Exhibit 10.4

Execution Version

SERVICES AND SECONDMENT AGREEMENT

among

PENNTEX MIDSTREAM PARTNERS, LLC,

PENNTEX MIDSTREAM MANAGEMENT COMPANY, LLC,

PENNTEX MIDSTREAM GP, LLC

and

PENNTEX MIDSTREAM PARTNERS, LP

Dated as of June 9, 2015

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TABLE OF CONTENTS

 

         Page  

ARTICLE 1

 

DEFINITIONS; INTERPRETATION

     1   

1.1

 

Definitions

     1   

1.2

 

Interpretation

     1   

1.3

 

Legal Representation of Parties

     2   

1.4

 

Titles and Headings

     2   

ARTICLE 2

 

SECONDMENT

     2   

2.1

 

Provided Personnel

     2   

2.2

 

Period of Secondment

     2   

2.3

 

Withdrawal, Departure or Resignation

     3   

2.4

 

Termination of Secondment

     3   

2.5

 

Supervision

     3   

2.6

 

Provided Personnel Qualifications; Approval

     4   

2.7

 

Workers Compensation

     4   

2.8

 

Benefit Plans

     4   

ARTICLE 3

 

REIMBURSEMENT FOR PROVIDED PERSONNEL

     4   

3.1

 

Reimbursement for Provided Personnel

     4   

3.2

 

Provided Personnel Expenses

     4   

3.3

 

Adjustments for Period of Secondment

     5   

3.4

 

Adjustments for Shared Services

     5   

ARTICLE 4

 

ALLOCATION; RECORDS

     5   

4.1

 

Allocation; Records

     5   

ARTICLE 5

 

GENERAL AND ADMINISTRATIVE SERVICES

     5   

5.1

 

General and Administrative Services Provided by Development

     5   

ARTICLE 6

 

TERM; DEFAULT AND TERMINATION

     8   

6.1

 

Term

     8   

6.2

 

Default

     8   

6.3

 

Termination

     8   

ARTICLE 7

 

INDEMNIFICATION

     8   

7.1

 

Indemnification by Development and Subsidiaries

     8   

7.2

 

Indemnification Procedures

     9   

ARTICLE 8

 

GENERAL PROVISIONS

     10   

8.1

 

Accuracy of Recitals

     10   

8.2

 

Notices

     10   

8.3

 

Further Assurances

     11   

8.4

 

Modifications

     11   

8.5

 

No Third Party Beneficiaries

     11   

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8.6

Relationship of the Parties

  11   

8.7

Assignment

  11   

8.8

Binding Effect

  11   

8.9

Counterparts

  11   

8.10

Time of the Essence

  11   

8.11

Governing Law

  11   

8.12

Delay or Partial Exercise Not Waiver

  11   

8.13

Entire Agreement

  11   

8.14

Waiver

  12   

8.15

Signatories Duly Authorized

  12   

8.16

Incorporation of Exhibits and Schedules by References

  12   

8.17

Arbitration

  12   

SCHEDULES AND EXHIBITS

 

Schedule 5.1(a) General and Administrative Services Provided by Development
Exhibit A Definitions Exhibit B Provided Personnel Exhibit C
Addition/Removal/Change of Responsibility of Provided Personnel Form

 

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SERVICES AND SECONDMENT AGREEMENT

This Services and Secondment Agreement (“Agreement”), dated as of June 9, 2015
(the “Effective Date”), is entered into among PennTex Midstream Partners, LLC, a
Delaware limited liability company (“Development”), PennTex Midstream Management
Company, LLC, a Delaware limited liability company (“Admin”), PennTex Midstream
GP, LLC, a Delaware limited liability company (the “General Partner”), and
PennTex Midstream Partners, LP, a Delaware limited partnership (the
“Partnership”). Each of Development, Admin, the General Partner and the
Partnership is sometimes referred to herein as a “Party” and collectively as the
“Parties.”

RECITALS:

WHEREAS, the General Partner is the sole general partner of the Partnership;

WHEREAS, the Partnership owns 100% of the limited liability company interests in
PennTex Midstream Operating, LLC, a Delaware limited liability company
(“Midstream Operating”);

WHEREAS, PennTex North Louisiana, LLC, a Delaware limited liability company
(“PennTex Operating”), owns and will operate certain midstream natural gas and
natural gas liquids gathering, processing and transportation assets, including
natural gas processing plants located in Lincoln Parish, Louisiana and certain
related pipelines (collectively, the “Assets”);

WHEREAS, pursuant to that certain Contribution, Conveyance and Assumption
Agreement, dated as of June 9, 2015, (i) PennTex NLA Holdings, LLC, a Delaware
limited liability company, and MRD WHR LA Midstream LLC, a Delaware limited
liability company, have contributed their respective limited liability company
interests in PennTex Operating to the Partnership and (ii) the Partnership has
contributed all of such limited liability company interests in PennTex Operating
to Midstream Operating;

WHEREAS, Admin desires to second to the General Partner certain personnel who
will be responsible for managing and operating the Assets; and

WHEREAS, Development will provide the General Partner, on behalf of the
Partnership Group, certain centralized partnership and administrative services.

NOW THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

ARTICLE 1

DEFINITIONS; INTERPRETATION

1.1 Definitions. As used in this Agreement, (a) the terms defined in this
Agreement will have the meanings so specified, and (b) capitalized terms not
defined in this Agreement will have the meanings ascribed to those terms on
Exhibit A to this Agreement.

1.2 Interpretation. In this Agreement, unless a clear contrary intention
appears: (a) the singular includes the plural and vice versa; (b) reference to
any Person includes such Person’s successors and assigns but, in the case of a
Party, only if such successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any other
capacity; (c) reference to any gender includes each other gender; (d) reference
to any agreement (including this Agreement), document or instrument means such
agreement, document, or instrument as amended or modified and in

 

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effect from time to time in accordance with the terms thereof and, if
applicable, the terms of this Agreement; (e) reference to any Section means such
Section of this Agreement, and references in any Section or definition to any
clause means such clause of such Section or definition; (f) “hereunder,”
“hereof,” “hereto” and words of similar import will be deemed references to this
Agreement as a whole and not to any particular Section or other provision hereof
or thereof; (g) “including” (and with correlative meaning “include”) means
including without limiting the generality of any description preceding such
term; and (h) relative to the determination of any period of time, “from” means
“from and including,” “to” means “to but excluding” and “through” means “through
and including.”

1.3 Legal Representation of Parties. This Agreement was negotiated by the
Parties with the benefit of legal representation, and any rule of construction
or interpretation requiring this Agreement to be construed or interpreted
against any Party merely because such Party drafted all or a part of such
Agreement will not apply to any construction or interpretation hereof or
thereof.

1.4 Titles and Headings. Section titles and headings in this Agreement are
inserted for convenience of reference only and are not intended to be a part of,
or to affect the meaning or interpretation of, this Agreement.

ARTICLE 2

SECONDMENT

2.1 Provided Personnel. Subject to the terms of this Agreement, Admin agrees to
second, or cause its Affiliates to second, to the General Partner, and the
General Partner agrees to accept the Secondment of, those certain specifically
identified individuals (the “Provided Personnel”) listed in Exhibit B (the
“Provided Personnel Schedule”) for the purpose of performing job functions
related to the Assets (the “Personnel Services”). The Provided Personnel will
remain employees of Admin during the Period of Secondment; however, at all times
during the Period of Secondment (and with respect to Shared Provided Personnel,
during those times that the Shared Provided Personnel are performing services
for the General Partner hereunder), the Provided Personnel shall work solely
under the direction, supervision and control of the General Partner. No Provided
Personnel shall have authority or apparent authority to act on behalf of Admin
during any period such individual is under the direction, supervision or control
of the General Partner. Individuals may be added or removed from the Provided
Personnel Schedule from time to time by the execution by Admin and the General
Partner of a completed “Addition/Removal/Change of Responsibility of Provided
Personnel” form, the form of which is attached to this Agreement as Exhibit C,
which will be fully binding on Admin and the General Partner for all purposes
under this Agreement. Those rights and obligations of Admin and the General
Partner under this Agreement that relate to individuals that were on the
Provided Personnel Schedule but then later removed from the Provided Personnel
Schedule, which rights and obligations accrued before the removal of such
individual, will survive the removal of such individual from the Provided
Personnel Schedule to the extent necessary to enforce such rights and
obligations.

2.2 Period of Secondment. Admin will second, or cause its applicable Affiliate
(such affiliate, a “Seconding Affiliate”) to second, to the General Partner the
Provided Personnel on the Effective Date and continuing, during the period (and
only during the period) that the Provided Personnel are performing services for
the General Partner, until the earlier of:

(a) the end of the term of this Agreement;

(b) such end date as is mutually agreed in writing by Admin and the General
Partner;

 

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(c) a withdrawal, departure, resignation or termination of such Provided
Personnel under Section 2.3; or

(d) a termination of Secondment of such Provided Personnel under Section 2.4.

The period of time that any Provided Personnel is provided by Admin to the
General Partner is referred to in this Agreement as the “Period of Secondment.”
At the end of the Period of Secondment for any Provided Personnel, such Provided
Personnel will no longer be subject to the supervision, control or direction of
the General Partner. Admin and the General Partner acknowledge that certain of
the Provided Personnel may also provide services to Admin and its Affiliates in
connection with their respective operations unrelated to the General Partner
(“Shared Provided Personnel”), and Admin and the General Partner intend that
such Shared Provided Personnel shall only be seconded to the General Partner
during those times that the Shared Provided Personnel are performing services
for the General Partner hereunder.

2.3 Withdrawal, Departure or Resignation. If any Provided Personnel tenders his
resignation to Admin as an employee of Admin, Admin will promptly notify the
General Partner. During the Period of Secondment of any Provided Personnel,
Admin will not voluntarily withdraw or terminate any Provided Personnel except
for terminations for cause (as reasonably determined by Admin) or with the
written consent of the General Partner (which may be through the execution of a
completed “Addition/Removal/Change of Responsibility of Provided Personnel” form
as set forth on Exhibit C), such consent not to be unreasonably withheld,
conditioned or delayed. Upon the termination of employment, the Provided
Personnel will cease performing services for the General Partner.

2.4 Termination of Secondment. The General Partner will have the right to
terminate the Secondment to the General Partner of any Provided Personnel for
any reason at any time in accordance with the policies and procedures of Admin.
Upon the termination of the Period of Secondment for any Provided Personnel
other than the Shared Provided Personnel, the General Partner shall be
responsible for reimbursing Admin for any and all severance costs or other
expenses (which, for the avoidance of doubt, shall constitute Provided Personnel
Expenses hereunder) associated with the termination of such Provided Personnel’s
employment by Admin, provided that such termination of employment occurs within
thirty (30) calendar days following the termination of the applicable Period of
Secondment. Upon the termination of a Secondment, the Provided Personnel will
cease performing services for the General Partner.

2.5 Supervision. During the Period of Secondment, the General Partner shall:

(a) be ultimately and fully responsible for the daily work assignments of the
Provided Personnel (and with respect to Shared Provided Personnel, during those
times that the Shared Provided Personnel are performing services for the General
Partner hereunder), including supervision of their the day-to-day work
activities and performance consistent with the purposes stated in Section 2.1
and the job functions set forth in the Provided Personnel Schedule;

(b) subject to Admin’s policies and procedures, set the hours of work and the
holidays and vacation schedules for Provided Personnel (other than with respect
to Shared Provided Personnel, as to which the General Partner and Admin shall
jointly determine); and

(c) have the right to determine training which will be received by the Provided
Personnel.

 

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In the course and scope of performing any Provided Personnel job functions, the
Provided Personnel will be integrated into the organization of the General
Partner, will report into the General Partner’s management structure and will be
under the direct management and supervision of the General Partner.

2.6 Provided Personnel Qualifications; Approval. Admin will provide such
suitably qualified and experienced Provided Personnel as Admin is able to make
available to the General Partner, and the General Partner will have the right to
approve such Provided Personnel.

2.7 Workers Compensation. At all times, Admin will maintain workers’
compensation or similar insurance (either through an insurance company or
self-insured arrangement) applicable to the Provided Personnel, as required by
applicable state and federal workers’ compensation and similar laws, and will
name the General Partner as an additional named insured under each such
insurance policy.

2.8 Benefit Plans. Neither the General Partner nor any Partnership Group Member
shall be deemed to be a participating employer in any Benefit Plan during the
Period of Secondment. Subject to the General Partner’s reimbursement obligations
hereunder, Admin (or its ERISA Affiliate) shall remain solely responsible for
all obligations and liabilities arising under the express terms of the Benefit
Plans, and the Provided Personnel will be covered under the Benefit Plans
subject to and in accordance with their respective terms and conditions, as they
may be amended from time to time. Admin and its ERISA Affiliates may amend or
terminate any Benefit Plan in whole or in part at any time. During the Period of
Secondment, neither the General Partner nor any Partnership Group Member shall
assume any Benefit Plan or have any obligations, liabilities or rights arising
under the Benefit Plans, in each case except for cost reimbursement pursuant to
this Agreement.

ARTICLE 3

REIMBURSEMENT FOR PROVIDED PERSONNEL

3.1 Reimbursement for Provided Personnel. On or before the fifteenth
(15th) business day after the end of each month during the Period of Secondment,
Admin shall send an itemized invoice (in a form mutually agreed upon by the
General Partner and Admin) to the General Partner detailing all reimbursable
expenses under Section 3.2, as incurred by Admin with respect to the Provided
Personnel in connection with the performance of the Personnel Services during
the preceding month (the “Services Reimbursement”). The General Partner shall,
within fifteen (15) business days of receipt, pay such invoice, except for any
amounts therein being disputed in good faith by the General Partner. Any amounts
that the General Partner has disputed in good faith and that are later
determined by any arbitrator, court or other competent authority having
jurisdiction, or by agreement of Admin and the General Partner, to be owing from
the General Partner to Admin shall be paid in full within fifteen (15) business
days of such determination, together with interest thereon at the Interest Rate
from the date due under the original invoice until the date of payment.

3.2 Provided Personnel Expenses. Subject to Section 3.3 and Section 3.4, the
Services Reimbursement for each month during the Period of Secondment shall
include all reasonable costs and expenses incurred for such month by Admin for
the Provided Personnel (collectively, the “Provided Personnel Expenses”),
including, but not limited to, the following:

(a) salaries, wages, bonuses or commissions (including payroll and withholding
taxes associated therewith) of Provided Personnel;

(b) the cost of providing the Benefit Plans to Provided Personnel;

 

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(c) the cost of providing workers’ compensation coverage and/or benefits to
Provided Personnel; and

(d) reimbursable business expenses of Provided Personnel.

Where it is not reasonably practicable to determine the amount of any Provided
Personnel Expenses, Admin and the General Partner shall mutually agree on the
method of determining or estimating such amount, which may include the
application of an agreed percentage benefit load to a Provided Personnel’s
salary and wages in order to value certain of the benefits listed above. If the
actual amount of any cost or expense, once known, varies from the estimate used
for billing purposes hereunder, the difference, once determined, shall be
reflected as either a credit or additional charge in the next monthly invoice
issued by Admin, or in such manner as may otherwise be agreed between Admin and
the General Partner.

3.3 Adjustments for Period of Secondment. It is understood and agreed that the
General Partner shall be liable for Provided Personnel Expenses to the extent,
and only to the extent, they are attributable to the Period of Secondment. As
such, if the Period of Secondment begins on other than the first day of a month
or ends on other than the last day of a month, the Provided Personnel Expenses
for such month shall be prorated based on the number of days during such month
that the Period of Secondment was in effect.

3.4 Adjustments for Shared Services. With respect to each Provided Personnel who
is a Shared Provided Personnel, Admin (or its applicable Seconding Affiliate)
will determine in good faith the percentage of such Shared Provided Personnel’s
time spent providing services to the General Partner (the “Allocation
Percentage”). For each month during the Period of Secondment, the amount of the
Services Reimbursement payable by the General Partner with respect to each
Shared Provided Personnel shall be calculated by multiplying the Provided
Personnel Expenses for such Shared Provided Personnel by the Allocation
Percentage for such Shared Provided Personnel.

ARTICLE 4

ALLOCATION; RECORDS

4.1 Allocation; Records. Admin will use commercially reasonable efforts to
maintain an allocation schedule reflecting the direct and indirect costs of the
Provided Personnel Expenses based on the services that the Provided Personnel
have provided to the General Partner in relation to the Assets. The General
Partner will use commercially reasonable efforts to keep and maintain
books/records reflecting hours worked and costs and expenses incurred in
connection with each of the Provided Personnel. The General Partner and its
representatives will have the right to audit such records and such other records
as the General Partner may reasonably require in connection with its
verification of the Provided Personnel Expenses during regular business hours
and on reasonable prior notice.

ARTICLE 5

GENERAL AND ADMINISTRATIVE SERVICES

5.1 General and Administrative Services Provided by Development.

(a) Development agrees to provide, and agrees to cause its Affiliates to
provide, to the General Partner, for the Partnership Group’s benefit, certain
centralized partnership and administrative services related to the Partnership’s
ownership and operation of the Assets, including, without limitation, the
general and administrative services listed on Schedule 5.1(a) to this Agreement
(collectively, the “G&A Services”). At the General Partner’s request from time
to

 

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time, Development shall consult with the General Partner and provide such
information as may be reasonably requested by the General Partner with respect
to the performance of the G&A Services. The Partnership shall have the right to
terminate any or all of the G&A Services, without penalty, upon thirty
(30) days’ prior written notice to Development.

(b) As consideration for the provision of G&A Services, the Partnership will pay
Development an administrative fee (the “Administrative Fee”). For the period
from the Effective Date through the end of the 2016 fiscal year, the
Administrative Fee shall be payable on or before the fifteenth (15th) business
day of each month and be calculated as follows:

(i) for the period from and including the Effective Date to and including
June 30, 2015 the Administrative Fee shall be $2,778 per day;

(ii) for each calendar month after June 30, 2015 to and including the Mt. Olive
Commencement Month, the Administrative Fee shall be $83,333 per month;

(iii) for each calendar month after the Mt. Olive Commencement Month to and
including the month of December 2015, the Administrative Fee shall be $166,667
per month;

(iv) for each calendar month during the first six months of the 2016 fiscal
year, the Administrative Fee shall be $250,000; and

(v) for each calendar month during the last six months of the 2016 fiscal year,
the Administrative Fee shall be $333,333.

(c) With respect to the 2017 fiscal year and each subsequent year through the
end of the term of this Agreement, Development and the General Partner shall
negotiate in good faith and mutually agree on an annual Administrative Fee for
the upcoming year, which shall be payable in equal monthly installments on or
before the fifteenth (15th) business day of each month. If Development and the
General Partner are unable to agree on the amount of the Administrative Fee for
an upcoming year on or prior to December 1 of the preceding year, then the
Administrative Fee for such upcoming year shall equal the Administrative Fee for
the preceding year (or, with respect to the 2017 fiscal year, $4.0 million) as
increased by a percentage equal to the change in the Producer Price Index over
the previous 12 calendar months; provided, however, that if Development and the
General Partner are unable to agree on the amount of the Administrative Fee on
or prior to March 31, then Development shall have the right to terminate the G&A
Services, without penalty. If the Agreement is not terminated and Development
and the General Partner agree on the amount of the Administrative Fee, then
Development shall thereafter charge such agreed-upon Administrative Fee for the
remainder of the year.

(d) The Partnership shall reimburse Development for all other direct or
allocated costs and expenses incurred by Development on behalf of the
Partnership Group including, but not limited to:

(i) salaries, wages, bonuses or commissions (including payroll and withholding
taxes associated therewith) of employees of Development and its Affiliates
(other than the Provided Personnel) who devote more than 50% of their business
time to the business and affairs of the Partnership Group, to the extent, but
only to the extent, such employees perform services for the Partnership Group as
determined in good faith by Development based on Development’s reasonable
allocation methodologies as in effect from time to time;

 

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(ii) the cost of employee benefits relating to employees of Development and its
Affiliates (other than the Provided Personnel) who devote more than 50% of their
business time to the business and affairs of the Partnership Group, including
401(k), pension, bonuses and health insurance benefits, to the extent, but only
to the extent, such employees perform services for the Partnership Group as
determined in good faith by Development based on Development’s reasonable
allocation methodologies as in effect from time to time;

(iii) any expenses incurred or payments made by Development for insurance
coverage with respect to the Assets or the business of the Partnership Group;

(iv) all expenses and expenditures incurred by Development as a result of the
Partnership becoming and continuing as a publicly traded entity, including, but
not limited to, costs associated with annual and quarterly reports, independent
auditor fees, partnership governance and compliance, registrar and transfer
agent fees, tax return and Schedule K-1 preparation and distribution, legal fees
and independent director compensation;

(v) all sales, use, excise, value added or similar taxes, if any, that may be
applicable from time to time with respect to the G&A Services provided by
Development to the Partnership Group pursuant to Section 5.1(a); and

(vi) all costs for outside services, including any third-party legal,
consulting, tax and accounting services not included in clause (iv) above, that
are incurred for the Partnership Group’s benefit.

On or before the fifteenth (15th) business day after the end of each month
during the term of this Agreement, Development shall send an itemized invoice
(in a form mutually agreed upon by Development and the Partnership) to the
Partnership detailing all reimbursable expenses under this Section 5.1(d)
incurred by Development during the preceding month. The Partnership shall,
within fifteen (15) business days of receipt, pay such invoice, except for any
amounts therein being disputed in good faith by the Partnership. Any amounts
that the Partnership has disputed in good faith and that are later determined by
any court or other competent authority having jurisdiction, or by agreement of
Development and the Partnership, to be owing from the Partnership to Development
shall be paid in full within fifteen (15) business days of such determination,
together with interest thereon at the Interest Rate from the date due under the
original invoice until the date of payment. For the avoidance of doubt, the
costs and expenses set forth in this Section 5.1(d) shall be paid by the
Partnership in addition to, and not as a part of or included in, the
Administrative Fee.

Development does not make any representations or warranties of any kind, express
or implied, with respect to the services (including the G&A Services) to be
provided under this Article 5, except that the services shall be provided in a
reasonably timely manner by personnel that Development deems to be competent and
qualified to perform such services.

 

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ARTICLE 6

TERM; DEFAULT AND TERMINATION

6.1 Term. The term of this Agreement will commence on the Effective Date and
will continue for an initial period of ten (10) years. Upon the expiration of
the initial ten-year period, the term of this Agreement shall automatically
extend for an additional five-year period, unless the General Partner or
Development provides at least 30 days’ prior written notice to the other Party
prior to the expiration of such initial period that the Party wishes for this
Agreement to expire at the end of the initial ten-year period. After the initial
five-year renewal period, the term of this Agreement shall automatically extend
for additional five-year periods, unless the General Partner or Development
provides prior written notice at least 30 days prior to the expiration of the
applicable five-year period, that the Party wishes for this Agreement to expire
at the end of such five-year period. Upon proper notice by a Party to the other
Party, in accordance with this Article 6, that the Party wishes for this
Agreement to expire on the expiration of the applicable five- or ten-year
period, this Agreement shall not automatically extend, but shall instead expire
upon the expiration of the five- or ten-year period and only those provisions
that, by their terms, expressly survive this Agreement shall so survive.

6.2 Default. A Party shall be in default under this Agreement if: (a) it fails
to perform a material obligation and (b) such failure continues for a period of
thirty (30) days after notice thereof or, if such failure cannot reasonably be
cured within such thirty (30) day period, such longer period (not to exceed
sixty (60) days) so long as such Party is diligently and continuously engaged in
curing such failure. In the event a Party is in default of this Agreement, the
non-defaulting Party may terminate this Agreement upon notice to the defaulting
Party or submit any claims regarding the defaulting Party’s non-performance to
arbitration in accordance with Section 8.17, which, for the avoidance of doubt,
permits the non-defaulting Party to seek interim relief and specific performance
in connection with such arbitration proceedings.

6.3 Termination. This Agreement may be terminated as follows, and only those
provisions that, by their terms, expressly survive this Agreement shall so
survive:

(a) by the Partnership Group at any time upon thirty (30) days’ prior written
notice to Admin or Development;

(b) by any Party upon a default of this Agreement by any other Party that has an
obligation to such Party; or

(c) by any Party at any time upon a Partnership Change of Control.

Any termination pursuant to this Section 6.3 shall be evidenced by a notice
given by the Party effectuating such termination.

ARTICLE 7

INDEMNIFICATION

7.1 Indemnification by Development and Subsidiaries. Development and its
Subsidiaries shall indemnify, protect and defend the Partnership Group and all
of the officers, directors, employees and agents of any Partnership Group Member
(each, an “Indemnified Party” and, collectively, the “Indemnified Parties”)
against, and hold the Indemnified Parties harmless from, any and against all
losses (including lost profits), costs, damages, injuries, taxes, penalties,
interests, expenses, obligations, claims and liabilities (joint or severable) of
any kind or nature whatsoever (collectively, the “Claims”) that are incurred by
such Indemnified Parties in connection with, relating to or arising out of
(a) the breach by Development or any of its Subsidiaries, or their respective
directors, officers, employees, agents, contractors, subcontractors or
consultants of any term or condition of this Agreement, or (b) the performance
of any services under this Agreement; provided, however, that Development and
its Subsidiaries shall not be obligated to indemnify, reimburse, defend or hold
harmless any Indemnified

 

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Party for any Claims incurred by such Indemnified Party in connection with,
relating to or arising out of (i) a breach by such Indemnified Party of this
Agreement, (ii) the gross negligence, willful misconduct, bad faith or reckless
disregard of such Indemnified Party with respect to any services provided under
this Agreement or (iii) the fraudulent or dishonest acts of such Indemnified
Party.

7.2 Indemnification Procedures.

(a) An Indemnified Party agrees that promptly after it becomes aware of facts
giving rise to a Claim under this Article 7, it will provide notice thereof to
Admin or Development, as applicable, pursuant to Section 7.1 (the “Indemnifying
Party”), specifying the nature of and specific basis for such claim, copies of
all correspondence with third parties, Governmental Authorities or other
individuals relating to the claim, and other relevant information reasonably
requested by the Indemnifying Party.

(b) The Indemnifying Party shall have the right to control all aspects of the
response to and/or defense of (and any counterclaims with respect to) any Claims
brought against the Indemnified Party that are covered by the indemnification
under this Article 7, including correspondence and negotiation with Governmental
Authorities, the selection of counsel and engineering and other consultants,
determination of the scope of and approach to any investigation or remediation,
determination of whether to appeal any decision of any court, determination of
whether to enter into any voluntary agreement with any Governmental Authority,
and the settling of any such matter or any issues relating thereto; provided,
however, that no such settlement shall be entered into without the consent of
the Indemnified Party unless it includes a full release of the Indemnified Party
from such matter or issues, as the case may be.

(c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party,
with respect to all aspects of the defense of any Claims covered by the
indemnification under this Article 7, including the prompt furnishing to the
Indemnifying Party of any correspondence or other notice relating thereto that
the Indemnified Party may receive, permitting the name of the Indemnified Party
to be utilized in connection with such defense, the making available to the
Indemnifying Party of any files, records or other information of the Indemnified
Party that the Indemnifying Party considers relevant to such defense and the
making available to the Indemnifying Party of any employees of the Indemnified
Party; provided, however, that in connection therewith the Indemnifying Party
agrees to use reasonable efforts to minimize the impact thereof on the
operations of the Indemnified Party and further agrees to maintain the
confidentiality of all files, records, and other information furnished by the
Indemnified Party pursuant to this Section 7.2. In no event shall the obligation
of the Indemnified Party to cooperate with the Indemnifying Party as set forth
in the immediately preceding sentence be construed as imposing upon the
Indemnified Party an obligation to hire and pay for counsel in connection with
the defense of any Claims covered by the indemnification set forth in this
Article 7; provided, however, that the Indemnified Party may, at its own option,
cost and expense, hire and pay for counsel in connection with any such defense.
The Indemnifying Party agrees to keep any such counsel hired by the Indemnified
Party informed as to the status of any such defense, but the Indemnifying Party
shall have the right to retain sole control over such defense.

(d) In determining the amount of any loss, cost, damage or expense for which the
Indemnified Party is entitled to indemnification under this Agreement, the gross
amount of the indemnification will be reduced by (i) any insurance proceeds
realized by the Indemnified Party, and such correlative insurance benefit shall
be net of any incremental insurance premiums that become due and payable by the
Indemnified Party as a result of such claim and (ii) all amounts recovered by
the Indemnified Party under contractual indemnities from third Persons.

 

9

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ARTICLE 8

GENERAL PROVISIONS

8.1 Accuracy of Recitals. The paragraphs contained in the recitals to this
Agreement are incorporated in this Agreement by this reference, and the Parties
to this Agreement acknowledge the accuracy thereof.

8.2 Notices. Any notice, demand, or communication required or permitted under
this Agreement shall be in writing and delivered personally, by reputable
courier, or by facsimile, and shall be deemed to have been duly given as of the
date and time reflected on the delivery receipt if delivered personally or sent
by reputable courier service, or on the automatic telecopier receipt if sent by
telecopier, addressed as follows:

Development:

PennTex Midstream Partners, LLC

11931 Wickchester Ln., Suite 300

Houston, TX 77043

Attn: Stephen M. Moore

Facsimile: (832) 456-4050

Admin:

PennTex Midstream Management Company, LLC

11931 Wickchester Ln., Suite 300

Houston, TX 77043

Attn: Stephen M. Moore

Facsimile: (832) 456-4050

General Partner:

PennTex Midstream GP, LLC

11931 Wickchester Ln., Suite 300

Houston, TX 77043

Attn: Stephen M. Moore

Facsimile: (832) 456-4050

Partnership:

PennTex Midstream Partners, LP

11931 Wickchester Ln., Suite 300

Houston, TX 77043

Attn: Stephen M. Moore

Facsimile: (832) 456-4050

A Party may change its address for the purposes of notices hereunder by giving
notice to the other Parties specifying such changed address in the manner
specified in this Section 8.2.

8.3 Further Assurances. The Parties agree to execute such additional
instruments, agreements and documents, and to take such other actions, as may be
necessary to effect the purposes of this Agreement.

 

10

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8.4 Modifications. Any actions or agreement by the Parties to modify this
Agreement, in whole or in part, shall be binding upon the Parties, so long as
such modification shall be in writing and shall be executed by all Parties with
the same formality with which this Agreement was executed.

8.5 No Third Party Beneficiaries. No Person not a Party to this Agreement will
have any rights under this Agreement as a third party beneficiary or otherwise,
including, without limitation, Provided Personnel.

8.6 Relationship of the Parties. Nothing in this Agreement will constitute any
Partnership Group Member, Development, Admin or their respective Affiliates as
members of any partnership, joint venture, association, syndicate or other
entity.

8.7 Assignment. No Party will, without the prior written consent of the other
Parties, which consent shall not be unreasonably withheld, assign, mortgage,
pledge or otherwise convey this Agreement or any of its rights or duties
hereunder; provided, however, that (a) a Party may assign or convey this
Agreement without the prior written consent of the other Parties to an Affiliate
and (b) the Partnership may make a collateral assignment of this Agreement to
secure financing for the Partnership Group without the prior written consent of
the other Parties. Unless written consent is not required under this
Section 8.7, any attempted or purported assignment, mortgage, pledge or
conveyance by a Party without the written consent of the other Parties shall be
void and of no force and effect. No assignment, mortgage, pledge or other
conveyance by a Party shall relieve the Party of any liabilities or obligations
under this Agreement.

8.8 Binding Effect. This Agreement will be binding upon, and will inure to the
benefit of, the Parties and their respective successors, permitted assigns and
legal representatives.

8.9 Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed to be an original, and all of which together shall
constitute one and the same Agreement. Each Party may execute this Agreement by
signing any such counterpart.

8.10 Time of the Essence. Time is of the essence in the performance of this
Agreement.

8.11 Governing Law. This Agreement shall be deemed to be a contract made under,
and for all purposes shall be construed in accordance with and governed by, the
laws of the State of Delaware excluding its conflicts of laws principles that
would apply the laws of another jurisdiction, except that the arbitration
agreement in Section 8.17 and any arbitration shall be governed by the Federal
Arbitration Act, Chapters 1 and 2, to the exclusion of state law inconsistent
therewith.

8.12 Delay or Partial Exercise Not Waiver. No failure or delay on the part of
any Party to exercise any right or remedy under this Agreement will operate as a
waiver thereof; nor shall any single or partial exercise of any right or remedy
under this Agreement preclude any other or further exercise thereof or the
exercise of any other right or remedy granted hereby or any related document.
The waiver by a Party of a breach of any provisions of this Agreement will not
constitute a waiver of a similar breach in the future or of any other breach or
nullify the effectiveness of such provision.

8.13 Entire Agreement. This Agreement constitutes and expresses the entire
agreement between the Parties with respect to the subject matter hereof. All
previous discussions, promises, representations and understandings relative
thereto are hereby merged in and superseded by this Agreement.

 

11

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8.14 Waiver. To be effective, any waiver or any right under this Agreement will
be in writing and signed by a duly authorized officer or representative of the
Party bound thereby.

8.15 Signatories Duly Authorized. Each of the signatories to this Agreement
represents that he is duly authorized to execute this Agreement on behalf of the
Party for which he is signing, and that such signature is sufficient to bind the
Party purportedly represented.

8.16 Incorporation of Exhibits and Schedules by References. Any reference herein
to any exhibit or schedule to this Agreement will incorporate it herein, as if
it were set out in full in the text of this Agreement.

8.17 Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration administered
by the American Arbitration Association in accordance with its Commercial
Arbitration Rules and judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The place of arbitration shall
be Houston, Texas, and the hearings shall be conducted in Houston, Texas. If the
claim in the demand for arbitration is less than $1 million, there shall be one
(1) arbitrator; otherwise, there shall be three (3) arbitrators. In the case of
one (1) arbitrator, the arbitrator shall be jointly appointed by the Parties
within thirty (30) days of the filing of the demand for arbitration. In the case
of three (3) arbitrators, one shall be appointed by the claimant(s) in the
demand for arbitration, the second appointed by the respondent(s) within thirty
(30) days of receipt of the demand for arbitration, and the third, who shall act
as chairman of the arbitral tribunal, appointed by the Parties within thirty
(30) days of the appointment of the second arbitrator. If any arbitrators are
not appointed within these time periods, the American Arbitration Association
shall make the appointment(s). All arbitrators must (a) be neutral parties who
have never been officers, directors or employees of any Partnership Group
Member, Development, Admin or their respective Affiliates and (b) have not less
than seven years’ experience in the energy industry. An arbitral tribunal
constituted under this agreement may, unless consolidation would prejudice the
rights of any Party, consolidate an arbitration hereunder with arbitration under
the Omnibus Agreement if the arbitration proceedings raise common questions of
law or fact. If two or more arbitral tribunals under these agreements issue
consolidation orders, the order issued first shall prevail. The award shall be
made within twelve months of the filing of the notice of intention to arbitrate
(demand), and the arbitrators shall agree to comply with this schedule before
accepting appointment. However, this time limit may be extended by the
arbitrators for good cause shown, or by mutual agreement of the Parties. The
arbitrators shall have no right to grant or award indirect, consequential,
punitive or exemplary damages of any kind. The award of the arbitrators shall be
accompanied by a reasoned opinion. Except as may be required by law, neither a
Party nor an arbitrator may disclose the existence, content, or results of any
arbitration hereunder without the prior written consent of the other Parties.

[Signature page follows]

 

12

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AS WITNESS HEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives on the date herein above mentioned.

 

PennTex Midstream Partners, LLC By: /s/ Steven R. Jones Name: Steven R. Jones
Title: Chief Financial Officer PennTex Midstream Management Company, LLC By: /s/
Steven R. Jones Name: Steven R. Jones Title: Chief Financial Officer PennTex
Midstream GP, LLC By: /s/ Steven R. Jones Name: Steven R. Jones Title: Chief
Financial Officer PennTex Midstream Partners, LP By: PennTex Midstream GP, LLC,
its general partner By: /s/ Steven R. Jones Name: Steven R. Jones Title: Chief
Financial Officer

Signature Page to Services and Secondment Agreement

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SCHEDULE 5.1(a)

General and Administrative Services Provided by Development

 

(i) Executive services of employees of the General Partner who devote less than
50% of their business time to the business and affairs of the Partnership Group

 

(ii) Financial and administrative services (including treasury and accounting)

 

(iii) Information technology

 

(iv) Legal services

 

(v) Health, safety and environmental services

 

(vi) Human resources services

 

(vii) Business development services

 

(viii) Investor relations and government relations

 

(ix) Tax matters

 

(x) Insurance administration

 

Schedule 5.1(a)

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EXHIBIT A

Definitions

“Admin” has the meaning set forth in the preamble to this Agreement.

“Administrative Fee” has the meaning set forth in Section 5.1(b).

“Affiliate” means, with respect to any Person, (a) any other Person directly or
indirectly Controlling, Controlled By or under common control with such Person,
(b) any Person owning or controlling fifty percent (50%) or more of the voting
interests of such Person, (c) any officer or director of such Person, or (d) any
Person who is the officer, director, trustee, or holder of fifty percent
(50%) or more of the voting interest of any Person described in clauses
(a) through (c). For purposes of this definition, the term “controls,” “is
controlled by” or “is under common control with” shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Voting
Securities, by contract or otherwise. For purposes of this Agreement, no
Partnership Group Member shall be deemed to be an Affiliate of Development or
Admin nor shall Development or Admin be deemed to be an Affiliate of any
Partnership Group Member or of each other.

“Agreement” shall mean this Services and Secondment Agreement, including all
Exhibits, Schedules and amendments to this Agreement.

“Applicable Law” means all statutes, regulations, rules, ordinances, codes,
licenses, permits, orders, approvals and rules of common law of each
Governmental Authority having jurisdiction over the Parties, including
Environmental Laws, all health, building, fire, safety and other codes,
ordinances and requirements, in each case, as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree, judgment or settlement; in each case, as applicable to
any Party or the Assets.

“Assets” has the meaning set forth in the Recitals to this Agreement.

“Allocation Percentage” has the meaning set forth in Section 3.4.

“Benefit Plans” means each employee benefit plan, as defined in Section 3(3) of
ERISA, and any other plan, policy, program, practice, agreement, understanding
or arrangement (whether written or oral) providing compensation or other
benefits to any Provided Personnel (or to any dependent or beneficiary thereof),
including, without limitation, any equity-based compensation, bonus or incentive
compensation, deferred compensation, profit sharing, holiday, cafeteria,
medical, disability or other employee benefit plan, program, policy, agreement
or arrangement sponsored, maintained, or contributed to by Admin or any of its
ERISA Affiliates, or under which Admin or any of its ERISA Affiliates may have
any obligation or liability, whether actual or contingent, in respect of or for
the benefit of any Provided Personnel.

“Claims” has the meaning set forth in Section 7.1.

“Control” (including with correlative meaning, the term “Controlled by”) means,
as used with respect to any Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of a majority of the Voting
Securities, by contract or otherwise.

 

Exhibit A-1

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“Development” has the meaning set forth in the preamble to this Agreement.

“Effective Date” has the meaning set forth in the preamble to this Agreement.

“Environmental Laws” means all federal, state, and local laws, statutes, rules,
regulations, orders, judgments, ordinances, codes, injunctions, decrees, permits
and other legally enforceable requirements and rules of common law now or
hereafter in effect, relating to (a) pollution or protection of human health,
natural resources, wildlife and the environment including, without limitation,
the federal Comprehensive Environmental Response, Compensation, and Liability
Act, the Superfund Amendments Reauthorization Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the
Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water
Act, the Hazardous Materials Transportation Act, and other environmental
conservation and protection laws and the regulations promulgated pursuant
thereto, and any state or local counterparts, each as amended from time to time,
and (b) the generation, manufacture, processing, distribution, use, treatment,
storage, transport, or handling of any hazardous wastes.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any entity that would be treated as a single employer
with an Operator under Sections 414(b), (c) or (m) of the Code or
Section 4001(b)(1) of ERISA.

“General Partner” has the meaning set forth in the preamble to this Agreement.

“Governmental Authority” means any federal, state, local or foreign government
or any provincial, departmental or other political subdivision thereof, or any
entity, body or authority exercising executive, legislative, judicial,
regulatory, administrative or other governmental functions or any court,
department, commission, board, bureau, agency, instrumentality or administrative
body of any of the foregoing.

“Indemnified Party” or “Indemnified Parties” has the meaning set forth in
Section 7.1.

“Indemnifying Party” has the meaning set forth in Section 7.2(a).

“Interest Rate” means the lesser of (i) two percent (2%) over the one month
London Interbank Offered Rate (LIBOR) prevailing during the period in question,
and (ii) the maximum rate permitted by Applicable Law.

“Midstream Operating” has the meaning set forth in the Recitals to this
Agreement.

“Mt. Olive Commencement Month” means the calendar month in which the Mt. Olive
Plant commences commercial operations.

“Mt. Olive Plant” means that certain gas processing plant being constructed by
the Partnership and its Affiliates and located at 155 LP&L Road-PVT, Ruston,
Louisiana.

“Omnibus Agreement” means that certain Omnibus Agreement, dated as of June 9,
2015, by and among the Partnership, the General Partner and Development.

“Partnership” has the meaning set forth in the preamble to this Agreement.

“Partnership Change of Control” means Development ceases to Control the General
Partner.

 

Exhibit A-2

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“Partnership Group” means the General Partner, the Partnership and all of the
Partnership’s Subsidiaries, treated as a single consolidated entity.

“Partnership Group Member” means any member of the Partnership Group.

“Party” or “Parties” has the meaning set forth in the preamble to this
Agreement.

“PennTex Operating” has the meaning set forth in the Recitals to this Agreement.

“Period of Secondment” has the meaning set forth in Section 2.2.

“Person” means any individual or any partnership, corporation, limited liability
company, trust, or other legal entity.

“Personnel Services” has the meaning set forth in Section 2.1.

“Producer Price Index” shall have the meaning ascribed to the term “PPI,” as
published by the United States Bureau of Labor Statistics.

“Provided Personnel” has the meaning set forth in Section 2.1.

“Provided Personnel Expenses” has the meaning set forth in Section 3.2.

“Provided Personnel Schedule” has the meaning set forth in Section 2.1.

“Seconding Affiliate” has the meaning set forth in Section 2.2.

“Secondment” means each assignment of any Provided Personnel to the General
Partner from Admin or its applicable Seconding Affiliate in accordance with the
terms of this Agreement.

“Services Reimbursement” has the meaning set forth in Section 3.1.

“Shared Provided Personnel” has the meaning set forth in Section 2.2.

“Subsidiary” means, with respect to any Person, (a) a corporation of which more
than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if such Person,
directly or by one or more Subsidiaries of such Person, or a combination
thereof, Controls such partnership on the date of determination, or (c) any
other Person (other than a corporation or a partnership) in which such Person,
one or more Subsidiaries of such Person, or a combination thereof, directly or
indirectly, at the date of determination, has (i) at least a majority ownership
interest or (ii) the power to elect or direct the election of a majority of the
directors, managers or other governing body of such Person.

“Voting Securities” of a Person means securities of any class of such Person
entitling the holders thereof 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 limited partnership, Voting Securities of
such Person shall be the general partner interest in such Person.

 

Exhibit A-3

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EXHIBIT B

Provided Personnel

In reference to that certain Services and Secondment Agreement, dated as of
June 9, 2015 (the “Secondment Agreement;” terms with initial capital letters
used but not defined herein shall have the meanings ascribed to such terms in
the Secondment Agreement), among PennTex Midstream Partners, LLC, a Delaware
limited liability company, PennTex Midstream Management Company, LLC, a Delaware
limited liability company, PennTex Midstream GP, LLC, a Delaware limited
liability company, and PennTex Midstream Partners, LP, a Delaware limited
partnership.

[Available upon request.]

 

Exhibit B-1

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EXHIBIT C

Addition/Removal/Change of Responsibility of Provided Personnel Form

In reference to that certain Services and Secondment Agreement, dated June 9,
2015 (the “Secondment Agreement;” terms with initial capital letters used but
not defined herein shall have the meanings ascribed to such terms in the
Secondment Agreement), among PennTex Midstream Partners, LLC, a Delaware limited
liability company, PennTex Midstream Management Company, LLC, a Delaware limited
liability company (“Admin”), PennTex Midstream GP, LLC, a Delaware limited
liability company (the “General Partner”), and PennTex Midstream Partners, LP, a
Delaware limited partnership.

In accordance with Section 2.1 of the Secondment Agreement, Admin and the
General Partner hereto wish to add remove, or change the responsibilities of the
following individual or individuals to the Provided Personnel Schedule (all
information must be filled in for this form to be valid):

Provided Personnel

 

Company

  

Name of Provided

Personnel

  

Title and Job Functions

                 

 

PENNTEX MIDSTREAM GP, LLC By:  

 

Name:  

 

Title:  

 

PENNTEX MIDSTREAM MANAGEMENT COMPANY, LLC By:  

 

Name:  

 

Title:  

 

 

Exhibit C-1