its election to require an independent determination of the Purchase Price
(an “Appraisal Notice”). Within ten (10) days following delivery of an Appraisal
Notice, the Affected Member shall appoint an independent expert and the other
Members (acting by a majority of their collective Ownership Percentages) shall
appoint an independent expert. Within five (5) days following delivery of an
Appraisal Notice, the two experts appointed pursuant to the foregoing shall
select a third independent expert. The fees and expenses of each of the three
independent experts shall be borne 50% by the Affected Member and 50% by the
Members who delivered a Price Determination Notice. Each such expert shall have
reasonable access to the Company’s and its Subsidiaries’ facilities, books and
records and, within thirty (30) days following the appointment of the third
expert, shall deliver to each Member its report setting forth its independent
determination of the Fair Market Value of the Affected Interest (each, an
“Appraised Value”). For purposes of this Section 5.03, the “Purchase Price” for
the Affected Interest shall be (A) such amount as may be agreed upon by the
Members, or (B) absent such agreement, an amount equal to the average of the two
Appraised Values that are closest in amount to each other.

(c) For a period of thirty (30) days following the determination of the Purchase
Price pursuant to Section 5.03(b), each Member (other than the Affected Member)
shall have the right to elect to purchase all, and not less than all, of the
Affected Interest for a price equal to the Purchase Price as determined pursuant
to Section 5.03(b), by delivering written notice of such election (a “Purchase
Notice”) to the Affected Member and each other Member. In the event that more
than one such Member delivers a Purchase Notice and satisfies the conditions to
closing thereunder, the rights to purchase the Affected Interest shall be
allocated among such Members upon the closing of such sale in proportion to
their then-existing Ownership Percentages or in such other proportion as such
Members may agree.

(d) If one or more Members delivers a Purchase Notice to the Affected Member
within thirty (30) days following determination of the Purchase Price pursuant
to Section 5.03(b), each such party and the Company shall use its commercially
reasonable efforts to obtain, as promptly as possible thereafter, any and all
consents, approvals and authorizations of any governmental authority required to
be obtained in order to consummate such sale and purchase. A sale and purchase
of the Affected Interest to one or more Members pursuant to this Section 5.03
shall be made at the offices of the Company on or before the later of (i) the
date that is one hundred and fifty (150) days following the determination of the
Purchase Price pursuant to Section 5.03(b) or (ii) the date that is five
(5) Business Days following receipt of all consents, approvals, and
authorizations of any governmental authority required to be obtained in order to
consummate such sale and purchase. Such purchase and sale shall be effected by
the Affected Member’s delivery of the Affected Interest, free and clear of all
Encumbrances (other than pursuant to Section 3.10 and restrictions imposed by
the governing documents of the Company and securities laws), to the applicable
Member(s), against payment of the Purchase Price to the Affected Member in
immediately available funds.

(e) In the event that no Member delivers either (i) a Price Determination Notice
within ten (10) days of its receipt of a Change in Control Notice or (ii) a
Purchase Notice to the Affected Member within thirty (30) days following
determination of the Purchase Price pursuant to Section 5.03(b), the Members’
right to purchase any portion of the Affected Interest as a result of the Change
in Control that gave rise to such right shall be deemed waived.

 

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ARTICLE VI

CAPITAL CONTRIBUTIONS

Section 6.01 Initial Capital Contributions.

(a) As of the Effective Date and pursuant to the terms of the Contribution
Agreement, Crestwood contributed to the Company the Initial Crestwood
Contribution and CEGPS contributed to the Company the Initial CEGPS
Contribution.

(b) Unless the Second Closing is terminated in accordance with the Contribution
Agreement, upon the Second Closing and pursuant to the terms of the Contribution
Agreement, Crestwood shall contribute to the Company the Second Crestwood
Contribution and CEGPS shall contribute to the Company the Second CEGPS
Contribution.

Section 6.02 Additional Contributions.

(a) From and after the Effective Date, each Member shall make additional cash
Capital Contributions to the Company for purposes of (i) funding any new
projects or the expansion of any existing project of the Company or its
Subsidiaries, in each case, as may be approved by the Board from time to time
(“Expansion Contributions”) and (ii) funding maintenance or other expenditures
of the Company or its Subsidiaries incurred in the ordinary course of business
approved by the Board from time to time (“Ordinary Course Contributions”).

(b) From and after the Effective Date and at such times and in such amounts as
may be determined by the Board, the Members shall make additional cash Capital
Contributions to the Company (“Extraordinary Contributions”) that have been
determined by the Board to be reasonably necessary (i) for the Company or any of
its Subsidiaries to comply with applicable law or any contract to which the
Company or any of its Subsidiaries is a party or (ii) to fund any Emergency
Expenditures.

(c) All Additional Contributions shall be made by the Members pro rata in
accordance with each Member’s Ownership Percentage (at the time the amount of
such Additional Contribution is determined).

(d) The Company shall issue a written request to each Member for the making of
Additional Contributions (a “Capital Call”) promptly upon the approval thereof
in accordance with this Section 6.02. Each Capital Call shall contain the
following information: (i) the purpose for which the requested Additional
Contributions will be used, and whether the requested Additional Contributions
are Expansion Contributions, Ordinary Course Contributions, or Extraordinary
Contributions; (ii) the total amount of Additional Contributions requested from
all Members; (iii) the amount of Additional Contribution requested from the
Member to whom the request is addressed (which such amount shall be in
accordance with the Ownership Percentage of such Member); and (iv) the date on
which payments of the Additional Contribution are due (which date shall not be
less than fifteen (15) Business Days following the date the Capital Call is
given) (a “Contribution Date”) and the method of payment; provided that such
date and method shall be the same for each of the Members.

 

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(e) No Member shall be required to make any Capital Contribution other than as
set forth in Section 6.01 and this Section 6.02.

Section 6.03 Default.

(a) In the event any Member (the “Non-Contributing Member”) fails to pay in
full, on or before the applicable Contribution Date, any Additional Contribution
required to be made by it (an “Unfunded Additional Contribution”), any Member
that has timely made its Additional Contribution in full (a “Contributing
Member”) may elect to (i) loan to the Company an amount equal to all or any
portion of the Unfunded Additional Contribution (an “Additional Contribution
Loan”), (ii) make an additional Capital Contribution in an amount equal to all
or any portion of the Unfunded Additional Contribution (an “Excess Additional
Contribution”) by (x) delivering written notice to the Company within five
(5) Business Days following the Contribution Date and (y) paying such Additional
Contribution Loan amount or Excess Additional Contribution amount to the Company
within ten (10) Business Days following the Contribution Date or (iii) in the
event that the Contributing Members do not elect to loan or fund any portion of
the Unfunded Additional Contribution pursuant to clause (i) or (ii) of this
Section 6.03(a), cause the Company to use its commercially reasonable efforts to
sell New Interests in accordance with Section 6.03(e) in an amount equal to all
or any portion of the Unfunded Additional Contribution; provided, however, for
the avoidance of doubt, the Contributing Member shall not be entitled to
(x) make any Additional Contribution Loan or Excess Additional Contribution,
individually or collectively, in an amount that exceeds such Unfunded Additional
Contribution, or (y) cause the Company sell New Interests in an amount that
exceeds such Unfunded Additional Contribution.

(b) If any Contributing Member elects to make an Additional Contribution Loan,
such Additional Contribution Loan shall bear interest at the Default Rate,
compounded weekly. All principal and accrued interest on outstanding Additional
Contribution Loans shall be repaid by the Company in advance of any
distributions to the Members. No approval of the Board or of any Directors shall
be required for an Additional Contribution Loan.

(c) In the event that the Contributing Member elects to make an Excess
Additional Contribution, then effective as of the Contribution Date:

(i) The Gross Asset Value of all Company assets, and consequently the Capital
Accounts of all Members, shall be adjusted pursuant to subparagraph (b) of the
definition of Gross Asset Value herein (disregarding the proviso thereto) to
reflect any unrealized gain or unrealized loss attributable to such Company
assets, as if such unrealized gain or unrealized loss had been recognized on an
actual sale of such assets immediately prior to such adjustment and had been
allocated to the Members at such time pursuant to Section 7.02;

(ii) Following application of Section 6.03(c)(i), the Ownership Percentage of
each Member shall be automatically adjusted as of such date to equal the
percentage obtained by dividing (A) the Capital Account of such Member (after
giving effect to Section 6.03(c)(i) and any such Additional Contributions and
Excess Additional

 

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Contributions made by such Member) by (B) the aggregate Capital Accounts of all
Members (in each case, after giving effect to Section 6.03(c)(i) and all such
Additional Contributions and Excess Additional Contributions made by the
Members); provided, however, that for purposes of the foregoing, except in the
case of Ordinary Course Contributions (and Excess Additional Contributions in
respect thereof), the amount of any such Additional Contributions and Excess
Additional Contributions shall be deemed to be two hundred and fifty percent
(250%) of the actual amount thereof; and

(iii) The Company shall amend Exhibit A hereto to reflect the foregoing
adjustments, and all future allocations of Profits and Losses and distributions
from the Company will be made based on the Members’ Ownership Percentages as
adjusted pursuant to the foregoing, until further adjusted in accordance with
this Agreement.

(d) The provisions of this Section 6.03 shall constitute the sole rights,
obligations, liabilities and remedies of the Company and the Members, including
the Non-Contributing Members and the Contributing Members, with respect to any
failure by a Member to make an Additional Contribution as and when required.

(e) In the event that the Contributing Members do not elect to loan or fund the
full amount of the Unfunded Additional Contribution in accordance with
Section 6.03(a), the Company (acting at the direction of the Contributing
Members) shall use commercially reasonable efforts to sell New Interests of any
class or series (with such features as the Contributing Members may determine)
as soon as reasonably practicable (but subject to Section 6.04) at an issue
price that implies no less than 95% of the Company’s Fair Market Value as
determined by an independent nationally recognized investment bank or valuation
or appraisal firm unless the Board determines not to pursue a sale of such New
Interests in accordance with Section 8.04(b) within twenty (20) Business Days
following the Contribution Date.

Section 6.04 Preemptive Rights.

(a) Subject to and without limiting the other terms of this Agreement, the
Company grants to each Member, and each Member shall have the right to purchase,
in accordance with the procedures set forth herein, up to such Member’s pro rata
portion (based on each Member’s Ownership Percentage at the time of the
applicable New Interests Notice) of any New Interests which the Company may,
from time to time, propose to issue and sell (hereinafter referred to as the
“Preemptive Rights”).

(b) In the event that the Company proposes to issue or sell New Interests, the
Company shall notify each Member in writing with respect to the proposed New
Interests to be issued or sold (the “New Interests Notice”). Each New Interests
Notice shall set forth: (i) the number and class of New Interests proposed to be
issued or sold by the Company and their purchase price, (ii) such Member’s pro
rata portion of New Interests and (iii) any other material term, including any
applicable regulatory requirements and, if known, the expected date of
consummation of the issuance and sale of the New Interests (which date, in any
event shall be no earlier than thirty (30) days following the date of delivery
of the New Interests Notice).

 

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(c) Each Member shall be entitled to exercise its Preemptive Rights to purchase
such New Interests by delivering an irrevocable written notice to the Company
within ten (10) days from the date of receipt of any New Interests Notice
specifying the number of New Interests to be subscribed, which in any event can
be no greater than such Member’s pro rata portion of such New Interests, at the
price and on the terms and conditions specified in the New Interests Notice.

(d) Each Member exercising its right to purchase its entire pro rata portion of
New Interests being issued (each a “Subscribing Member”) shall have a right of
over-allotment such that if any other Member fails to exercise its Preemptive
Right to purchase its entire pro rata portion of New Interests (each, a
“Non-Subscribing Member,” including any Member that fails to exercise its right
to purchase its entire pro rata share of Remaining New Interests, as described
below), such Subscribing Member may purchase its pro rata share, based on the
relative Ownership Percentage then owned by the Subscribing Members, of those
New Interests in respect to which the Non-Subscribing Members have not exercised
their Preemptive Right (the “Remaining New Interests”) by giving written notice
to the Company within three (3) Business Days from the date that the Company
provides written notice of the amount of New Interests as to which such
Non-Subscribing Members have failed to exercise their rights to purchase. The
Company shall reoffer any Remaining New Interests to the Members in successive
rounds (without regard to the time periods specified in the foregoing
provisions) until such time as the Members have collectively agreed to purchase
all of the New Interests being issued or all of the Members are Non-Subscribing
Members in the last round of offers.

(e) If the Members do not elect within the applicable notice periods described
above to exercise their Preemptive Rights with respect to any of the New
Interests proposed to be sold by the Company, the Company shall have one hundred
and twenty (120) days after the expiration of all such notice periods to sell or
to enter into an agreement to sell such unsubscribed New Interests proposed to
be sold by the Company, at a price and on material terms no more favorable to
the purchaser than those offered to the Members pursuant to this Section 6.04.

(f) No Member will be required to take up and pay for any New Interests pursuant
to the Preemptive Right unless all New Interests (other than those to be taken
up by the Member) are sold, whether to the other Members or pursuant to
Section 6.04(e) above.

Section 6.05 Loans.

Any Member may loan funds to the Company only in accordance with the approval
thereof by the Board in accordance with Section 8.04 or as otherwise provided in
Section 6.03. Loans by a Member to the Company will not be treated as Capital
Contributions but will be treated as debt obligations having such terms as are
approved in accordance with Section 8.04.

 

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Section 6.06 Return of Contributions.

Except as expressly provided herein, no Member is entitled to the return of any
part of its Capital Contributions or to be paid interest in respect of either
its Capital Account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Company or of any Member. A Member is not
required to contribute or to lend any cash or property to the Company to enable
the Company to return any Member’s Capital Contributions.

Section 6.07 Capital Accounts.

A separate capital account (“Capital Account”) shall be established, determined
and maintained for each Member in accordance with the substantial economic
effect test set forth in Treasury Regulation § 1.704-l(b)(2), which provides, in
part, that a Capital Account shall be:

(a) increased by (i) the amount of money contributed by the Member to the
Company; (ii) the fair market value of any property contributed by the Member to
the Company (net of liabilities secured by such contributed property); and
(iii) allocations to the Member of the Company income and gain (or items
thereof), including income and gain exempt from tax; and

(b) decreased by (i) the amount of money distributed to the Member by the
Company, including any Crestwood Required Payment pursuant to Section 7.07(a)
and any CEGPS Required Payment pursuant to Section 7.07(b); (ii) the fair market
value of any property distributed to the Member by the Company (net of
liabilities secured by such distributed property); (iii) allocations to the
Member of expenditures of the Company not deductible in computing its taxable
income and not properly capitalized for federal income tax purposes; and
(iv) allocations to the Member of Company loss and deduction (or items thereof).

In the case of an additional Capital Contribution by an existing or newly
admitted Member, the Capital Accounts of the Members shall be adjusted as of the
date of such Capital Contribution.

Section 6.08 Approved Credit Support.

(a) The Annual Budget shall include the reasonable, out-of-pocket costs incurred
by a Member or any of its Affiliates to provide Approved Credit Support, which
such cost shall be reimbursed by the Company to such Member or such Affiliate.
If the Member or any of its Affiliates makes any good faith payment required
pursuant to any Approved Credit Support, or if any draw upon any Approved Credit
Support is made, the payment or draw amount shall be treated as a loan to the
Company by the Member or such Affiliate. Such loan will bear interest at the
Default Rate from the date of payment or draw, and must be repaid in full before
any additional distributions are made to the Members.

 

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(b) At such time as a Member ceases to be a Member and has no Affiliate that is
a Member (such Member, upon ceasing to be a Member, a “Former Member”), the
Company shall use commercially reasonable efforts to (i) effect the full release
and return of the Approved Credit Support provided by the Former Member and its
Affiliates and (ii) effect the full release of each issuer of or obligor under
such Approved Credit Support (excluding Newco and any Contributed Entity) from
its obligations and liabilities thereunder or in respect thereof, including by
offering that the Company issue or post, or cause one of its Subsidiaries to
issue or post, replacement credit support, including guarantees, letters of
credit, surety, performance or other bonds, cash or other collateral or similar
credit support arrangements (the “Company Support Instruments”). The Former
Member shall reasonably cooperate with the Company with respect to the
foregoing.

(c) If the Company is not successful, following the use of commercially
reasonable efforts, in effecting the full release and return of any Approved
Credit Support provided by the Former Member and its Affiliates, and the full
release of each issuer of or obligor under such Approved Credit Support
(excluding Newco and any Contributed Entity), as provided in Section 6.08(b)
(such Approved Credit Support, a “Continuing Support Obligation”), then:

(i) the Former Member shall cause such Continuing Support Obligation to remain
outstanding, and the Company shall continue to reimburse the Former Member and
its relevant Affiliates for the reasonable, out-of-pocket costs incurred by the
Former Member and such Affiliates to provide such Continuing Support Obligation,
until such Continuing Support Obligation is released and returned pursuant to
Section 6.08(b);

(ii) from and after the time such Former Member ceases to be a Member, the
Company shall continue to use commercially reasonable efforts to effect promptly
the full release and return of such Continuing Support Obligation and the full
release of the Former Member and its Affiliates from such Continuing Support
Obligation;

(iii) the Company shall fully reimburse and otherwise indemnify and hold
harmless the Former Member and its Affiliates from and against any good faith
payment made pursuant to, and any draw upon, such Continuing Support Obligation
(such reimbursement to be made within ten (10) days following written notice to
the Company from the Former Member of such payment or draw); and

(iv) the Company shall not, and shall cause its Subsidiaries not to, effect any
amendments or modifications or any other changes to the contracts or obligations
secured by such Continuing Support Obligation, or otherwise take any action that
would reasonably be expected to increase, extend or accelerate the liability of
the Former Member and its Affiliates under such Continuing Support Obligation,
without, in any such case, such Former Member’s prior written consent.

ARTICLE VII

DISTRIBUTIONS AND ALLOCATIONS

Section 7.01 Distributions.

(a) On the Effective Date, the Company shall distribute to Crestwood an amount
in cash equal to the Initial CEGPS Contribution and, immediately upon the Second
Closing, the Company shall distribute to Crestwood an amount in cash equal to
the Second CEGPS Contribution; provided, however, that in each case such amounts
shall be subject to adjustment and true-up as provided in the Contribution
Agreement.

 

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(b) Except as otherwise provided in Section 7.07 or Section 15.03, and after
giving effect to any adjustments to Ownership Percentages set forth in
Section 7.01(c), within thirty (30) days following the end of each Quarter,
commencing with the Quarter in which the Effective Date occurs, an amount equal
to 100% of the Available Cash as of the end of such Quarter, subject to Sections
6.03(b), shall be distributed to all Members simultaneously pro rata in
accordance with each Member’s Ownership Percentage (as of the end of such
Quarter) in accordance with this Article VII.

(c) Notwithstanding any other provision of this Agreement, with respect to any
period prior to the Third Anniversary End of the Initial Closing, the Ownership
Percentages shall be deemed to be adjusted as follows solely for purposes of
Section 7.01 (and not for purposes of determining voting or other rights):

(i) For the period from the Effective Date through the end of the Quarter in
which the first anniversary of the Initial Closing occurs, (A) the Ownership
Percentage represented by the Membership Interest issued to CEGPS shall be
deemed for purposes of Section 7.01 to be equal to the Ownership Percentage of
such Membership Interest plus 15%, and (B) the Ownership Percentage represented
by the Membership Interest issued to Crestwood shall be deemed for purposes of
Section 7.01 to be equal to the Ownership Percentage of such Membership Interest
minus 15%.

(ii) For the period following the end of the Quarter in which the first
anniversary of the Initial Closing occurs through the end of the Quarter in
which the second anniversary of the Initial Closing occurs, (A) the Ownership
Percentage represented by the Membership Interest issued to CEGPS shall be
deemed for purposes of Section 7.01 to be equal to the Ownership Percentage of
such Membership Interest plus 15%, and (B) the Ownership Percentage represented
by the Membership Interest issued to Crestwood shall be deemed for purposes
Section 7.01 to be equal to the Ownership Percentage of such Membership Interest
minus 15%.

(iii) For the period following the end of the Quarter in which the second
anniversary of the Initial Closing occurs through the end of the Quarter in
which the third anniversary of the Initial Closing occurs (the end of such
Quarter, the “Third Anniversary End of the Initial Closing”), (A) the Ownership
Percentage represented by the Membership Interest issued to CEGPS shall be
deemed for purposes of Section 7.01(b) to be equal to the Ownership Percentage
of such Membership Interest plus 10%, and (B) the Ownership Percentage
represented by the Membership Interest issued to Crestwood shall be deemed for
purposes of Section 7.01 to be equal to the Ownership Percentage of such
Membership Interest minus 10%.

(iv) Following the Third Anniversary End of the Initial Closing, all
distributions made pursuant to Section 7.01 shall be made in accordance with the
Members’ Ownership Percentages without any adjustments pursuant to this
Section 7.01(c).

 

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(d) Subject to Section 7.01(c) and Section 7.07, each distribution in respect of
Membership Interests shall be paid by the Company only to the holder of record
of such Membership Interests as of the record date set for such distribution.
Such payment shall constitute full payment and satisfaction of the Company’s
liability in respect of such payment, regardless of any claim of any Person who
may have an interest in such payment by reason of an assignment or otherwise.

Section 7.02 Allocations.

After giving effect to the allocations set forth in Section 7.03, Profits and
Losses for any Allocation Year shall be allocated to the Members in accordance
with the Members’ Ownership Percentages.

Section 7.03 Special Allocations.

(a) If there is a net decrease in Company Minimum Gain during any Allocation
Year, each Member shall be allocated items of Company income and gain for such
Allocation Year (and, if necessary, subsequent Allocation Years) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. This
Section 7.03(a) is intended to comply with the Company Minimum Gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.

(b) Except as provided in Treasury Regulation Section 1.704-2(i)(4), if there is
a net decrease in Member Nonrecourse Debt Minimum Gain during any Allocation
Year, any Member with a share of Member Nonrecourse Debt Minimum Gain at the
beginning of such Allocation Year shall be allocated items of Company income and
gain for such Allocation Year (and, if necessary, subsequent Allocation Years)
in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4)
and 1.704-2(j)(2)(ii), or any successor provisions. This Section 7.03(b) is
intended to comply with the chargeback of items of income and gain requirement
in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith

(c) In the event that any Member unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6),
items of Company income and gain will be allocated to the Member in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
the Adjusted Capital Account Deficit of the Member as quickly as possible;
provided that an allocation pursuant to this Section 7.03(c) will be made only
if and to the extent that the Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article VII have been
tentatively made as if this Section 7.03(c) were not in this Agreement. This
Section 7.03(c) is intended to constitute a qualified income offset described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

 

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(d) In the event any Member has an Adjusted Capital Account Deficit at the end
of any Allocation Year, such Member shall be specially allocated items of
Company gross income and gain in the amount of its Adjusted Capital Account
Deficit as quickly as possible; provided, that an allocation pursuant to this
Section 7.03(d) shall be made only if and to the extent that such Member would
have an Adjusted Capital Account Deficit after all other allocations provided
for in this Article VII have been tentatively made as if Section 7.03(c) and
this Section 7.03(d) were not in this Agreement.

(e) Nonrecourse Deductions for any Allocation Year shall be allocated to the
Members pro rata in accordance with each Member’s Ownership Percentage.

(f) Member Nonrecourse Deductions for any Allocation Year shall be allocated
100% to the Member that bears the economic risk of loss with respect to the
Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(i). 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 in accordance with the ratios in
which they share such economic risk of loss.

(g) For purposes of Treasury Regulation Section 1.752-3(a)(3), the Members agree
that Nonrecourse Liabilities of the Company shall be allocated to the Members
pro rata in accordance with each Member’s Ownership Percentage.

(h) 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
Treasury Regulation 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 Treasury Regulations.

(i) Gross income of the Company for any Allocation Year shall be allocated to
CEGPS in an amount equal to the excess, if any, of (i) the Excess Distributions
made to CEGPS with respect to the current and all prior Allocation Years, over
(ii) the cumulative amount of gross income allocated to CEGPS for all prior
Allocation Years.

(j) Notwithstanding any other provision of this Section 7.03, the allocations
set forth in Sections 7.03(a), (b), (c), (d), (e), (f) and (h) (the “Required
Allocations”) shall be taken into account so that, to the extent possible, the
net amount of items of gross income, gain, loss and deduction allocated to each
Member pursuant to Sections 7.02 and 7.03, together, shall be equal to the net
amount of such items that would have been allocated to each such Member under
Section 7.02 and Section 7.03 had the Required Allocations and this
Section 7.03(j) not otherwise been provided in this Agreement. The Company may
take into account future Required Allocations that, although not yet made, are
likely to offset other Required Allocations previously made.

 

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(k) The allocations in Section 7.02, this Section 7.03 and Section 7.05, and the
provisions of this Agreement relating to the maintenance of Capital Accounts,
are included to ensure compliance with requirements of the federal income tax
law (and any applicable state income tax laws). Such provisions are intended to
comply with Treasury Regulations Sections 1.704-1 and 1.704-2 and shall be
interpreted and applied in a manner consistent with such Treasury Regulations
and any amendment or successor provision thereto. The Members shall cause
appropriate modifications to be made if unanticipated events might otherwise
cause this Agreement not to comply with such Treasury Regulations, so long as
such modifications do not cause a material change in the relative economic
benefit of the Members under this Agreement.

Section 7.04 Section 704(c).

In accordance with Section 704(c) of the Code and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes, be
allocated among the Members to take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its initial Gross Asset Value (computed in accordance with the definition of
same under this Agreement). In the event the Gross Asset Value of any Company
asset is adjusted pursuant to subparagraph (b) of the definition of Gross Asset
Value hereof, subsequent allocations of income, gain, loss, and deduction with
respect to such asset shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its Gross Asset Value in
the same manner as under Section 704(c) of the Code and the Treasury Regulations
thereunder. Any elections or other decisions relating to such allocations shall
be made by the Board in any manner that reasonably reflects the purpose and
intention of this Agreement; provided that the Company shall use the remedial
method set forth in Treasury Regulation Section 1.704-3(d). Allocations pursuant
to this Section 7.04 are solely for purposes of federal, state, and local taxes
and shall not affect, or in any way be taken into account in computing, any
Member’s Capital Account or share of Profits, Losses, other items, or
distributions pursuant to any provision of this Agreement.

Section 7.05 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 Ownership Percentage,
the Members agree that their allocable shares of such items for the taxable year
shall be determined on any method determined by the Board to be permissible
under Code Section 706 and the related Treasury Regulations to take account of
the Members’ varying Ownership Percentages.

 

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Section 7.06 Withheld Taxes.

All amounts withheld pursuant to the Code or any provision of any state or local
tax law with respect to any payment, distribution or allocation to the Company
or the Members shall be treated as amounts distributed to the Members pursuant
to this Article VII for all purposes of this Agreement. The Company is
authorized to withhold from distributions, or with respect to allocations, to
the Members and to pay over to any federal, state or local government any
amounts required to be so withheld pursuant to the Code or any provision of any
other federal, state or local law and shall allocate such amounts to those
Members with respect to which such amounts were withheld.

Section 7.07 Required Payments.

(a) Notwithstanding any provision in Section 7.01 to the contrary, in the event
any amount is payable (i) by Crestwood to CEGPS or a CEGPS Indemnified Party
pursuant to the terms of the Contribution Agreement or (ii) by Crestwood to
CEGPS pursuant to the terms of this Agreement (in each case, including any
adjustments, damages or indemnity payments) (any such amount, a “Crestwood
Required Payment”), and any such Crestwood Required Payment is not paid by
Crestwood, any subsequent distributions due and owing to Crestwood pursuant to
this Agreement shall first be paid to CEGPS in the amount of such Crestwood
Required Payment in advance of any further distributions to Crestwood; provided,
however, that the Parties acknowledge and agree that any amounts paid to CEGPS
pursuant to this sentence are being paid to CEGPS directly as a matter of
convenience and that such distributions shall be treated as distributions to
Crestwood for all purposes under this Agreement (including for the purposes of
maintaining capital accounts and for the determination of Excess Distributions).
The amount of any Crestwood Required Payment payable by Crestwood under
Section 7.07(a)(i) shall bear interest pursuant to the terms and conditions of
the Contribution Agreement and any Crestwood Required Payment attributable to
this Agreement shall bear interest from and including the date that Crestwood is
required to make any such payment until the date that such Crestwood Required
Payment is fully paid to CEGPS but excluding the date of payment at a rate per
annum equal to the Prime Rate as set forth in the Wall Street Journal plus four
percent (4%). Such interest shall be calculated daily on the basis of a 365 day
year and the actual number of days elapsed. For the avoidance of doubt, no
approval of the Board or of any Directors shall be required for any such
payment. In addition to the foregoing, any payment made in accordance with this
Section 7.07 shall be treated as a distribution of cash to Crestwood in the
amount of such payment to CEGPS.

(b) Notwithstanding any provision in Section 7.01 to the contrary, in the event
any amount is payable (i) by CEGPS to Crestwood or any Person entitled to
indemnification by CEGPS pursuant to the terms of the Contribution Agreement or
(ii) by CEGPS to Crestwood pursuant to the terms of this Agreement (in each
case, including any adjustments, damages or indemnity payments) (any such
amount, a “CEGPS Required Payment”), and any such CEGPS Required Payment is not
paid by CEGPS, any subsequent distributions due and owing to CEGPS pursuant to
this Agreement shall first be paid to Crestwood in the amount of such CEGPS
Required Payment in advance of any further distributions to CEGPS; provided,
however, that the

 

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Parties acknowledge and agree that any amounts paid to Crestwood pursuant to
this sentence are being paid to Crestwood directly as a matter of convenience
and that such distributions shall be treated as distributions to CEGPS for all
purposes under this Agreement (including for the purposes of maintaining capital
accounts and for the determination of Excess Distributions). The amount of any
CEGPS Required Payment payable by CEGPS under Section 7.07(b)(i) shall bear
interest pursuant to the terms and conditions of the Contribution Agreement and
any CEGPS Required Payment attributable to this Agreement shall bear interest
from and including the date that CEGPS is required to make any such payment
until the date that such CEGPS Required Payment is fully paid to Crestwood but
excluding the date of payment at a rate per annum equal to the Prime Rate as set
forth in the Wall Street Journal plus four percent (4%). Such interest shall be
calculated daily on the basis of a 365-day year and the actual number of days
elapsed. For the avoidance of doubt, no approval of the Board or of any
Directors shall be required for any such payment. In addition to the foregoing,
any payment made in accordance with this Section 7.07(b) shall be treated as a
distribution of cash to CEGPS in the amount of such payment to Crestwood.

Section 7.08 Limitations on Distributions.

Notwithstanding any provision to the contrary contained in this Agreement, the
Company shall not make a distribution to any Member on account of its interest
in the Company if such distribution would violate Section 18-607 of the Delaware
Act or other applicable law. All distributions required to be made under this
Agreement shall be made subject to Sections 18-607 and 18-804 of the Delaware
Act.

Section 7.09 Growth Project True-Up Payments

(a) Crestwood shall, or shall cause the Operator to, calculate, prepare and
deliver to CEGPS a statement setting forth in reasonable detail the good faith
calculation of the Growth Project EBITDA for the Calculation Period and a
certificate of the Chief Financial Officer of Crestwood or the Operator, as
applicable, that the Growth Project EBITDA was calculated in accordance with the
definition thereof (the “Growth Project EBITDA Statement”) no later than five
(5) Business Days after the audited financial statements are finalized for the
fiscal year ending December 31, 2020.

(b) After receipt of the Growth Project EBITDA Statement, CEGPS shall have
forty-five (45) days (the “Review Period”) to review the Growth Project EBITDA
Statement. During the Review Period, CEGPS and CEGPS’s accountants shall have
full access to the books and records of the Company and its Subsidiaries and the
personnel of, and work papers prepared by, the Company, its Subsidiaries, and
their respective accountants (and Crestwood shall cause CEGPS and CEGPS’s
accountants to have full access to the books and records of the Operator and the
personnel of, and work papers prepared by, the Operator and its accountants, in
each case to the extent relating to the Company or any of its Subsidiaries) as
CEGPS may reasonably request for the purpose of reviewing the Growth Project
EBITDA Statement and preparing an initial Growth Project EBITDA Dispute Notice.

 

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(c) On or prior to the last day of the Review Period, CEGPS may object to the
Growth Project EBITDA Statement by delivering to Crestwood a written statement
setting forth CEGPS’s objections in reasonable detail, indicating each disputed
item or amount and the basis for CEGPS’s disagreement therewith, together with
reasonable supporting documentation and calculations (the “Growth Project EBITDA
Dispute Notice”). If CEGPS fails to deliver a Growth Project EBITDA Dispute
Notice before the expiration of the Review Period, the Growth Project EBITDA
Statement as delivered to CEGPS will be deemed to be correct and mutually agreed
upon by the Parties and the Growth Project EBITDA set forth in such Growth
Project EBITDA Statement will be final and binding on the Parties. If CEGPS
delivers the Growth Project EBITDA Dispute Notice before the expiration of the
Review Period, CEGPS and Crestwood shall negotiate in good faith to resolve such
objections within thirty (30) days after the delivery of the Growth Project
EBITDA Dispute Notice (the “Resolution Period”), and, if the same are so
resolved within the Resolution Period, the Growth Project EBITDA, with such
changes as may be agreed to in writing by CEGPS and Crestwood, shall be final
and binding.

(d) If Crestwood and CEGPS fail to reach an agreement (i) with respect to all of
the matters set forth in the Growth Project EBITDA Dispute Notice before
expiration of the Resolution Period, then any amounts remaining in dispute
(“Disputed Amounts”) shall be submitted for resolution to an independent
nationally recognized accounting firm mutually agreed upon by CEGPS and
Crestwood, or failing such agreement, CEGPS and Crestwood shall engage the
American Arbitration Association to appoint, an independent nationally
recognized accounting firm other than Crestwood’s accountants, the Operator’s
accountants or CEGPS’s accountants (the “Independent Accountants”) who, acting
as experts and not arbitrators, shall resolve the Disputed Amounts only and make
any adjustments to the Growth Project EBITDA. The Parties agree that all
adjustments shall be made without regard to materiality. The Independent
Accountants shall only decide the specific items under dispute by the Parties
and their decision for each Disputed Amount must be within the range of values
assigned to each such item in the Growth Project EBITDA Statement and the Growth
Project EBITDA Dispute Notice, respectively. The fees and expenses of the
Independent Accountants shall be paid by Crestwood, on the one hand, and by
CEGPS, on the other hand, based upon the percentage that the amount actually
contested but not awarded to Crestwood or CEGPS, respectively, bears to the
aggregate amount actually contested by Crestwood and CEGPS. Each of Crestwood
and CEGPS shall pay fifty percent (50%) of the fees and expenses of the American
Arbitration Association, if any.

(e) (i) If, during the Calculation Period, the Growth Projects generate CEGPS
Growth Project EBITDA of less than the Growth Project EBITDA Target, Crestwood
shall pay to CEGPS an amount equal to (x) the Growth Project EBITDA Target minus
(y) the CEGPS Growth Project EBITDA (the “Growth Project EBITDA Shortfall
Amount”), which amount Crestwood shall pay to CEGPS as follows:

(A) within five (5) Business Days following the finalization of the Growth
Project EBITDA (the “Finalization Date”) in accordance with this Section 7.09,
Crestwood shall pay to CEGPS an amount equal to either (I) the Growth Project
EBITDA Shortfall Amount or (II) one third (1/3) of the Growth Project EBITDA
Shortfall Amount;

 

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(B) if under clause (A) of this Section 7.09(e)(i), Crestwood pays one third
(1/3) of the Growth Project EBITDA Shortfall Amount, then no later than
January 1, 2022, Crestwood shall pay to CEGPS an amount that calculated as of
the date of such payment, and after giving effect to a discount rate of 11%,
would cause the Net Present Value (as of January 1, 2021) of such payment to be
equal to one third (1/3) of the Growth Project Shortfall Amount; and

(C) if under clause (A) of this Section 7.09(e)(i), Crestwood pays one third
(1/3) of the Growth Project EBITDA Shortfall Amount, then no later than
January 1, 2023, Crestwood shall pay to CEGPS an amount that calculated as of
the date of such payment, and after giving effect to a discount rate of 11%,
would cause the Net Present Value (as of January 1, 2021) of such payment to be
equal to one third (1/3) of the Growth Project Shortfall Amount.

(ii) If, during the Calculation Period, the Growth Projects generate CEGPS
Growth Project EBITDA in excess of the Growth Project EBITDA Threshold, CEGPS
shall pay to Crestwood an amount equal to the lesser of (x) CEGPS Growth Project
EBITDA minus (2) the Growth Project EBITDA Threshold, and (y) $57,000,000 (such
lesser amount, the “Growth Project EBITDA Incentive Amount”), which amount CEGPS
shall pay to Crestwood as follows:

(A) within five (5) Business Days following the Finalization Date, CEGPS shall
pay to Crestwood an amount equal to either (I) the Growth Project EBITDA
Incentive Amount or (II) one third (1/3) of the Growth Project EBITDA Incentive
Amount;

(B) if under clause (A) of this Section 7.09(e)(ii), CEGPS pays one third
(1/3) of the Growth Project EBITDA Incentive Amount, then no later than
January 1, 2022, CEGPS shall pay to Crestwood an amount that calculated as of
the date of such payment, and after giving effect to a discount rate of 11%,
would cause the Net Present Value (as of January 1, 2021) of such payment to be
equal to one third (1/3) of the Growth Project EBITDA Incentive Amount; and

(C) if under clause (A) of this Section 7.09(e)(ii), CEGPS pays one third
(1/3) of the Growth Project EBITDA Incentive Amount, then no later than
January 1, 2023, CEGPS shall pay to Crestwood an amount that calculated as of
the date of such payment, and after giving effect to a discount rate of 11%,
would cause the Net Present Value (as of January 1, 2021) of such payment to be
equal to one third (1/3) of the Growth Project EBITDA Incentive Amount.

(iii) If, during the Calculation Period, the Growth Projects generate CEGPS
Growth Project EBITDA greater than or equal to the Growth Project EBITDA Target
but less or equal to the Growth Project EBITDA Threshold, neither Crestwood nor
CEGPS shall be entitled to receive, and neither Crestwood nor CEGPS shall be
required to pay, any adjustments pursuant to this Section 7.09.

 

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(f) All payments made under this Section 7.09 shall be paid by in immediately
available funds by wire transfer to the account designated in writing by the
Party receiving such payment.

ARTICLE VIII

BOARD OF DIRECTORS

Section 8.01 Management by Board of Directors.

(a) All powers to conduct, direct and manage all activities of the Company shall
be fully vested in the Members, acting exclusively through the Board and their
Representatives on the Board. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the Company
shall be exclusively vested in the Board, and the Members shall act solely
through the Board. Decisions or actions taken by the Board in accordance with
the provisions of this Agreement shall constitute decisions or actions by the
Company and the Members and shall be binding on each Member.

(b) No Member, in its capacity as such, shall participate in the operation,
management or control of the Company’s business, transact any business in the
Company’s name or have the power to sign documents for or otherwise bind the
Company, except to the extent specifically authorized with respect to any matter
by resolution of the Board.

(c) No Director, in his or her individual capacity as such, shall have the
authority to manage the Company or approve matters relating to, or otherwise to
bind, the Company, such powers being reserved to a Director acting through the
Board, and to such other committees of the Board, and officers and agents of the
Company, as may be designated by the Board.

Section 8.02 Board Composition.

(a) General. The Board shall be composed of two directors appointed by each
Member, each of whom shall be a natural person (each such person a “Director”
and collectively, the “Directors”). The Directors shall not constitute
“managers” of the Company within the meaning of the Delaware Act. A Director
need not be a Member or an officer of the Company.

(b) Designation of Directors and Alternate Directors.

(i) Each Member each shall be permitted to designate two (2) natural persons to
serve as Directors.

(ii) In addition, each Member shall be permitted to designate an Alternate
Director in connection with any meeting of the Board by notifying the other
Members in writing at or prior to such meeting or at the time of any action to
be taken pursuant to Section 8.06. Each Alternate Director so designated shall
serve in place of one of such Member’s designated Directors at such meeting of
the Board or in connection with any action or approval of the Board, and the
presence of such Alternate Director shall be the equivalent of

 

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the presence of one of such Member’s designated Directors for all purposes under
this Agreement. When serving in such capacity as a Director, each Alternate
Director shall be entitled to all of the rights and obligations of a Director as
set forth in this Agreement and all references to a Director shall be read to
include an Alternate Director.

(iii) The Representatives of each Member as of the Effective Date are set forth
on Exhibit B.

(iv) The collective voting power of the Representatives appointed by a Member
will equal the Ownership Percentage owned by such Member.

(v) Subject to Section 4.02(f), a Transferee of a direct Transfer of a Member’s
entire Membership Interest shall automatically succeed to the rights of the
Transferring Member to designate, appoint and remove Representatives hereunder,
including any Representatives previously appointed by the Transferring Member.

(c) Removal; Resignation; Vacancies.

(i) Each Representative may be removed and replaced, with or without cause, at
any time by the Member that designated him or her, in such Member’s sole
discretion, and shall not be removed or replaced by any other means. A Member
who removes any Representative of such Member shall promptly notify the other
Members of the removal and the name of its replacement Representative.

(ii) A Representative may resign at any time, such resignation to be made in
writing and to take effect immediately or on such later date as may be specified
therein.

(iii) If any Representative designated by a Member shall cease to serve as a
Representative for any reason, the vacancy resulting thereby shall be filled by
another natural person designated by that Member; provided that such Member
would, at such time, otherwise be permitted to designate a Representative
pursuant to Section 8.02(b).

(d) Changes in Size. The number of Directors constituting the full Board may be
increased or decreased from time to time by unanimous vote of the Members;
provided, however, that (i) for so long as at least two Members are permitted to
designate Directors in accordance with Section 8.02(b), the Members shall be
entitled to appoint an equal number of Directors; and (ii) the number of
Directors shall automatically be increased by one upon the admission of a new
Member pursuant to the terms of this Agreement.

Section 8.03 Board Meetings; Quorum.

(a) The Board shall meet at least quarterly at the offices of the Company (or
such other place as determined by the Board), with the participation of such
officers of the Company as such Representative may request. Special meetings of
the Board, to be held at the offices of the Company (or such other place as
shall be determined by the Board), shall be called at the direction of any one
Director. Attendance of a Director at a meeting shall constitute a

 

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waiver of notice of such meeting, except where a Director attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that such meeting is not properly called or convened. The reasonable
costs and expenses incurred by the Directors in connection with any meeting of
the Board shall be borne and paid by the Company (and any Director may obtain
reimbursement from the Company for any such reasonably documented costs and
expenses).

(b) The presence (in person or participating in accordance with Section 8.07) of
at least one Director (or Alternate Director) appointed by each Member that,
collectively, with the Directors (or Alternate Directors) present in person or
participating in accordance with Section 8.07 appointed by any other Members,
control a majority of the voting power in accordance with Section 8.02(b)(iv)
shall be necessary to constitute a quorum for the transaction of business at any
meeting of the Board; provided, that no Member shall have the right to dispute
the lack of the foregoing quorum requirement in respect of a duly called meeting
of the Board for which at least ten (10) days’ prior written notice has been
given to all Directors (a “Quorum Failure Meeting”) if the Directors (or
Alternate Directors) appointed by such Member have failed to attend the two
immediately prior duly called meetings of the Board (and provided that at least
ten (10) days’ prior written notice shall have been given to all Directors for
such meetings) and a quorum at such two immediately prior duly called meetings
and the Quorum Failure Meeting would have been present but for such failure. In
the absence of a quorum for any such meeting, a majority of the Directors (or
Alternate Directors) present thereat may adjourn such meeting from time to time
until a quorum shall be present or, in the case of a Quorum Failure Meeting,
would have been present but for the failure of the Directors (or Alternate
Directors) appointed by a Member to attend the Quorum Failure Meeting as
provided in the previous sentence. However, notwithstanding anything to the
contrary herein, no business may be transacted at, and no other action may be
taken at, any Quorum Failure Meeting (or any adjourned Quorum Failure Meeting)
unless the notice for such meeting included an agenda that specified the purpose
of the meeting, including the consideration of such business transaction or
other action. For the avoidance of doubt, if any Director is absent from a Board
meeting, then, except as otherwise provided herein, the attending Director(s)
(or Alternate Director(s)) appointed by the same Member that appointed such
absent Director (or Alternative Director) will vote such Member’s entire
Ownership Percentage.

Section 8.04 Board Voting.

(a) General; Majority Voting. On all matters requiring the vote or action of the
Board, any action undertaken by the Board must be authorized by the affirmative
vote of (i) one or more Directors that are entitled to vote at least a majority
of the Ownership Percentages except as otherwise provided in Section 8.04(c)
with respect to Affiliate Transactions or (ii) at a Quorum Failure Meeting, all
Directors present at such meeting except that any Affiliate Transactions shall
only require the approval of the Directors present at such meeting who are not
Representatives of the Interested Member.

 

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(b) Actions Requiring Approval of the Board. Except as otherwise provided by
this Agreement, the Company shall not, shall not permit any Subsidiary of the
Company to, and shall not authorize or permit any officer or agent of the
Company or any of its Subsidiaries on behalf of the Company or any of its
Subsidiaries to, effect any material action or any action outside of the
ordinary course of business, including any of the following actions, without
Board approval, except to the extent approval authority is expressly delegated
by the Board pursuant to a resolution of the Board or the terms of an agreement
specifically approved by the Board that specifically grants the authority to
engage in the applicable action (excluding any grant of plenary or similar
authority):

(i) engage in any business activity other than Midstream Activities;

(ii) incur any Indebtedness or enter into any definitive agreement providing for
the incurrence of any Indebtedness, other than any Additional Contribution Loan;

(iii) sell, transfer, lease (as lessor), abandon or otherwise dispose of (i) any
assets with a value in excess of $2,000,000 or (ii) any Equity Interests in the
Company or any Subsidiary, in either case other than to the Company or any
Subsidiary (other than in accordance with Section 6.03);

(iv) form or dissolve any Subsidiary of the Company;

(v) acquire (A) any Equity Interests in any Person or (B) any assets or rights
that constitute substantially all of the assets or rights of any Person, or that
are operated by any Person as a separate business, division, or asset group;

(vi) merge, consolidate, or reorganize;

(vii) enter into any partnership or joint venture;

(viii) amend, modify or waive any provisions of the Certificate of Formation,
this Agreement (other than revisions permitted by Section 16.02), or the
constituent documents of any Subsidiary of the Company;

(ix) dissolve or liquidate, or file any voluntary petition for bankruptcy;

(x) undertake any public offering of securities or any registration of any
offering or securities under the Securities Act;

(xi) admit any new Member (other than in connection with any New Interests
issued in accordance with Section 6.03(e) and Section 6.04 to any Person other
than any of the Members) or redeem any Membership Interest;

(xii) authorize or permit any Capital Contribution or make any Capital Call
other than in accordance with Section 6.02, or approve any non-cash Capital
Contribution, in each case other than by the Company or any of its Subsidiaries
to a Subsidiary of the Company;

(xiii) make determinations of Available Cash or, other than distributions by any
Subsidiary of the Company to another Subsidiary of the Company or to the
Company, make any dividend or distribution on Equity Interests other than in
accordance with this Agreement;

 

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(xiv) agree to any restrictions on the ability of the Company or any Subsidiary
to make dividends or distributions on Equity Interests;

(xv) appoint or remove the Certified Public Accountants;

(xvi) change any accounting or tax policy (other than as required by Required
Accounting Practices or applicable law);

(xvii) subject to Section 8.04(c), remove the Operator or appoint any successor
Operator;

(xviii) initiate any litigation or other dispute resolution proceeding
reasonably expected to involve claims of more than $1,000,000 individually, or
agree to any settlement or compromise of any claim or proceeding (A) in which
the aggregate amount claimed by the Company or any of its Subsidiaries with
respect to such claim or proceeding exceeds $1,000,000, (B) requiring aggregate
payments by the Company or any of its Subsidiaries with respect to such claim or
proceeding in excess of $1,000,000, (C) involving any admission by, or any
finding against, the Company or any of its Subsidiaries of criminal wrongdoing,
or (D) that restricts the conduct of business by the Company or any of its
Subsidiaries;

(xix) approve or amend the Annual Budget, or any other material capital or
operating budget of the Company or any of its Subsidiaries;

(xx) take any action that would reasonably be expected to cause the Annual
Budget, or any capital budget of the Company or any of its Subsidiaries in
excess of $5 million, then in effect to be exceeded in the aggregate by more
than ten percent (10%), except for Emergency Expenditures and reimbursement or
indemnity obligations to any Member, any Former Member, or any Affiliate of any
Member or Former Member with respect to the cost of or any payment under or draw
upon any Approved Credit Support or any Continuing Support Obligation;

(xxi) except to the extent reasonably contemplated in the Annual Budget then in
effect, or in any delegation of approval policy approved by the Board and then
in effect, enter into any contract under which expected revenues are expected to
exceed $5,000,000 annually or $25,000,000 during the life of such contract;

(xxii) enter into any Hedge Contract;

(xxiii) make any material filing with any governmental authority, other than in
the ordinary course of business;

(xxiv) issue any New Interests, other than pursuant to Section 6.03(e), or enter
into any agreement that provides for or contemplates the issuance of Membership
Interests pursuant to transactions of the nature described in the proviso in the
definition of “New Interests” in Section 1.01; and

 

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(xxv) such other matters as the Board may determine from time to time by
resolution in accordance with Section 8.04(a).

(c) Affiliate Transactions.

(i) No contract or transaction between the Company, any of its Subsidiaries or
the Operator (for the benefit or account of the Company or any of its
Subsidiaries), on the one hand, and any Member or Affiliate of a Member, on the
other hand, or in which a Member or an Affiliate of a Member otherwise has a
financial interest (other than by reason of its ownership of Membership
Interests in the Company) shall be void or voidable by reason of the financial
interest of any Member or Affiliate of any Member therein; provided, however,
that with respect to any contract or transaction between the Company, any of its
Subsidiaries or the Operator (for the benefit or account of the Company or any
of its Subsidiaries), on the one hand, and any Member Parent or Subsidiary of a
Member Parent, on the other hand, or in which a Member Parent or a Subsidiary of
a Member Parent otherwise has a financial interest (other than by reason of its
ownership of Membership Interests in the Company) (each, an “Affiliate
Transaction” and such Member, the “Interested Member”) (A) the Interested Member
or its Representatives fully and fairly disclose any such Affiliate Transaction
and its material terms promptly to the other Members, the Company, and the
Operator and (B) none of the Company, any Subsidiary thereof or the Operator
(for the benefit or account of the Company or any of its Subsidiaries) shall
enter into, amend, waive any provision of, or terminate any Affiliate
Transaction other than on terms that are no less favorable in the aggregate to
the Company, such Subsidiary or the Operator (for the benefit or account of the
Company or any of its Subsidiaries), as applicable, than as would have been
reasonably expected to be obtained from a Person that is not an Interested
Member, a Member Parent or a Subsidiary of a Member Parent.

(ii) The Company, its Subsidiaries and the Operator shall not enter into, amend,
waive any provision of, or terminate any Affiliate Transaction other than with
the approval of the Board that includes the affirmative vote of all of the
Directors (or Alternate Directors) who are not Representatives of the Interested
Member; provided, however, that if such Affiliate Transaction is an Affiliate
Transaction with respect to all Members, the entry into, amendment, waiver any
provision of, or termination of such Affiliate Transaction shall be valid if
approved by all Directors (or Alternate Directors) so long as each Member or its
Directors fully and fairly disclose the material terms of such Affiliate
Transaction to the other Members, the Company, and the Operator. Approval of an
Affiliate Transaction or of the amendment, waiver of any provision of, or
termination of such Affiliate Transaction by all of the Directors (or Alternate
Directors) who are not Representatives of the Interested Member shall constitute
conclusive evidence of the satisfaction of Section 8.04(c)(i) with respect to
the fairness to the Company, its Subsidiaries or the Operator, as applicable, of
such Affiliate Transaction or such amendment, waiver of any provision, or
termination thereof. Nothing herein shall be deemed to prohibit an Interested
Member or any of its Representatives from participating in any discussion or
negotiation regarding, or any vote of the Board to enter into, amend, waive any
provision of, or terminate, any Affiliate Transaction.

 

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(iii) Enforcement of Affiliate Transactions. Notwithstanding any other provision
of this Agreement, the Board, acting solely with the approval of a majority of
the voting power of the Directors who are not Representatives of the Interested
Member, shall have the right and authority to cause the Company, any Subsidiary
thereof or the Operator, as applicable, to pursue or enforce any remedy and
exercise any other rights of the Company, such Subsidiary or the Operator under
an Affiliate Transaction. In the case of any Affiliate Transaction that is an
Affiliate Transaction with respect to all Members, if one of such Members or an
Affiliate thereof is in breach or other default of its obligations under such
Affiliate Transaction, the Board, acting solely with the approval a majority of
the voting power of the Directors who are not Representatives of such breaching
or defaulting Member, shall have the right to cause the Company, the applicable
Subsidiary thereof or the Operator, as applicable, to pursue or enforce any
remedy or exercise any other rights of the Company, such Subsidiary or the
Operator, as applicable, under such Affiliate Transaction.

(d) Board Deadlock; Dispute Resolution.

(i) In the event that the Board is unable to obtain the requisite vote under
Section 8.04(a) for the approval of any matter, which deadlock, if unresolved,
could reasonably be expected to have a material and adverse impact on the
Company or its prospects, including the payment of distributions in accordance
with Article VII (each such event, a “Deadlock”), either Member may give the
other Member written notice (a “Deadlock Notice”) of such Deadlock. Within five
(5) days after receipt of the Deadlock Notice, the receiving Member shall submit
to the other Member a written response (a “Dispute Response”). The Deadlock
Notice and the Dispute Response shall each include (A) a statement setting forth
the position of the Member giving the notice and a summary of arguments
supporting such position and (B) the name and title of a senior representative
of such Member who has authority to settle the Deadlock. The Deadlock Notice
shall also include a description of the alleged Deadlock that is reasonably
sufficient for the other Member to determine the basis of the alleged Deadlock.
Within five (5) days of the delivery of the Dispute Response, the senior
representatives of both Members shall meet or communicate by telephone at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, and shall negotiate in good faith to resolve the Deadlock.

(ii) If such Deadlock has not been resolved within thirty (30) days following
delivery of the Dispute Response, then each Member agrees to have executives who
have authority to resolve the Dispute and who are at a higher level of
management than the senior representatives addressed in (i) above (A) meet or
communicate by telephone at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary and (B) negotiate in good faith to
resolve the Deadlock.

(iii) If the executives are unable to resolve the Dispute within thirty
(30) days after they have met pursuant to clause (ii) above, then such Dispute
shall be submitted to mediation if either Party so requests in writing. Any
mediation, unless otherwise agreed by the Parties, shall be carried out within
forty-five (45) days following the date of a written request therefor. Each
Party shall bear one-half of the costs and expenses of any mediator, including
any costs incurred by such mediator that are attributable to the consultation of
any third party; provided, however, that each Party shall bear its own legal
fees and costs of preparing for mediation.

 

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(iv) Notwithstanding anything herein to the contrary, until a Deadlock is
resolved, each Member agrees to continue to perform its obligations under this
Agreement and to cause its Representatives to continue to perform their
obligations under this Agreement.

Section 8.05 Notice.

Written notice of all regular meetings of the Board shall be given to all
Directors at least ten (10) days prior to the regular meeting of the Board and
one Business Day prior to any special meeting of the Board. All notices and
other communications to be given to Directors shall be sufficiently given for
all purposes hereunder if in writing and received by hand, courier or overnight
delivery service, or three (3) days after being mailed by certified or
registered mail, return receipt requested, with appropriate postage prepaid, or
received by email, and shall be directed to the address or email address as such
Director shall designate by notice to the Company and each Member. Except as
provided in Section 8.03(b), neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board need be specified in the
notice of such meeting. A meeting may be held at any time without notice if all
the Directors are present or if those not present waive notice of the meeting
either before or after such meeting.

Section 8.06 Action by Written Consent of Board.

To the extent permitted by applicable law, the Board may act without a meeting,
without notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by a Director or Directors having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a duly held meeting of the Board. All actions taken by the
Board in the form of a written consent shall be distributed to each Director
upon the taking of such action.

Section 8.07 Conference Telephone Meetings.

Directors may participate in a meeting of the Board or any committee thereof by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such meeting.

Section 8.08 Minutes.

All decisions and resolutions of the Board shall be reported in the minutes of
its meetings, which shall state the date, time and place of the meeting (or the
date of the written consent in lieu of a meeting), the persons present at the
meeting, the resolutions put to a vote (or the subject of a written consent) and
the results of such voting (or written consent). The minutes of all meetings of
the Board shall be kept at a location authorized by the Board from time to time.
Initially, the minutes of all meetings of the Board shall be kept in an office
located at Two Brush Creek Blvd. in Kansas City, Missouri.

 

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Section 8.09 Management Committee; Other Board Committees.

(a) There shall be a management committee of the Company (the “Management
Committee”), comprised of one or more subcommittees (each, together with the
Management Committee, a “Committee”), including as of Effective Date, a
“Commercial Affairs Committee” and an “Operating Committee”). Each Committee
shall have two (2) members appointed by each Member. Each member of each
Committee shall be a natural person who may nor may not be a Director or
Alternate Director appointed by such Member. Each Committee shall have
co-chairmen, with each Member entitled to appoint one co-chairman. The initial
members and co-chairmen of the Commercial Affairs Committee and the Operating
Committee are set forth on Exhibit H attached hereto. At any time and for any or
no reason, a Member may remove or replace any member of any Committee appointed
by such Member, upon notice to the other Members. The role of the Committees
will be to facilitate communications and cooperation among the Members with
regard to the business and affairs of the Company and its Subsidiaries, and each
Committee will have such specific responsibilities as may be delegated or
assigned to it by the Board; provided, however, that (i) no Committee shall have
the authority to bind the Company to any obligation or liability, and (ii) no
action may be taken by any Committee except upon the unanimous approval of all
members thereof. Each Committee will have regular meetings at least quarterly,
and special meetings of any Committee may be called at the direction of any
member of such Committee. Notice of meetings of any Committee shall be given to
each member of such Committee in the manner provided in Section 8.05. Meetings
of a Committee may include the participation of such subject matter experts as
any member of such Committee reasonably deems appropriate. Each Committee may
establish rules for its governance, including with respect to the roles and
responsibilities of the co-chairmen, provided such rules do not contravene the
requirements of this Section 8.09(a). The members of each Committee will not be
compensated by the Company, but the Company will reimburse the reasonable
out-of-pocket costs incurred by the member of such Committee to attend any
meeting thereof.

(b) The Board may establish committees of the Board and may delegate any of its
responsibilities to such committees, except as prohibited by applicable law.
Each Member shall appoint one or more Directors to each such committee in the
same proportion as such Members have the right to designate Directors.

(c) All of the members of any committee shall constitute a quorum for the
transaction of business of such committee, provided that in all cases a quorum
shall require at least one member of such committee appointed by each Member.
Except as otherwise required by law, all decisions of a committee shall require
the affirmative vote of at least a majority of the committee members at any
meeting at which a quorum is present.

 

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(d) A majority of the members of any committee may determine its action and fix
the time and place of its meetings unless the Board shall otherwise provide.
Notice of such meetings shall be given to each member of the committee in the
manner provided for in Section 8.05. Subject to Section 8.09(a), the Board shall
have power at any time to dissolve any such committee.

Section 8.10 Operations.

(a) The Directors and officers of the Company shall take steps and actions
necessary to cause the Company and its Subsidiaries, collectively, to
(a) maintain books and records, bank accounts and financial statements separate
from any other Person, including the Members, (b) not commingle its assets with
those of any other Person, including the Members, (c) conduct its business in
its own name, (d) pay its own expenses and liabilities out of its own funds,
(e) observe all organizational formalities required under the Delaware Act,
(f) not guarantee or become obligated for, or pledge its assets for, the debts
or liabilities of any of its Members, or hold out its credit as being available
to satisfy the obligations of its Members, (g) conduct its business in offices
which are physically segregated from those of its Affiliates or, if unable to be
segregated, allocate fairly and reasonably any overhead for shared office space,
(h) use its own distinct stationary, invoices and checks, (i) at all times hold
itself out to the public and all other Persons as a legal entity separate from
any other Person and correct any known misunderstanding regarding its separate
identity, (j) have a mailing address and telephone and telecopy numbers
different than those of its Members, (k) be duly qualified and in good standing
as a foreign company under applicable law in each state in which its assets are
located and such qualification is necessary or advisable, (l) except as
otherwise provided herein, not permit any Person, including the Members, to
control its daily business decisions, (m) maintain an arm’s length relationship
with its Affiliates, (n) except as contemplated by any Transaction Documents or
other contract or agreement entered into for such purpose, pay the salaries of
its own employees and (o) maintain adequate capital for its operation and
business purposes at all times.

(b) Neither this Section 8.10 nor any other provision of this Agreement shall
limit, restrict, or impose any requirements upon Operator, solely in its
capacity as Operator, with respect to any business, operations or activities of
Operator of any nature, including for or with its Affiliates or any other
Person; provided, however, that (i) the activities of the Operator conducted
pursuant to the Management Agreement or otherwise undertaken by the Operator on
behalf of the Company or any of its Subsidiaries shall be subject to the
requirements of this Agreement and of the Management Agreement, and (ii) the
Operator shall be subject to Section 11.01 hereof so long as the Operator is an
Affiliate of a Member.

ARTICLE IX

OFFICERS

Section 9.01 Elected Officers.

The executive officers of the Company shall serve at the pleasure of the Board.
Such officers shall have the authority and duties delegated to each of them,
respectively, by the Board from time to time. The elected officers of the
Company shall be such officers as the Board from time to time may deem proper,
including, initially, a President, a Treasurer, and a Secretary. The officers of
the Company as of the Effective Date are set forth on Exhibit D attached hereto.

 

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Section 9.02 Term of Office.

Each officer shall hold office until such person’s successor shall have been
duly elected and qualified or until such person’s death, resignation, or removal
pursuant to Section 9.03.

Section 9.03 Removal.

Any officer elected, or agent appointed, by the Board may be removed, with or
without cause, by the Board at any time in its sole discretion. No elected
officer shall have any contractual rights against the Company for compensation
by virtue of such election, except as otherwise provided in an employment
contract or under an employee deferred compensation plan.

Section 9.04 Vacancies.

Any newly created office and any vacancy in any office for any reason may be
filled by the Board.

Section 9.05 Officers of Subsidiaries.

Promptly following the Effective Date, and for so long as Crestwood and CEGPS
each hold an Ownership Percentage of fifty percent (50%), Crestwood and CEGPS
shall, and shall cause their respective Representatives to, take such actions as
may be necessary to cause each Subsidiary of the Company to have an equal number
of directors (if applicable), managers (if applicable) and officers designated
by each of Crestwood and CEGPS. Otherwise, the directors (if applicable),
managers (if applicable) and officers of each Subsidiary of the Company shall be
selected by the Board, and the Members shall, and shall cause their respective
Representatives to, take such actions as may be necessary to implement such
selections.

ARTICLE X

BUDGET, MANAGEMENT AGREEMENT, NEWCO SERVICE COMPANY

Section 10.01 Budget

Attached hereto as Exhibit C is the initial budget (the “Initial Budget”) for
the Company and its Subsidiaries that sets forth reasonable line item detail
regarding anticipated expenditures, including: (i) estimated operating
expenditures; (ii) estimated capital expenditures; (iii) the proposed financing
plans for such expenditures; and (iv) such other items as are set forth therein,
for the period from the Effective Date through December 31, 2016. At such
reasonable time prior to the expiration of the Initial Budget, and each year
thereafter, the Board shall cause to be

 

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prepared the Annual Budget for the following year, which Annual Budget will be
presented to the Board on or before September 15 of the preceding year for
approval in accordance with Section 8.04(b)(xix). The Board shall cause the
Annual Budget to be prepared and approved for distribution to the Members by
November 1 prior to the calendar year to which such Annual Budget applies, and
finally approved by December 1 prior to the calendar year to which such Annual
Budget applies, for each calendar year during the term of this Agreement. If the
Budget is not approved by the Board prior to the date when such Budget is to
become effective, the Company shall continue to use the Initial Budget or Annual
Budget then in effect, extrapolated to a 12-month budget period in the case of
the use of the Initial Budget, except that (x) any items of the proposed Annual
Budget that previously were approved by the Board shall be given effect in
substitution of the corresponding items in the Annual Budget for the previous
year, (y) any one-time or non-recurring items and the corresponding budget
entries therefor shall be deleted, and (z) all other categories of expenses from
the Initial Budget or Annual Budget for the previous period or year, as
applicable, shall be increased by five percent (5%).

Section 10.02 Management Agreement.

(a) As of the Effective Date, the Company has entered into an Operating and
Maintenance Agreement with the Operator and Newco Service Company, in a form
that has been approved by the Members (such agreement and any other services
agreement entered into by the Company and any replacement Operator that is
approved under the terms hereof, the “Management Agreement”).

(b) Subject to Section 10.02(c), the Management Agreement shall not be
terminated, and the Operator shall not be removed, except in accordance with the
terms of the Management Agreement; provided, however, that so long as the
Operator is an Affiliate of a Member, any determination by the Company with
respect thereto shall be made pursuant to Section 8.04(c).

(c) Upon any termination of the Management Agreement or resignation or removal
of the Operator, a successor Operator shall be selected by the Board and, until
a successor Operator has been selected and assumed responsibility for providing
its services, the authority, power, and rights of the Operator shall vest in,
and be exercisable by, the Board. A successor Operator shall have all authority,
power, and rights of the Operator as provided in the Management Agreement
entered into by the Company and such successor Operator. The Company shall cause
the former Operator to transfer to the successor Operator custody of all assets,
books and records of the Company.

Section 10.03 Newco Service Company.

(a) On the Effective Date, Crestwood and CEGPS (on behalf of the Company) shall
cause the limited liability company agreement of Newco Service Company to be
amended and restated in the form attached hereto as Exhibit I (the “Newco
Service Company LLC Agreement”). Until the purchase by the Company of all the
Equity Interests held by Crestwood in Newco Service Company pursuant to
Section 10.03(c) or Section 10.03(d), CEGPS shall have the right to appoint, on
behalf of the Company, the directors of Newco Service Company that the Company
has the right to appoint pursuant to the Newco Service Company LLC Agreement.

 

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(b) From and after the Effective Date and until the purchase by the Company of
all of the Equity Interests held by Crestwood in Newco Service Company pursuant
to Section 10.03(c) or 10.03(d), the Newco Employees will continue to
participate in the compensation and employee benefit plans and arrangements of
Crestwood and its Affiliates. Following such purchase, the Newco Employees will
participate in compensation and employee benefit plans and arrangements of the
Company, Newco Service Company, CEGPS or Affiliates of CEGPS. The Parties agree
to, and agree to cause the Company to, cooperate and work together in good faith
to prepare for the transition, as soon as reasonably practicable, of the Newco
Employees from participating in the compensation and employee benefit plans and
arrangements of Crestwood and its Affiliates to participating in compensation
and employee benefit plans and arrangements of the Company, Newco Service
Company, CEGPS or Affiliates of CEGPS.

(c) CEGPS shall have the right, exercisable in its sole discretion, to cause the
Company to purchase upon such election from Crestwood all of the Equity
Interests held by Crestwood in Newco Service Company for a purchase price of
$1.00, exercisable upon written notice from CEGPS (on behalf of the Company) to
Crestwood (the “Call Exercise Notice”). The Call Exercise Notice shall specify a
date for such purchase, which shall be at least ninety (90) days after the
delivery of the Call Exercise Notice, and Crestwood agrees to sell and convey
such Equity Interests to the Company, free and clear of all Encumbrances, and
CEGPS agrees to cause the Company to purchase such Equity Interests from
Crestwood, on the later to occur of (i) the date specified in the Call Exercise
Notice and (ii) the date on which the Company is prepared for the participation
of the Newco Employees in compensation and employee benefit plans and
arrangements of the Company, Newco Service Company, CEGPS or Affiliates of
CEGPS.

(d) Crestwood shall have the right, exercisable in its sole discretion, to cause
the Company to purchase upon such election from Crestwood all of the Equity
Interests held by Crestwood in Newco Service Company for a purchase price of
$1.00, exercisable upon written notice from Crestwood to CEGPS (on behalf of the
Company) at any time after which neither Crestwood nor any of its Affiliates is
the Operator (the “Put Exercise Notice”). The Put Exercise Notice shall specify
a date for such purchase, and CEGPS agrees to cause the Company to purchase such
Equity Interests from Crestwood, and Crestwood agrees to sell and convey such
Equity Interests to the Company, free and clear of all Encumbrances, on the
later to occur of (i) the date specified in the Put Exercise Notice and (ii) the
date on which the Company is prepared for the participation of the Newco
Employees in compensation and employee benefit plans and arrangements of the
Company, Newco Service Company, CEGPS or Affiliates of CEGPS.

(e) The Company shall reimburse and otherwise indemnify and hold harmless
Crestwood and its Affiliates for (i) all costs and expenses incurred by
Crestwood and its Affiliates to the extent arising from or related to the
participation of the Newco Employees in the compensation and employee benefit
plans and arrangements of Crestwood and its Affiliates and (ii) all other
losses, claims, damages, obligations, liabilities, costs, and expenses to the
extent arising from or related to the acts or omissions of the Newco Employees,
in either case (i) or (ii), to the extent such losses, claims, damages,
liabilities, costs or expenses (y) arise at any time after which neither
Crestwood nor any of its Affiliates is the Operator under the Management
Agreement and (z) would have been reimbursable or indemnifiable by the Company
under the Management Agreement if they had arisen during the term thereof.

 

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(f) For a period of two (2) years following the Effective Date, neither Party
will, or will permit any of its Affiliates (other than Newco Service Company)
to, without the consent of the other Party, hire any Newco Employee who is
identified on Exhibit J attached hereto or who is designated by the Board from
time to time as a Newco Employee to which this Section 10.03(f) applies (the
“Key Employees”). However, to permit Key Employees to consider and accept career
advancement opportunities with a Member and its Affiliates, either Party may
replace a Key Employee with a qualified replacement employee approved in writing
by the other Party (such approval not to be unreasonably withheld), whereupon
such Key Employee may become an employee of the first Party or any of its
Affiliates notwithstanding anything to the contrary contained in this
Section 10.03(f). Following such replacement, the replacement employee shall be
a Key Employee for purposes of this Section 10.03(f).

ARTICLE XI

CERTAIN DUTIES

Section 11.01 Corporate Opportunities.

(a) Except as set forth in Section 11.01(b), (i) each Member, Director, and
officer of the Company and their respective Affiliates shall have the right to
engage in businesses of every type and description and other activities for
profit and to engage in and possess an interest in other business ventures of
any and every type or description, whether in businesses engaged in or
anticipated to be engaged in by the Company or any Subsidiary of the Company,
independently or with others, including business interests and activities in
direct competition with the business and activities of the Company or any
Subsidiary of the Company, and none of the same shall constitute a breach of
this Agreement or any duty otherwise existing at law, in equity or otherwise, to
the Company or any Member, (ii) no Member, Director, or officer of the Company
or any of their respective Affiliates shall have any duty or obligation to
present or offer to the Company the opportunity to consider or participate in
any business activity or venture, and (iii) neither of the Company, nor any
Member nor any other Person shall have any rights, by virtue of this Agreement
or the business relationship established hereby, in or to any business ventures
or activities of any Member, Director or officer of the Company or of any of
their respective Affiliates.

(b) Notwithstanding Section 11.01(a), during the term of the Company,
Section 11.01(a) shall apply, with respect to any Identified Growth Project,
(i) to CEGPS and its Affiliates only if the Directors who are representatives of
Crestwood (A) do not approve pursuit of such Identified Growth Project by the
Company or a Subsidiary thereof within thirty (30) days following receipt of all
information that is requested by any such Director within thirty (30) days
following the initial presentation of the Identified Growth Project to the
Board, or (B) vote at any time to discontinue pursuit of such Identified Growth
Project by the Company and any Subsidiaries thereof, or (ii) to Crestwood and
its Affiliates only if the Directors who are representatives of CEGPS (A) do not
approve pursuit of such Identified Growth Project by the Company or a Subsidiary
thereof within thirty (30) days following receipt of all information that

 

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is requested by any such Director within thirty (30) days following the initial
presentation of the Identified Growth Project to the Board, or (B) vote at any
time to discontinue pursuit of such Identified Growth Project by the Company and
any Subsidiaries thereof. Except as provided in clause (i) or (ii) of this
Section 11.01(b), each Identified Growth Project shall be an opportunity that
only the Company or a Subsidiary thereof may pursue and Crestwood and CEGPS
shall not, and shall cause their respective Member Parent and Member Parent’s
Subsidiaries not to, directly or indirectly, own, invest in, develop, construct,
operate or otherwise pursue, whether alone or with any other Person, such
Identified Growth Project. For the avoidance of doubt, nothing in this
Section 11.01, including the pursuit or failure to pursue any one or more
Identified Growth Project or any satisfaction of clause (i) or (ii) of this
Section 11.01(b) with respect to any one or more Identified Growth Project,
shall affect the obligations of Crestwood pursuant to Section 7.09.

Section 11.02 Duties.

(a) Subject to compliance with the terms and conditions of this Agreement,
whenever a Member makes a determination or takes or declines to take any other
action in its capacity as a Member, whether under this Agreement or any other
agreement contemplated hereby or otherwise, then such Member shall be entitled,
to the fullest extent permitted by law, to make such determination or to take or
decline to take such other action free of any duty (including any fiduciary
duty) or obligation whatsoever to the Company, any Member or Director, and the
Member shall not, to the fullest extent permitted by law, be required to act
pursuant to any other standard under the Delaware Act or any other law, rule or
regulation or at equity, it being the intent of all Members that, subject to
such Member’s compliance with the express terms and conditions of this
Agreement, such Member, in its capacity as a Member, shall have the right to
make such determination solely on the basis of its own interests.

(b) Subject to, and as limited by the provisions of this Agreement, the Members,
Directors and officers of the Company, in the performance of their duties as
such, shall not, to the fullest extent permitted by the Delaware Act and other
applicable law, owe any duties (including fiduciary duties) as a Member,
Director or officer of the Company, notwithstanding anything to the contrary
existing at law, in equity or otherwise; provided, however, that each Member,
Director and officer of the Company shall act in accordance with the implied
contractual covenant of good faith and fair dealing. In furtherance of the
foregoing and to the fullest extent permitted by the Delaware Act, a
Representative, in performing his duties and obligations as a Director under
this Agreement, shall (i) owe no fiduciary or similar duty or obligation
whatsoever to the Company, any Member (other than the Member designating such
Representative) or the other Directors, and (ii) be entitled to act or omit to
act at the direction of the Member that designated such Representative,
considering only such factors, including the separate interests of the Member,
as such Representative or Member chooses to consider, and any action of a
Representative or failure to act, taken or omitted in good faith reliance on the
foregoing provisions shall not, as between the Company and the other Members, on
the one hand, and the Representative or Member designating such Representative,
on the other hand, constitute a breach of any duty (including any fiduciary or
other similar duty, to the extent such exists under the Delaware Act or any
other applicable law) on the part of such Representative or Member to the
Company or any other Representative or Member of the Company. Notwithstanding
any duty otherwise existing at law or in equity, any matter approved by the
Board in accordance with the provisions shall not be deemed to be a breach of
any duties owed by the Board or any Director to the Company or the Members.

 

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(c) The provisions of this Agreement, to the extent that they restrict,
eliminate or otherwise modify the duties (including fiduciary duties) and
liabilities of an officer of the Company or a Member or Director otherwise
existing at law, in equity or by operation of the preceding sentences, are
agreed by the Company and the Members to replace such duties and liabilities of
such officer, Member or Director. The Members (in their own names and in the
name and on behalf of the Company), acknowledge, affirm and agree that (i) none
of the Members would be willing to make an investment in the Company or enter
into this Agreement, and no Representative would be willing to so serve on the
Board, in the absence of this Section 11.02, and (ii) they have reviewed and
understand the provisions of Section 18-1101(b) and (c) of the Delaware Act.

(d) Nothing in this Agreement is intended to or shall eliminate any implied
contractual covenant of good faith and fair dealing, the requirement not to
waste Company assets or otherwise relieve or discharge any Representative or
Member from liability to the Company or the Members on account of such Member’s
breach of the terms and conditions hereof, or any fraudulent or intentional
misconduct of such Representative or Member.

ARTICLE XII

EXCULPATION AND INDEMNIFICATION

Section 12.01 Indemnification.

(a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, all Indemnitees, in their capacity as
such, shall be indemnified and held harmless by the Company from and against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including legal fees and expenses), judgments, fines, penalties, interest,
settlements or other amounts arising from any and all threatened, pending or
completed claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, and whether formal or informal and
including appeals, in which any Indemnitee may be involved, or is threatened to
be involved, as a party or otherwise, by reason of its status as an Indemnitee
and acting (or refraining to act) in such capacity; provided, that the
Indemnitee shall not be indemnified and held harmless pursuant to this Agreement
if there has been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that, in respect of the matter for which the
Indemnitee is seeking indemnification pursuant to this Agreement, the Indemnitee
breached the terms of this Agreement, acted in bad faith or engaged in fraud,
willful misconduct or, in the case of a criminal matter, acted with knowledge
that the Indemnitee’s conduct was unlawful; provided further, no indemnification
pursuant to this Section 12.01 shall be available to the Members or their
Affiliates with respect to its or their obligations incurred pursuant to the
Contribution Agreement (other than obligations incurred by such Member on behalf
of the Company) or the Management Agreement. Any indemnification pursuant to
this Section 12.01 shall be made only out of the assets of the Company, it being
agreed that the Members shall not be personally liable for such indemnification
and shall have no obligation to contribute or loan any monies or property to the
Company to enable it to effectuate such indemnification.

 

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(b) To the fullest extent permitted by law, expenses (including legal fees and
expenses) incurred by an Indemnitee who is indemnified pursuant to
Section 12.01(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Company prior to a final and
non-appealable judgment entered by a court of competent jurisdiction determining
that, in respect of the matter for which the Indemnitee is seeking
indemnification pursuant to this Section 12.01, the Indemnitee is not entitled
to be indemnified upon receipt by the Company of any undertaking by or on behalf
of the Indemnitee to repay such amount if it shall be ultimately determined that
the Indemnitee is not entitled to be indemnified as authorized by this
Section 12.01.

(c) The indemnification provided by this Section 12.01 shall be in addition to
any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of a Majority Interest or of the Board, as a matter of law,
in equity or otherwise, both as to actions in the Indemnitee’s capacity as an
Indemnitee and as to actions in any other capacity, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.

(d) The Company may purchase and maintain insurance, on behalf of the Company,
its Affiliates, the Indemnitees and such other Persons as the Company shall
determine, against any liability that may be asserted against, or expense that
may be incurred by, such Person in connection with the Company’s or any of its
Affiliate’s activities or such Person’s activities on behalf of the Company or
any of its Affiliates, regardless of whether the Company would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.

(e) For purposes of this Section 12.01, the Company shall be deemed to serve as
a fiduciary of an employee benefit plan of the Company whenever the performance
by it of its duties to the Company also imposes duties on, or otherwise involves
services by, it to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute “fines” within the meaning of
Section 12.01(a); and action taken or omitted by it with respect to any employee
benefit plan in the performance of its duties for a purpose reasonably believed
by it to be in the best interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose that is in the best interests of the
Company.

(f) An Indemnitee shall not be denied indemnification in whole or in part under
this Section 12.01 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.

(g) The provisions of this Section 12.01 are for the benefit of the Indemnitees
and their heirs, successors, assigns, executors and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

 

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(h) Any amendment, modification or repeal of this Section 12.01 or any provision
hereof shall be prospective only and shall not in any manner terminate, reduce
or impair the right of any past, present or future Indemnitee to be indemnified
by the Company, nor the obligations of the Company to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 12.01 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.

(i) TO THE FULLEST EXTENT PERMITTED BY THIS SECTION 12.01, THE PROVISIONS OF THE
INDEMNIFICATION PROVIDED IN THIS SECTION 12.01 ARE INTENDED BY THE MEMBERS TO
APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF EXCULPATING THE INDEMNITEE FROM
LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF SUCH PERSON’S NEGLIGENCE, FAULT OR
OTHER CONDUCT.

Section 12.02 Liability of Indemnitees.

(a) Notwithstanding anything to the contrary set forth in this Agreement, no
Indemnitee shall be liable for monetary damages to the Company, the Members or
any other Persons who have acquired interests in the Membership Interests, for
losses sustained or liabilities incurred as a result of any act or omission of
an Indemnitee unless there has been a final and non-appealable judgment entered
by a court of competent jurisdiction determining that, in respect of the matter
in question, the Indemnitee breached the terms of this Agreement, acted in bad
faith or engaged in fraud, willful misconduct or, in the case of a criminal
matter, acted with knowledge that the Indemnitee’s conduct was criminal.

(b) To the extent that, at law or in equity, an Indemnitee has duties (including
fiduciary duties) and liabilities relating thereto to the Company or to the
Members, the Indemnitee acting in connection with the Company’s business or
affairs shall not be liable to the Company or to any Member for its good faith
reliance on the provisions of this Agreement, and the provisions of this
Agreement, to the extent that they restrict, eliminate or otherwise modify the
duties and liabilities, including fiduciary duties, of any Indemnitee otherwise
existing at law or in equity, are agreed by the Members to replace such other
duties and liabilities of the Indemnitee.

(c) Any amendment, modification or repeal of this Section 12.02 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the liability of the Indemnitees under this Section 12.02 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

 

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Section 12.03 Other Matters Concerning the Directors.

(a) The Directors may rely upon, and shall be protected in acting or refraining
from acting upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.

(b) The Directors may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other consultants and advisers
selected by the Directors, and any act taken or omitted to be taken in reliance
upon the advice or opinion of such Persons as to matters that the Directors
reasonably believe to be within such Person’s professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such advice or opinion.

Section 12.04 Priority.

The Company hereby acknowledges that each Indemnitee that is entitled to
indemnification, advancement of expenses or insurance and who is or was a
director, officer, fiduciary, trustee, manager or managing member of a Member or
any of its Affiliates or employee benefit plans (each such Person, a “Member
Indemnitee”), may have certain rights to indemnification, advancement of
expenses or insurance provided by or on behalf of such Member or one of its
Affiliates. Notwithstanding anything to the contrary in this Agreement or
otherwise, (i) the Company is the indemnitor of first resort (i.e., the
Company’s obligations to each Member Indemnitee are primary and any obligation
of such Member or any of its Affiliates to advance expenses or to provide
indemnification for the same expenses or liabilities incurred by each Member
Indemnitee are secondary), (ii) the Company will be required to advance the full
amount of expenses incurred by each Member Indemnitee and will be liable for the
full amount of any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments, fines,
penalties, interest, settlements or other amounts arising from any and all
threatened, pending or completed claims, demands, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, and whether formal or
informal and including appeals, in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise to the extent legally
permitted and as required by this Article XII, without regard to any rights each
Member Indemnitee may have against such Member or Affiliate of such Member and
(iii) the Company irrevocably waives, relinquishes and release such Member and
its Affiliates from any and all claims against such Member or Affiliates of such
Member for contribution, subrogation or any other recovery of any kind in
respect thereof. Notwithstanding anything to the contrary in this Agreement or
otherwise, no advancement or payment by such Member or any of its Affiliates to
or on behalf of a Member Indemnitee with respect to any claim for which such
Member Indemnitee has sought indemnification or advancement of expenses from the
Company will affect the foregoing and such Member and its Affiliates will have a
right of contribution or be subrogated to the extent of such advancement or
payment to all of the rights of recovery of such Member Indemnitee against the
Company. The Affiliates of any of the Members are express and intended third
party beneficiaries of this Section 12.04.

 

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Section 12.05 Savings Clause.

If this Article XII or any portion hereof shall be invalidated on any ground by
any court or other governmental authority of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless all Indemnitees from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including legal fees and expenses), judgments, fines, penalties,
interest, settlements or other amounts arising from any and all threatened,
pending or completed claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, and whether formal or informal
and including appeals, in which any Indemnitee may be involved, or is threatened
to be involved, as a party or otherwise, by reason of its status as an
Indemnitee and acting (or refraining to act) in such capacity to the full extent
permitted by any applicable portion of this Article XII that shall not have been
invalidated and to the fullest extent permitted by applicable law.

Section 12.06 Survival.

The provisions of this Article XII shall survive the termination or amendment of
this Agreement and are intended to be for the benefit of, and shall be
enforceable by, the Indemnitees and their respective successors, heirs and
assigns (which shall be express and intended third party beneficiaries),
notwithstanding any provision of Section 16.8 to the contrary.

ARTICLE XIII

TAXES

Section 13.01 Tax Returns.

The Board shall prepare and timely file or cause to be prepared and filed (on
behalf of the Company) all federal, state, local and foreign tax returns
required to be filed by the Company. Each Member shall furnish to the Company
all pertinent information in its possession relating to the Company’s operations
that is necessary to enable the Company’s tax returns to be timely prepared and
filed. The Company shall bear the costs of the preparation and filing of its
returns. Not less than fifteen (15) days prior to the due date (as extended) of
the Company’s federal income tax return or any state income tax return, the
return proposed by the Company to be filed by the Company shall be furnished to
the Members for review. In addition, not more than ten (10) days after the date
on which the Company files its federal income tax return or any state income tax
return, a copy of the return so filed shall be furnished to the Members. The
Company shall deliver to each of its Members the following information,
schedules and tax returns: (i) at least fifteen (15) days prior to the due date
that any corporation estimated quarterly tax payments are due, an estimate of
the U.S. Federal and state income quarterly tax obligations of each person who
was a Member at any time during such calendar quarter, (ii) within sixty
(60) days after the Company’s year-end, a draft Schedule K-1, and (iii) within
ninety (90) days of the Company’s year-end, a final Schedule K-1, along with
copies of all other federal, state, or local income tax returns or reports filed
by the Company for the previous year as may be required as a result of the
operations of the Company. In addition, the Company shall provide, to the extent
reasonably available, such other information as a Member may reasonably request
for purposes of complying with applicable tax reporting requirements that arises
as a result of its Membership Interest.

 

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Section 13.02 Tax Elections.

(a) The Company shall make the following elections on the appropriate tax
returns:

(i) to adopt as the Company’s taxable year the calendar year;

(ii) to adopt the accrual method of accounting;

(iii) if a distribution of the Company’s property as described in Section 734 of
the Code occurs or upon a transfer of a Membership Interest as described in
Section 743 of the Code occurs, to elect, pursuant to Section 754 of the Code,
to adjust the basis of the Company’s properties; and

(iv) any other election the Board may deem appropriate.

(b) Neither the Company nor any Member shall 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.

Section 13.03 Tax Matters Member.

(a) Crestwood shall act as the “tax matters partner” of the Company pursuant to
Section 6231(a)(7) of the Code (the “Tax Matters Member”). The Tax Matters
Member shall take such action as may be necessary to cause to the extent
possible each Member to become a “notice partner” within the meaning of
Section 6223 of the Code. The Tax Matters Member 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 fifteenth
(15th) Business Day after becoming aware thereof and, within that time, shall
forward to each Member copies of all significant written communications it may
receive in that capacity.

(b) Any reasonable cost or expense incurred by the Tax Matters Member in
connection with its duties, including the preparation for or pursuance of
administrative or judicial proceedings, shall be paid by the Company.

(c) The Tax Matters Member shall not enter into any extension of the period of
limitations for making assessments on behalf of any Member without first
obtaining the consent of such Member. The Tax Matters Member shall not bind any
Member to a settlement agreement without obtaining the consent of such Member.
Any Member that enters into a settlement agreement with respect to any Company
item (as described in Section 6231(a)(3) of the Code in respect of the term
“partnership item”) shall notify the other Members of such settlement agreement
and its terms within ninety (90) days from the date of the settlement.

 

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(d) No Member shall file a request pursuant to Section 6227 of the Code for an
administrative adjustment of Company items for any taxable year without first
notifying the other Members. If the Board consents to the requested adjustment,
the Tax Matters Member shall file the request for the administrative adjustment
on behalf of the Members. If such consent is not obtained within thirty
(30) days from such notice, or within the period required to timely file the
request for administrative adjustment, if shorter, any Member may file a request
for administrative adjustment on its own behalf. Any Member intending to file a
petition under Sections 6226, 6228 or other Section of the Code with respect to
any item involving the Company shall notify the other Members of such intention
and the nature of the contemplated proceeding. In the case where the Tax Matters
Member is intending to file such petition on behalf of the Company, such notice
shall be given to each other Member ninety (90) days prior to filing and the Tax
Matters Member shall obtain the consent of the other Members to the forum in
which such petition will be filed prior to filing, which consent shall not be
unreasonably withheld or delayed.

(e) If any Member intends to file a notice of inconsistent treatment under
Section 6222(b) of the Code, such Member shall give reasonable notice under the
circumstances to the other Members of such intent and the manner in which the
Member’s intended treatment of an item is (or may be) inconsistent with the
treatment of that item by the other Members.

(f) For taxable years beginning after December 31, 2017, the “partnership
representative” (as such term is used in Section 6223 of the Code as amended by
the Budget Act) shall be the Person that would have been the Tax Matters Member
as determined under Section 13.03(a). The partnership representative shall cause
the Company to, with the consent of the Members, make the election under
Section 6221(b) of the Code (as amended by the Budget Act) with respect to
determinations of adjustments at the partnership level and take any other action
such as filings, disclosures and notifications necessary to effectuate such
election. If the election described in the preceding sentence is not available
and to the extent applicable, if the Company receives a notice of final
partnership adjustment as described in Section 6226 of the Code (as amended by
the Budget Act), the partnership representative shall cause the Company to, with
the consent of the Members, make the election under Section 6226(a) of the Code
(as amended by the Budget Act) with respect to the alternative to payment of
imputed underpayment by the Company and take other action such as filings,
disclosures and notifications necessary to effectuate such election. Each Member
agrees (i) to cooperate with the partnership representative and to provide any
information reasonably requested by the partnership representative in connection
with a Company-level tax audit of any taxable period during which such Member
was a Member of the Company, and (ii) to indemnify and hold harmless the Company
from and against any liability with respect to such Member’s proportionate share
of any tax liability (including related interest and penalties) imposed at the
Company level in connection with a Company-level tax audit of a taxable period
during which such Member was a Member of the Company, regardless of whether such
Member is a member of the Company in the year in which such tax is actually
imposed on the Company or becomes payable by the Company as a result of such
audit. The Board shall reasonably determine a Member’s proportionate share of
any such tax liability, taking into account the relevant facts and any
information provided by such Member that would reduce such liability. A Member’s
cooperation and indemnification obligations pursuant to this Section 13.03(f)
shall survive the termination of a Member’s participation in the Company and the
termination, dissolution and winding up of the Company

 

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Section 13.04 Tax Sharing Agreements.

If any Member is required to include the income, receipts or related items of
the Company in a combined or consolidated return (the “Included Return”) filed
by such Member (the “Including Member”), then (a) the Including Member shall pay
the tax due in connection with such Included Return; (b) the Company shall
promptly pay the Including Member the amount of tax that the Company would have
been required to pay if the Company had filed a hypothetical “standalone” return
(the “Standalone Return”) for such period; and (c) the Including Member will
indemnify and hold harmless the Company and the other Members (the “Nonincluding
Members”) against any liability for tax of its combined or consolidated group in
excess of the amounts in clause (b), including any liabilities relating to other
parties joining in the Included Return. The Including Member shall provide a
copy of such Standalone Return to each Nonincluding Members for such
Nonincluding Member’s review and reasonable comment not later than thirty
(30) days prior to the due date (including applicable extensions) of the
Included Return. Tax administration and controversy matters with respect to any
such taxes shall be handled by the Including Member; provided that the Including
Member shall keep the Nonincluding Members reasonably informed of developments
that affect the amount of tax computed with respect to the Standalone Return and
provide each Nonincluding Member with a reasonable opportunity to comment on any
communication to the tax authorities related to the portion of any tax
attributable to such Standalone Return, taking into account any reasonable
comments of such Nonincluding Member.

ARTICLE XIV

BOOKS, RECORDS, REPORTS, BANK ACCOUNTS, AND BUDGETS

Section 14.01 Maintenance of Books.

(a) The Board shall cause to be kept a record containing the minutes of the
proceedings of the meetings of the Board and of the Members, appropriate
registers and such books of records and accounts as may be necessary for the
proper conduct of the business of the Company.

(b) The books of account of the Company shall be (i) maintained on the basis of
a fiscal year that is the calendar year, (ii) maintained on an accrual basis in
accordance with Required Accounting Practices, consistently applied and
(iii) audited by the Certified Public Accountants at the end of each calendar
year.

 

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Section 14.02 Reports.

(a) As soon as practicable, but in no event later than forty-five (45) days
after the close of each fiscal year of the Company, the Board shall cause to be
mailed or made available, by any reasonable means, to each holder of record of a
Membership Interest as of a date selected by the Board, an annual report
containing (i) consolidated financial statements of the Company and its
Subsidiaries for such fiscal year of the Company, presented in accordance with
GAAP, including a balance sheet and statements of operations, company equity and
cash flows, such statements to be audited by the Certified Public Accountants,
(ii) a comparison of the Company’s actual performance with the Annual Budget and
any written business plan and (iii) such other information as may be required by
applicable law or as the Board determines to be necessary or appropriate. In
addition, if needed to comply with the Exchange Act and the rules and
regulations promulgated thereunder, the Company shall deliver to any member,
upon request, a preliminary (subject to review) unaudited consolidated balance
sheet and consolidated income statement thirty-five (35) days after the close of
each fiscal year.

(b) As soon as practicable, but in no event later than thirty-five (35) days
after the close of each Quarter except the last Quarter of each fiscal year, the
Board shall cause to be mailed or made available, by any reasonable means to
each holder of record of a Membership Interest, as of a date selected by the
Board, a report containing (i) unaudited consolidated financial statements of
the Company and its Subsidiaries (subject to the absence of footnotes and normal
year-end adjustments), (ii) a comparison of the Company’s actual performance
with the Annual Budget and any written business plan and (iii) such other
information as may be required by applicable law or as the Board determines to
be necessary or appropriate. In addition, if needed to comply with the Exchange
Act and the rules and regulations promulgated thereunder, the Company shall
deliver to any member, upon request, a preliminary (subject to review) unaudited
consolidated balance sheet and consolidated income statement thirty (30) days
after the close of each Quarter.

(c) As soon as practicable, but in no event later than four (4) Business Days
after the end of each calendar month, the Board shall cause to be made
available, by any reasonable means, to each holder of record of a Membership
Interest as of a date selected by the Board, a report containing (i) the
estimated net income of the Company and its Subsidiaries for such immediately
preceding calendar month, determined in accordance with GAAP, and (ii) such
other information as may be required by applicable law or as the Board
determines to be necessary or appropriate.

(d) As soon as practicable, but in no event later than thirty (30) days after
the end of each calendar month, the Board shall cause to be made available, by
any reasonable means, to each holder of record of a Membership Interest as of a
date selected by the Board, a report containing (i) the actual net income of the
Company and its Subsidiaries for such immediately preceding calendar month,
determined in accordance with GAAP, and (ii) such other information as may be
required by applicable law or as the Board determines to be necessary or
appropriate.

 

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(e) The Company shall timely prepare and deliver to any Member, upon request,
all of such additional financial statements, notes thereto and additional
financial information as may be required in order for each Member or an
Affiliate of such Member to comply with any reporting requirements under (i) the
Securities Act and the rules and regulations promulgated thereunder, (ii) the
Exchange Act and the rules and regulations promulgated thereunder, and (iii) any
national securities exchange or automated quotation system. The reasonable
incremental cost to the Company of preparing and delivering such additional
financial statements, notes thereto and additional financial information,
including any required incremental audit fees and expenses, shall be reimbursed
to the Company by the Member requesting such reports.

(f) The Company will keep the Members reasonably apprised of the status of the
business of the Company and its Subsidiaries, including any material adverse
developments or issues related thereto or in connection therewith.

Section 14.03 Bank Accounts.

Funds of the Company shall be deposited in such banks or other depositories as
shall be designated from time to time by the Board. All withdrawals from any
such depository shall be made only as authorized by the Board and shall be made
only by check, wire transfer, debit memorandum or other written instruction.

Section 14.04 Emergencies.

The Company, for itself or on behalf of its Subsidiaries, shall take any and all
actions required or appropriate in response to an Emergency, and the Company is
expressly authorized to make Emergency Expenditures and incur expenses without
prior authorization or approval of the Board, when reasonably necessary to deal
with Emergencies. In the event of an Emergency, the Company shall notify the
Board and each Member of the Emergency within 24 hours of its knowledge of such
Emergency or as soon as reasonably practicable thereafter, setting forth the
nature of the Emergency, the corrective action taken or proposed to be taken,
and the actual or estimated cost and expense associated with such corrective
action. Each Member shall designate representatives to be included in an
electronic notice system that shall be implemented and maintained by the Company
to notify parties of Emergencies, and all notifications made under such system
shall be deemed to meet any and all applicable notice requirements under the
terms of this Agreement.

 

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ARTICLE XV

DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION

Section 15.01 Dissolution.

The Company shall dissolve, and its affairs shall be wound up, upon:

(a) an election to dissolve the Company by the unanimous consent of the Board;

(b) the entry of a decree of judicial dissolution of the Company pursuant to the
provisions of the Delaware Act; or

(c) at any time there are no Members, unless the Company is continued without
dissolution in accordance with the Delaware Act.

Section 15.02 Liquidator.

Upon dissolution of the Company, the Board shall select one or more Persons to
act as liquidator of the Company (the “Liquidator”). The Liquidator (if other
than the Board) shall be entitled to receive such compensation for its services
as may be approved by the Board. Except as expressly provided in this
Article XV, the Liquidator selected in the manner provided herein shall have and
may exercise, without further authorization or consent of any of the Members,
all of the powers conferred upon the Board under the terms of this Agreement
(but subject to all of the applicable limitations, contractual and otherwise,
upon the exercise of such powers, other than the limitation on transferring
assets set forth in Section 8.04(b)) necessary or appropriate to carry out the
duties and functions of the Liquidator hereunder for and during the period of
time required to complete the winding up and liquidation of the Company as
provided for herein.

Section 15.03 Liquidation.

The Liquidator shall proceed to dispose of the assets of the Company, discharge
its liabilities, and otherwise wind up its affairs in such manner and over such
period as determined by the Liquidator, subject to Section 18-804 of the
Delaware Act and the following:

(a) The assets may be disposed of by public or private sale or by distribution
in kind to one or more Members on such terms as the Liquidator and such Member
or Members may agree. The Liquidator may defer liquidation or distribution of
the Company’s assets for a reasonable time if it determines that an immediate
sale or distribution of all or some of the Company’s assets would be impractical
or would cause undue loss to the Members. The Liquidator may distribute the
Company’s assets, in whole or in part, in kind if it determines that a sale
would be impractical or would cause undue loss to the Members.

(b) Liabilities of the Company include amounts owed to the Liquidator as
compensation for serving in such capacity and amounts to Members otherwise than
in respect of their distribution rights under Article VII. With respect to any
liability that is contingent, conditional or unmatured or is otherwise not yet
due and payable, the Liquidator shall either settle such claim for such amount
as it thinks appropriate or establish a reserve of cash or other assets to
provide for its payment. When paid, any unused portion of the reserve shall be
distributed as additional liquidation proceeds.

(c) All property and all cash in excess of that required to discharge
liabilities as provided in Section 15.03(b) shall be distributed to the Members
in accordance with the Member’s positive Capital Account balances after giving
effect to all allocations, contributions, and distributions for all prior
periods.

 

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Section 15.04 Certificate of Cancellation of Formation.

Upon the completion of the distribution of Company cash and property as provided
in Section 15.03 in connection with the liquidation of the Company, the Company
shall be terminated and the Certificate of Formation and all qualifications of
the Company as a foreign limited liability company in jurisdictions other than
the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Company shall be taken.

Section 15.05 Return of Contributions.

It is expressly understood that the return of any Capital Contributions of the
Members shall be made solely from Company assets.

Section 15.06 Waiver of Partition.

To the maximum extent permitted by law, each Member hereby irrevocably waives
during the term of the Company any right that it may have to maintain any action
to partition any property of the Company.

Section 15.07 Capital Account Restoration.

No Member shall have any obligation to restore any negative balance in its
Capital Account upon liquidation of the Company.

ARTICLE XVI

GENERAL PROVISIONS

Section 16.01 Offset.

Whenever the Company is to pay any sum to any Member, including distributions
pursuant to Article VII, any amounts that Member owes the Company, as determined
by the Board, may be deducted from that sum before payment.

Section 16.02 Amendment.

(a) Except as provided in Section 16.02(b), this Agreement shall not be altered
modified or changed except by a written amendment approved by each Member.

 

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(b) The Board may make any amendment to this Agreement and Exhibit A as
necessary to (i) reflect any issuance of New Interests, additional Membership
Interests or other Equity Interests, any redemption or purchase of Membership
Interests, New Interests or other Equity Interests, or any other change in the
Membership Interests, other Equity Interests, or Ownership Percentages as
provided herein, or (ii) make administrative changes that do not adversely
impact any Member’s rights under this Agreement or the value of the Company.

Section 16.03 Addresses and Notices; Written Communications.

(a) Any notice, demand, request, report or other materials required or permitted
to be given or made to a Member under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to such
Member at the address set forth on Exhibit A.

(b) If a Member shall consent to receiving notices, demands, requests, reports
or other materials via electronic mail, any such notice, demand, request, report
or other materials shall be deemed given or made when delivered or made
available via such mode of delivery. An affidavit or certificate of making of
any notice, payment or report in accordance with the provisions of this
Section 16.03 executed by the Company or the mailing organization shall be prima
facie evidence of the giving or making of such notice, payment or report.

(c) Any notice to the Company shall be deemed given if received by the Company
at the principal office of the Company designated pursuant to Section 2.03. The
Company may rely and shall be protected in relying on any notice or other
document from a Member or other Person if believed by it to be genuine.

(d) The terms “in writing”, “written communications,” “written notice” and words
of similar import shall be deemed satisfied under this Agreement by use of
e-mail and other forms of electronic communication.

Section 16.04 Further Action.

The Parties shall execute and deliver all documents, provide all information and
take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.

Section 16.05 Binding Effect.

This Agreement shall be binding upon and inure to the benefit of the Parties and
their heirs, executors, administrators, successors, legal representatives and
permitted assigns.

 

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Section 16.06 Entire Agreement; Integration.

This Agreement and the other Transaction Documents supersede all prior
understandings, agreements, or representations by or among the Parties, written
or oral with respect to the subject matter hereof and thereof. Without limiting
the foregoing, the Parties and their Affiliates formally acknowledge and agree
that (a) each of the Transaction Documents were, at the time of execution, and
continue to be, executed and delivered in connection with each of the other
Transaction Documents and the transactions contemplated thereby, (b) the
performance of each of the Transaction Documents and expected benefits therefrom
are a material inducement to the willingness of the Parties and their Affiliates
to enter into and perform the other Transaction Documents and the transactions
described therein, (c) the Parties and their Affiliates would not have been
willing to enter into any of the Transaction Documents in the absence of the
entrance into, performance of and the economic interdependence of, the
Transaction Documents, (d) the execution and delivery of each of the Transaction
Documents and the rights and obligations of the parties thereto are interrelated
and part of an integrated transaction being effected pursuant to the terms of
the Transaction Documents, (e) irrespective of the form such documents have
taken, or otherwise, the transactions contemplated by the Transaction Documents
are necessary elements of one and the same overall and integrated transaction,
(f) the transactions contemplated by the Transaction Documents are economically
interdependent, and (g) it is the intent of the Parties and their Affiliates
that they have executed and delivered the Transaction Documents with the
understanding that the Transaction Documents constitute one unseverable and
single agreement (except that, in interpreting any of the Transaction Documents,
any reference in such Transaction Document to “this Agreement” or any similar
reference shall mean that particular Transaction Document only); provided,
however, that notwithstanding anything to the contrary contained in this
Section 16.06, (i) nothing in this Section 16.06 shall prohibit, restrict or
otherwise limit any assignment of any Transaction Document (or rights, duties,
obligations or liabilities thereunder) in accordance with its contractual terms
or any permitted change in control of a party thereto (to the extent permitted
by such Transaction Document) and (ii) if a Transaction Document is wholly or
partially assigned by a party thereto that is a CEQP Entity in accordance with
its contractual terms and the assignee does not constitute a CEQP Entity, other
than in connection with a transfer of all or substantially all of the assets
with respect to the natural gas transportation and storage business of CEQP and
all of the CEQP Entities, or a change in control of CEQP (or its successors or
assigns) or a change in control of one or more CEQP Entities which together own
such business, then, from and after the effective date of such assignment, such
Transaction Document (to the extent assigned) shall constitute an independent
instrument that is unrelated to any other Transaction Document and such
Transaction Document (to the extent assigned) and the transactions contemplated
thereby shall no longer be, or be deemed to be, (A) interrelated with any other
Transaction Document, (B) part of an integrated transaction effected pursuant to
the terms of the Transaction Documents or (C) economically interdependent with
respect to any other Transaction Documents or any transactions contemplated by
any other Transaction Document. For the avoidance of doubt, the parties
acknowledge that nothing in this Section 16.06 will affect any provision in any
Transaction Document with respect to assignment, change in control, transfer or
similar events.

 

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Section 16.07 Waivers.

No failure by any Party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy upon a breach thereof shall constitute a waiver of any such breach, of
any subsequent breach thereof, or of any breach of any other covenant, duty,
agreement or condition.

Section 16.08 Third-Party Beneficiaries.

Each Member agrees that (a) any Indemnitee shall be entitled to assert rights
and remedies hereunder as a third-party beneficiary hereto with respect to those
provisions in Article XII of this Agreement affording a right, benefit or
privilege to such Indemnitee, (b) any Affiliate of any Member shall be entitled
to assert rights and remedies hereunder as a third-party beneficiary hereto with
respect to those provisions in Section 12.04 of this Agreement affording a
right, benefit or privilege to such Indemnitee, (c) Directors and officers of
the Company shall be entitled to assert rights and remedies hereunder as a
third-party beneficiary hereto with respect to those provisions in this
Agreement affording a right, benefit or privilege to such Directors and officers
and (d) Former Members and their Affiliates shall be entitled to assert rights
and remedies hereunder as a third-party beneficiary hereto with respect to those
provisions in Section 6.08(c) of this Agreement affording a right, benefit or
privilege to such Former Members and their Affiliates. Except as expressly
provided by the foregoing, the provisions of this Agreement are for the
exclusive benefit of the Members and their respective successors and permitted
assigns, and this Agreement is not intended to benefit, create any rights in, or
be enforceable by any other Person, including any creditor of the Company.

Section 16.09 Counterparts.

This Agreement may be executed in counterparts (including by facsimile or other
electronic transmission), all of which together shall constitute an agreement
binding on all the Parties, notwithstanding that all such Parties are not
signatories to the original or the same counterpart. Each Party shall become
bound by this Agreement immediately upon affixing its signature hereto.

Section 16.10 Governing Law, Forum, Jurisdiction; Waiver of Jury Trial.

(a) To the maximum extent permitted by applicable law, all matters relating to
the interpretation, construction, validity and enforcement of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware, without regard to principles of conflict of laws that
would require an application of another state’s laws. Each of the Parties hereto
agrees that this Agreement involves at least $100,000 and that this Agreement
has been entered into in express reliance upon 6 Del. C. § 2708. Each of the
Parties hereto irrevocably and unconditionally confirms and agrees (i) that it
is and shall continue to be

 

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subject to the jurisdiction of the courts of the State of Delaware and of the
federal courts sitting in the State of Delaware and (ii)(A) to the extent that
such Party is not otherwise subject to service of process in the State of
Delaware, to appoint and maintain an agent in the State of Delaware as such
Party’s agent for acceptance of legal process and notify the other Parties
hereto of the name and address of such agent and (B) to the fullest extent
permitted by law, that service of process may also be made on such Party by
prepaid certified mail with a proof of mailing receipt validated by the U.S.
Postal Service constituting evidence of valid service, and that, to the fullest
extent permitted by applicable law, service made pursuant to (ii)(A) or
(B) above shall have the same legal force and effect as if served upon such
Party personally within the State of Delaware.

(b) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY (i) CONSENTS SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF DELAWARE,
INCLUDING THE DELAWARE COURT OF CHANCERY IN AND FOR NEW CASTLE COUNTY (THE
“DELAWARE COURTS”) FOR ANY ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
(AND AGREE TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS),
(ii) WAIVES OBJECTION TO THE LAYING OF VENUE OF ANY SUCH LITIGATION IN THE
DELAWARE COURTS, AGREES NOT TO PLEAD OR CLAIM IN ANY DELAWARE COURT THAT SUCH
LITIGATION BROUGHT THEREIN HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM AND
(iii) ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OR RELATING TO THIS AGREEMENT OR TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.

(c) Each of the Parties:

(i) irrevocably agrees that any claims, suits, actions or proceedings
(A) arising out of or relating in any way to this Agreement (including any
claims, suits or actions to interpret, apply or enforce the provisions of this
Agreement or the duties, obligations or liabilities among the Parties, or the
rights or powers of, or restrictions on, the Parties or the Company),
(B) asserting a claim of breach of a fiduciary duty owed by any director,
officer, or other employee of the Company, or owed by the Company, to the
Parties, (C) asserting a claim arising pursuant to any provision of the Delaware
Act or (D) asserting a claim governed by the internal affairs doctrine shall be
exclusively brought in the Delaware Courts, in each case regardless of whether
such claims, suits, actions or proceedings sound in contract, tort, fraud or
otherwise, are based on common law, statutory, equitable, legal or other
grounds, or are derivative or direct claims; and

(ii) expressly waives any requirement for the posting of a bond by a party
bringing such claim, suit, action or proceeding.

 

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Section 16.11 Invalidity of Provisions.

If any provision or part of a provision of this Agreement is or becomes for any
reason, invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions and part thereof contained herein
shall not be affected thereby and this Agreement shall, to the fullest extent
permitted by law, be reformed and construed as if such invalid, illegal or
unenforceable provision, or part of a provision, had never been contained
herein, and such provision or part reformed so that it would be valid, legal and
enforceable to the maximum extent possible.

Section 16.12 Creditors.

None of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Company.

Section 16.13 Member Governance Provisions.

(a) The certificate of incorporation, bylaws, certificate of formation,
operating agreement, partnership certificate, partnership agreement or similar
organizational documents of each Member shall contain provisions requiring, and
such Member covenants, that: (i) such Member will not carry on any business or
activities other than its ownership of Equity Interests in the Company and
activities in connection therewith and (ii) such Member will (A) maintain its
own separate books and records, (B) not commingle its assets with those of any
other Person, (C) conduct its business in its own name, (D) strictly comply with
all organizational formalities to maintain its separate existence, and (E) file
its own tax returns, if any, as may be required under applicable law, to the
extent (1) not part of a consolidated group filing a consolidated return or
returns or (2) not treated as a division for tax purposes of another taxpayer,
and pay any taxes so required to be paid under applicable law and (G) pay the
salaries of its own employees, if any (collectively, the “Member Governance
Provisions”).

(b) Each Member will at all times comply with, and keep in full force and
effect, the Member Governance Provisions of its organizational documents and
will not amend, waive or modify the Member Governance Provisions of its
organizational documents or amend, waive or modify any other provision of its
organizational documents if it would have the effect of amending, waiving or
modifying the Member Governance Provisions (including, in each case, by way of
merger or consolidation).

(c) Upon the reasonable request of another Member, each Member will provide such
other Member with a certified copy of its certificate of incorporation, bylaws,
certificate of formation, operating agreement, partnership certificate,
partnership agreement or similar organizational documents including the Member
Governance Provisions.

(d) At any time upon reasonable request by the Company or another Member, each
Member will provide a certificate signed by an executive officer of such Member
certifying as to the compliance by Crestwood with this Section 16.13, together
with such supporting details as may reasonably be requested by the Company or
such other Member.

 

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(e) Any Transferee of a direct Transfer of a Member’s Membership Interests shall
agree to be bound by, and be required to comply with, this Section 16.13 to the
same extent as such Member.

Section 16.14 Specific Performance.

The Parties agree that irreparable damage would occur in the event that a Party
does not perform any of the provisions of this Agreement (including the failure
to take such actions as are required of such Party hereunder to consummate the
transactions set forth in this Agreement) in accordance with their specific
terms or otherwise breaches such provisions. It is accordingly agreed that each
Party will be entitled to an injunction or injunctions to prevent breaches of
this Agreement by any other Party and, subject to Section 16.10, to enforce
specifically the terms and provisions hereof against such other Party in any
court having jurisdiction, this being in addition to any other remedy to which
the Parties are entitled at law or in equity. Each of the Parties agrees that it
will not oppose the granting of an injunction, specific performance or other
equitable relief as contemplated herein on the basis that the other Parties have
an adequate remedy at law or on any other basis. For the avoidance of doubt, the
Parties acknowledge and agree that the remedies in this Section 16.14 are in
addition to, and not in lieu of, any other rights and remedies granted in this
Agreement (including in Sections 3.08(e), 4.03(a), 6.03, 8.03 and 8.04) with
respect to equitable relief, including injunctive relieve and specific
performance for breaches or violations, or threatened breaches or violations, of
this Agreement.

[Signature pages follow.]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed
by their respective officer hereunto duly authorized, all as of the date first
written above.

 

CRESTWOOD PIPELINE AND STORAGE NORTHEAST LLC By:  

/s/ Robert Phillips

Name: Robert Phillips Title: President & CEO CON EDISON GAS PIPELINE AND STORAGE
NORTHEAST, LLC By: Con Edison Gas Pipeline and Storage, LLC, its sole member By:
Con Edison Transmission, Inc., its sole member By:  

/s/ Joseph P. Oates

Name: Joseph P. Oates Title: President

[Signature Page to Amended and Restated SGS LLC Agreement]