exv10w1






Exhibit 10.1




SECURITIES PURCHASE AND

GLOBAL TRANSACTION AGREEMENT




AMONG




NATURAL GAS PARTNERS VII, L.P.

NATURAL GAS PARTNERS VIII, L.P.

MONTIERRA MINERALS & PRODUCTION, L.P.

MONTIERRA MANAGEMENT LLC

EAGLE ROCK HOLDINGS, L.P.

EAGLE ROCK ENERGY G&P, LLC

EAGLE ROCK ENERGY GP, L.P.




AND




EAGLE ROCK ENERGY PARTNERS, L.P.




DATED DECEMBER 21, 2009




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I Definitions
	 	 	2	 
	1.1 Definitions
	 	 	2	 
	1.2 Certain Interpretive Matters
	 	 	11	 
	 
	 	 	 	 
	ARTICLE II The Rights Offering
	 	 	12	 
	2.1 The Rights Offering
	 	 	12	 
	2.2 The NGP Commitment
	 	 	14	 
	2.3 Conditions to the NGP Commitment
	 	 	14	 
	 
	 	 	 	 
	ARTICLE III The Equity Offering
	 	 	15	 
	3.1 The Equity Offering
	 	 	15	 
	3.2 The NGP Commitment
	 	 	17	 
	3.3 Conditions to the NGP Commitment
	 	 	18	 
	 
	 	 	 	 
	ARTICLE IV Payment of the Transaction Fee
	 	 	19	 
	4.1 Payment
	 	 	19	 
	4.2 Conditions to Payment of the Transaction Fee
	 	 	19	 
	4.3 Fixed and Irrevocable Obligations
	 	 	21	 
	4.4 Transaction Fee Allocation
	 	 	21	 
	 
	 	 	 	 
	ARTICLE V The Contribution of the ERH Interests
	 	 	21	 
	5.1 Deliveries at the ERH Interests Contribution Closing
	 	 	21	 
	5.2 Representations and Warranties Relating to the
ERH Interests Contribution Closing
	 	 	22	 
	 
	 	 	 	 
	ARTICLE VI The General Partner Acquisition Option
	 	 	22	 
	6.1 The General Partner Acquisition Option
	 	 	22	 
	6.2 Conditions to the General Partner Acquisition Option
	 	 	23	 
	6.3 General Partner Activities
	 	 	24	 
	6.4 Representations and Warranties Regarding the
General Partner Acquisition Option
	 	 	25	 
	 
	 	 	 	 
	ARTICLE VII Covenants
	 	 	25	 
	7.1 The Registration Statement
	 	 	25	 
	7.2 The Proxy Statement and the Unitholder Meeting
	 	 	27	 
	7.3 Further Assurances
	 	 	29	 
	7.4 Press Releases
	 	 	29	 
	7.5 Partnership Activities
	 	 	29	 
	7.6 Notification of Certain Matters
	 	 	30	 
	7.7 Competing Proposals
	 	 	31	 
	7.8 Use of Proceeds
	 	 	31	 
	7.9 Assurances Regarding ERH’s Obligations
	 	 	31	 
	7.10 Assurances Regarding the R&M Purchase Agreement
	 	 	32	 
	 
	 	 	 	 
	ARTICLE VIII UNITHOLDER APPROVAL
	 	 	32	 
	8.1 Conditions to All Transactions
	 	 	32	 
	 
	 	 	 	 
	ARTICLE IX Representations and Warranties
	 	 	32	 
	9.1 Representations and Warranties of the Partnership
	 	 	32	 






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	9.2 Representations and Warranties of the NGP Parties
	 	 	35	 
	 
	 	 	 	 
	ARTICLE X TERMINATION
	 	 	37	 
	10.1 Termination
	 	 	37	 
	10.2 Effect of Termination
	 	 	39	 
	 
	 	 	 	 
	ARTICLE XI MISCELLANEOUS
	 	 	40	 
	11.1 Fees and Expenses
	 	 	40	 
	11.2 Entire Agreement; No Third Party Beneficiaries
	 	 	40	 
	11.3 Successors
	 	 	40	 
	11.4 Assignments
	 	 	40	 
	11.5 Notices
	 	 	40	 
	11.6 Construction
	 	 	41	 
	11.7 Time
	 	 	42	 
	11.8 Counterparts
	 	 	42	 
	11.9 Amendments and Waivers
	 	 	42	 
	11.10 Headings
	 	 	42	 
	11.11 Governing Law
	 	 	42	 
	11.12 Severability
	 	 	42	 
	11.13 Incorporation of Exhibits
	 	 	43	 
	11.14 Remedies
	 	 	43	 
	 
	 	 	 	 
	Exhibit A            Form of Partnership Agreement Amendment
	 	 	 	 
	Exhibit B            Form of Amended Partnership Agreement
	 	 	 	 
	Exhibit C            Form of Contribution Agreement
	 	 	 	 
	Exhibit D            Form of Assignment and Assumption Agreement
	 	 	 	 
	Exhibit E            Form and Terms of Warrant
	 	 	 	 






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SECURITIES PURCHASE AND

GLOBAL TRANSACTION AGREEMENT



          This Securities Purchase and Global Transaction Agreement (this “Agreement”) is entered into
as of December 21, 2009 by and among Natural Gas Partners VII, L.P., a Delaware limited partnership
(“NGP VII”), Natural Gas Partners VIII, L.P., a Delaware limited partnership (“NGP VIII”),
Montierra Minerals & Production, L.P., a Texas limited partnership (“Montierra”), Montierra
Management LLC, a Texas limited liability company (“Montierra Management”), Eagle Rock Holdings,
L.P., a Texas limited partnership (“ERH” and, together with NGP VII, NGP VIII, Montierra and
Montierra Management, the “NGP Parties”), Eagle Rock Energy G&P, LLC, a Delaware limited liability
company (“G&P LLC”), Eagle Rock Energy GP, L.P., a Delaware limited partnership (“Eagle Rock GP”),
and Eagle Rock Energy Partners, L.P., a Delaware limited partnership (the “Partnership”).





RECITALS:




          A. Eagle Rock GP is the general partner of the Partnership, and G&P LLC is the general partner
of Eagle Rock GP.




          B. ERH owns 100% of the limited liability company interests of G&P LLC and all of the limited
partner interests of Eagle Rock GP.




          C. The NGP Parties collectively own 8,700,169 common units representing limited partner
interests (“Common Units”) in the Partnership and 20,691,495 subordinated units representing
limited partner interests (“Subordinated Units”) in the Partnership.




          D. Contemporaneously with the execution and delivery of this Agreement, BSAP II GP, L.L.C, a
Delaware limited liability company (“Black Stone”), Eagle Rock Pipeline GP, LLC, a Delaware limited
liability company (“ER Pipeline”) and EROC Production, LLC, a Delaware limited liability company
(“EROC Production”), have entered into the R&M Purchase Agreement (defined herein).




          E. The conflicts committee (the “Conflicts Committee”) of the board of directors of G&P LLC
(the “Board”) has approved and recommended to the Board and the Board has approved, subject to
receipt of the Required Unitholder Approvals (defined herein), the transactions described in this
Agreement and the R&M Purchase Agreement.




AGREEMENT:




          NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein
contained, the parties hereto hereby stipulate and agree as follows.




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ARTICLE I

DEFINITIONS




     1.1 Definitions. As used in this Agreement, the following terms have the meanings specified or referred to
in this Section 1.1.



          “Action” means any claim, action, suit, proceeding, or investigation brought by any
Governmental Authority.




          “Adjusted EBITDA” means, with respect to the Partnership on a consolidated basis, net income
(loss), adjusted for income tax provision (benefit); interest-net, including realized interest rate
risk management instruments and other expense; depreciation, depletion and amortization expense;
impairment expense; other operating expense, non-recurring; other non-cash operating and general
and administrative expenses, including non-cash compensation related to equity-based compensation
program; unrealized (gains) losses on commodity and interest rate risk management related
instruments; (gains) losses on discontinued operations and other (income) expense; in each case,
determined on a consistent basis in accordance with GAAP.




          “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly,
Controls, is Controlled by or is under common Control with, such specified Person through one or
more intermediaries or otherwise; provided, however, that (i) with respect to the Partnership
Group, the term “Affiliate” will exclude the NGP Parties and their Affiliates other than the
Partnership Group, and (ii) with respect to each of the NGP Parties, the term “Affiliate” will
exclude G&P LLC, Eagle Rock GP and the Partnership Group.




          “Agreement” is defined in the Preamble.




          “Alternative Offering” is defined in Section 3.1.




          “Amended Partnership Agreement” means an amendment and restatement of the Partnership
Agreement substantially in the form set forth on Exhibit B.




          “Assignment and Assumption Agreement” means an assignment and assumption agreement
substantially in the form of Exhibit D.




          “Black Stone” is defined in the Recitals.




          “Board” is defined in the Recitals.




          “Business Day” means each day of the week except Saturdays, Sundays and days on which banking
institutions are authorized or required to close in the State of Texas.




          “Change in Recommendation” is defined in Section 7.2(a).




          “Code” means the Internal Revenue Code of 1986.




          “Commitments” means (a) options, warrants, convertible securities, exchangeable securities,
subscription rights, conversion rights, exchange rights, or other contracts or agreements that
could require a Person to issue any of its Equity Interests or to sell any Equity



2









 






Interests it owns in another Person; (b) any other securities convertible into, exchangeable
or exercisable for, or representing the right to subscribe for any Equity Interest of a Person or
owned by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted under a Person’s
organizational documents; and (d) stock appreciation rights, phantom stock, profit participation,
or other similar rights with respect to a Person.




          “Common Unit” is defined in the Recitals.




          “Competing Proposal” means any proposal, offer or inquiry from or by any Person other than the
NGP Parties and their Affiliates (1) relating to (i) a merger, tender or exchange offer,
consolidation, reorganization, reclassification, recapitalization, liquidation or dissolution, or
other business combination involving the Partnership, (ii) the issuance by the Partnership of (A)
any general partner interest in the Partnership or (B) any class of equity securities in the
Partnership constituting more than 15% of such class of securities or (iii) the acquisition of, in
any manner, directly or indirectly, (A) any general partner interest in the Partnership, (B) any
class of equity securities in the Partnership constituting more than 15% of such class of
securities, or (C) more than 15% of the consolidated total assets of the Partnership (including
equity interests in any subsidiary of the Partnership) or (D) all or substantially all of the
Equity Interests in or the assets held by Eagle Rock Production, L.P., and (2) that is inconsistent
with the consummation of the transactions contemplated by this Agreement or requires or results in
termination of this Agreement.




          “Conflicts Committee” is defined in the Recitals.




          “Contribution Agreement” means a contribution agreement substantially in the form of
Exhibit C.




          “Control” means, where 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 voting securities, by contract or otherwise, and the terms
“Controlling” and “Controlled” have correlative meanings.




          “Delaware LP Act” means the Delaware Revised Uniform Limited Partnership Act.




          “DTC” means The Depositary Trust Company.




          “Eagle Rock GP” is defined in the Recitals.




          “Encumbrance” means any mortgage, pledge, lien, encumbrance, charge, or other security
interest.




          “Equity Commitment Amount” means a number (rounded to the nearest whole number) of Common
Units determined as follows: the number of Common Units which, purchased at a price of $3.10 per
Common Unit, would result in an aggregate purchase price equal to the lesser of (A) $105 million
minus the actual gross proceeds (if any) of the Offering and (B) $41,648,370.




          “Equity Commitment Exercise Notice” is defined in Section 3.2(a).




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          “Equity Interests” means (a) with respect to a corporation, any and all shares of capital
stock and any Commitments with respect thereto, (b) with respect to a partnership, limited
liability company, trust or similar Person, any and all units, interests or other
partnership/limited liability company interests, and any Commitments with respect thereto, and (c)
any other direct or indirect equity ownership or participation in a Person.




          “ERGP LP Interest” means all of the outstanding limited partner interests in Eagle Rock GP.




          “ERH” is defined in the Preamble.




          “ERH Interests” means the ERH Subordinated Units and the IDRs.




          “ERH Interests Contribution Closing” means the closing of the contribution of the ERH
Interests to the Partnership pursuant to Section 5.1.




          “ERH Subordinated Units” means 20,691,495 Subordinated Units.




          “EROC Production” is defined in the Recitals.




          “ER Pipeline” is defined in the Recitals.




          “Exchange Act” means the Securities Exchange Act of 1934.




          “Expiration Time” is defined in Section 7.2(d).




          “FINRA” means the Financial Industry and Regulatory Authority, Inc.




          “GAAP” is defined in the definition of Material Adverse Change.




          “G&P LLC” is defined in the Recitals.




          “G&P LLC Interest” means all of the issued and outstanding limited liability company interests
in G&P LLC.




          “General Partner Interests” means the G&P LLC Interest and the ERGP LP Interest.




          “General Partner Units” means the general partner units representing general partner interests
in the Partnership issued pursuant to the Partnership Agreement.




          “Governmental Authority” means any legislature, agency, bureau, branch, department, division,
commission, court, tribunal, magistrate, justice, multi-national organization, quasi-governmental
body, or other similar recognized organization or body of any federal, state, county, municipal,
local, or foreign government or other similar recognized organization or body exercising similar
powers or authority having competent jurisdiction.




          “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.




          “IDRs” means all of the Incentive Distribution Rights (as such term is defined in the
Partnership Agreement).




4









 








          “Initial NGP Common Unit Purchase Date” is defined in Section 3.2(c).




          “Law” means any law (statutory, common, or otherwise), constitution, treaty, convention,
ordinance, equitable principle, code, rule, regulation, executive order, or other similar authority
enacted, adopted, promulgated, or applied by any Governmental Authority, each as amended and now
and hereinafter in effect.




          “Material Adverse Change” or “Material Adverse Effect” means any of the following:





          (a) any state of facts, change, development, event, effect, condition or occurrence
that is material and adverse to the financial position, results of operations, business or
assets of the Partnership and its subsidiaries taken as a whole; provided, however, that in
no event shall the impact of any of the following be considered in any determination of the
existence of a Material Adverse Change or a Material Adverse Effect under this subparagraph
(a): (A) circumstances affecting companies engaged in the gathering and processing of
natural gas or the exploration and production of oil or natural gas (in each case in the
geographic regions in which the Partnership Group operates) generally or affecting the
natural gas gathering and processing or oil and natural gas exploration and production
industry (in each case in the geographic regions in which the Partnership Group operates)
generally (including in each case changes in the price of natural gas, natural gas liquids,
crude oil, sulphur or other commodities and the cost associated with the drilling and/or
production of natural gas), (B) any general market, economic, financial or political
conditions, or outbreak or hostilities or war, in the United States, (C) the effects of the
Transactions and compliance by the Partnership with this Agreement on the financial
position, results of operations, business or assets of the Partnership and its subsidiaries,
(D) changes in Laws or United States generally accepted accounting principles (“GAAP”) or
(E) changes in the price or trading volume of the Common Units (provided that this clause
(E) does not prevent a determination that any underlying cause of such change resulted in or
contributed to a Material Adverse Change or Material Adverse Effect);




          (b) the Adjusted EBITDA of the Partnership for the calendar quarter ending (i) December
31, 2009 being less than $37.275 million, (ii) March 31, 2010 being less than $25.05
million, or (iii) June 30, 2010 being less than $24.675 million (all as reported or
calculable from the Partnership SEC Reports) and, in any such case the primary cause(s) of
such reduced Adjusted EBITDA is or are reasonably expected to continue for 12 months from
its or their inception;




          (c) the aggregate average daily throughput of all Partnership midstream and production
assets (excluding the R&M Assets (as defined in the R&M Purchase Agreement)) for the
calendar quarter ending (i) December 31, 2009 being less than 464,141 mcf/d, (ii) March 31,
2010 being less than 481,287 mcf/d, or (iii) June 30, 2010 being less than 508,707 mcf/d
and, in any such case the primary cause(s) of such reduced throughput is or are reasonably
expected to continue for 12 months from its or their inception; or



5









 






          (d) the removal from office (with the approval of a majority of the members of the
Board who serve on the Conflicts Committee), death or permanent disability of Joseph Mills,
the chief executive officer of G&P LLC.



          “Measurement Window” means any period of ten consecutive Trading Days, except that the last
Measurement Window is the ten consecutive Trading Day period ending on the third Trading Day
immediately preceding the date upon which the Required Unitholder Approvals are received.




          “Measurement Window Average Price” means, for any Measurement Window, the average of the
closing prices on NASDAQ of a Common Unit for all Trading Days in such Measurement Window.




          “Montierra” is defined in the Preamble.




          “Montierra Management” is defined in the Preamble.




          “NASDAQ” means the NASDAQ Global Market or any other stock exchange or market on which the
Common Units are primarily listed.




          “NGP Common Unit Purchase Date” is defined in Section 3.2(c).




          “NGP Parties” is defined in the Preamble.




          “NGP VII” is defined in the Preamble.




          “NGP VIII” is defined in the Preamble.




          “Non-Affiliated Unitholders” means holders of Common Units other than Eagle Rock GP and its
Affiliates (including the NGP Parties and their respective Affiliates).




          “Non-Public Information” is defined in Section 7.7(b).




          “Notice Period” is defined in Section 4.5.




          “Offering” is defined in Section 3.1.




          “Offering Completion Deadline” means the end of the day occurring four months after the
Unitholder Approval Date; provided, however, that the Conflicts Committee shall be entitled to
extend the Offering Completion Deadline to the end of the day occurring five months after the
Unitholder Approval Date, upon notice to the NGP Parties, if at such time (a) the SEC has issued
any stop order suspending the effectiveness of the Registration Statement or any order preventing
or suspending the use of the Offering Document or initiated any proceedings for that purpose, (b)
the Registration Statement has ceased to be effective for any reason or the prospectus contained
therein fails to satisfy the requirements of Section 10(a) of the Securities Act which failure to
meet such requirement, in the good faith judgment of the Conflicts Committee, could not reasonably
be expected to be remedied by the end of the day occurring four months after the Unitholder
Approval Date following the Partnership’s use of commercially reasonable efforts to satisfy such
requirement, or (c) the Partnership has experienced an event, transaction or



6









 






development that in the good faith judgment of the Conflicts Committee is material to the
Partnership or that otherwise would be required to be disclosed in the Offering Document to avoid
the Offering Document from including any untrue statement of a material fact or omitting to state
any material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and the Conflicts Committee determines in
good faith that the Partnership is unable to disclose such event, transaction or development in a
manner sufficient to meet the requirements of the Securities Act or that it is in the best interest
of the Partnership not to disclose such event, transaction or development, in each case at such
time.




          “Offering Document” is defined in Section 3.1(c)(i).




          “Omnibus Agreement” means that certain Omnibus Agreement, dated as of October 27, 2006, among
the Eagle Rock GP, the Partnership, G&P LLC and ERH and certain other parties thereto, as in effect
on the date of this Agreement.




          “Option Closing Date” is defined in Section 6.1.




          “Option Consideration” means 1,000,000 Common Units; provided that such amount will be
correspondingly adjusted in the event of any subdivisions, reclassifications, reorganizations,
recapitalizations, splits, combinations or distributions in the form of equity interests (other
than as expressly contemplated by this Agreement or other agreements entered into in connection
with the Transactions) with respect to Common Units prior to delivery of the Option Consideration.




          “Option Notice” is defined in Section 6.1.




          “Order” means any order, writ, injunction, decree, ruling, compliance or consent order or
decree, settlement agreement, schedule and similar binding legal agreement issued by or entered
into with a Governmental Authority.




          “Owned Units” is defined in Section 7.2(d).




          “Parties” means the NGP Parties and the Partnership.




          “Partnership” is defined in the Preamble.




          “Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership
of the Partnership dated as of October 27, 2006.




          “Partnership Agreement Amendment” means an amendment of the Partnership Agreement
substantially in the form set forth on Exhibit A




          “Partnership Group” means the Partnership and its subsidiaries.




          “Partnership SEC Reports” means the forms, reports, schedules, registration statements,
definitive proxy statements and other documents filed with or furnished to the SEC by the
Partnership.




7









 








          “Person” means any individual or entity, including any firm, corporation, partnership (general
or limited), limited liability company, trust, joint venture, Governmental Authority or other
entity.




          “Proxy Statement” means the proxy statement relating to the Unitholder Meeting.




          “R&M Purchase Agreement” means the R&M Purchase Agreement between ER Pipeline, EROC Production
and Black Stone dated the date of this Agreement.




          “Receiving Party” is defined in Section 7.7(a).




          “Recommendation” is defined in Section 7.2(a).




          “Registration Statement” means a “universal shelf” registration statement on Form S-3 covering
securities including Rights, Warrants, and Common Units (including Common Units issuable upon
exercise of Rights and Common Units issuable upon exercise of Warrants).




          “Registration Statement Effectiveness Date” means the date upon which the Registration
Statement is declared effective by the SEC.




          “Representative” shall mean with respect to a Person, its directors, officers, employees,
agents and representatives, including any investment banker, financial advisor, attorney,
accountant or other advisor, agent or representative.




          “Required Unitholder Approvals” means approval of the Unitholder Proposals, including the
following: (i) approval of the Unitholder Proposals by the holders of a majority of the Common
Units held by Non-Affiliated Unitholders, and (ii) approval of the Amended Partnership Agreement by
the holders of a Unit Majority (as defined in the Partnership Agreement).




          “Right” is defined in Section 2.1(a).




          “Right Subscription Price” is defined in Section 2.1(a).




          “Rights Agent” is defined in Section 2.1(e)(iii).




          “Rights Offering” is defined in Section 2.1.




          “Rights Offering Distribution Date” means the date on which the Partnership begins
distribution of Rights to holders of Common Units pursuant to Section 2.1.




          “Rights Offering Expiration Time” means the time disclosed in the Rights Offering Prospectus
as the expiration of the period in which holders of Rights may exercise such Rights (which will
initially be 5:00 p.m., New York City time, on the last Business Day of the month in which the
Rights Offering Launch Date occurs), and any extensions thereof (i) mutually agreed upon by the
Conflicts Committee and the NGP Parties or (ii) as determined by the Conflicts Committee pursuant
to the following sentence. If between the Rights Offering Distribution Date and the Rights
Offering Expiration Time, (a) the Partnership experiences an event, transaction or development
that, in the good faith judgment of the Conflicts Committee, is material to the



8









 






Partnership or that otherwise would be required to be disclosed in the Rights Offering
Prospectus to avoid the Rights Offering Prospectus from including any untrue statement of a
material fact or omitting to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then existing and (b) the
Conflicts Committee determines in good faith that the Partnership is unable to disclose such event,
transaction or development in a manner sufficient to meet the requirements of the Securities Act
or that it is in the best interest of the Partnership not to disclose such event, transaction or
development, in each case prior to the Rights Offering Expiration Time (or a sufficient period of
time prior to the Rights Offering Expiration Time to allow adequate dissemination of such
disclosure), the Conflicts Committee shall be entitled to extend the Rights Offering Expiration
Time; provided, however, that in no event shall such Rights Offering Expiration Time be extended by
more than 30 days without the consent of the NGP Parties.




          “Rights Offering Launch Date” means the first Business Day of the calendar month following the
latest of (i) the Unitholder Approval Date, (ii) the Registration Statement Effectiveness Date and
(iii) the consummation of the transactions contemplated by the R&M Purchase Agreement; provided,
however, that the Conflicts Committee may delay the Rights Offering Launch Date if at such time (a)
the SEC has issued any stop order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Rights Offering Prospectus or initiated any
proceedings for that purpose, (b) the Registration Statement has ceased to be effective for any
reason or the prospectus contained therein fails to satisfy the requirements of Section 10(a) of
the Securities Act which failure to meet such requirement, in the good faith judgment of the
Conflicts Committee, could not reasonably be expected to be remedied by the Rights Offering Launch
Date following the Partnership’s use of commercially reasonable efforts to satisfy such
requirement, (c) the Partnership has experienced an event, transaction or development that in the
good faith judgment of the Conflicts Committee is material to the Partnership or that otherwise
would be required to be disclosed in the Rights Offering Prospectus to avoid the Rights Offering
Prospectus from including any untrue statement of a material fact or omitting to state any material
fact required to be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing and the Conflicts Committee determines in good faith that
the Partnership is unable to disclose such event, transaction or development in a manner sufficient
to meet the requirements of the Securities Act or that it is in the best interest of the
Partnership not to disclose such event, transaction or development, in each case at such time or
(d) all conditions set forth in Section 2.1(f) have not been satisfied or waived. If the
Rights Offering Launch Date is delayed as a result of any of the events described in clauses (a),
(b) or (d) of the preceding proviso, the Rights Offering Launch Date shall be the first Business
Day of the calendar month immediately following the time that any such order or proceedings have
been revoked or ceased or such conditions have been satisfied. If the Rights Offering Launch Date
is delayed as a result of any event, transaction or development described in clause (c) of the
preceding proviso, the Rights Offering Launch Date shall be the date set by the Conflicts
Committee, which date shall not be any later than the first Business Day of the next calendar
month; provided that the Rights Offering Launch Date may only be delayed once pursuant to clause
(c) of the preceding proviso.




          “Rights Offering Prospectus” is defined in Section 2.1(e)(i).




          “SEC” means the United States Securities and Exchange Commission.




9









 








          “Securities Act” means the Securities Act of 1933.




          “Subordinated Unit” is defined in the Recitals.




          “Subsequent NGP Common Unit Purchase Date” is defined in Section 3.2(c).




          “Termination Date” means June 30, 2010, or such other date to which the Termination Date may
be extended pursuant to Section 7.2(c).




          “Termination Fee” means $7 million cash in immediately available funds.




          “Trading Day” means any day on which Common Units are traded on NASDAQ.




          “Transaction Fee” is defined in Section 4.1.




          “Transaction Fee Allocation Schedule” is defined in Section 4.5.




          “Transaction Fee Payment Date” is defined in Section 4.1(a).




          “Transactions” means the transactions contemplated by this Agreement and the R&M Purchase
Agreement, including:





          (a) The Rights Offering;




          (b) The exercise by the NGP Parties of their Rights as contemplated by Section
2.2 and (if exercised) the exercise by the NGP Parties of some or all of their
oversubscription privileges;




          (c) The Offering;




          (d) The purchase by the NGP Parties of Common Units if the Partnership timely delivers
an Equity Commitment Exercise Notice;




          (e) The contribution by ERH to the Partnership of the IDRs and the ERH Subordinated
Units as contemplated by Section 5.1;




          (f) The payment by the Partnership to ERH of the Transaction Fee as contemplated by
Section 4.1;




          (g) The sale by ER Pipeline and EROC Production to Black Stone of the R&M Interests, as
contemplated by the R&M Purchase Agreement;




          (h) The execution and delivery by Eagle Rock GP (for itself and on behalf of the
limited partners of the Partnership) of the Amended Partnership Agreement as contemplated by
Section 5.1; and




          (i) The acquisition (if the Option Notice is delivered) of the General Partner
Interests as contemplated by Section 6.1.



10









 





          “Underwritten Public Offering” means a firm commitment underwritten primary offering of Common
Units by the Partnership resulting in gross proceeds to the Partnership of not more than $105
million or $140 million, as applicable, (excluding any over-allotment option) and otherwise meeting
the requirements set forth in Article III.




          “Unitholder Approval Date” means the date, if any, on which the Partnership has received the
Required Unitholder Approvals.




          “Unitholder Meeting” is defined in Section 7.2(a).




          “Unitholder Proposals” means the following proposals to be presented at the Unitholder
Meeting:





          (a) Approval of this Agreement;




          (b) Approval of the Partnership Agreement Amendment; and




          (c) Approval of the Amended Partnership Agreement.



          “Warrant” means a warrant, in the form attached hereto as Exhibit E, that entitles the
holder thereof, upon exercise thereof, to purchase one Common Unit at an exercise price of $6.00,
which may be exercised during the two-year period following the completion of the Rights Offering
on any March 15, May 15, August 15 or November 15.




     1.2 Certain Interpretive Matters. In this Agreement:




          (a) Any reference to a statute, regulation or Law will be deemed also to refer to any
amendment thereto and all rules and regulations promulgated thereunder, unless the context
expressly requires otherwise;




          (b) Any reference to an agreement, instrument or document will be deemed to refer to
that agreement, instrument or document as amended, restated, supplemented and otherwise
modified from time to time, unless the context expressly requires otherwise;




          (c) The words “include,” “includes,” and “including” will be deemed to be followed by
“without limitation”;




          (d) Examples will not be construed to limit, expressly or by implication, the matter
they illustrate;




          (e) Any pronoun will include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns, pronouns and verbs will include the plural and vice versa,
unless the context otherwise expressly requires;




          (f) The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of
similar import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited;




          (g) The term “cost” includes expense and the term “expense” includes cost;



11









 






          (h) The headings and titles herein are for convenience only and will have no
significance in the interpretation hereof;




          (i) Currency amounts referenced herein are in U.S. Dollars;




          (j) Unless the context otherwise requires, all references to time mean time in Houston,
Texas;




          (k) Whenever this Agreement refers to a number of days, such number refers to calendar
days unless Business Days are specified;




          (l) If a term is defined as one part of speech (such as a noun), it has a corresponding
meaning when used as another part of speech (such as a verb).



ARTICLE II

THE RIGHTS OFFERING




     2.1 The Rights Offering. Subject to Section 2.1(f), on the Rights Offering Launch Date, the Partnership will
distribute to each holder of Common Units or General Partner Units, in respect of each Common Unit
and General Partner Unit held by such holder, 0.35 Rights pursuant to and in accordance with the
provisions of this Section 2.1. Such distribution, the related offering of securities for
which the Rights are exercisable, and the issuance of such securities to the extent that the Rights
are exercised (including those for which oversubscription privileges are exercised and also
including the issuance of the Warrants), as more fully described in this Section 2.1, are
referred to herein collectively as the “Rights Offering”.




          (a) Each whole right (a “Right”) will entitle the holder thereof to subscribe for and
purchase from the Partnership one Common Unit for a subscription price of $2.50 per Common
Unit (the “Right Subscription Price”) for which such holder’s Rights are exercised. No
fractional Common Units will be issued pursuant to the Rights Offering; accordingly, any
Person exercising Rights would be entitled to exercise for an aggregate number of Common
Units that is rounded down to the nearest whole number. The Rights will be evidenced by one
or more detachable subscription certificates (which may be evidenced by one global
certificate) in form and substance reasonably acceptable to the Partnership and the NGP
Parties.




          (b) The holders of Rights will be entitled to exercise such Rights from the Rights
Offering Distribution Date until the Rights Offering Expiration Time.




          (c) The Rights Offering will include oversubscription privileges for each Person timely
exercising Rights in full, which privilege will permit each such Person to purchase any
Common Units, at the Right Subscription Price, for which Rights were exercisable but with
respect to which Rights were not exercised, subject to a pro rata allotment (based on
relative participation (i.e., number of Rights exercised) in the initial exercise of Rights)
among all such Persons exercising such privilege.




          (d) In addition, the Partnership will issue to each Person exercising Rights (for no
additional consideration) one Warrant in respect of each Common Unit purchased by such
Person in the Rights Offering (including Common Units purchased pursuant to the



12









 







oversubscription privilege). The Warrants will be evidenced by one or more
certificates (which may be evidenced by one global certificate) substantially in the form
attached hereto as Exhibit E.




          (e) In connection with the Rights Offering, the Partnership will:




          (i) prepare a prospectus supplement to the base prospectus in the Registration
Statement (the “Rights Offering Prospectus”) covering the Common Units for which the
Rights are exercisable, the Warrants, and the Common Units for which the Warrants
are exercisable;




          (ii) at least five Business Days before the Rights Offering Distribution Date,
provide a copy of the Rights Offering Prospectus to the NGP Parties for review and
comment;




          (iii) enter into a rights agent agreement with a bank or other intermediary,
which agreement and such intermediary must be reasonably acceptable to both the
Partnership and the NGP Parties, and which agreement will (among other things)
appoint such intermediary as the rights agent (the “Rights Agent”) for the Rights
Offering;




          (iv) enter into a warrant agent agreement with a bank or other intermediary
including terms substantially similar to those set forth in Exhibit E, which
agreement and such intermediary must be reasonably acceptable to both the
Partnership and the NGP Parties, and which agreement will (among other things)
appoint such intermediary as the warrant agent for the Warrants;




          (v) enter into such agreements with, and provide such instruments and documents
to, NASDAQ, DTC and the Partnership’s transfer agent as are reasonably necessary or
appropriate to consummate the Rights Offering; and




          (vi) use its best efforts to as promptly as practicable take any and all action
necessary or appropriate to keep effective all registrations, permits, consents and
approvals of the SEC and any other applicable Governmental Authorities, and make
such filings under applicable Laws as are reasonably necessary or appropriate in
connection with the Rights Offering; provided, that none of the foregoing requires
the Partnership to disclose material non-public information regarding the
Partnership Group if the Conflicts Committee determines in good faith that it is in
the best interest of the Partnership not to disclose such information at such time
and the Partnership is not otherwise required to disclose such information
hereunder.




          (f) The obligations of the Partnership set forth in this Section 2.1 will be subject to
the fulfillment (or the waiver by the Conflicts Committee on behalf of the Partnership,
which may be granted or withheld in the Conflicts Committee’s sole discretion) of each
condition precedent listed in this Section 2.1(f).




          (i) All conditions set forth in Section 8.1 have been fulfilled prior
to the Rights Offering Distribution Date;



13









 






          (ii) No Action is pending or threatened in writing that seeks to restrain or
prohibit the consummation of, or otherwise challenges the legality or validity of,
the launch or consummation of the Rights Offering or the exercise by the NGP Parties
and Eagle Rock GP of the Rights as required by Section 2.2(a);




          (iii) No Order has been issued and is continuing that restrains or prohibits
the launch or consummation of the Rights Offering or the exercise by the NGP Parties
and Eagle Rock GP of the Rights as required by Section 2.2(a);




          (iv) The representations and warranties of the NGP Parties, as applicable, set
forth in Section 9.2 are true and correct in all material respects on the
Rights Offering Launch Date, as though made at and as of the Rights Offering Launch
Date;




          (v) The NGP Parties have performed and complied in all material respects with
all covenants and agreements contained in this Agreement that are required to be
performed and complied with by the Partnership on or prior to the Rights Offering
Launch Date; and




          (vi) The NGP Parties have delivered to the Partnership an officer’s
certificate, dated the Rights Offering Launch Date, to the effect that the
conditions set forth in Sections 2.1(f)(iv) and (v) have been
satisfied.



     2.2 The NGP Commitment.




          (a) Subject to the satisfaction or waiver by the NGP Parties of the conditions set
forth in Section 2.3, each NGP Party and Eagle Rock GP will properly and timely
exercise, and pay the appropriate aggregate Right Subscription Price with respect to, all
Rights it receives in respect of its Common Units or General Partner Units. Each NGP Party
and Eagle Rock GP will have the right, but not the obligation, to exercise all or part of
its oversubscription privilege in respect of its Rights.




          (b) To the fullest extent permitted by Law, no NGP Party will assign, pledge, sell,
dispose of or otherwise transfer or permit any Encumbrance to exist with respect to any
Common Units or Rights it receives in respect thereof to any Person at or before the Rights
Offering Expiration Time.



     2.3 Conditions to the NGP Commitment. The obligation of the NGP Parties and Eagle Rock GP to exercise Rights pursuant to
Section 2.2(a) will be subject to the fulfillment (or the waiver by the NGP Parties, which
may be granted or withheld in the NGP Parties’ sole discretion) of each condition precedent listed
in this Section 2.3.




          (a) All conditions set forth in Section 8.1 have been fulfilled prior to the
Rights Offering Distribution Date;




          (b) No Action is pending or threatened in writing that seeks to restrain or prohibit
the consummation of, or otherwise challenges the legality or validity of, the Rights
Offering or the exercise by the NGP Parties and Eagle Rock GP of the Rights as required by
Section 2.2(a);



14









 






          (c) No Order has been issued and is continuing that restrains or prohibits the
consummation of the Rights Offering or the exercise by the NGP Parties and Eagle Rock GP of
the Rights as required by Section 2.2(a);




          (d) The representations and warranties of the Partnership set forth in Section
9.1 are true and correct in all material respects on the Rights Offering Distribution
Date, as though made at and as of the Rights Offering Distribution Date;




          (e) The Partnership has performed and complied in all material respects with all
covenants and agreements contained in this Agreement that are required to be performed and
complied with by the Partnership on or prior to the Rights Offering Distribution Date;




          (f) The Partnership has delivered to the NGP Parties an officer’s certificate, dated
the Rights Offering Distribution Date, to the effect that the conditions set forth in
Sections 2.3(a), 2.3(d) and 2.3(e) have been satisfied; and




          (g) The transactions contemplated by the R&M Purchase Agreement shall have closed.



ARTICLE III

THE EQUITY OFFERING




     3.1 The Equity Offering. The Partnership will pursue, and use commercially reasonable efforts to market and
complete, an Underwritten Public Offering pursuant to and in accordance with this Section
3.1 as soon as reasonably practicable after the completion of the Rights Offering but before
the Offering Completion Deadline. In lieu of completing any such Underwritten Public Offering, the
Partnership may elect to issue and sell by or before the Offering Completion Deadline Common Units
in a public offering that does not constitute an Underwritten Public Offering, including any direct
placement, “bought deal” or block trade pursuant to an effective registration statement or
registration statement under the Securities Act, or in a private placement (any such offering being
referred to as an “Alternative Offering” and collectively with any Underwritten Public Offering, an
“Offering”) if the Conflicts Committee concludes in good faith that engaging in an Alternative
Offering is in the best interests of the Partnership. Upon the consummation of any Offering, the
Partnership shall be deemed to have satisfied its obligations under this Section 3.1.
Notwithstanding anything to the contrary herein, the Partnership shall have no obligation to
initiate marketing of (i.e., distribution of a prospectus or offering memorandum to potential
investors), or complete, any Offering if the Conflicts Committee concludes in good faith that it is
not in the best interests of the Partnership to do so. Other than (x) pursuant to employee benefit
plans, qualified stock option plans or employee compensation plans and (y) as otherwise
contemplated by this Agreement or the Transactions, the Partnership will not complete any Offering
before the Offering Completion Deadline that does not comply with this Section 3.1.




          (a) The price to the public or ultimate purchaser in the Offering will be no less than
$3.10 per Common Unit. If the price to the public or ultimate purchaser in the Offering is
$3.40 per Common Unit or less, the gross proceeds of the Offering will not exceed $105
million (excluding any overallotment option). If the price to the public or



15









 







the ultimate purchaser in the Offering is greater than $3.40 per Common Unit, the gross
proceeds of the Offering will not exceed $140 million (excluding any overallotment option).




          (b) The Conflicts Committee shall have the authority to determine on behalf of the
Partnership the form of the Offering, the size of the Offering, the timing of the Offering,
the price to be received in the Offering and the other material terms of the Offering. For
the avoidance of doubt, the Partnership shall have no obligation to initiate marketing of
(i.e., distribution of a prospectus or offering memorandum to potential investors), or
complete, such Offering if the Conflicts Committee concludes in good faith that it is not in
the best interests of the Partnership to initiate marketing of or complete such Offering.




          (c) In connection with any Offering, the Partnership will (as applicable):




          (i) prepare a prospectus supplement to the base prospectus in the Registration
Statement or an offering memorandum (the “Offering Document”) covering the Common
Units to be issued in the Offering;




          (ii) at least five Business Days before beginning marketing of the Offering,
provide a draft of the Offering Document (if any) to the NGP Parties for reasonable
review and comment;




          (iii) enter into an underwriting agreement or other purchase agreement, having
reasonable and customary terms, with one or more underwriters, reasonably acceptable
to the NGP Parties;




          (iv) enter into such agreements with, and provide such instruments and
documents to, NASDAQ, DTC and the Partnership’s transfer agent as are reasonably
necessary or appropriate to consummate the Offering; and




          (v) take any and all action necessary or reasonably appropriate to keep
effective all registrations, permits, consents and approvals of the SEC and any
other applicable Governmental Authorities, and make such filings under applicable
Laws as are necessary or reasonably appropriate in connection with the Offering;
provided, that none of the foregoing requires the Partnership to disclose material
non-public information regarding the Partnership Group if the Conflicts Committee
determines in good faith that it is in the best interest of the Partnership not to
disclose such information at such time.




          (d) In connection with the Offering, the NGP Parties shall:




          (i) enter into a customary lock-up agreement regarding any securities of the
Partnership held by such NGP Party, as reasonably requested by the lead underwriter
or the applicable initial purchaser; and




          (ii) furnish to the Partnership for inclusion in any offering or disclosure
document, information regarding the NGP Parties to the extent reasonably requested
by the Partnership; provided, that, unless the Partnership is



16









 







required by Law to disclose such information in such offering or disclosure
document, none of the foregoing requires the NGP Parties to disclose material
non-public information regarding the NGP Parties if the NGP Parties determine
reasonably and in good faith that it is in the best interest of the NGP Parties not
to disclose such information at such time.



     3.2 The NGP Commitment. If, at any time, the Conflicts Committee determines in good faith that the Partnership (i)
will not be able to complete the Offering (excluding any overallotment option) prior to the
Offering Completion Deadline or (ii) will receive gross proceeds from the Offering (excluding any
overallotment option) of less than $105 million (or, if the price to the public or ultimate
purchaser in the Offering is greater than $3.40 per Common Unit, $140 million) prior to the
Offering Completion Deadline, then the Conflicts Committee, in its sole discretion, may elect to
exercise its option hereunder, and ERH shall be obligated to purchase Common Units as set forth in
this Section 3.2.




          (a) The Partnership may deliver notice (the “Equity Commitment Exercise Notice”) to the
NGP Parties at any time before the Offering Completion Deadline electing to exercise the
Partnership’s rights under this Section 3.2.




          (b) If the Equity Commitment Exercise Notice is timely delivered, then subject to the
satisfaction or waiver by the NGP Parties of the conditions set forth in Section
3.3, ERH will purchase from the Partnership, the Equity Commitment Amount at a price of
$3.10 per Common Unit.




          (c) The purchase by ERH of Common Units pursuant to Section 3.2(b) will take
place on the later of (A) the earlier of (i) the closing date of the Offering (excluding any
overallotment option) and (ii) the Offering Completion Deadline and (B) if all conditions
set forth in Section 3.3 are not satisfied or waived on the date described in clause
(A), the first Business Day on which all of the conditions set forth in Section 3.3
have been satisfied or waived (the “Initial NGP Common Unit Purchase Date”); provided,
however, that ERH shall not be required to purchase Common Units pursuant to Section
3.2(b) more than six months after the Offering Completion Deadline. In the event that
the purchase by ERH of Common Units pursuant to Section 3.2(b) requires HSR Act
approval, ERH shall purchase on the Initial NGP Common Unit Purchase Date the maximum amount
of Common Units that may be purchased without HSR Act approval, and the Parties will
thereafter cooperate and use commercially reasonable efforts to obtain such approval. As
promptly as practicable following the receipt of such HSR Act approval and subject to the
satisfaction of the conditions set forth in Section 3.3, ERH shall purchase any
remaining Equity Commitment Amount at a price of $3.10 per Common Unit (the date of such
purchase, the “Subsequent NGP Common Unit Purchase Date”). If HSR Act approval has not been
obtained within six months after the Initial NGP Common Unit Purchase Date, the Parties will
use commercially reasonable efforts in good faith to negotiate, or cause to be negotiated, a
mutually satisfactory resolution to the remaining Equity Commitment Amount. If the Parties
are unable to reach such mutually satisfactory resolution within six months after initiating
negotiations pursuant to the immediately preceding sentence, then NGP shall have no further
obligation under this Section 3.2 to purchase the remaining Equity Commitment
Amount. Each of the Initial NGP Common Unit Purchase Date and each Subsequent NGP



17









 







Common Unit Purchase Date is referred to herein as an “NGP Common Unit Purchase Date”.




          (d) The Conflicts Committee shall have the sole authority and discretion to determine
whether and when to deliver (or not deliver, as applicable) the Equity Commitment Exercise
Notice.




          (e) The NGP Parties will deliver to the Partnership an officer’s certificate dated the
NGP Common Unit Purchase Date to the effect that the representations and warranties of the
NGP Parties set forth in Section 9.2 are true and correct in all material respects
on the NGP Common Unit Purchase Date, as though made at and as of the NGP Common Unit
Purchase Date.




          (f) The NGP Parties shall not take any action (other than actions required under this
Agreement) with respect to any Common Units or Subordinated Units that would be reasonably
likely (taken together with the transactions contemplated by this Agreement) to result in a
HSR Act filing obligation.



     3.3 Conditions to the NGP Commitment. The obligation of ERH to purchase Common Units pursuant to Section 3.2 will be
subject to the fulfillment (or the waiver by ERH, which may be granted or withheld in ERH’s sole
discretion) of each condition precedent listed in this Section 3.3.




          (a) All conditions set forth in Section 8.1 have been fulfilled prior to the
NGP Common Unit Purchase Date;




          (b) No Action is pending or threatened in writing that seeks to restrain or prohibit
the consummation of, or otherwise challenges the legality or validity of, the consummation
of ERH’s purchase of Common Units pursuant to Section 3.2;




          (c) No Order has been issued and is continuing that restrains or prohibits the
consummation of ERH’s purchase of Common Units pursuant to Section 3.2;




          (d) The representations and warranties of the Partnership set forth in Section
9.1 are true and correct in all material respects on the NGP Common Unit Purchase Date,
as though made at and as of the NGP Common Unit Purchase Date;




          (e) The Partnership has performed and complied in all material respects with all
covenants and agreements contained in this Agreement that are required to be performed and
complied with by the Partnership on or prior to the NGP Common Unit Purchase Date;




          (f) The Rights Offering has been completed and all outstanding Rights have been
exercised or have expired;




          (g) The Partnership delivers to ERH an officer’s certificate, dated the NGP Common Unit
Purchase Date, to the effect that the conditions set forth in Sections 3.3(a),
3.3(d), 3.3(e) and 3.3(f) have been satisfied; and




18











 






          (h) The transactions contemplated by the R&M Purchase Agreement shall have closed.



ARTICLE IV

PAYMENT OF THE TRANSACTION FEE




     4.1 Payment. If the Required Unitholder Approvals have been obtained, the Partnership will pay to ERH an
aggregate of $29 million (the “Transaction Fee”) in accordance with this Section 4.1.




          (a) Payment of the Transaction Fee will be made on or before the later of (A) the
earlier of (i) the completion of the Offering (excluding any overallotment option) and (ii)
the Offering Completion Deadline and (B) if all conditions set forth in Section 4.2
are not satisfied or waived on the date described in clause (A), the first Business Day on
which all of the conditions set forth in Section 4.2 have been satisfied or waived
(the “Transaction Fee Payment Date”).




          (b) The Partnership shall pay the Transaction Fee by delivering to ERH either (i) $29
million cash or (ii) 9,354,839 Common Units (as determined by and in the sole discretion of
the Conflicts Committee).



     4.2 Conditions to Payment of the Transaction Fee. The obligation of the Partnership to pay the Transaction Fee pursuant to Section
4.1 will be subject to the fulfillment (or the waiver by the Conflicts Committee on behalf of
the Partnership, which may be granted or withheld in the Conflicts Committee’s sole discretion) of
each condition precedent listed in this Section 4.2.




          (a) The NGP Parties shall have performed and complied in all material respects with all
covenants and agreements contained in this Agreement that are required to be performed and
complied with by such NGP Parties on or prior to the Unitholder Approval Date;




          (b) The representations and warranties set forth in Section 5.2; solely to the
extent that the substance of such representations and warranties pertains to the
transactions contemplated by Article IV or Article V of this Agreement,
Section 9.2(c); Section 9.2(e); if applicable, Section 9.2(g);
Section 9.2(h); and, with respect to the applicable representations and warranties
described in this Section 4.2(b), Section 9.2(i), are true and correct in
all material respects on the Transaction Fee Payment Date, as though made at and as of the
Transaction Fee Payment Date;




          (c) No Action is pending or threatened in writing that seeks to restrain or prohibit
the consummation of, or otherwise challenges the legality or validity of, the payment of the
Transaction Fee pursuant to Section 4.1;




          (d) The deliverables set forth in Section 5.1(a) shall have been delivered to
the Partnership;




          (e) No Order has been issued and is continuing that restrains or prohibits the purchase
of the NGP Commitment Amount pursuant to Section 3.2, the payment of the



19









 







Transaction Fee or the consummation of ERH or Eagle Rock GP’s contribution of the ERH Interests pursuant
to Section 5.1;




          (f) The applicable NGP Parties deliver to the Partnership an officer’s certificate,
dated as of the Transaction Fee Payment Date, to the effect that the conditions set forth in
Sections 4.2(a) and 4.2(d) have been satisfied;




          (g) Each of ERH, NGP VII and NGP VIII deliver to the Partnership an officer’s
certificate, dated as of the Transaction Fee Payment Date, to the effect that such NGP
Party’s applicable conditions set forth in Section 4.2(b) has been satisfied; and




          (h) The transactions contemplated by the R&M Purchase Agreement shall have closed.



20









 





     4.3 Fixed and Irrevocable Obligations. Subject to Section 6.2 and Article X, and notwithstanding the failure of
any of the representations and warranties of the NGP Parties set forth in Section 9.2 to be
true and correct on the Transaction Fee Payment Date, from and after the payment of the Transaction
Fee, all obligations of the NGP Parties under this Agreement that have not been performed on or
before the Transaction Fee Payment Date shall be fixed and irrevocable, and must be fully
performed, in accordance with the terms of this Agreement.



     4.4 Transaction Fee Allocation. For income tax purposes, the Transaction Fee shall be allocated among its component parts
in the manner set forth in a schedule (the “Transaction Fee Allocation Schedule”). The Transaction
Fee Allocation Schedule shall be prepared by ERH and delivered (along with certain non-privileged
supporting materials that it has gathered in preparing such schedule that support the
reasonableness thereof) to the Partnership within forty-five (45) days following the date of this
Agreement. The Partnership will have a period of twenty-one (21) days after receipt of the
Transaction Fee Allocation Schedule (the “Notice Period”) to notify ERH in writing of its election
to accept or reject the Transaction Fee Allocation Schedule; provided, however, that any rejection
must be reasonable. In the event written notice is received rejecting the Transaction Fee
Allocation Schedule during the Notice Period, ERH and the Partnership shall attempt to resolve any
disputes in good faith. If any dispute shall not have been resolved within thirty (30) days after
the initial written notice of rejection is received by ERH, then the dispute shall, unless the
parties otherwise agree, be submitted to and settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, now in effect. In the event
no written notice rejecting the Transaction Fee Allocation Schedule is received by ERH during the
Notice Period, the Transaction Fee Allocation Schedule prepared by ERH will be deemed accepted by
the Partnership and shall be deemed final and binding on the parties hereto. ERH and the
Partnership (or their applicable Affiliates) shall not take any position on their respective tax
returns that is inconsistent with the allocation set forth on the Transaction Fee Allocation
Schedule.



ARTICLE V

THE CONTRIBUTION OF THE ERH INTERESTS




     5.1 Deliveries at the ERH Interests Contribution Closing. On the date that the Transaction Fee is paid, ERH and Eagle Rock GP will contribute the ERH
Interests free and clear of any Encumbrances to the Partnership pursuant to and in accordance with
this Section 5.1.




          (a) At the ERH Interests Contribution Closing, the applicable NGP Parties will deliver
(or cause to be delivered) to the Partnership:




          (i) A counterpart to the Contribution Agreement
executed by Eagle Rock GP;




          (ii) A counterpart to the Contribution Agreement executed by ERH;




          (iii) Certificate(s) representing the ERH Subordinated Units;




          (iv) An affidavit of each of ERH and Eagle Rock GP stating, under penalty of
perjury, ERH’s taxpayer identification number and that ERH or Eagle



21









 







Rock GP, as applicable, is not a foreign person for United States federal tax purposes, pursuant
to Section 1445(b)(2) of the Code;




          (v) The Amended Partnership Agreement executed by Eagle
Rock GP (for itself and
on behalf of the limited partners of the Partnership); and




          (vi) An officer’s certificate, dated the date of the ERH Interests Contribution
Closing, to the effect that the representations and warranties of such NGP Party set
forth in Section 5.2; Section 9.2(a); solely to the extent that the
substance of such representations and warranties pertains to the transactions
contemplated by Article IV or Article V of this Agreement,
Sections 9.2(b) through 9.2(d); Section 9.2(e); Section
9.2(h); and with respect to the applicable representations and warranties
described in this Section 5.1(a)(vi), Section 9.2(i), are true and
correct in all material respects on the date of the ERH Interests Contribution
Closing as though made at and as of the date of the ERH Interests Contribution
Closing.




          (b) At the ERH Interests Contribution Closing, the Partnership will deliver to ERH and
Eagle Rock GP an executed counterpart to the Contribution Agreement.



     5.2 Representations and Warranties Relating to the ERH Interests Contribution
Closing.




          (a) ERH hereby represents and warrants that the following statements are true and
correct on the date hereof and will be true and correct on and as of the ERH Interests
Contribution Closing.




          (i) ERH holds of record and owns beneficially the ERH Subordinated Units, free
and clear of any Encumbrances (other than any restrictions under the Securities Act,
state securities Laws, the Partnership Agreement and the Delaware LP Act).




          (ii) Eagle Rock GP holds of record and owns beneficially the IDRs, free and
clear of any Encumbrances (other than any restrictions under the Securities Act,
state securities Laws, the Partnership Agreement and the Delaware LP Act).




          (b) NGP VII and NGP VIII hereby jointly and severally represent and warrant that (i) to
their knowledge, the representations and warranties made by ERH in Section 5.2(a)
are true and correct and (ii) neither of them has taken any action, or knowingly acquiesced
to any action, that would cause the representations and warranties of ERH in Section
5.2(a) not to be true and correct.



ARTICLE VI

THE GENERAL PARTNER ACQUISITION OPTION




     6.1 The General Partner Acquisition Option. Subject to the satisfaction of the conditions
set forth in Section 6.2, ERH grants
the Partnership an option, exercisable in accordance with this Section 6.1, to purchase the
General Partner Interests. If the Partnership



22









 







desires to exercise such option, the Partnership
must deliver to ERH, no earlier than the first Business Day after the day on which the Transaction
Fee is paid and no later than December 31, 2012, a written notice that the Partnership is
exercising its option to purchase the General Partner Interests (the “Option Notice”). If the
Partnership timely delivers an Option Notice, then, within 20 Business Days following its receipt
of the Option Notice, the Partnership will purchase (and ERH will sell) the General Partner
Interests in accordance with this Section 6.1. At the closing of such purchase and sale
(the date of which is referred to herein as the “Option Closing Date”):




          (a) The applicable NGP Parties will deliver to the Partnership:




          (i) An executed counterpart to the Assignment and Assumption Agreement;




          (ii) An affidavit of ERH stating, under penalty of perjury, ERH’s taxpayer
identification number and that ERH is not a foreign person for United States federal
tax purposes, pursuant to Section 1445(b)(2) of the Code; and




          (iii) An officer’s certificate, dated the Option Closing Date, to the effect
that the representations and warranties of each of ERH, NGP VII and NGP VIII set
forth in Sections 6.4, 9.2(a) through (g) (solely to the
extent that the substance of such representations and warranties pertains to the
transactions contemplated by this Article VI) and 9.2(h) (solely
with respect to the General Partner Units) are true and correct in all material
respects on the Option Closing Date as though made at and as of the date of the
Option Closing Date and that each of ERH, NGP VII and NGP VIII has performed and
complied in all material
respects with all covenants and agreements contained in Section 6.3 of
this Agreement.




          (b) The Partnership will deliver to ERH:




          (i) The Option Consideration; and




          (ii) An executed counterpart to the Assignment and Assumption Agreement.




          (c) The Conflicts Committee shall have the sole authority and discretion to determine
whether and when to deliver (or not deliver, as applicable) the Option Notice.



     6.2 Conditions to the General Partner Acquisition Option. The obligation of ERH to sell the General Partner Interests pursuant to Section 6.1
will be subject to the fulfillment (or the waiver by ERH, which may be granted or withheld in ERH’s
sole discretion) of each condition precedent listed in this Section 6.2.




          (a) No Action is pending or threatened in writing that seeks to restrain or prohibit
the consummation of, or otherwise challenges the legality or validity of, consummation of
ERH’s sale of the General Partner Interests pursuant to Section 6.1;




          (b) No Order has been issued and is continuing that restrains or prohibits the
consummation of ERH’s sale of the General Partner Interests pursuant to Section 6.1;



23









 







          (c) The Partnership has performed and complied in all material respects with all
covenants and agreements contained in this Agreement that are required to be performed and
complied with by the Partnership on or prior to the Option Closing Date;




          (d) The Partnership delivers to ERH an officer’s certificate, dated the Option Closing
Date, to the effect that the conditions set forth in Section 6.2(c) have been
satisfied.



     6.3 General Partner Activities. From the date hereof until the first Business Day following the earlier of (i) the Option
Closing Date and (ii) December 31, 2012, and except as contemplated by the Transactions or this
Agreement, ERH will not, without the prior written consent of the Partnership:




          (a) sell, transfer or otherwise dispose of, or permit any Encumbrance to exist with
respect to, any Equity Interests in G&P LLC or Eagle Rock GP; or




          (b) cause or permit G&P LLC or Eagle Rock GP to:




	 	(i)	 	conduct any business other than the management
of the Partnership;
	 
	 	(ii)	 	issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional Equity
Interests in G&P LLC or Eagle Rock GP;
	 
	 	(iii)	 	make, declare or pay any distribution, other
than the distribution of (A) the cash received from the Partnership
between the date hereof and the Option Closing Date in respect of the
General Partner Interests or the IDRs and (B) Rights received pursuant
to the Rights Offering and any Common Units and Warrants received upon
the exercise of such Rights;
	 
	 	(iv)	 	incur any indebtedness or other liabilities
(whether accrued, absolute, contingent or otherwise) of any nature,
other than liabilities incurred in the ordinary course of business
consistent with past practice in connection with the management of the
Partnership that are subject to reimbursement by the Partnership
pursuant to the terms of the Omnibus Agreement;
	 
	 	(v)	 	sell, transfer or otherwise dispose of, or
permit any Encumbrance to exist with respect to, any General Partner
Units or the general partner interest in Eagle Rock GP;
	 
	 	(vi)	 	split, combine or reclassify any of its Equity
Interests or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for its Equity
Interests; or
	 
	 	(vii)	 	repurchase, redeem or otherwise acquire any of
its Equity Interests.




24









 











     6.4 Representations and Warranties Regarding the General Partner Acquisition Option.




          (a) ERH hereby represents and warrants that the following statements are true and
correct on the date hereof and will be true and correct on and as of the Option Closing
Date.




	 	(i)	 	Each of G&P LLC and Eagle Rock GP (i) is a
limited liability company or limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware
and has all requisite entity power and authority to own, operate and
lease its properties and to carry on its business as now conducted,
(ii) is duly qualified to do business, and is in good standing, in each
of the jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified and (iii) has in
effect all federal, state, local and foreign governmental
authorizations and permits necessary for it to own or lease its
properties and assets and to carry on its business as it is now
conducted; except, in the instance of clauses (ii) and (iii) above,
where the failure to be so qualified or in good standing, or to have
in effect all such governmental authorizations and permits would not,
individually or in the aggregate, have a material adverse effect on
the financial position, results of operation, business or assets of
G&P LLC or Eagle Rock GP.
	 
	 	(ii)	 	G&P LLC has no material assets other than its
general partner interest in Eagle Rock GP. G&P LLC has no material
liabilities or obligations other than those set forth in its governing
documents or arising out of its ownership of the general partner
interest in Eagle Rock GP.
	 
	 	(iii)	 	Eagle Rock GP has no material assets other
than (i) the General Partner Units and (ii) solely on the date hereof,
the IDRs. Eagle Rock GP has no material liabilities or obligations
other than those set forth in its governing documents or arising out of
its ownership of the General Partner Units and the IDRs.






          (b) NGP VII and NGP VIII hereby jointly and severally represent and warrant that (i) to
their knowledge, the representations and warranties made by ERH in Section 6.2(a)
are true and correct and (ii) neither of them has taken any action, or knowingly acquiesced
to any action, that would cause the representations and warranties of ERH in Section
6.2(a) not to be true and correct.



ARTICLE VII

COVENANTS




     7.1 The Registration Statement. As soon as reasonably practicable after the date hereof, the Partnership will file the
Registration Statement with the SEC. The Partnership will



25









 







use its commercially reasonable efforts
to cause the Registration Statement to be declared effective by the SEC as promptly as reasonably
practicable following such filing and to remain effective at all times during the term of this
Agreement. In connection with the Registration Statement, the Partnership will:




          (a) cause the Registration Statement to comply as to form in all material respects with
the requirements of the applicable form and include all financial statements required by the
SEC to be incorporated therein or filed therewith;




          (b) notify the NGP Parties at least five Business Days before filing the Registration
Statement of its intention to file the Registration Statement with the SEC and provide a
copy of the Registration Statement to the NGP Parties for review and comment;




          (c) notify the NGP Parties at least two Business Days before filing any amendment or
supplement to the Registration Statement and provide a copy of such amendment or supplement
to the NGP Parties for review and comment;




          (d) promptly following receipt from the SEC, provide to the NGP Parties copies of any
comments made by the SEC staff relating to the Registration Statement
and, promptly following the preparation thereof, the Partnership’s responses thereto
for review and comment;




          (e) as promptly as reasonably practicable, prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the period required hereunder;




          (f) notify the NGP Parties promptly (i) when the Registration Statement has become
effective and when any post-effective amendments and supplements thereto become effective,
(ii) of the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation or threatening
of any proceedings for that purpose, or (iii) of any request by the SEC or any other federal
or state Governmental Authority for amendments or supplements to the Registration Statement
or any related prospectus or prospectus supplement or for additional information;




          (g) prepare and file in a timely manner all documents and reports required by the
Exchange Act;




          (h) if required under the rules of FINRA, in connection with the initial filing of the
Registration Statement and each amendment thereto, prepare and, within one Business Day of
such filing with the SEC, file with the FINRA all forms and information required by FINRA to
be so filed in order to obtain written confirmation from FINRA that FINRA conditionally does
not object to the fairness and reasonableness of the underwriting terms and arrangements
relating to the sale of securities pursuant to the Registration Statement, including
information provided to FINRA through its COBRADesk system, and pay all costs, fees and
expenses incident to FINRA’s review of the Registration Statement and the related
underwriting terms and arrangements, including all filing fees associated with any filings
or submissions to FINRA; and



26









 






          (i) otherwise use its commercially reasonable efforts to comply in all material
respects with all applicable rules and regulations of the SEC.



     7.2 The Proxy Statement and the Unitholder Meeting.




          (a) Eagle Rock GP, as general partner of the Partnership, will take, in accordance with
applicable Law, NASDAQ rules and the Partnership Agreement, all action necessary to call,
hold and convene an appropriate meeting of the holders of Common Units and Subordinated
Units to consider and vote solely upon the Unitholder Proposals and any other matters
required to be approved by them for consummation of the Transactions (including any
adjournment or postponement as determined by the Conflicts Committee, the “Unitholder
Meeting”) as promptly as reasonably practicable after the date hereof. The Board and the
Conflicts Committee will recommend approval of the Unitholder Proposals (the
“Recommendation”), and the Partnership will take all reasonable lawful action to solicit
approval of the Unitholder Proposals by the holders of Common Units and by the holders of
Subordinated Units. Notwithstanding the foregoing, at any time prior to obtaining the
Required Unitholder Approvals, the Board
and/or the Conflicts Committee may withdraw, modify or qualify in any manner adverse to
the NGP Parties the Recommendation (any such action a “Change in Recommendation”) if the
Board and/or the Conflicts Committee (as the case may be) has concluded in good faith, after
consultation with its outside legal advisors and financial consultants, that the failure to
make a Change in Recommendation would either not be in the best interests of the Partnership
or in the best interests of the Non-Affiliated Unitholders; provided, however, that the
Board and/or the Conflicts Committee shall not be entitled to exercise its rights to make a
Change in Recommendation pursuant to this sentence unless the Partnership has provided to
the NGP Parties five days prior written notice advising the NGP Parties that the Board
and/or the Conflicts Committee intends to take such action and specifying the reasons
therefor in reasonable detail, including, if applicable, the terms and conditions of any
proposed transaction that is the basis of the proposed action. Any Change in Recommendation
will not change the approval of the Unitholder Proposals or any other approval of the Board
and the Conflicts Committee, including in any respect that would have the effect of causing
any state (including Delaware) takeover statute or other similar statute to be applicable to
the matters contemplated hereby.




          (b) As promptly as reasonably practicable after the date hereof, the Partnership will
prepare and file with the SEC the Proxy Statement in preliminary form. The Parties will
cooperate with each other in the preparation of the Proxy Statement; without limiting the
generality of the foregoing, the NGP Parties will furnish to the Partnership the information
relating to the NGP Parties required by the Exchange Act to be set forth in the Proxy
Statement, and the NGP Parties and their counsel will be given the opportunity to review and
comment on the Proxy Statement prior to the filing thereof with the SEC. The Partnership
and the NGP Parties will each use its commercially reasonable efforts, after consultation
with the other Parties, to respond promptly to any comments made by the SEC with respect to
the Proxy Statement. The Partnership will use its commercially reasonable efforts to cause
the Proxy Statement to be transmitted to the holders of Common Units and Subordinated Units
as promptly as practicable following the filing thereof in definitive form with the SEC.
The Partnership will advise



27









 







the NGP Parties promptly after it receives notice of any request
by the SEC for amendment of the Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information. If at any time prior to the Unitholder
Meeting any information relating to the Partnership or the NGP Parties, or any of their
respective affiliates, officers or directors, should be discovered by the Partnership or any
NGP Party that should be set forth in an amendment or supplement to the Proxy Statement, so
that any of such documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Party which discovers such
information will promptly notify the other Parties and an appropriate amendment or
supplement describing such information will be promptly filed with the SEC and, to the
extent required by Law, disseminated to the holders of Common Units and Subordinated Units.
The Partnership will not mail any Proxy Statement, or any amendment or supplement thereto,
with respect to which any NGP Party reasonably objects to disclosure therein specifically
regarding any NGP Party or any representative of any NGP Party (including members of the
Board appointed, pursuant to the terms of the Partnership Agreement, by the NGP
Representative (as defined therein)).




          (c) Once the Unitholder Meeting has been called and noticed, the Partnership will not
postpone or adjourn the Unitholder Meeting past the Termination Date without the consent of
the NGP Parties, which consent will not be unreasonably withheld or delayed, other than (i)
for the absence of a quorum or (ii) to allow reasonable additional time for the filing and
mailing of any supplemental or amended disclosure that the Partnership believes in good
faith is necessary under applicable Law and for such supplemental or amended disclosure to
be disseminated and reviewed by the holders of Common Units and Subordinated Units prior to
the Unitholder Meeting; provided that if the Unitholder Meeting is so delayed to a date
after the Termination Date as a result of either (i) or (ii) above, then the Termination
Date will be extended to the seventh Business Day after such date.




          (d) Each of the NGP Parties hereby irrevocably and unconditionally agrees that from and
after the date hereof and until the earlier of (i) the first Business Day after the
Unitholder Approval Date or (ii) the date this Agreement is terminated in accordance with
its terms (the “Expiration Time”), at any Unitholders’ Meeting, such NGP Party will, unless
the Partnership directs the NGP Parties to do otherwise, (A) appear at such Unitholders’
Meeting or otherwise cause the Common Units and Subordinated Units beneficially owned by
such NGP Party as of the relevant time (“Owned Units”) to be counted as present for purposes
of calculating a quorum and respond to any other request by the Partnership for written
consent, if any, and, (B) vote, or cause to be voted, all of its Owned Units (1) in favor of
the approval of the Unitholder Proposals (whether or not recommended by the Board or the
Conflicts Committee), (2) in favor of the approval of proposals made by the Partnership or
the Conflicts Committee for an adjournment of the Unitholders’ Meeting, and (3) against any
action or agreement that would reasonably be expected to (a) result in a breach of any
representation, warranty or covenant of any NGP Party under this Agreement or (b) interfere
with, delay or attempt to discourage the consummation of the Transactions.



28









 






          (e) Each of the NGP Parties hereby agrees, while this Agreement is in effect, promptly
to notify the Partnership of the number of any new Common Units with respect to which
beneficial ownership is acquired by such NGP Party, if any, after the date hereof and before
the Expiration Time. Any such Common Units shall automatically become subject to the terms
of this Agreement as Owned Units as though beneficially owned by such NGP Party as of the
date hereof.




          (f) Except as provided for herein, the NGP Parties agree, from the date hereof until
the Expiration Time, not to (i) directly or indirectly transfer or offer to transfer any
Owned Units; (ii) tender any Owned Units into any tender or exchange offer or otherwise; or
(iii) otherwise restrict the ability of the NGP Parties to freely exercise all voting rights
with respect to the Owned Units. Any action attempted to be taken in violation of the
preceding sentence will be null and void.




          (g) The Conflicts Committee shall have the sole authority to act on behalf of the
Partnership with respect to the matters set forth in Sections 7.2(d), 7.2(e)
and 7.2(f).




          (h) Notwithstanding anything to the contrary in this Agreement, no approval of any
Unitholder Proposal will be sought, and no such Unitholder Meeting will be held, if the R&M
Purchase Agreement has terminated.



     7.3 Further Assurances. Subject to the terms and conditions of this Agreement, each Party will use commercially
reasonable efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper, desirable or advisable under applicable Laws, so as to
enable consummation of the matters contemplated hereby, including obtaining (and cooperating with
the other Parties to obtain) HSR Act approval, if required, or the expiration or early termination
of any applicable waiting period thereunder, and any other third party approval that is required to
be obtained by the Party in connection with the Transactions and the other matters contemplated by
this Agreement and the R&M Purchase Agreement, and using commercially reasonable efforts to lift or
rescind any injunction or restraining order or other order adversely affecting the ability of the
Parties to consummate the matters contemplated hereby, and using commercially reasonable efforts to
defend any litigation seeking to enjoin, prevent or delay the consummation of the matters
contemplated hereby or seeking material damages, and each Party will cooperate fully with the other
Parties to that end, and will furnish to the other Parties copies of all correspondence, filings
and communications between it and its Affiliates, on the one hand, and any Governmental Authority,
on the other hand, with respect to the matters contemplated hereby. In complying with the
foregoing, the Partnership shall not be required to take any action that is reasonably likely to
result in a Material Adverse Effect.



     7.4 Press Releases. No Party will, without the prior approval of the Conflicts Committee in the case of any NGP
Party and the NGP Parties in the case of the Partnership, issue any press release or written
statement for general circulation relating to the matters contemplated hereby, except as otherwise
required by applicable Law or regulation or the rules of the NASDAQ, in which case it will consult
with the other applicable Party before issuing any such press release or written statement.



     7.5 Partnership Activities. From the date hereof until the first Business Day following the ERH
Interests Contribution
Closing and except as contemplated by the Transactions, this



29









 







Agreement or the R&M Purchase
Agreement, the Partnership will not, without the prior written consent of the NGP Parties:




          (a) conduct the business of it and its subsidiaries other than in all material respects
in the ordinary and usual course or take any action that would adversely affect its ability
to perform any of its obligations under this Agreement;




          (b) issue, sell or otherwise permit to become outstanding, or authorize the creation
of, any additional Equity Interests (other than (i) pursuant to employee benefit plans,
qualified stock option plans or employee compensation plans or (ii) in connection with any
Offering);




          (c) make, declare or pay any distribution (except quarterly cash distributions of
Available Cash (as defined in the Partnership Agreement));




          (d) split, combine or reclassify any of its Equity Interests or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in substitution
for its Equity Interests; or




          (e) repurchase, redeem or otherwise acquire any of its Equity Interests (other than
pursuant to employee benefit plans, qualified stock option plans or employee compensation
plans).



     7.6 Notification of Certain Matters.




          (a) The Partnership will give prompt notice to the NGP Parties of (i) any fact, event
or circumstance known to it that (A) would, or is reasonably likely to, individually or
taken together with all other facts, events and circumstances known to it, result in a
Material Adverse Change or (B) would, or is reasonably likely to, cause or constitute a
material breach of any of its representations, warranties, covenants or agreements contained
herein, and (ii) any change in its condition (financial or otherwise) or business or any
litigation or governmental complaints, investigations or hearings, in each case to the
extent such change, litigation, complaints, investigations, or hearings results in, or would
result in, or is reasonably likely to be expected to result in, a Material Adverse Change.




          (b) The NGP Parties will give prompt notice to the Partnership of any fact, event or
circumstance known to them that would, or is reasonably likely to, cause or constitute a
material breach of any of their representations, warranties, covenants or agreements
contained herein.




          (c) The Partnership will promptly provide copies to the NGP Parties of all notices,
requests, demands, and other communications delivered or received by any Affiliate of the
Partnership under the R&M Purchase Agreement pursuant to Section 13.1 thereof.



30









 





     7.7 Competing Proposals.




          (a) Except as contemplated by this Agreement, the Partnership will not, and it will
cause its Representatives (including the Conflicts Committee) not to, directly or
indirectly, (i) solicit the submission of any Competing Proposal, or (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any non-public information
with respect to, any Competing Proposal. Subject to the limitations in Section
7.7(b), nothing contained in this Agreement will prohibit the Partnership (or the
Conflicts Committee) from furnishing any information to, or entering into or participating
in discussions or negotiations with, any Person that makes an unsolicited written Competing
Proposal which did not result from a breach of this Section 7.7 (a “Receiving
Party”) if the Board or the Conflicts Committee determines, after consultation with its
outside legal advisors and financial consultants, that such Competing Proposal could
possibly lead to a Change in Recommendation.




          (b) The Partnership (including the Conflicts Committee) will not provide any Receiving
Party with any non-public information or data pertaining to the Partnership or any of its
assets (the “Non-Public Information”) unless (i) the Partnership has complied with all of
its obligations under this Section 7.7, (ii) the Board or the Conflicts Committee
determines, after consultation with its outside legal advisors and financial consultants
that the provision of such Non-Public Information to the Receiving Party could possibly lead
to a Change in Recommendation, and (iii) the Partnership has first (A) required the
Receiving Party to execute and deliver a confidentiality agreement with terms deemed
reasonable in good faith by the Conflicts Committee, (B) furnished a copy of such
confidentiality agreement to the NGP Parties and (C) notified the NGP Parties of the
identity of such Receiving Party. The Partnership will promptly provide or make available
to the NGP Parties any non-public information concerning the Partnership or any of its
assets that is provided or made available to any Receiving Party pursuant to this
Section 7.7 which was not previously provided or made available to the NGP Parties.




          (c) The Parties acknowledge that, while the Conflicts Committee has been delegated the
authority to effect a Change in Recommendation and to terminate this Agreement pursuant to
Section 10.1(e), the Conflicts Committee has not been delegated the authority to
approve execution or delivery by the Partnership of any agreement constituting a Competing
Proposal.



     7.8
Use of Proceeds. The Partnership will use all net proceeds received by it from all issuances of Common Units
hereunder (a) to pay to ERH any cash portion of the Transaction Fee payable pursuant to Section
4.1, (b) to repay outstanding Partnership indebtedness and (c) for other general purposes of
the Partnership, including, if determined by the board of directors of G&P LLC, resetting
Partnership hedge arrangements.



     7.9 Assurances Regarding ERH’s Obligations. Subject to the terms and conditions of this Agreement, NGP VII and NGP VIII shall take, and
shall cause ERH to take, promptly, or to cause to be taken promptly, all actions, and to do
promptly, or to cause to be done promptly, all things necessary, proper or advisable to perform,
fulfill or consummate ERH’s obligations under this Agreement other than (i) the obligation to
deliver a specific number of Subordinated Units



31









 







under Section 5.1(a)(iii) and (ii) the
obligation to deliver a specific quantum of ownership pursuant to the Contribution Agreement.



     7.10 Assurances Regarding the R&M Purchase Agreement. The Partnership will not, without the prior written consent of the NGP Parties:




          (a) permit ER Pipeline or EROC Production to waive, amend or otherwise modify the R&M
Purchase Agreement or any portion thereof; or




          (b) permit ER Pipeline or EROC Production to terminate, or agree to terminate, the R&M
Purchase Agreement.



ARTICLE VIII

UNITHOLDER APPROVAL




     8.1 Conditions to All Transactions. No Party will be required to consummate any of the Transactions unless each of the Required
Unitholder Approvals has been obtained on or prior to the date of such consummation.



ARTICLE IX

REPRESENTATIONS AND WARRANTIES




     9.1 Representations and Warranties of the Partnership. The Partnership hereby represents and warrants to the NGP Parties as follows:




          (a) Organization, Standing and Authority. The Partnership (i) is a limited partnership
duly formed, validly existing and in good standing under the laws of the State of Delaware
and has all requisite entity power and authority to own, operate and lease its properties
and to carry on its business as now conducted, (ii) is duly qualified to do business, and is
in good standing, in each of the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and (iii) has in effect all
federal, state, local and foreign governmental authorizations and permits necessary for it
to own or lease its properties and assets and to carry on its business as it is now
conducted; except, in the instance of clauses (ii) and (iii) above, where the failure to be
so qualified or in good standing, or to have in effect all such governmental authorizations
and permits would not, individually or in the aggregate, have a Material Adverse Effect.




          (b) Capitalization. As of the date hereof, there are 844,551 General Partner Units,
54,593,876 Common Units (excluding 687,106 unvested restricted units issued under the
Partnership’s long term incentive plan), and 20,691,495 Subordinated Units issued and
outstanding, which collectively constitute all of the issued and outstanding Equity
Interests of the Partnership. The limited partner interests represented by the Common Units
and Subordinated Units have been duly authorized and validly issued in accordance with the
Partnership Agreement and are fully paid (to the extent required under the Partnership
Agreement) and nonassessable (except as such nonassessability may be affected by Sections
17-303, 17-607, and 17-804 of the Delaware LP Act). The general partner interests
represented by such General Partner Units have been duly authorized and validly issued in
accordance with the Partnership Agreement. Except as




32











 






expressly contemplated by this Agreement, otherwise disclosed in the Partnership
SEC Reports or pursuant to employee benefit plans, qualified stock option plans or employee
compensation plans, there are no issued or outstanding Commitments of the Partnership with
respect to any equity securities of the Partnership and the Partnership does not have any
commitment to authorize, issue or sell any equity securities or Commitments.




          (c) Subsidiaries. Each of the Partnership’s subsidiaries has the entity power and
authority to carry on its business as it is now being conducted and to own all its
properties and assets, except as would not (individually or in the aggregate) reasonably be
expected to have a Material Adverse Effect.




          (d) Unitholder Authority. Subject to receipt of the Required Unitholder Approvals,
this Agreement and the matters contemplated hereby have been authorized by all necessary
partnership and limited liability company action, and this Agreement has been duly executed
and delivered and is a legal, valid and binding agreement of the Partnership, ER Pipeline
and EROC Production, as applicable, enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar Laws of general applicability relating to or
affecting creditors’ rights or by general equity principles).




          (e) No Defaults. Subject to receipt of any required HSR Act approval or the expiration
or early termination of any applicable waiting period thereunder, the declaration of
effectiveness of the Registration Statement, required filings under federal and state
securities Laws, FINRA and the NASDAQ, and the Required Unitholder Approvals and except as
would not have a Material Adverse Effect, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, do not and will not
(i) constitute a breach or violation of, or result in a default (or an event that, with
notice or lapse of time or both, would become a default) under, or result in the termination
or in a right of termination or cancellation of, or accelerate the performance required by,
any note, bond, mortgage, indenture, deed of trust, license, franchise, lease, contract,
agreement, joint venture or other instrument or obligation to which the Partnership or any
of its subsidiaries is a party or by which it or any of its subsidiaries or properties is
subject or bound, (ii) constitute a breach or violation of, or a default under the
Partnership Agreement, (iii) contravene or conflict with or constitute a violation of any
provision of any Law or Order binding upon or applicable to the Partnership or any of its
subsidiaries, or (iv) result in the creation of any Encumbrance on any of the Partnership’s
(or any of its subsidiaries’) assets.




          (f) Financial Reports and SEC Documents. All of the Partnership SEC Reports filed with
the SEC since January 1, 2009 (i) complied or will comply in all material respects as to
form with the applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (ii) did not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were made, not
misleading; and each of the balance sheets (other than the balance sheet of G&P LLC)
contained in or incorporated by reference into any such Partnership SEC Report (including
the related notes and schedules thereto) fairly presents the
financial position of the Partnership as of its date, and each of the statements of
income



33









 






and changes in partners’ capital and cash flows in such Partnership SEC Reports
(including any related notes and schedules thereto) fairly presents the results of
operations, changes in partners’ capital and changes in cash flows, as the case may be, of
the Partnership for the periods to which it relates, in each case in accordance with GAAP
consistently applied during the periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments in the case of unaudited statements.
Except (i) as would not have a Material Adverse Effect and (ii) as and to the extent set
forth on the Partnership’s balance sheet as of September 30, 2009, as of such date, neither
the Partnership nor any of its subsidiaries had any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to be reflected
on, or reserved against in, a balance sheet or in the notes thereto prepared in accordance
with GAAP consistently applied.




          (g) No Brokers. No action has been taken by or on behalf of the Partnership that would
give rise to any valid claim against any party hereto for a brokerage commission, finder’s
fee or other like payment with respect to the matters contemplated hereby, excluding fees to
be paid pursuant to letter agreements which have been heretofore disclosed to the NGP
Parties.




          (h) Regulatory Approvals. Except (i) as would not have a Material Adverse Effect and
(ii) to the extent that HSR Act approval, or the expiration or early termination of any
applicable waiting period thereunder, is required, there are no approvals of any
Governmental Authority required to be obtained by the Partnership to consummate the matters
contemplated by this Agreement (other than filings with and approvals by the SEC).




          (i) Conflicts Committee/Board Recommendations. At meetings duly called and held, (i)
the Conflicts Committee (A) determined that this Agreement and the R&M Purchase Agreement
and the transactions contemplated hereby and thereby are in the best interests of the
Partnership and (B) recommended that the Board approve this Agreement and the R&M Purchase
Agreement and the transactions contemplated hereby and thereby, (ii) the Board and Conflicts
Committee (A) approved this Agreement and the R&M Purchase Agreement and the transactions
contemplated hereby and thereby and (B) recommended to the Non-Affiliated Unitholders that
they approve the Unitholder Proposals.




          (j) Fairness Opinion. SMH Capital Inc. has delivered to the Conflicts Committee its
written opinion dated as of the date hereof, that as of such date, the transactions
contemplated by this Agreement and the R&M Purchase Agreement are fair, from a financial
point of view, to the Non-Affiliated Unitholders, a copy of which written opinion has been
provided to the Board.




          (k) Issuances of Common Units. All Common Units issued to any NGP Party pursuant to
this Agreement, when so issued as provided in this Agreement, will be duly authorized,
validly issued, fully paid (to the extent required by the Partnership Agreement) and
non-assessable (except as such non-assessability may be affected by Sections 17-303, 17-607,
and 17-804 of the Delaware LP Act) and free of preemptive
rights (except as provided in Section 5.8 of the Partnership Agreement or the Amended



34









 






Partnership Agreement, as applicable) and will entitle such NGP Party to all of the rights
of a holder of Common Units in accordance with the Partnership Agreement and the Delaware LP
Act.



   9.2 Representations and Warranties of the NGP Parties.
Except as set forth in Section 9.2(h), each NGP Party hereby severally represents
and warrants to the Partnership as follows:




     (a) Organization, Standing and Authority. Such NGP Party (i) is a limited partnership
or limited liability company duly organized or formed, validly existing and in good standing
under the laws of the State of Delaware or the State of Texas and has all requisite entity
power and authority to own, operate and lease its properties and to carry on its business as
now conducted, (ii) is duly qualified to do business, and is in good standing, in each of
the jurisdictions where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and (iii) has in effect all federal, state, local and foreign
governmental authorizations and permits necessary for it to own or lease its properties and
assets and to carry on its business as it is now conducted.




     (b) Authority. This Agreement and the matters contemplated hereby and the consummation
of the transactions contemplated hereby have been authorized by all necessary partnership or
limited liability company action by such NGP Party, and this Agreement has been duly
executed and delivered and is a legal, valid and binding agreement of such NGP Party,
enforceable in accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting creditors’ rights or by
general equity principles).




     (c) No Defaults. Subject to receipt of any required HSR Act approval or the expiration
or early termination of any applicable waiting period thereunder, the execution, delivery
and performance of this Agreement and the consummation of the transactions contemplated
hereby, do not and will not (i) constitute a breach or violation of, or result in a default
(or an event that, with notice or lapse of time or both, would become a default) under, or
result in the termination or in a right of termination or cancellation of, or accelerate the
performance required by, any note, bond, mortgage, indenture, deed of trust, license,
franchise, lease, contract, agreement, joint venture or other instrument or obligation to
which such NGP Party is a party or by which any of them is subject or bound, (ii) constitute
a breach or violation of, or a default under the organizational agreements of such NGP
Party, or (iii) contravene or conflict with or constitute a violation of any provision of
any Law or Order binding upon or applicable to such NGP Party.




     (d) Regulatory Approvals. Except to the extent that HSR Act approval, or the
expiration or early termination of any applicable waiting period thereunder, is required,
there are no approvals of any Governmental Authority required to be obtained by such NGP
Party to consummate the transactions contemplated by this Agreement.




     (e) No Brokers. No action has been taken by or on behalf of such NGP Party that would
give rise to any valid claim against any party hereto for a brokerage



35









 






commission, finder’s
fee or other like payment with respect to the matters contemplated hereby.




     (f) Limited Representations and Warranties. Such NGP Party acknowledges that, except
for the representations and warranties made by the Partnership in Section 9.1,
neither the Partnership nor any of its Affiliates has made and shall not be deemed to have
made any representation or warranty of any kind. Without limiting the generality of the
foregoing, such NGP Party agrees that neither the Partnership nor any of its Affiliates,
makes or has made any representation or warranty to the NGP Parties or their Affiliates with
respect to (i) any projections, forecasts or other estimates, plans or budgets of future
revenues, expenses or expenditures, future results of operations (or any component thereof),
future cash flows (or any component thereof) or future financial condition (or any
component thereof) of the Partnership or any of its subsidiaries or the future business,
operations or affairs of the Partnership or any of its subsidiaries or (ii) any other
information, statement or documents delivered to or made available to the NGP Parties or
their Affiliates.




     (g) Securities Laws Representations. Such NGP Party is an “accredited investor,” as
such term is defined in Regulation D promulgated under the Securities Act. The Partnership
has made available and such NGP Party has reviewed such information as such NGP Party
considers necessary or appropriate to evaluate the risks and merits of an investment in
Common Units or other securities of the Partnership and the consummation of the
Transactions. Such NGP Party has such knowledge and experience in financial, tax and
business matters, including substantial experience in evaluating and investing in securities
of entities and businesses similar to that of the Partnership, and has had an opportunity to
ask all questions of and receive answers from the Partnership, in order to evaluate the
merits and risks of an investment in Common Units or other securities of the Partnership and
the consummation of the Transactions and to make an informed investment decision with
respect thereto. Any securities of the Partnership acquired by such NGP Party pursuant to
the Transactions are being acquired for such NGP Party’s own account, not as a nominee or
agent, and with no intention of distributing such securities or any part thereof, and such
NGP Party has no present intention of selling or granting any participation in or otherwise
distributing the same in any transaction in violation of the securities laws of the United
States or any State.




     (h) Ownership of Units. Without giving effect to the consummation of any of the
Transactions:




	 	(i)	 	ERH represents and warrants that Eagle Rock GP
owns of record 844,551 General Partner Units and ERH owns of record
2,338,419 Common Units and 20,691,495 Subordinated Units, in each case
free and clear of all Encumbrances;
	 
	 	(ii)	 	Montierra represents and warrants that
Montierra owns of record 2,868,556 Common Units free and clear of all
Encumbrances;




36









 












	 	(iii)	 	Montierra Management represents and warrants
that Montierra Management owns of record 28,491 Common Units free and
clear of all Encumbrances;
	 
	 	(iv)	 	NGP VII represents and warrants that NGP VII
owns of record 1,701,497 Common Units free and clear of all
Encumbrances; and
	 
	 	(v)	 	NGP VIII represents and warrants that NGP VIII
owns of record 1,763,206 Common Units, in each case, free and clear of
all Encumbrances.






     (i) Accuracy of Representations and Warranties. NGP VII and NGP VIII hereby jointly
and severally represent and warrant that (i) to their knowledge, the representations and
warranties made by the other NGP Parties in Section 9.2 are true and correct and
(ii) neither of them has taken any action, or knowingly acquiesced to any action, that would
cause the representations and warranties of the other NGP Parties in Section 9.2 not
to be true and correct.




     (j) Financial Ability. NGP VII and NGP VIII hereby jointly and severally represent
that each NGP Party will have sufficient funds available to timely fund its obligations in
connection with the transactions contemplated by this Agreement and satisfy all other costs
and expenses of such NGP Party arising in connection with this Agreement.



ARTICLE X

TERMINATION




   10.1
Termination.
Notwithstanding anything herein to the contrary, this Agreement may be terminated and the
Transactions that have not been consummated prior to such termination may be abandoned at any time
prior to the Option Closing Date, whether before or after the receipt of the Required Unitholder
Approvals:




     (a) By the mutual consent of all of the Parties in a written instrument;




     (b) By either the NGP Parties, on one hand, or the Partnership, on the other, upon
written notice to the other (in the case of clauses (iv) and (v), delivered prior to the
Transaction Fee Payment Date), if:




     (i) the Required Unitholder Approvals have not been obtained on or before the
Termination Date; provided that the right to terminate this Agreement pursuant to
this Section 10.1(b)(i) will not be available to a party whose failure to
fulfill any material obligation under this Agreement or other material breach of
this Agreement has been the primary cause of, or resulted in, the failure of the
Required Unitholder Approvals to have been consummated on or before such date;




     (ii) any Governmental Authority has issued a Law or Order or regulation or
taken any other action, in each case permanently restraining,



37









 






enjoining or otherwise prohibiting the consummation of any of the Transactions
or making any of the Transactions illegal and such Law or Order or other action has
become final and nonappealable (provided that the terminating party is not then in
breach of Section 7.3;




     (iii) the Required Unitholder Approvals are not all obtained at the Unitholder
Meeting;




     (iv) there has been a material breach of or any inaccuracy in any of the
representations or warranties set forth in this Agreement on the part of the other
party (treating the NGP Parties as one party for the purposes of this Section
10.1(b)(iv)), which breach is not cured within 30 days following receipt by the
breaching party of written notice of such breach from the terminating party, or
which breach, by its nature, cannot be cured prior to the Transaction Fee Payment
Date (provided in any such case that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein); or




     (v) there has been a material breach of any of the covenants or agreements set
forth in this Agreement on the part of the other party (treating the NGP Parties as
one party for the purposes of this Section 10.1(b)(v)), which breach has not
been cured within 30 days following receipt by the breaching party of written notice
of such breach from the terminating party, or which breach, by its nature, cannot be
cured prior to the Transaction Fee Payment Date (provided in any such case that the
terminating party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein);




     (c) By the NGP Parties, upon written notice to the Partnership delivered prior to the
receipt of the Required Unitholder Approvals, if (i) the Partnership has willfully and
materially breached Section 7.7 or (ii) a Change in Recommendation has occurred.




     (d) By the NGP Parties, upon written notice to the Partnership delivered within eight
Trading Days following the end of the applicable Measurement Window if the Measurement
Window Average Price was less than $1.50 for such Measurement Window; provided, that no such
notice may be delivered to the Partnership after the Required Unitholder Approvals are
obtained.




     (e) By the Conflicts Committee, upon written notice to the NGP Parties delivered prior
to the receipt of the Required Unitholder Approval, if at any time after the date of this
Agreement, the Conflicts Committee (after consultation with, and taking into account the
advice of, its outside legal advisors and financial consultants) determines that terminating
this Agreement in favor of a Competing Proposal is either in the best interest of the
Partnership or in the best interests of the Non-Affiliated Unitholders.




     (f) By the NGP Parties upon written notice to the Partnership delivered prior to the
Transaction Fee Payment Date, if a Material Adverse Change has occurred.




     (g) By the NGP Parties upon written notice to the Partnership delivered prior to the
Transaction Fee Payment Date, if the transactions contemplated by the R&M



38









 






Purchase Agreement have not closed within seven Business Days following the Unitholder
Approval Date.



     In addition, this Agreement will automatically terminate, with no further action by any Party
hereto, upon the termination of the R&M Purchase Agreement prior to the closing of the transactions
contemplated thereby. The Partnership will provide prompt written notice to the NGP Parties of any
such termination.



  10.2
Effect of Termination.




     (a) If this Agreement is terminated as provided in Section 10.1, the
terminating Party will promptly give written notice thereof to the other Parties specifying
the provision of this Agreement pursuant to which such termination is made, and this
Agreement will be null and void and, except as provided in Sections 10.2 and 11.1 or
as otherwise expressly provided herein, no Party will have any rights or obligations under
this Agreement, except that no such termination will relieve any Party from liability for
damages for any willful and material breach of any agreement or covenant contained herein.




     (b) If this Agreement is terminated (i) by the Conflicts Committee pursuant to
Section 10.1(e), (ii) by any Party pursuant to Section 10.1(b)(iii) and a
Change in Recommendation occurred, or (iii) by the NGP Parties pursuant to Section
10.1(b)(v) because the Partnership breached its obligations regarding filing or
transmission of the Proxy Statement pursuant to Section 7.2, then in any such case
the Partnership will pay to ERH, within five Business Days after such termination, the
Termination Fee. If the R&M Purchase Agreement is terminated by Black Stone because either
the Partnership or any of its Affiliates breached any representation, warranty or covenant
in the R&M Purchase Agreement, then the Partnership will pay to ERH, within five Business
Days after such termination, the Termination Fee. Notwithstanding anything to the contrary
in this Agreement, the Parties agree that in circumstances where payment of the Termination
Fee is required hereunder, upon such payment, the payment of any Termination Fee in
accordance with this Section 10.2 shall be the exclusive remedy of the NGP Parties
for (i) any loss suffered as a result of the failure of the Transactions to be consummated
and (ii) any other losses, damages, obligations or liabilities suffered as a result of or
under this Agreement and the Transactions. Upon payment of the Termination Fee in
accordance with this Section 10.2, none of the Partnership Parties or any of their
respective directors, Affiliates, officers or agents, as the case may be, shall have any
further liability or obligation to the NGP Parties relating to or arising out of this
Agreement or the Transactions.



39









 





ARTICLE XI

MISCELLANEOUS




     11.1
Fees and Expenses.
Whether or not any or all of the Transactions are consummated and whether or not any or all
of the Required Unitholder Approvals are received, the Partnership will reimburse the NGP Parties
for all documented reasonable out-of-pocket costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including reasonable attorneys’ fees. This
Section 11.1 will survive any termination of this Agreement.



     11.2
Entire Agreement; No Third Party Beneficiaries.
This Agreement and the exhibits and schedules hereto and the certificates, documents,
instruments and writings that are delivered pursuant hereto, constitutes the entire agreement and
understanding of the Parties in respect of its subject matters and supersedes all prior
understandings, agreements, or representations by or among the Parties, written or oral, to the
extent they relate in any way to the subject matter hereof or the transactions contemplated hereby.
There are no third party beneficiaries having rights under or with respect to this Agreement.



     11.3
Successors.
All of the terms, agreements, covenants, representations, warranties, and conditions of
this Agreement are binding upon, and inure to the benefit of and are enforceable by, the Parties
and their respective successors.



     11.4
Assignments.
No Party may assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of all of the other Parties.



     11.5
Notices.
Notwithstanding anything herein to the contrary, the Partnership will be entitled for all
purposes relative to this Agreement to rely solely and exclusively on the notices, statements and
representations of ERH to the Partnership as being the notice, statements and representations of
the NGP Parties hereunder. For any notice, invoice, statement or representation required or
permitted to be given by the Partnership to the NGP Parties under this Agreement, the Partnership
will be entitled to provide such notice, invoice, statement or representation to ERH and such
communication will fulfill all such requirements of the Partnership to the NGP Parties hereunder.
All notices, requests, demands, claims and other communications hereunder will be in writing. Any
notice, request, demand, claim or other communication hereunder will be deemed duly given if (and
then three Business Days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth below:



Notice to the NGP Parties:



Eagle Rock Holdings, L.P.

125 E. John Carpenter Freeway

Suite 600

Irving, Texas 75062

Fax: (972) 432-1441

Attn: Christopher Ray




40









 





With copies to (which shall not constitute notice)



Akin Gump Strauss Hauer & Feld LLP

1111 Louisiana Street, 44th Floor

Houston, Texas 77002

Fax: (713) 236-0822

Attn: John Goodgame




Notice to the Partnership:



Eagle Rock Energy Partners, L.P.

1415 Louisiana Street

The Wedge Tower, Suite 2700

Houston, Texas 77002

Fax: (281) 408 — 1302

Attn: Joseph Mills and Charles Boettcher




With copies to (which shall not constitute notice):



Vinson & Elkins, L.L.P.

First City Tower

1001 Fannin Street, Suite 2500

Houston, Texas 77002

Fax: (713) 615 — 5725

Attn: Douglas McWilliams



Eagle Rock Energy G&P, L.L.C.

1415 Louisiana Street

The Wedge Tower, Suite 2700

Houston, Texas 77002

Fax: (281) 408 — 1302

Attn: Conflicts Committee



Andrews Kurth LLP

600 Travis, Suite 4200

Houston, Texas 77002

Fax: (713) 238-7409

Attn: G. Michael O’Leary and Meredith Mouer



Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, facsimile, ordinary mail, or electronic
mail). Any Party may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.




     11.6
Construction.
The Parties have participated jointly in the negotiation and drafting of this Agreement.
If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the Parties and no presumption or burden of proof will arise



41









 




favoring or disfavoring any Party because of the authorship of any provision of this
Agreement. The Parties intend that each representation, warranty, and covenant contained herein
will have independent significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached will not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.




     11.7
Time. Time is of the essence in the performance of this Agreement.



     11.8
Counterparts. This Agreement may be executed in multiple counterparts, each of which will be deemed an
original but all of which together will constitute one and the same instrument.



     11.9
Amendments and Waivers.
No amendment, modification, replacement, termination or cancellation of any provision of
this Agreement will be valid, unless the same will be in writing and signed by all of the Parties.
No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights
arising because of any prior or subsequent such occurrence.



     11.10
Headings.
The article and section headings contained in this Agreement are inserted for convenience
only and will not affect in any way the meaning or interpretation of this Agreement.



     11.11
Governing Law.
This Agreement and the performance of the transactions contemplated hereby and obligations
of the Parties hereunder will be governed by and construed in accordance with the laws of the State
of Delaware, without giving effect to any choice of Law principles. Each of the Parties agrees
that this Agreement (i) involves at least $100,000.00 and (ii) has been entered into by the Parties
in express reliance on 6 Del. C. § 2708. Each of the Parties hereby irrevocably and
unconditionally agrees (A) to be subject to the jurisdiction of the courts of the State of Delaware
and of the federal courts sitting in the State of Delaware, and (B)(1) to the extent 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 of the name and address of such agent, and (2) that service of process may, to the
fullest extent permitted by law, also be made on such Party by prepaid certified mail with a proof
of mailing receipt validated by the United States Postal Service constituting evidence of valid
service, and that service made pursuant to (B)(1) or (2) above shall, to the fullest extent
permitted by law, have the same legal force and effect as if served upon such Party personally
within the State of Delaware.



     11.12
Severability.
The provisions of this Agreement will be deemed severable and the invalidity or
unenforceability of any provision will not affect the validity or enforceability of the other
provisions hereof, if both the economic and legal substance of the transactions contemplated by
this Agreement are not affected in any manner adverse to any Party.



42









 





   11.13
Incorporation of Exhibits.
The Exhibits identified in this Agreement are incorporated herein by reference and made a
part hereof.



   11.14
Remedies.




     (a) Except as expressly provided herein, the rights, obligations and remedies created
by this Agreement are cumulative and in addition to any other rights, obligations, or
remedies otherwise available at Law or in equity. Nothing herein will be considered an
election of remedies.




     (b) The Parties acknowledge and agree that the Parties would be damaged irreparably in
the event that the obligations to consummate the transactions contemplated hereby are not
performed in accordance with their specific terms or this Agreement is otherwise breached,
and that in addition to remedies, other than injunctive relief and specific performance,
that the Parties may have under law or equity, the Parties shall be entitled to injunctive
relief to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof.



(The remainder of this page is intentionally left blank; the next page is the signature page.)




43









 





     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective
duly authorized representatives effective as of the date first written in the preamble to this
Agreement.



	 	 	 	 	 
	 	NATURAL GAS PARTNERS VII, L.P.





By its general partner,

G..F.W. Energy VII, L.P.





By its general partner,

G.FW VII, L.L.C.

 	 
	 	By:  	/s/   Kenneth A. Hersh
 	 
	 	 	Name:  	Kenneth A. Hersh 	 
	 	 	Title:  	Authorized Member 	 
	 



	 	 	 	 	 
	 	NATURAL GAS PARTNERS VIII, L.P.





By its general partner,

G..F.W. Energy VIII, L.P.





By its general partner,

G.FW VIII, L.L.C.

 	 
	 	By:  	/s/   Kenneth A. Hersh
 	 
	 	 	Name:  	Kenneth A. Hersh 	 
	 	 	Title:  	Authorized Member 	 
	 



	 	 	 	 	 
	 	MONTIERRA MINERALS & PRODUCTION, L.P.





By its general partner,

Montierra Management LLC

 	 
	 	By:  	/s/   Joseph A. Mills
 	 
	 	 	Name:  	Joseph A. Mills 	 
	 	 	Title:  	Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	MONTIERRA MANAGEMENT LLC

 	 
	 	By:  	/s/   Joseph A. Mills
 	 
	 	 	Name:  	Joseph A. Mills 	 
	 	 	Title:  	Chief Executive Officer 	 
	 



[Signature Page to Securities Purchase and Global Transaction Agreement]





 









 





	 	 	 	 	 
	 	EAGLE ROCK HOLDINGS, L.P.





By its general partner,

Eagle Rock GP, LLC

 	 
	 	By:  	/s/   Kenneth A. Hersh
 	 
	 	 	Name:  	Kenneth A. Hersh 	 
	 	 	Title:  	Manager 	 
	 
	 	EAGLE ROCK ENERGY G&P, LLC

 	 
	 	By:  	/s/   Joseph A. Mills
 	 
	 	 	Name:  	Joseph A. Mills 	 
	 	 	Title:  	Chairman & Chief Executive Officer 	 
	 
	 	EAGLE ROCK ENERGY GP, L.P.





By its general partner,

Eagle Rock Energy G&P, LLC

 	 
	 	By:  	/s/   Joseph A. Mills
 	 
	 	 	Name:  	Joseph A. Mills 	 
	 	 	Title:  	Chairman & Chief Executive Officer 	 
	 
	 	EAGLE ROCK ENERGY PARTNERS, L.P.





By its general partner,

Eagle Rock Energy GP, L.P.





By its general partner,

Eagle Rock Energy G&P, LLC

 	 
	 	By:  	/s/   Joseph A. Mills
 	 
	 	 	Name:  	Joseph A. Mills 	 
	 	 	Title:  	Chairman & Chief Executive Officer 	 
	 



[Signature Page to Securities Purchase and Global Transaction Agreement]





 









 





Exhibit A




Form of Partnership Agreement Amendment




 









 






Exhibit A




AMENDMENT NO. 1 TO




FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP




OF




EAGLE ROCK ENERGY PARTNERS, L.P.




     THIS AMENDMENT NO. 1 TO THE FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
EAGLE ROCK ENERGY PARTNERS, L.P. dated as of [                    ], 2010 (this “Amendment No. 1”), is
entered into by and among Eagle Rock Energy GP, L.P., a Delaware limited partnership, as the
General Partner and as the lawful attorney-in-fact for the Limited Partners, together with any
other Persons who become Partners in the Partnership or parties hereto as provided herein.



     WHEREAS, the General Partner and Limited Partners entered into the First Amended and Restated
Agreement of Limited Partnership of Eagle Rock Energy Partners, L.P. on October 27, 2006 (the
“First Amended and Restated Agreement”);



     WHEREAS, the Partnership has entered into the Securities Purchase and Global Transaction
Agreement, dated December 21, 2009, among the Partnership and the other parties thereto, which
contemplates, among other things, the distribution of rights and the issuance of warrants by the
Partnership; and



     WHEREAS, this Amendment No. 1 has been approved by a Unit Majority and the General Partner.



     NOW, THEREFORE, pursuant to Section 13.2 of the First Amended and Restated Agreement, in
consideration of the covenants, conditions and agreements contained herein, the First Amended and
Restated Agreement is hereby amended as follows:



     Section 1. Amendment.



     (a) Section 1.1 is hereby amended to add the following definitions:




     (i) “Right Exercised Common Unit” means any Common Unit issued by the
Partnership upon the exercise of a right to purchase a Common Unit.




     (ii) “Warrant Exercised Common Unit” means any Common Unit issued by the
Partnership upon the exercise of a warrant to purchase a Common Unit.



     (b) Section 5.5(a) is hereby amended and restated in its entirety as follows:




     The Partnership shall maintain for each Partner (or a beneficial owner of
Partnership Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with Section
6031(c) of the Code or any other method acceptable to the General Partner)



 









 







owning a Partnership Interest a separate Capital Account with respect to such
Partnership Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv) and Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions made to the Partnership with respect to such Partnership Interest and
(ii) all items of Partnership income and gain (including income and gain exempt from
tax) computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1, and decreased by (x) the amount of
cash or Net Agreed Value of all actual and deemed distributions of cash or property
made with respect to such Partnership Interest and (y) all items of Partnership
deduction and loss computed in accordance with Section 5.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 6.1. The Partnership shall
follow the proposed noncompensatory option regulations under Proposed Treasury
Regulation Sections 1.704-1, 1.721-2 and 1.761-3 at all times, including when the
assets of the Partnership are revalued or any warrant is exercised in accordance
with its terms.



     (c) Section 5.5(d) is hereby amended and restated in its entirety as follows:




     (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an
issuance of additional Partnership Interests for cash or Contributed Property, the
issuance of Partnership Interests as consideration for the provision of services or
the conversion of the General Partner’s Combined Interest to Common Units pursuant
to Section 11.3(b), the Capital Account of all Partners and the Carrying Value of
each Partnership property immediately prior to such issuance shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property for an amount equal to its fair
market value immediately prior to such issuance. In accordance with Proposed
Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(2), upon any exercise of a warrant,
the Capital Account of all Partners and the Carrying Value of each Partnership
property shall immediately after such exercise be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been recognized on an
actual sale of each such property for an amount equal to its fair market value
immediately prior to such exercise. Any Unrealized Gain or Unrealized Loss (or
items thereof) shall first be allocated to the Partners who were the initial holders
of a Warrant Exercised Common Unit until the Capital Account in respect of each such
Warrant Exercised Common Unit is equal to the Per Unit Capital Amount for a then
Outstanding Common Unit (other than a Warrant Exercised Common Unit) if the
operation of this sentence is triggered by the exercise of a warrant, and regardless
of whether the operation of this sentence is triggered by the exercise of a warrant,
any remaining Unrealized Gain or Unrealized Loss shall be allocated among the
Partners pursuant to Section 6.1(c) in the same manner as any item of gain or loss
actually recognized following an event giving rise to the dissolution of the
Partnership would have been allocated. If the Unrealized Gain or



-2-









 






Unrealized Loss allocated as a result of the exercise of a warrant is not
sufficient to cause the Capital Account of each Warrant Exercised Common Unit to
equal the Per Unit Capital Amount for a then Outstanding Common Unit (other than a
Warrant Exercised Common Unit), then Capital Account balances shall be reallocated
between the Partners holding Warrant Exercised Common Units and the Partners holding
Common Units (other than Warrant Exercised Common Units) so as to cause the Capital
Account of each Warrant Exercised Common Unit to equal the Per Unit Capital Amount
for a then Outstanding Common Unit (other than a Warrant Exercised Common Unit), in
accordance with Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(3). In
determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount and
fair market value of all Partnership assets (including cash or cash equivalents)
immediately prior to the issuance of additional Partnership Interests, or
immediately after the exercise of a warrant, shall be determined by the General
Partner using such method of valuation as it may adopt; provided, however, that the
General Partner, in arriving at such valuation, must take fully into account the
fair market value of the Partnership Interests of all Partners at such time. The
General Partner shall allocate such aggregate value among the assets of the
Partnership (in such manner as it determines) to arrive at a fair market value for
individual properties.




     (ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property (other than a distribution of cash that is not in redemption or
retirement of a Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been recognized in a
sale of such property immediately prior to such distribution for an amount equal to
its fair market value, and had been allocated to the Partners, at such time,
pursuant to Section 6.1(c) in the same manner as any item of gain or loss actually
recognized during such period would have been allocated. In determining such
Unrealized Gain or Unrealized Loss the aggregate cash amount and fair market value
of all Partnership assets (including cash or cash equivalents) immediately prior to
a distribution shall (A) in the case of an actual distribution that is not made
pursuant to Section 12.4 or in the case of a deemed distribution, be determined and
allocated in the same manner as that provided in Section 5.5(d)(i) or (B) in the
case of a liquidating distribution pursuant to Section 12.4, be determined and
allocated by the Liquidator using such method of valuation as it may adopt.



     (d) Section 5.9 is hereby amended and restated in its entirety as follows:




     Splits, Combinations and Other Pro Rata Distributions.




     (a) Subject to Section 5.9(d), Section 6.6 and Section 6.9 (dealing with
adjustments of distribution levels), the Partnership may make a Pro Rata
distribution of Partnership Securities and any options, rights, warrants or



-3-









 






appreciation rights relating to any Partnership Security to all Record Holders
or may effect a subdivision or combination of Partnership Securities so long as,
after any such event (but before giving effect to the exercise of any options,
rights, warrants or appreciation rights relating to any Partnership Securities
distributed in connection with such event), each Partner shall have the same
Percentage Interest in the Partnership as before such event, and any amounts
calculated on a per Unit basis (including any Common Unit Arrearage or Cumulative
Common Unit Arrearage) or stated as a number of Units (including the number of
Subordinated Units that may convert prior to the end of the Subordination Period)
are proportionately adjusted.




     (b) Whenever such a distribution, subdivision or combination of Partnership
Securities or any options, rights, warrants or appreciation rights relating to any
Partnership Securities is declared, the General Partner shall select a Record Date
as of which the distribution, subdivision or combination shall be effective and
shall send notice thereof at least 20 days prior to such Record Date to each Record
Holder as of a date not less than 10 days prior to the date of such notice. The
General Partner also may cause a firm of independent public accountants selected by
it to calculate the number of Partnership Securities or any options, rights,
warrants or appreciation rights relating to any Partnership Securities to be held by
each Record Holder after giving effect to such distribution, subdivision or
combination. The General Partner shall be entitled to rely on any certificate
provided by such firm as conclusive evidence of the accuracy of such calculation.




     (c) Promptly following any such distribution, subdivision or combination, the
Partnership may issue Certificates to the Record Holders of Partnership Securities
as of the applicable Record Date representing the new number of Partnership
Securities held by such Record Holders, or the General Partner may adopt such other
procedures that it determines to be necessary or appropriate to reflect such
changes. If any such combination results in a smaller total number of Partnership
Securities Outstanding, the Partnership shall require, as a condition to the
delivery to a Record Holder of such new Certificate, the surrender of any
Certificate held by such Record Holder immediately prior to such Record Date.




     (d) The Partnership shall not issue fractional Units upon any distribution,
subdivision or combination of Units. If a distribution, subdivision or combination
of Units would result in the issuance of fractional Units but for the provisions of
this Section 5.9(d), each fractional Unit shall be rounded to the nearest whole Unit
(and a 0.5 Unit shall be rounded to the next higher Unit).



     (e) Section 6.1(e)(x) is hereby amended and restated in its entirety as follows:




     Economic Uniformity. (A) At the election of the General Partner with respect
to any taxable period ending upon, or after, the termination of the Subordination
Period, all or a portion of the remaining items of Partnership



-4-









 






income or gain for such taxable period, after taking into account allocations
pursuant to Section 6.1(d)(iii), shall be allocated 100% to each Partner holding
Subordinated Units that are Outstanding as of the termination of the Subordination
Period (“Final Subordinated Units”) in the proportion of the number of Final
Subordinated Units held by such Partner to the total number of Final Subordinated
Units then Outstanding, until each such Partner has been allocated an amount of
income or gain that increases the Capital Account maintained with respect to such
Final Subordinated Units to an amount equal to the product of (A) the number of
Final Subordinated Units held by such Partner and (B) the Per Unit Capital Amount
for a Common Unit. The purpose of this allocation is to establish uniformity between
the Capital Accounts underlying Final Subordinated Units and the Capital Accounts
underlying Common Units held by Persons other than the General Partner and its
Affiliates immediately prior to the conversion of such Final Subordinated Units into
Common Units. This allocation method for establishing such economic uniformity will
be available to the General Partner only if the method for allocating the Capital
Account maintained with respect to the Subordinated Units between the transferred
and retained Subordinated Units pursuant to Section 5.5(c)(ii) does not otherwise
provide such economic uniformity to the Final Subordinated Units.




     (B) With respect to any taxable period ending after a right is exercised, all
or a portion of the remaining items of Partnership gross income or gain for such
taxable period shall be allocated 100% to each Partner who was the initial holder of
a Right Exercised Common Unit until each such Partner has been allocated an amount
of gross income or gain that increases the Capital Account maintained with respect
to such Right Exercised Common Units to an amount equal to the product of (A) the
number of Right Exercised Common Units held by such Partner and (B) the Per Unit
Capital Amount for a Common Unit (other than a Right Exercised Common Unit).



     (f) Section 6.2(c) is hereby amended and restated in its entirety as follows:




     For the proper administration of the Partnership and for the preservation of
uniformity of the Limited Partner Interests (or any class or classes thereof), the
General Partner shall (i) adopt such conventions as it deems appropriate in
determining the amount of depreciation, amortization and cost recovery deductions,
(ii) make special allocations for federal income tax purposes of income (including
gross income), gains, losses, deductions, Unrealized Gains or Unrealized Losses, and
(iii) amend the provisions of this Agreement as appropriate (x) to reflect the
proposal or promulgation of Treasury Regulations under Section 704(b) or Section
704(c) of the Code (including, if necessary to accomplish the intent of this
Agreement, the finalization of Treasury Regulations that may differ from the
Proposed Treasury Regulations relied upon in Section 5.5(d)(i) and Section 6.2(i)
hereof) or (y) otherwise to preserve or achieve uniformity of the Limited Partner
Interests (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as
provided in this Section 6.2(c) only if such



-5-









 






conventions, allocations or amendments would not have a material adverse effect
on the Partners, the holders of any class or classes of Limited Partner Interests
issued and Outstanding or the Partnership, and if such allocations are consistent
with the principles of Section 704 of the Code.



     (g) Section 6.2 is hereby amended to add the following as Section 6.2(i) immediately following
Section 6.2(h):




     If Capital Account balances are reallocated between the Partners in accordance
with Section 5.5(d)(i) hereof and Proposed Treasury Regulation Section
1.704-1(b)(2)(iv)(s)(4), beginning with the year of reallocation and continuing
until the allocations required are fully taken into account, the Partnership shall
make corrective allocations (allocations of items of gross income or gain or loss or
deduction for federal income tax purposes that do not have a corresponding book
allocation) to take into account the Capital Account reallocation, as provided in
Proposed Treasury Regulation Section 1.704-1(b)(4)(x).



     Section 2. Defined Terms. Capitalized terms used in this Amendment No. 1 but not
otherwise defined shall have the meaning assigned to such terms in the First Amended and Restated
Agreement.



     Section 3. General Authority. The appropriate officers of the General Partner are
hereby authorized to make such further clarifying and conforming changes to the Partnership
Agreement as they deem necessary or appropriate, and to interpret the Partnership Agreement, to
give effect to the intent and purpose of this Amendment No. 1.



     Section 4. Ratification of Partnership Agreement. Except as expressly modified and
amended herein, all of the terms and conditions of the First Amended and Restated Agreement shall
remain in full force and effect.



     Section 5. Governing Law. This Amendment No. 1 will be governed by and construed in
accordance with the laws of the State of Delaware.



[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]





-6-









 







IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 as of the date first
written above.




	 	 	 	 	 
	 	GENERAL PARTNER:


EAGLE ROCK ENERGY GP, L.P.

 	 
	 	By:  	EAGLE ROCK ENERGY G&P, LLC
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	LIMITED PARTNERS:



All Limited Partners now and hereafter

Admitted as Limited Partners of the

Partnership, pursuant to powers of attorney

Now and hereafter executed in favor of, and

Granted and delivered to the General

Partner or without execution hereof

Pursuant to Section 10.1(a) hereof.

 	 
	 	 	 



	 	 	 	 	 
	 	EAGLE ROCK HOLDINGS, L.P.

 	 
	 	By:  	     EAGLE ROCK GP, L.L.C.
 	 
	 	 	 	 
	 	 	 	 



	 	 	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[Signature Page to Amendment No. 1]

















 





Exhibit B




Form of Amended Partnership Agreement




 









 





Exhibit B




SECOND AMENDED AND RESTATED




AGREEMENT OF LIMITED PARTNERSHIP




OF




EAGLE ROCK ENERGY PARTNERS, L.P.




 









 





TABLE OF CONTENTS




Page




	 	 	 	 	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Construction
	 	 	15	 
	 
	 	 	 	 
	ARTICLE II ORGANIZATION
	 	 	15	 
	 
	 	 	 	 
	Section 2.1 Formation
	 	 	15	 
	Section 2.2 Name
	 	 	15	 
	Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices
	 	 	16	 
	Section 2.4 Purpose and Business
	 	 	16	 
	Section 2.5 Powers
	 	 	16	 
	Section 2.6 Power of Attorney
	 	 	16	 
	Section 2.7 Term
	 	 	18	 
	Section 2.8 Title to Partnership Assets
	 	 	18	 
	 
	 	 	 	 
	ARTICLE III RIGHTS OF LIMITED PARTNERS
	 	 	18	 
	 
	 	 	 	 
	Section 3.1 Limitation of Liability
	 	 	18	 
	Section 3.2 Management of Business
	 	 	18	 
	Section 3.3 Outside Activities of the Limited Partners
	 	 	19	 
	Section 3.4 Rights of Limited Partners
	 	 	19	 






	 	 	 	 	 
	ARTICLE IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF
PARTNERSHIP INTERESTS
	 	 	20	 
	 
	 	 	 	 
	Section 4.1 Certificates
	 	 	20	 
	Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates
	 	 	20	 
	Section 4.3 Record Holders
	 	 	21	 
	Section 4.4 Transfer Generally
	 	 	21	 
	Section 4.5 Registration and Transfer of Limited Partner Interests
	 	 	22	 
	Section 4.6 Transfer of the General Partner’s General Partner Interest
	 	 	23	 
	Section 4.7 [Reserved.]
	 	 	24	 
	Section 4.8 Restrictions on Transfers
	 	 	24	 
	Section 4.9 Citizenship Certificates; Non-citizen Assignees
	 	 	25	 
	Section 4.10 Redemption of Partnership Interests of Non-citizen Assignees
	 	 	26	 
	Section 4.11 Special Provisions Relating to Holders of NGP Common Units
	 	 	27	 
	 
	 	 	 	 
	ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
	 	 	27	 
	 
	 	 	 	 
	Section 5.1 Cancellation of Subordinated Units and Incentive Distribution Rights
	 	 	27	 
	Section 5.2 General Partner Interest; Additional Contributions by the General Partner
	 	 	27	 
	Section 5.3 [Reserved.]
	 	 	28	 
	Section 5.4 Interest and Withdrawal
	 	 	28	 
	Section 5.5 Capital Accounts
	 	 	28	 
	Section 5.6 Issuances of Additional Partnership Securities
	 	 	31	 






i









 






	 	 	 	 	 
	Section 5.7 [Reserved.]
	 	 	32	 
	Section 5.8 Limited Preemptive Right
	 	 	32	 
	Section 5.9 Splits, Combinations and Other Pro Rata Distributions
	 	 	32	 
	Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests
	 	 	33	 
	 
	 	 	 	 
	ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS
	 	 	33	 
	 
	 	 	 	 
	Section 6.1 Allocations for Capital Account Purposes
	 	 	33	 
	Section 6.2 Allocations for Tax Purposes
	 	 	38	 
	Section 6.3 Distributions
	 	 	41	 
	 
	 	 	 	 
	ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS
	 	 	41	 
	 
	 	 	 	 
	Section 7.1 Management
	 	 	41	 
	Section 7.2 Certificate of Limited Partnership
	 	 	43	 
	Section 7.3 Restrictions on the General Partner’s Authority
	 	 	44	 
	Section 7.4 Reimbursement of the General Partner
	 	 	44	 
	Section 7.5 Outside Activities
	 	 	45	 
	Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or Group Members
	 	 	46	 
	Section 7.7 Indemnification
	 	 	47	 
	Section 7.8 Liability of Indemnitees
	 	 	48	 
	Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
	 	 	49	 
	Section 7.10 Other Matters Concerning the General Partner
	 	 	51	 
	Section 7.11 Purchase or Sale of Partnership Securities
	 	 	51	 
	Section 7.12 Registration Rights of the General Partner and its Affiliates
	 	 	51	 
	Section 7.13 Reliance by Third Parties
	 	 	55	 
	 
	 	 	 	 
	ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS
	 	 	56	 
	 
	 	 	 	 
	Section 8.1 Records and Accounting
	 	 	56	 
	Section 8.2 Fiscal Year
	 	 	56	 
	Section 8.3 Reports
	 	 	56	 
	 
	 	 	 	 
	ARTICLE IX TAX MATTERS
	 	 	56	 
	 
	 	 	 	 
	Section 9.1 Tax Returns and Information
	 	 	56	 
	Section 9.2 Tax Elections
	 	 	57	 
	Section 9.3 Tax Controversies
	 	 	57	 
	Section 9.4 Withholding
	 	 	57	 
	 
	 	 	 	 
	ARTICLE X ADMISSION OF PARTNERS
	 	 	57	 
	 
	 	 	 	 
	Section 10.1 Admission of Limited Partners
	 	 	58	 
	Section 10.2 Admission of Successor General Partner
	 	 	58	 
	Section 10.3 Amendment of Agreement and Certificate of Limited Partnership
	 	 	59	 
	 
	 	 	 	 
	ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS
	 	 	59	 
	 
	 	 	 	 
	Section 11.1 Withdrawal of the General Partner
	 	 	59	 
	Section 11.2 Removal of the General Partner
	 	 	61	 
	Section 11.3 Interest of Departing General Partner and Successor General Partner
	 	 	62	 






ii









 






	 	 	 	 	 
	Section 11.4 [Reserved.]
	 	 	63	 
	Section 11.5 Withdrawal of Limited Partners
	 	 	63	 
	 
	 	 	 	 
	ARTICLE XII DISSOLUTION AND LIQUIDATION
	 	 	63	 
	 
	 	 	 	 
	Section 12.1 Dissolution
	 	 	63	 
	Section 12.2 Continuation of the Business of the Partnership After Dissolution
	 	 	64	 
	Section 12.3 Liquidator
	 	 	65	 
	Section 12.4 Liquidation
	 	 	65	 
	Section 12.5 Cancellation of Certificate of Limited Partnership
	 	 	66	 
	Section 12.6 Return of Contributions
	 	 	66	 
	Section 12.7 Waiver of Partition
	 	 	66	 
	Section 12.8 Capital Account Restoration
	 	 	66	 
	 
	 	 	 	 
	ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
	 	 	66	 
	 
	 	 	 	 
	Section 13.1 Amendments to be Adopted Solely by the General Partner
	 	 	66	 
	Section 13.2 Amendment Procedures
	 	 	68	 
	Section 13.3 Amendment Requirements
	 	 	68	 
	Section 13.4 Common Unitholder Meetings
	 	 	69	 
	Section 13.5 Notice of a Meeting
	 	 	73	 
	Section 13.6 Record Date
	 	 	73	 
	Section 13.7 Adjournment
	 	 	73	 
	Section 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes
	 	 	73	 
	Section 13.9 Quorum and Voting
	 	 	73	 
	Section 13.10 Conduct of a Meeting
	 	 	74	 
	Section 13.11 Action Without a Meeting
	 	 	74	 
	Section 13.12 Right to Vote and Related Matters
	 	 	75	 
	Section 13.13 Board of Directors
	 	 	75	 
	 
	 	 	 	 
	ARTICLE XIV MERGER, CONSOLIDATION OR CONVERSION
	 	 	78	 
	 
	 	 	 	 
	Section 14.1 Authority
	 	 	78	 
	Section 14.2 Procedure for Merger, Consolidation or Conversion
	 	 	78	 
	Section 14.3 Approval by Limited Partners
	 	 	80	 
	Section 14.4 Certificate of Merger
	 	 	81	 
	Section 14.5 Effect of Merger, Consolidation or Conversion
	 	 	81	 
	 
	 	 	 	 
	ARTICLE XV RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
	 	 	82	 
	 
	 	 	 	 
	Section 15.1 Right to Acquire Limited Partner Interests
	 	 	82	 
	 
	 	 	 	 
	ARTICLE XVI GENERAL PROVISIONS
	 	 	84	 
	 
	 	 	 	 
	Section 16.1 Addresses and Notices
	 	 	84	 
	Section 16.2 Further Action
	 	 	84	 
	Section 16.3 Binding Effect
	 	 	85	 
	Section 16.4 Integration
	 	 	85	 
	Section 16.5 Creditors
	 	 	85	 
	Section 16.6 Waiver
	 	 	85	 
	Section 16.7 Third-Party Beneficiaries
	 	 	85	 






iii









 






	 	 	 	 	 
	Section 16.8 Counterparts
	 	 	85	 
	Section 16.9 Applicable Law
	 	 	85	 
	Section 16.10 Invalidity of Provisions
	 	 	85	 
	Section 16.11 Consent of Partners
	 	 	85	 
	Section 16.12 Facsimile Signatures
	 	 	85	 







iv











 





SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF EAGLE ROCK ENERGY PARTNERS, L.P.




     THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF EAGLE ROCK ENERGY
PARTNERS, L.P. dated as of
[____________], 2010, is entered into by and among Eagle Rock Energy GP,
L.P., a Delaware limited partnership, as the General Partner and as the lawful attorney-in-fact for
the Limited Partners, together with any other Persons who become Partners in the Partnership or
parties hereto as provided herein.



     WHEREAS, the General Partner and Limited Partners entered into the First Amended and Restated
Agreement of Limited Partnership of Eagle Rock Energy Partners, L.P. on October 27, 2006 (as
heretofore amended, the “First Amended and Restated Agreement”); and



     WHEREAS, the Securities Purchase and Global Transaction Agreement, dated December 21, 2009
(the “Transaction Agreement”), among Natural Gas Partners VII, L.P., Natural Gas Partners VIII,
L.P., Montierra Minerals & Production, L.P., Montierra Management LLC, Eagle Rock Holdings, L.P.,
Eagle Rock Energy G&P, LLC, Eagle Rock Energy GP, L.P. and the Partnership, contemplates certain
amendments to the First Amended and Restated Agreement.



     NOW, THEREFORE, pursuant to Section 13.2 of the First Amended and Restated Agreement, in
consideration of the covenants, conditions and agreements contained herein, the First Amended and
Restated Agreement is hereby restated in its entirety as follows:



ARTICLE I

DEFINITIONS




     Section 1.1 Definitions. The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.



     “Adjusted Capital Account” means the Capital Account maintained for each Partner as of the end
of each fiscal year of the Partnership, (a) increased by any amounts that such Partner is obligated
to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is
deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and
(b) decreased by (i) the amount of all losses and deductions that, as of the end of such fiscal
year, are reasonably expected to be allocated to such Partner in subsequent years under Sections
704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such fiscal year, are reasonably expected to be
made to such Partner in subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such Partner’s Capital Account that are
reasonably expected to occur during (or prior to) the year in which such distributions are
reasonably expected to be made (other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(e)(i) or 6.1(e)(ii)). The foregoing definition of Adjusted Capital Account
is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith. The “Adjusted Capital Account” of a Partner in respect
of a General Partner Unit, a Common Unit or any other Partnership Interest shall be the amount that
such Adjusted Capital Account would be if such General Partner Unit, Common Unit or other
Partnership Interest were the only interest in the Partnership held by such



 









 







Partner from and after the date on which such General Partner Unit, Common Unit or other
Partnership Interest was first issued.



     “Adjusted Property” means any property the Carrying Value of which has been adjusted pursuant
to Section 5.5(d)(i) or 5.5(d)(ii).



     “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. As used herein, the term “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.



     “Agreed Allocation” means any allocation, other than a Required Allocation, of an item of
income, gain, loss or deduction pursuant to the provisions of Section 6.1, including a Curative
Allocation (if appropriate to the context in which the term “Agreed Allocation” is used).



     “Agreed Value” of any Contributed Property means the fair market value of such property or
other consideration at the time of contribution as determined by the General Partner. The General
Partner shall use such method as it determines to be appropriate to allocate the aggregate Agreed
Value of Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair market value of each
Contributed Property.



     “Agreement” means this Second Amended and Restated Agreement of Limited Partnership of Eagle
Rock Energy Partners, L.P., as it may be amended, supplemented or restated from time to time.



     “Appointed Directors” means the Directors appointed by the NGP Representative pursuant to
Section 13.13(c) and their respective successors.



     “Associate” means, when used to indicate a relationship with any Person, (a) any corporation
or organization of which such Person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same principal residence as such Person.



     “Available Cash” means, with respect to any Quarter ending prior to the Liquidation Date:



     (a) the sum of (i) all cash and cash equivalents of the Partnership Group on hand at the end
of such Quarter, and (ii) if the General Partner so determines, all or any portion of any
additional cash and cash equivalents of the Partnership Group on hand on the date of determination
of Available Cash with respect to such Quarter, less



2









 





     (b) the amount of any cash reserves established by the General Partner to (i) provide for the
proper conduct of the business of the Partnership Group (including reserves for future capital
expenditures and for anticipated future credit needs of the Partnership Group) subsequent to such
Quarter, (ii) comply with applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which any Group Member is a party or by which it is
bound or its assets are subject or (iii) provide funds for distributions under Section 6.3 in
respect of any one or more of the next four Quarters; provided, however, that disbursements made by
a Group Member or cash reserves established, increased or reduced after the end of such Quarter but
on or before the date of determination of Available Cash with respect to such Quarter shall be
deemed to have been made, established, increased or reduced, for purposes of determining Available
Cash, within such Quarter if the General Partner so determines.



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



     “Board of Directors” means, with respect to the General Partner, its board of directors or
managers, as applicable, if a corporation or limited liability company, or if a limited
partnership, the board of directors or board of managers of the general partner of the General
Partner.



     “Book-Tax Disparity” means with respect to any item of Contributed Property or Adjusted
Property, as of the date of any determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference between such
Partner’s Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical
balance of such Partner’s Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.



     “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.



     “Capital Account” means the capital account maintained for a Partner pursuant to Section 5.5.
The “Capital Account” of a Partner in respect of a General Partner Unit, a Common Unit or any
Partnership Interest shall be the amount that such Capital Account would be if such General Partner
Unit, Common Unit or other Partnership Interest were the only interest in the Partnership held by
such Partner from and after the date on which such General Partner Unit, Common Unit or other
Partnership Interest was first issued.



     “Capital Contribution” means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership.



     “Carrying Value” means (a) with respect to a Contributed Property, the Agreed Value of such
property reduced (but not below zero) by all depreciation, amortization and cost recovery
deductions charged to the Partners’ Capital Accounts in respect of such Contributed Property, and
(b) with respect to any other Partnership property, the adjusted basis of such property for



3









 







federal income tax purposes, all as of the time of determination. The Carrying Value of any
property shall be adjusted from time to time in accordance with Sections 5.5(d)(i) and 5.5(d)(ii)
and to reflect changes, additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General Partner.



     “Cause” means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud or willful misconduct in its capacity as a
general partner of the Partnership.



     “Cause for Removal” shall mean with respect to any Director (i) such Director having engaged
in willful misconduct, gross negligence or a breach of fiduciary duty that, in any such case,
results in material and demonstrable harm to the Partnership or any of its Affiliates, (ii) such
Director having been convicted of, or having entered a plea bargain or settlement admitting guilt
or the imposition of unadjudicated probation for, any felony under the laws of the United States,
any state or the District of Columbia, where such felony involves moral turpitude or where, as a
result of such felony, the continuation of such Director’s role as a Director would have, or would
reasonably be expected to have, a material adverse impact on the Partnership’s or any of its
Affiliates’ reputations, (iii) such Director having been the subject of any order, judicial or
administrative, obtained or issued by the Commission, for any securities violation involving fraud
including, for example, any such order consented to by such Director in which findings of facts or
any legal conclusions establishing liability are neither admitted nor denied, or (iv) such
Director’s commission of an act of fraud, embezzlement, or misappropriation, in each case, against
the Partnership or any of its Affiliates.



     “Certificate” means (a) a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the
Partnership evidencing ownership of one or more Common Units or (b) a certificate, in such form as
may be adopted by the General Partner, issued by the Partnership evidencing ownership of one or
more other Partnership Securities.



     “Certificate of Limited Partnership” means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware as referenced in Section
7.2, as such Certificate of Limited Partnership may be amended, supplemented or restated from time
to time.



     “Citizenship Certification” means a properly completed certificate in such form as may be
specified by the General Partner by which a Limited Partner certifies that he (and if he is a
nominee holding for the account of another Person, that to the best of his knowledge such other
Person) is an Eligible Citizen.



     “Claim” (as used in Section 7.12(d)) has the meaning assigned to such term in Section 7.12(d).



     “Closing Price” has the meaning assigned to such term in Section 15.1(a).



4









 





     “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any successor law.



     “Combined Interest” has the meaning assigned to such term in Section 11.3(a).



     “Commission” means the United States Securities and Exchange Commission.



     “Common Unit” means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees, and having the rights and obligations specified
with respect to Common Units in this Agreement.



     “Conflicts Committee” means a committee of the Board of Directors of the General Partner
composed entirely of two or more directors, each of whom (a) is not a security holder, officer or
employee of the General Partner, (b) is not an officer, director or employee of any Affiliate of
the General Partner (other than the general partner thereof if the General Partner is a limited
partnership), (c) is not a holder of any ownership interest in the Partnership Group other than
Common Units and (d) meets the independence standards required of directors who serve on an audit
committee of a board of directors established by the Securities Exchange Act and the rules and
regulations of the Commission thereunder and by the National Securities Exchange on which the
Common Units are listed or admitted to trading.



     “Contributed Property” means each property or other asset, in such form as may be permitted by
the Delaware Act, but excluding cash, contributed to the Partnership. Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an Adjusted Property.



     “Contribution Agreement” means that certain Contribution and Conveyance Agreement, dated as of
October 27, 2006, among the General Partner, the Partnership, the Operating Partnership and certain
other parties, together with the additional conveyance documents and instruments contemplated or
referenced thereunder, as such may be amended, supplemented or restated from time to time.



     “Curative Allocation” means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(e)(xi).



     “Current Market Price” has the meaning assigned to such term in Section 15.1(a).



     “Delaware Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del C. Section
17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such
statute.



     “Departing General Partner” means a former General Partner from and after the effective date
of any withdrawal or removal of such former General Partner pursuant to Section 11.1 or Section
11.2.



     “Depositary” means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.



5









 





     “Derivative Instrument” has the meaning assigned to such term in Section 13.4(c)(iv).



     “Director” means an individual serving as a director or manager on the Board of Directors.



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



     “Elected Directors” means the Directors elected at an annual meeting of Limited Partners
pursuant to Section 13.4(c) (or otherwise designated an “Elected Director” pursuant to Section
13.13) and their respective successors.



     “Eligible Citizen” means a Person qualified to own interests in real property in jurisdictions
in which any Group Member does business or proposes to do business from time to time, and whose
status as a Limited Partner the General Partner determines does not or would not subject such Group
Member to a significant risk of cancellation or forfeiture of any of its properties or any interest
therein.



     “Event of Withdrawal” has the meaning assigned to such term in Section 11.1(a).



     “Existing Registration Rights Agreement” means the Registration Rights Agreement, dated March
27, 2006, by and among the Operating Partnership and certain investors named therein.



     “Final NGP Voting Termination Event” has the meaning assigned to such term in Section
13.13(d).



     “First Amended and Restated Agreement” has the meaning assigned such term in the preamble.



     “First NGP Voting Termination Event” has the meaning assigned to such term in Section
13.13(d).



     “General Partner” means Eagle Rock Energy GP, L.P., a Delaware limited partnership, and its
successors and permitted assigns that are admitted to the Partnership as general partner of the
Partnership, in its capacity as general partner of the Partnership (except as the context otherwise
requires).



     “General Partner Interest” means the ownership or management interest of the General Partner
in the Partnership (in its capacity as a general partner without reference to any Limited Partner
Interest held by it), which is evidenced by General Partner Units, and includes any and all
benefits to which the General Partner is entitled as provided in this Agreement, together with all
obligations of the General Partner to comply with the terms and provisions of this Agreement.



     “General Partner Unit” means a fractional part of the General Partner Interest having the
rights and obligations specified with respect to the General Partner Interest. A General Partner
Unit is not a Unit.



6









 





     “GP Acquisition” means the acquisition by the Partnership or its Subsidiary of all of the
outstanding limited partner interests in the General Partner and all of the outstanding limited
liability company interests of Eagle Rock Energy G&P, LLC pursuant to the Transaction Agreement.



     “GP Acquisition Date” means the date on which the GP Acquisition is consummated.



     “Group” means a Person that with or through any of its Affiliates or Associates has any
contract, arrangement, understanding or relationship for the purpose of acquiring, holding, voting
(except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy
or consent solicitation made to 10 or more Persons), exercising investment power or disposing of
any Partnership Interests with any other Person that beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly, Partnership Interests.



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



     “Group Member Agreement” means the partnership agreement of any Group Member, other than the
Partnership, that is a limited or general partnership, the limited liability company agreement of
any Group Member that is a limited liability company, the certificate of incorporation and bylaws
or similar organizational documents of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other Group Member that is a Person other
than a limited or general partnership, limited liability company, corporation or joint venture, as
such may be amended, supplemented or restated from time to time.



     “Holder” as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).



     “Incentive Distribution Right” has the meaning assigned to such term in Section 1.1 of the
First Amended and Restated Agreement.



     “Indemnified Persons” has the meaning assigned to such term in Section 7.12(d).



     “Indemnitee” means (a) the General Partner, (b) any Departing General Partner, (c) any Person
who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person
who is or was serving at the request of the General Partner or any Departing General Partner or any
Affiliate of the General Partner or any Departing General Partner as a member, partner, director,
officer, fiduciary or trustee of any Group Member, the General Partner or any Departing General
Partner or any Affiliate of any Group Member, the General Partner or any Departing General Partner,
(e) any Person who is or was serving at the request of the General Partner or any Departing General
Partner or any Affiliate of the General Partner or any Departing General Partner as an officer,
director, member, partner, fiduciary or trustee of another Person; provided that a Person shall not
be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or
custodial services, and (f) any Person the General Partner designates as an “Indemnitee” for
purposes of this Agreement.



7









 





     “Limited Partner” means, unless the context otherwise requires, the Organizational Limited
Partner prior to its withdrawal from the Partnership, each Initial Limited Partner (as defined in
the First Amended and Restated Agreement), each additional Person that became a Limited Partner
pursuant to the First Amended and Restated Agreement or becomes a Limited Partner pursuant to the
terms of this Agreement and any Departing General Partner upon the change of its status from
General Partner to Limited Partner pursuant to Section 11.3, in each case, in such Person’s
capacity as limited partner of the Partnership.



     “Limited Partner Interest” means the ownership interest of a Limited Partner in the
Partnership, which may be evidenced by Common Units or other Partnership Securities or a
combination thereof or interest therein, and includes any and all benefits to which such Limited
Partner is entitled as provided in this Agreement, together with all obligations of such Limited
Partner to comply with the terms and provisions of this Agreement.



     “Limited Partnership Associated Person” has the meaning assigned to such term in Section
13.4(c)(iv).



     “Liquidation Date” means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to continue the business of the Partnership has expired without such an election
being made, and (b) in the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.



     “Liquidator” means one or more Persons selected by the General Partner to perform the
functions described in Section 12.4 as liquidating trustee of the Partnership within the meaning of
the Delaware Act.



     “Management Director” has the meaning assigned to such term in Section 13.13(f).



     “Merger Agreement” has the meaning assigned to such term in Section 14.1.



     “National Securities Exchange” means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act, and any successor to such statute, or the Nasdaq Stock Market
or any successor thereto.



     “Net Agreed Value” means, (a) in the case of any Contributed Property, the Agreed Value of
such property reduced by any liabilities either assumed by the Partnership upon such contribution
or to which such property is subject when contributed, (b) in the case of any property distributed
to a Partner by the Partnership, the Partnership’s Carrying Value of such property (as adjusted
pursuant to Section 5.5(d)(ii)) at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which such property is
subject at the time of distribution, in either case, as determined under Section 752 of the Code,
and (c) in the case of a contribution of Common Units by the General Partner to the Partnership as
a Capital Contribution pursuant to Section 5.2(b), an amount per Common Unit contributed equal to
the Current Market Price per Common Unit as of the date of the contribution.



8









 





     “Net Income” means, for any taxable year, the excess, if any, of the Partnership’s items of
income and gain (other than those items taken into account in the computation of Net Termination
Gain or Net Termination Loss) for such taxable year over the Partnership’s items of loss and
deduction (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not include any items specially
allocated under Section 6.1(e).



     “Net Loss” means, for any taxable year, the excess, if any, of the Partnership’s items of loss
and deduction (other than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable year over the Partnership’s items of income and gain
(other than those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation of Net Loss shall be
determined in accordance with Section 5.5(b) and shall not include any items specially allocated
under Section 6.1(e).



     “Net Termination Gain” means, for any taxable year ending prior to the GP Acquisition Date,
the sum, if positive, of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net Termination Gain shall
be determined in accordance with Section 5.5(b) and shall not include any items of income, gain or
loss specially allocated under Section 6.1(e).



     “Net Termination Loss” means, for any taxable year ending prior to the GP Acquisition Date,
the sum, if negative, of all items of income, gain, loss or deduction recognized by the Partnership
after the Liquidation Date. The items included in the determination of Net Termination Loss shall
be determined in accordance with Section 5.5(b) and shall not include any items of income, gain or
loss specially allocated under Section 6.1(e).



     “NGP Common Unit” means any Common Unit held by an NGP Party, including any Common Units
issued in connection with the GP Acquisition.



     “NGP Parties” means Natural Gas Partners VII, L.P., a Delaware limited partnership, Natural
Gas Partners VIII, L.P., a Delaware limited partnership, Montierra Minerals & Production, L.P., a
Texas limited partnership, Montierra Management LLC, a Texas limited liability company, Eagle Rock
Holdings, L.P., a Texas limited partnership, and each of their respective Affiliates; provided,
that none of Eagle Rock Energy G&P, LLC, the General Partner, the Partnership and the Partnership’s
subsidiaries shall be included in the definition of “NGP Parties.”



     “NGP Representative” means Eagle Rock Holdings, L.P., a Texas limited partnership, or such
other NGP Party as is determined by the holders of a majority of the Common Units held by the NGP
Parties, which determination shall be evidenced by, and effective as of, the delivery to the
General Partner of a notice, executed by the holders of such majority and by such replacement NGP
Representative, (i) identifying such replacement NGP Representative, (ii) setting forth such
replacement NGP Representative’s address for notice and (iii) acknowledging such replacement
Person’s status as NGP Representative hereunder.



9









 






     “NGP Restriction Period” means the period beginning on [________]1 and ending on
[________]2; provided that the NGP Restriction Period shall end at 11:59 p.m. Houston,
Texas time on December 31, 2012 if the Partnership does not provide the Option Notice in accordance
with the terms of the Transaction Agreement on or prior to December 31, 2012.



     “NGP Voting Termination Event” means the First NGP Voting Termination Event, Second NGP Voting
Termination Event or Final NGP Voting Termination Event.



     “Non-citizen Assignee” means a Person whom the General Partner has determined does not
constitute an Eligible Citizen and as to whose Partnership Interest the General Partner has become
the substituted Limited Partner, pursuant to Section 4.9.



     “Nonrecourse Built-in Gain” means with respect to any Contributed Properties or Adjusted
Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of
any taxable gain that would be allocated to the Partners pursuant to Sections 6.2(b)(i)(A),
6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.



     “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
1.752-1(a)(2).



     “Notice of Election to Purchase” has the meaning assigned to such term in Section 15.1(b).



     “Omnibus Agreement” means that certain Omnibus Agreement, dated as of October 27, 2006, among
the General Partner, the Partnership, Eagle Rock Energy GRP, LLC and Eagle Rock Holding, L.P. and
certain other parties thereto, as such may be amended, supplemented or restated from time to time.



     “Operating Partnership” means Eagle Rock Pipeline, L.P., a Delaware limited partnership, and
any successors thereto.



     “Opinion of Counsel” means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.



     “Option Notice” has the meaning assigned to such term in the Transaction Agreement.



     “Organizational Limited Partner” means Eagle Rock Holdings, L.P. in its capacity as the
organizational limited partner of the Partnership pursuant to this Agreement.





 




			
	1	 	To be the date of the Second Amended and Restated
Partnership Agreement.
	 
	2	 	To be the fifth anniversary of the Unitholder Approval
Date.




10









 










     “Outstanding” means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnership’s books and records
as of the date of determination; provided, however, that if at any time any Person or Group
beneficially owns 20% or more of the Outstanding Partnership Securities of any class then
Outstanding, all Partnership Securities owned by such Person or Group shall not be voted on any
matter and shall not be considered to be Outstanding (except solely for purposes of a determination
made in accordance with Section 13.13(d) following the GP Acquisition, for Partnership Securities
owned by any of the NGP Parties) when sending notices of a meeting of Limited Partners to vote on
any matter (unless otherwise required by law), calculating required votes, determining the presence
of a quorum or for other similar purposes under this Agreement, except that Units so owned shall be
considered to be Outstanding for purposes of Section 11.1(b)(iv) (such Units shall not, however, be
treated as a separate class of Partnership Securities for purposes of this Agreement); provided,
further, that (A) prior to the GP Acquisition, the foregoing limitation shall not apply to (i) the
General Partner or its Affiliates (which , for the avoidance of doubt, as of the date hereof
includes the NGP Parties), (ii) any Person or Group who acquired 20% or more of the Outstanding
Partnership Securities of any class then Outstanding directly from the General Partner or its
Affiliates, (iii) any Person or Group who acquired 20% or more of the Outstanding Partnership
Securities of any class then Outstanding directly or indirectly from a Person or Group described in
clause (ii) provided that the General Partner shall have notified such Person or Group in writing
that such limitation shall not apply, or (iv) any Person or Group who acquired 20% or more of any
Partnership Securities issued by the Partnership with the prior approval of the Board of Directors
and (B) following the GP Acquisition, the foregoing limitation shall not apply to (i) any of the
NGP Parties, (ii) any Person or Group designated by the Board of Directors following the GP
Acquisition or (iii) any Person or Group who acquired 20% or more of the Outstanding Partnership
Securities of any class then Outstanding in a transaction approved by the Board of Directors
following the GP Acquisition.



     “Partner Nonrecourse Debt” has the meaning set forth in Treasury Regulation Section
1.704-2(b)(4).



     “Partner Nonrecourse Debt Minimum Gain” has the meaning set forth in Treasury Regulation
Section 1.704-2(i)(2).



     “Partner 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 Partner Nonrecourse
Debt.



     “Partners” means the General Partner and the Limited Partners.



     “Partnership” means Eagle Rock Energy Partners, L.P., a Delaware limited partnership.



     “Partnership Group” means the Partnership and its Subsidiaries treated as a single
consolidated entity.



     “Partnership Interest” means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.



11









 





     “Partnership Minimum Gain” means that amount determined in accordance with the principles of
Treasury Regulation Section 1.704-2(d).



     “Partnership Security” means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including Common Units and General Partner Units.



     “Per Unit Capital Amount” means, as of any date of determination, the Capital Account, stated
on a per Unit basis, underlying any Unit. The Per Unit Capital Amount of Common Units means the
Per Unit Capital Amount of any Person other than the General Partner or any Affiliate of the
General Partner who holds Common Units.



     “Percentage Interest” means as of any date of determination (a) as to the General Partner with
respect to General Partner Units and as to any Unitholder with respect to Units, the product
obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii) the
quotient obtained by dividing (A) the number of General Partner Units held by the General Partner
or the number of Units held by such Unitholder, as the case may be, by (B) the total number of
Outstanding Units and General Partner Units, and (b) as to the holders of any Common Units or other
Partnership Securities issued by the Partnership in accordance with Section 5.6, the percentage
established as a part of such issuance. Notwithstanding the foregoing, as of any date of
determination on or after the GP Acquisition Date, the Percentage Interest with respect to any
General Partner Unit shall be zero and the number of General Partner Units outstanding will be
deemed be zero for the purposes of this definition.



     “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.



     “Premium” has the meaning assigned to such term in Section 4.5(e).



     “Pro Rata” means (a) when used with respect to Units or any class thereof, apportioned equally
among all designated Units in accordance with their relative Percentage Interests and (b) when used
with respect to Partners and Assignees or Record Holders, apportioned among all Partners and
Assignees or Record Holders in accordance with their relative Percentage Interests.



     “Proxy Statement” means the Proxy Statement filed by the Partnership with the Commission in
connection with the transactions contemplated by the Transaction Agreement, as it has been or may
be supplemented from time to time.



     “Purchase Date” means the date determined by the General Partner as the date for purchase of
all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests
owned by the General Partner and its Affiliates) pursuant to Article XV.



     “Quarter” means, unless the context requires otherwise, a fiscal quarter of the Partnership.



12









 





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



     “Record Date” means the date established by the General Partner or otherwise in accordance
with this Agreement for determining (a) the identity of the Record Holders entitled to notice of,
or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in respect of any
lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any
report or distribution or to participate in any offer.



     “Record Holder” means the Person in whose name a Common Unit is registered on the books of the
Transfer Agent as of the opening of business on a particular Business Day, or with respect to other
Partnership Interests, the Person in whose name any such other Partnership Interest is registered
on the books that the General Partner has caused to be kept as of the opening of business on such
Business Day.



     “Redeemable Interests” means any Partnership Interests for which a redemption notice has been
given, and has not been withdrawn, pursuant to Section 4.10.



     “Registration Statement” means the Registration Statement on Form S-1 (File No. 333-314750)
filed by the Partnership with the Commission.



     “Required Allocations” means (a) any limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or Section 6.1(d)(ii) and (b) any allocation of an item of
income, gain, loss or deduction pursuant to Section 6.1(e)(i), Section 6.1(e)(ii), Section
6.1(e)(iv), Section 6.1(e)(vii) or Section 6.1(e)(ix).



     “Residual Gain” or “Residual Loss” means any item of gain or loss, as the case may be, of the
Partnership recognized for federal income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the extent such item of gain or loss
is not allocated pursuant to Section 6.2(b)(i)(A) or Section 6.2(b)(ii)(A), respectively, to
eliminate Book-Tax Disparities.



     “Right Exercised Common Unit” means any Common Unit issued by the Partnership upon the
exercise of a right to purchase a Common Unit.



     “Second NGP Voting Termination Event” has the meaning assigned to such term in Section
13.13(d).



     “Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.



     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, supplemented
or restated from time to time and any successor to such statute.



13









 





     “Special Approval” means approval by a majority of the members of the Conflicts Committee.



     “Subordinated Unit” has the meaning assigned to such term in Section 1.1 of the First Amended
and Restated Agreement.



     “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 more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) 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, 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 or other governing body of such Person.



     “Surviving Business Entity” has the meaning assigned to such term in Section 14.2(b).



     “Tax Matters Partner” has the meaning assigned to such term in the Code.



     “Trading Day” has the meaning assigned to such term in Section 15.1(a).



     “Transaction Agreement” has the meaning assigned such term in the preamble.



     “Transfer” has the meaning assigned to such term in Section 4.4(a).



     “Transfer Agent” means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as shall be appointed from time to time by the General Partner to act as
registrar and transfer agent for the Common Units; provided, that if no Transfer Agent is
specifically designated for any other Partnership Securities, the General Partner shall act in such
capacity.



     “Underwriting Agreement” means that certain Underwriting Agreement dated as of October 24,
2006 among the Underwriters named therein, the Partnership, the General Partner, the Operating
Partnership and other parties thereto, providing for the purchase of Common Units by the
Underwriters named therein.



     “Unit” means a Partnership Security that is designated as a “Unit” and shall include Common
Units but shall not include General Partner Units (or the General Partner Interest represented
thereby).



     “Unit Majority” means at least a majority of the Outstanding Common Units voting as a class.



14









 





     “Unitholders” means the holders of Units.



     “Unrealized Gain” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the fair market value of such property as of such date
(as determined under Section 5.5(d)) over (b) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date).



     “Unrealized Loss” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section 5.5(d)).



     “U.S. GAAP” means United States generally accepted accounting principles consistently applied.



     “Warrant Exercised Common Unit” means any Common Unit issued by the Partnership upon the
exercise of a warrant to purchase a Common Unit.



     “Withdrawal Opinion of Counsel” has the meaning assigned to such term in Section 11.1(b).



     Section 1.2 Construction. Unless the context requires otherwise: (a) 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; (b) references
to Articles and Sections refer to Articles and Sections of this Agreement; (c) the terms “include”,
“includes”, “including” or words of like import shall be deemed to be followed by the words
“without limitation”; and (d) the terms “hereof”, “herein” or “hereunder” refer to this Agreement
as a whole and not to any particular provision of this Agreement. 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.



ARTICLE II

ORGANIZATION




     Section 2.1 Formation. The General Partner and the Organizational Limited Partner
have previously formed the Partnership as a limited partnership pursuant to the provisions of the
Delaware Act. This amendment and restatement shall become effective on the date of this Agreement.
Except as expressly provided to the contrary in this Agreement, the rights, duties (including
fiduciary duties), liabilities and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Delaware Act. All Partnership Interests
shall constitute personal property of the owner thereof for all purposes.



     Section 2.2 Name. The name of the Partnership shall be “Eagle Rock Energy Partners,
L.P.” The Partnership’s business may be conducted under any other name or names as determined by
the General Partner, including the name of the General Partner. The words “Limited Partnership,”
“L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where
necessary for the purpose of complying with the laws of any



15









 







jurisdiction that so requires. The General Partner may change the name of the Partnership at
any time and from time to time and shall notify the Limited Partners of such change in the next
regular communication to the Limited Partners.



     Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices.
Unless and until changed by the General Partner, the registered office of the Partnership in the
State of Delaware shall be located at 2711 Centerville Road, Suite 400, Wilmington, Delaware
19808-1645, and the registered agent for service of process on the Partnership in the State of
Delaware at such registered office shall be Corporation Service Company. The principal office of
the Partnership shall be located at 1415 Louisiana Street, The Wedge Tower, Suite 2700, Houston,
Texas 77002, or such other place as the General Partner may from time to time designate by notice
to the Limited Partners. The Partnership may maintain offices at such other place or places within
or outside the State of Delaware as the General Partner shall determine necessary or appropriate.
The address of the General Partner shall be 1415 Louisiana Street, The Wedge Tower, Suite 2700,
Houston, Texas 77002, or such other place as the General Partner may from time to time designate
by notice to the Limited Partners.



     Section 2.4 Purpose and Business. The purpose and nature of the business to be
conducted by the Partnership shall be to (a) engage directly in, or enter into or form, hold and
dispose of any corporation, partnership, joint venture, limited liability company or other
arrangement to engage indirectly in, any business activity that is approved by the General Partner
and that lawfully may be conducted by a limited partnership organized pursuant to the Delaware Act
and, in connection therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business activity, and (b) do anything
necessary or appropriate to the foregoing, including the making of capital contributions or loans
to a Group Member; provided, however, that the General Partner shall not cause the Partnership to
engage, directly or indirectly, in any business activity that the General Partner determines would
cause the Partnership to be treated as an association taxable as a corporation or otherwise taxable
as an entity for federal income tax purposes. To the fullest extent permitted by law, the General
Partner shall have no duty or obligation to propose or approve, and may decline to propose or
approve, the conduct by the Partnership of any business free of any fiduciary duty or obligation
whatsoever to the Partnership or any Limited Partner and, in declining to so propose or approve,
shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity.



     Section 2.5 Powers. The Partnership shall be empowered to do any and all acts and
things necessary or appropriate for the furtherance and accomplishment of the purposes and business
described in Section 2.4 and for the protection and benefit of the Partnership.



     Section 2.6 Power of Attorney.



     (a) Each Limited Partner hereby constitutes and appoints the General Partner and, if a
Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (and any successor to
the Liquidator by merger, transfer, assignment, election or otherwise) and each of their authorized
officers and attorneys-in-fact, as the case may be, with full power of substitution, as




16












 




his true and lawful agent and attorney-in-fact, with full power and authority in his name,
place and stead, to:





     (i) execute, swear to, acknowledge, deliver, file and record in the appropriate public
offices (A) all certificates, documents and other instruments (including this Agreement and
the Certificate of Limited Partnership and all amendments or restatements hereof or thereof)
that the General Partner or the Liquidator determines to be necessary or appropriate to
form, qualify or continue the existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have limited liability) in the
State of Delaware and in all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and other instruments that the
General Partner or the Liquidator determines to be necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification or restatement of this
Agreement; (C) all certificates, documents and other instruments (including conveyances and
a certificate of cancellation) that the General Partner or the Liquidator determines to be
necessary or appropriate to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement; (D) all certificates, documents and other
instruments relating to the admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Article IV, Article X, Article XI or Article XII;
(E) all certificates, documents and other instruments relating to the determination of the
rights, preferences and privileges of any class or series of Partnership Securities issued
pursuant to Section 5.6; and (F) all certificates, documents and other instruments
(including agreements and a certificate of merger) relating to a merger, consolidation or
conversion of the Partnership pursuant to Article XIV; and




     (ii) execute, swear to, acknowledge, deliver, file and record all ballots, consents,
approvals, waivers, certificates, documents and other instruments that the General Partner
or the Liquidator determines to be necessary or appropriate to (A) make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other action that is made or
given by the Partners hereunder or is consistent with the terms of this Agreement or (B)
effectuate the terms or intent of this Agreement; provided, that when required by Section
13.3 or any other provision of this Agreement that establishes a percentage of the Limited
Partners or of the Limited Partners of any class or series required to take any action, the
General Partner and the Liquidator may exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the Limited Partners or of
the Limited Partners of such class or series, as applicable.


Nothing contained in this Section 2.6(a) shall be construed as authorizing the General Partner to
amend this Agreement except in accordance with Article XIII or as may be otherwise expressly
provided for in this Agreement.




     (b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled
with an interest, and it shall survive and, to the maximum extent permitted by law, not be affected
by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or
termination of any Limited Partner and the transfer of all or any portion of such Limited Partner’s
Partnership Interest and shall extend to such Limited Partner’s heirs,



17









 







successors, assigns and personal representatives. Each such Limited Partner hereby agrees to
be bound by any representation made by the General Partner or the Liquidator acting in good faith
pursuant to such power of attorney; and each such Limited Partner, to the maximum extent permitted
by law, hereby waives any and all defenses that may be available to contest, negate or disaffirm
the action of the General Partner or the Liquidator taken in good faith under such power of
attorney. Each Limited Partner shall execute and deliver to the General Partner or the Liquidator,
within 15 days after receipt of the request therefor, such further designation, powers of attorney
and other instruments as the General Partner or the Liquidator may request in order to effectuate
this Agreement and the purposes of the Partnership.



     Section 2.7 Term. The term of the Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the dissolution of the Partnership in accordance with the provisions of Article
XII. The existence of the Partnership as a separate legal entity shall continue until the
cancellation of the Certificate of Limited Partnership as provided in the Delaware Act.



     Section 2.8 Title to Partnership Assets. Title to Partnership assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership
assets may be held in the name of the Partnership, the General Partner, one or more of its
Affiliates or one or more nominees, as the General Partner may determine. The General Partner
hereby declares and warrants that any Partnership assets for which record title is held in the name
of the General Partner or one or more of its Affiliates or one or more nominees shall be held by
the General Partner or such Affiliate or nominee for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the General Partner shall
use reasonable efforts to cause record title to such assets (other than those assets in respect of
which the General Partner determines that the expense and difficulty of conveyancing makes transfer
of record title to the Partnership impracticable) to be vested in the Partnership as soon as
reasonably practicable; provided, further, that, prior to the withdrawal or removal of the General
Partner or as soon thereafter as practicable, the General Partner shall use reasonable efforts to
effect the transfer of record title to the Partnership and, prior to any such transfer, will
provide for the use of such assets in a manner satisfactory to the General Partner. All Partnership
assets shall be recorded as the property of the Partnership in its books and records, irrespective
of the name in which record title to such Partnership assets is held.



ARTICLE III

RIGHTS OF LIMITED PARTNERS




     Section 3.1 Limitation of Liability. The Limited Partners and assignees shall have no
liability under this Agreement except as expressly provided in this Agreement or the Delaware Act.



     Section 3.2 Management of Business. No Limited Partner, in its capacity as such,
shall participate in the operation, management or control (within the meaning of the Delaware Act)
of the Partnership’s business, transact any business in the Partnership’s name or have the power to
sign documents for or otherwise bind the Partnership. Any action taken by any Affiliate



18









 







of the General Partner or any officer, director, employee, manager, member, general partner,
agent or trustee of the General Partner or any of its Affiliates, or any officer, director,
employee, manager, member, general partner, agent or trustee of a Group Member, in its capacity as
such, shall not be deemed to be participation in the control of the business of the Partnership by
a limited partner of the Partnership (within the meaning of Section 17-303(a) of the Delaware Act)
and shall not affect, impair or eliminate the limitations on the liability of the Limited Partners
or assignees under this Agreement.



     Section 3.3 Outside Activities of the Limited Partners. Subject to the provisions of
Section 7.5, which shall continue to be applicable to the Persons referred to therein, regardless
of whether such Persons shall also be Limited Partners, any Limited Partner shall be entitled to
and may have business interests and engage in business activities in addition to those relating to
the Partnership, including business interests and activities in direct competition with the
Partnership Group. Neither the Partnership nor any of the other Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner.



     Section 3.4 Rights of Limited Partners.



     (a) In addition to other rights provided by this Agreement or by applicable law, and except as
limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable
written demand stating the purpose of such demand, and at such Limited Partner’s own expense:




     (i) to obtain true and full information regarding the status of the business and
financial condition of the Partnership;




     (ii) promptly after its becoming available, to obtain a copy of the Partnership’s
federal, state and local income tax returns for each year;




     (iii) to obtain a current list of the name and last known business, residence or
mailing address of each Partner;




     (iv) to obtain a copy of this Agreement and the Certificate of Limited Partnership and
all amendments thereto, together with copies of the executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed;




     (v) to obtain true and full information regarding the amount of cash and a description
and statement of the Net Agreed Value of any other Capital Contribution by each Partner and
that each Partner has agreed to contribute in the future, and the date on which each Partner
became a Partner; and




     (vi) to obtain such other information regarding the affairs of the Partnership as is
just and reasonable.



19









 





     (b) The General Partner may keep confidential from the Limited Partners, for such period of
time as the General Partner deems reasonable, (i) any information that the General Partner
reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure
of which the General Partner in good faith believes (A) is not in the best interests of the
Partnership Group, (B) could damage the Partnership Group or its business or (C) that any Group
Member is required by law or by agreement with any third party to keep confidential (other than
agreements with Affiliates of the Partnership the primary purpose of which is to circumvent the
obligations set forth in this Section 3.4).



ARTICLE IV

CERTIFICATES; RECORD HOLDERS; TRANSFER OF

PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS




     Section 4.1 Certificates. Upon the Partnership’s issuance of Common Units to any
Person, the Partnership shall issue, upon the request of such Person, one or more Certificates in
the name of such Person evidencing the number of such Common Units being so issued. In addition,
(a) upon the General Partner’s request, the Partnership shall issue to it one or more Certificates
in the name of the General Partner evidencing its General Partner Units and (b) upon the request of
any Person owning any other Partnership Securities other than Common Units, the Partnership shall
issue to such Person one or more certificates evidencing such other Partnership Securities.
Certificates shall be executed on behalf of the Partnership by the President or any Executive Vice
President, Senior Vice President or Vice President and the Secretary or any Assistant Secretary of
the General Partner. No Common Unit Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent; provided, however, that if the General Partner elects to issue
Common Units in global form, the Common Unit Certificates shall be valid upon receipt of a
certificate from the Transfer Agent certifying that the Common Units have been duly registered in
accordance with the directions of the Partnership.



     Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates.



     (a) If any mutilated Certificate is surrendered to the Transfer Agent (for Common Units) or
the General Partner (for Partnership Securities other than Common Units), the appropriate officers
of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent (for
Common Units) or the General Partner (for Partnership Securities other than Common Units) shall
countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type
of Partnership Securities as the Certificate so surrendered.



     (b) The appropriate officers of the General Partner on behalf of the Partnership shall execute
and deliver, and the Transfer Agent (for Common Units) shall countersign, a new Certificate in
place of any Certificate previously issued if the Record Holder of the Certificate:




     (i) makes proof by affidavit, in form and substance satisfactory to the General
Partner, that a previously issued Certificate has been lost, destroyed or stolen;




     (ii) requests the issuance of a new Certificate before the General Partner has notice
that the Certificate has been acquired by a purchaser for value in good faith and without
notice of an adverse claim;



20









 






     (iii) if requested by the General Partner, delivers to the General Partner a bond, in
form and substance satisfactory to the General Partner, with surety or sureties and with
fixed or open penalty as the General Partner may direct to indemnify the Partnership, the
Partners, the General Partner and the Transfer Agent against any claim that may be made on
account of the alleged loss, destruction or theft of the Certificate; and




     (iv) satisfies any other reasonable requirements imposed by the General Partner.



     If a Limited Partner fails to notify the General Partner within a reasonable period of time
after he has notice of the loss, destruction or theft of a Certificate, and a transfer of the
Limited Partner Interests represented by the Certificate is registered before the Partnership, the
General Partner or the Transfer Agent receives such notification, the Limited Partner shall be
precluded from making any claim against the Partnership, the General Partner or the Transfer Agent
for such transfer or for a new Certificate.



     (c) As a condition to the issuance of any new Certificate under this Section 4.2, the General
Partner may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Transfer Agent) reasonably connected therewith.



     Section 4.3 Record Holders. The Partnership shall be entitled to recognize the Record
Holder as the Partner with respect to any Partnership Interest and, accordingly, shall not be bound
to recognize any equitable or other claim to, or interest in, such Partnership Interest on the part
of any other Person, regardless of whether the Partnership shall have actual or other notice
thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or
requirement of any National Securities Exchange on which such Partnership Interests are listed or
admitted to trading. Without limiting the foregoing, when a Person (such as a broker, dealer, bank,
trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee,
agent or in some other representative capacity for another Person in acquiring and/or holding
Partnership Interests, as between the Partnership on the one hand, and such other Persons on the
other, such representative Person shall be the Record Holder of such Partnership Interest.



     Section 4.4 Transfer Generally.



     (a) The term “transfer,” when used in this Agreement with respect to a Partnership Interest,
shall be deemed to refer to a transaction (i) by which the General Partner assigns its General
Partner Units to another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii) by which the
holder of a Limited Partner Interest assigns such Limited Partner Interest to another Person who is
or becomes a Limited Partner, and includes a sale, assignment, gift, exchange or any other
disposition by law or otherwise, including any transfer upon foreclosure of any pledge,
encumbrance, hypothecation or mortgage.



     (b) No Partnership Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article IV. Any transfer or purported



21









 







transfer of a Partnership Interest not made in accordance with this Article IV shall be null
and void.



     (c) Except as provided in Section 13.4(c)(v), nothing contained in this Agreement shall be
construed to prevent a disposition by any stockholder, member, partner or other owner of the
General Partner of any or all of the shares of stock, membership interests, partnership interests
or other ownership interests in the General Partner.



     Section 4.5 Registration and Transfer of Limited Partner Interests.



     (a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register
in which, subject to such reasonable regulations as it may prescribe and subject to the provisions
of Section 4.5(b), the Partnership will provide for the registration and transfer of Limited
Partner Interests. The Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Common Units and transfers of such Common Units as herein provided. The
Partnership shall not recognize transfers of Certificates evidencing Limited Partner Interests
unless such transfers are effected in the manner described in this Section 4.5. Upon surrender of a
Certificate for registration of transfer of any Limited Partner Interests evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate officers of the
General Partner on behalf of the Partnership shall execute and deliver, and in the case of Common
Units, the Transfer Agent shall countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder’s instructions, one or
more new Certificates evidencing the same aggregate number and type of Limited Partner Interests as
was evidenced by the Certificate so surrendered.



     (b) Except as otherwise provided in Section 4.9, the General Partner shall not recognize any
transfer of Limited Partner Interests until the Certificates evidencing such Limited Partner
Interests are surrendered for registration of transfer. No charge shall be imposed by the General
Partner for such transfer; provided, that as a condition to the issuance of any new Certificate
under this Section 4.5, the General Partner may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed with respect thereto.



     (c) Subject to (i) the provisions of this Section 4.5, (ii) Section 4.3, (iii) Section 4.8,
(iv) with respect to any class or series of Limited Partner Interests, the provisions of any
statement of designations or an amendment to this Agreement establishing such class or series, (v)
any contractual provisions binding on any Limited Partner and (vi) provisions of applicable law
including the Securities Act, Limited Partner Interests shall be freely transferable.



     (d) Subject to Section 4.5(e), the General Partner and its Affiliates shall have the right at
any time to transfer their Common Units to one or more Persons.



     (e) Except as may be sold in a Broadly Distributed Underwritten Public Offering or in any
transaction or series of related transactions in which all holders of Partnership Securities share
in the Premium (as defined below) Pro Rata, during the NGP Restriction Period, the NGP Parties
(individually or collectively) may not, without the prior approval of the Conflicts Committee, sell
5.0% or more of the Outstanding Partnership Securities of any class in any



22









 







transaction or series of related transactions for a sales price that exceeds by 5.0% or more
the greater of (A) the Current Market Price and (B) the Closing Price on the immediately preceding
Trading Day, in each case, as of the date on which any of the NGP Parties enters into an agreement
to sell any such Partnership Securities (such excess, the “Premium”). For the purposes of this
Section 4.5(e), (i) the term “Broadly Distributed Underwritten Public Offering” means a firm
commitment underwritten public offering whereby no purchaser or group of affiliated purchasers is
sold 5.0% or more of the Outstanding Partnership Securities of any class and (ii) the term
“Outstanding Partnership Securities” shall be deemed to include Partnership Securities that may be
issued in respect of warrants outstanding calculated on a net diluted basis using the treasury
stock method.



     Section 4.6 Transfer of the General Partner’s General Partner Interest.



     (a) Subject to Section 4.6(c) and Section 4.6(d) below, prior to September 30, 2016, the
General Partner shall not transfer all or any part of its General Partner Interest (represented by
General Partner Units) to a Person unless such transfer (i) has been approved by the prior written
consent or vote of the holders of at least a majority of the Outstanding Common Units (excluding
Common Units held by the General Partner and its Affiliates) or (ii) is of all, but not less than
all, of its General Partner Interest to (A) an Affiliate of the General Partner (other than an
individual) or (B) another Person (other than an individual) in connection with the merger or
consolidation of the General Partner with or into such other Person or the transfer by the General
Partner of all or substantially all of its assets to such other Person.



     (b) Subject to Section 4.6(c) and Section 4.6(d) below, on or after September 30, 2016, the
General Partner may transfer all or any of its General Partner Interest without Unitholder
approval.



     (c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all
or any part of its General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under this Agreement and
to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of any Limited Partner
under the Delaware Act or cause the Partnership 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) and (iii) such transferee also agrees to purchase all (or the
appropriate portion thereof, if applicable) of the partnership or membership interest of the
General Partner as the general partner or managing member, if any, of each other Group Member. In
the case of a transfer pursuant to and in compliance with this Section 4.6, the transferee or
successor (as the case may be) shall, subject to compliance with the terms of Section 10.3, be
admitted to the Partnership as the General Partner immediately prior to the transfer of the General
Partner Interest, and the business of the Partnership shall continue without dissolution.



     (d) Following the consummation of GP Acquisition, (i) the General Partner shall not transfer
all or any part of its General Partner Interest or otherwise delegate the power and authority to
manage and control the business and affairs of the Partnership to any Person and (ii)



23









 







so long as the Partnership is a limited partnership, the General Partner shall remain a direct
or indirect wholly-owned Subsidiary of the Partnership.



     Section 4.7 [Reserved.]



     Section 4.8 Restrictions on Transfers.



     (a) Except as provided in Section 4.8(d) below, but notwithstanding the other provisions of
this Article IV, no transfer of any Partnership Interests shall be made if such transfer would (i)
violate the then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental authority with jurisdiction
over such transfer, (ii) terminate the existence or qualification of the Partnership under the laws
of the jurisdiction of its formation, or (iii) cause the Partnership 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).



     (b) The General Partner may impose restrictions on the transfer of Partnership Interests if it
receives an Opinion of Counsel that such restrictions are necessary to avoid a significant risk of
the Partnership becoming taxable as a corporation or otherwise becoming taxable as an entity for
federal income tax purposes. The General Partner may impose such restrictions by amending this
Agreement; provided, however, that any amendment that would result in the delisting or suspension
of trading of any class of Limited Partner Interests on the principal National Securities Exchange
on which such class of Limited Partner Interests is then listed or admitted to trading must be
approved, prior to such amendment being effected, by the holders of at least a majority of the
Outstanding Limited Partner Interests of such class.



     (c) [Reserved.]



     (d) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude the
settlement of any transactions involving Partnership Interests entered into through the facilities
of any National Securities Exchange on which such Partnership Interests are listed or admitted to
trading.



     (e) Each certificate evidencing Partnership Interests shall bear a conspicuous legend in
substantially the following form:




THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF EAGLE ROCK
ENERGY PARTNERS, L.P. THAT THIS SECURITY 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 EAGLE ROCK ENERGY PARTNERS, L.P. UNDER THE LAWS OF THE
STATE OF DELAWARE, OR (C) CAUSE EAGLE ROCK ENERGY PARTNERS, L.P. TO BE
TREATED AS AN ASSOCIATION TAXABLE AS A



24









 






CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX
PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). EAGLE ROCK
ENERGY GP L.P., THE GENERAL PARTNER OF EAGLE ROCK ENERGY PARTNERS, L.P.,
MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT
RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO
AVOID A SIGNIFICANT RISK OF EAGLE ROCK ENERGY PARTNERS, L.P. BECOMING
TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR
FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT
PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY
ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE
ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.



     Section 4.9 Citizenship Certificates; Non-citizen Assignees.



     (a) If any Group Member is or becomes subject to any federal, state or local law or regulation
that the General Partner determines would create a substantial risk of cancellation or forfeiture
of any property in which the Group Member has an interest based on the nationality, citizenship or
other related status of a Limited Partner, the General Partner may request any Limited Partner to
furnish to the General Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality, citizenship or
other related status (or, if the Limited Partner is a nominee holding for the account of another
Person, the nationality, citizenship or other related status of such Person) as the General Partner
may request. If a Limited Partner fails to furnish to the General Partner within the aforementioned
30-day period such Citizenship Certification or other requested information or if upon receipt of
such Citizenship Certification or other requested information the General Partner determines that a
Limited Partner is not an Eligible Citizen, the Limited Partner Interests owned by such Limited
Partner shall be subject to redemption in accordance with the provisions of Section 4.10. In
addition, the General Partner may require that the status of any such Limited Partner be changed to
that of a Non-citizen Assignee and, thereupon, the General Partner shall be substituted for such
Non- citizen Assignee as the Limited Partner in respect of the Non-citizen Assignee’s Limited
Partner Interests.



     (b) The General Partner shall, in exercising voting rights in respect of Limited Partner
Interests held by it on behalf of Non-citizen Assignees, distribute the votes in the same ratios as
the votes of Partners (including the General Partner) in respect of Limited Partner Interests other
than those of Non-citizen Assignees are cast, either for, against or abstaining as to the matter.



     (c) Upon dissolution of the Partnership, a Non-citizen Assignee shall have no right to receive
a distribution in kind pursuant to Section 12.4 but shall be entitled to the cash equivalent
thereof, and the Partnership shall provide cash in exchange for an assignment of the Non-citizen
Assignee’s share of any distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Partnership from the Non-citizen Assignee of his Limited
Partner Interest (representing his right to receive his share of such distribution in kind).



25









 





     (d) At any time after he can and does certify that he has become an Eligible Citizen, a
Non-citizen Assignee may, upon application to the General Partner, request that with respect to any
Limited Partner Interests of such Non-citizen Assignee not redeemed pursuant to Section 4.10, such
Non-citizen Assignee be admitted as a Limited Partner, and upon approval of the General Partner,
such Non-citizen Assignee shall be admitted as a Limited Partner and shall no longer constitute a
Non-citizen Assignee and the General Partner shall cease to be deemed to be the Limited Partner in
respect of the Non-citizen Assignee’s Limited Partner Interests.



     Section 4.10 Redemption of Partnership Interests of Non-citizen Assignees.



     (a) If at any time a Limited Partner fails to furnish a Citizenship Certification or other
information requested within the 30-day period specified in Section 4.9(a), or if upon receipt of
such Citizenship Certification or other information the General Partner determines, with the advice
of counsel, that a Limited Partner is not an Eligible Citizen, the Partnership may, unless the
Limited Partner establishes to the satisfaction of the General Partner that such Limited Partner is
an Eligible Citizen or has transferred his Partnership Interests to a Person who is an Eligible
Citizen and who furnishes a Citizenship Certification to the General Partner prior to the date
fixed for redemption as provided below, redeem the Limited Partner Interest of such Limited Partner
as follows:




     (i) The General Partner shall, not later than the 30th day before the date fixed for
redemption, give notice of redemption to the Limited Partner, at his last address designated
on the records of the Partnership or the Transfer Agent, by registered or certified mail,
postage prepaid. The notice shall be deemed to have been given when so mailed. The notice
shall specify the Redeemable Interests, the date fixed for redemption, the place of payment,
that payment of the redemption price will be made upon surrender of the Certificate
evidencing the Redeemable Interests and that on and after the date fixed for redemption no
further allocations or distributions to which the Limited Partner would otherwise be
entitled in respect of the Redeemable Interests will accrue or be made.




     (ii) The aggregate redemption price for Redeemable Interests shall be an amount equal
to the Current Market Price (the date of determination of which shall be the date fixed for
redemption) of Limited Partner Interests of the class to be so redeemed multiplied by the
number of Limited Partner Interests of each such class included among the Redeemable
Interests. The redemption price shall be paid, as determined by the General Partner, in cash
or by delivery of a promissory note of the Partnership in the principal amount of the
redemption price, bearing interest at the rate of 5% annually and payable in three equal
annual installments of principal together with accrued interest, commencing one year after
the redemption date.




     (iii) Upon surrender by or on behalf of the Limited Partner, at the place specified in
the notice of redemption, of the Certificate evidencing the Redeemable Interests, duly
endorsed in blank or accompanied by an assignment duly executed in blank, the Limited
Partner or his duly authorized representative shall be entitled to receive the payment
therefor.




26












 






     (iv) After the redemption date, Redeemable Interests shall no longer constitute issued
and Outstanding Limited Partner Interests.



     (b) The provisions of this Section 4.10 shall also be applicable to Limited Partner Interests
held by a Limited Partner as nominee of a Person determined to be other than an Eligible Citizen.



     (c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption from
transferring his Limited Partner Interest before the redemption date if such transfer is otherwise
permitted under this Agreement. Upon receipt of notice of such a transfer, the General Partner
shall withdraw the notice of redemption, provided the transferee of such Limited Partner Interest
certifies to the satisfaction of the General Partner that he is an Eligible Citizen. If the
transferee fails to make such certification, such redemption shall be effected from the transferee
on the original redemption date.



     Section 4.11 Special Provisions Relating to Holders of NGP Common Units. A
Unitholder holding an NGP Common Unit shall be required to provide notice to the General Partner of
the transfer of the NGP Common Unit within the earlier of (i) thirty (30) days following such
transfer and (ii) the last Business Day of the calendar year during which such transfer occurred,
unless (x) the transfer is to an Affiliate of such Unitholder (in which case such transferring
Unitholder shall take all actions necessary to cause such Affiliate to be bound by the terms of
this Section 4.11) or (y) by virtue of the application of Section 6.1(e)(x)(B) and (C), the General
Partner has previously determined, based on advice of counsel, that the NGP Common Unit should
have, as a substantive matter, like intrinsic economic and federal income tax characteristics of
Outstanding Common Units held by unrelated third party Unitholders. In connection with the
condition imposed by this Section 4.11, the General Partner shall take whatever steps are required
to provide economic uniformity to the NGP Common Units in preparation for a transfer of such Units;
provided, however, that no such steps may be taken that would have a material adverse effect on the
Unitholders holding Common Units that are not NGP Common Units.



ARTICLE V

CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS




     Section 5.1 Cancellation of Subordinated Units and Incentive Distribution Rights. On
the date hereof, simultaneously with the effectiveness of this Agreement (a) pursuant to a
contribution agreement contemplated by the Transaction Agreement, the General Partner and its
Affiliates transferred all outstanding Subordinated Units and the Incentive Distribution Rights to
the Partnership and (b) the Partnership cancelled such Subordinated Units and Incentive
Distribution Rights; such actions being hereby approved and ratified notwithstanding any provision
of the First Amended and Restated Agreement.



     Section 5.2 General Partner Interest; Additional Contributions by the General Partner.



     (a) Upon consummation of the GP Acquisition, (i) all economic rights with respect to the
Partnership of the General Partner Interest, and the General Partner Units representing the General
Partner Interest, including any and all rights to be allocated income, gains, losses and



27









 







deductions of the Partnership and to receive distributions made by the Partnership in respect
of the General Partner Interest, shall automatically terminate notwithstanding Section 4.6 or any
other provision of this Agreement and (ii) the Percentage Interest with respect to the General
Partner Units shall automatically be reduced to zero, in each case, without further action by the
Partnership or the General Partner. Following the GP Acquisition, the General Partner Interest
shall continue to represent a non-economic general partner interest in the Partnership and the
General Partner shall continue as the general partner of the Partnership and the Partnership will
continue without dissolution.



     (b) Prior to the consummation of the GP Acquisition, upon the issuance of any additional
Limited Partner Interests by the Partnership the General Partner may, in exchange for a
proportionate number of General Partner Units, make additional Capital Contributions in an amount
equal to the product obtained by multiplying (i) the quotient determined by dividing (A) the
General Partner’s Percentage Interest by (B) 100 less the General Partner’s Percentage Interest
times (ii) the amount contributed to the Partnership by the Limited Partners in exchange for such
additional Limited Partner Interests. Except as set forth in Article XII, the General Partner shall
not be obligated to make any additional Capital Contributions to the Partnership.



     Section 5.3 [Reserved.]



     Section 5.4 Interest and Withdrawal. No interest shall be paid by the Partnership on
Capital Contributions. No Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or
upon termination of the Partnership may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent expressly provided in this Agreement, no
Partner shall have priority over any other Partner either as to the return of Capital Contributions
or as to profits, losses or distributions. Any such return shall be a compromise to which all
Partners agree within the meaning of Section 17-502(b) of the Delaware Act.



     Section 5.5 Capital Accounts.



     (a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership
Interests held by a nominee in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the Code or any other method
acceptable to the General Partner) owning a Partnership Interest (other than the non-economic
General Partner Interest of the General Partner following the GP Acquisition) a separate Capital
Account with respect to such Partnership Interest in accordance with the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv) and Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s).
Such Capital Account shall be increased by (i) the amount of all Capital Contributions made to the
Partnership with respect to such Partnership Interest and (ii) all items of Partnership income and
gain (including income and gain exempt from tax) computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1, and decreased by (x)
the amount of cash or Net Agreed Value of all actual and deemed distributions of cash or property
made with respect to such Partnership Interest and (y) all items of Partnership deduction and loss
computed in accordance with Section 5.5(b) and allocated with respect to such Partnership Interest
pursuant to Section 6.1. The Partnership shall follow the proposed noncompensatory option
regulations under Proposed Treasury Regulation



28









 







Sections 1.704-1, 1.721-2 and 1.761-3 at all times, including when the assets of the
Partnership are revalued or any warrant is exercised in accordance with its terms.



     (b) For purposes of computing the amount of any item of income, gain, loss or deduction which
is to be allocated pursuant to Article VI and is to be reflected in the Partners’ Capital Accounts,
the determination, recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes (including any method
of depreciation, cost recovery or amortization used for that purpose), provided, that:




     (i) Solely for purposes of this Section 5.5, the Partnership shall be treated as owning
directly its proportionate share (as determined by the General Partner based upon the
provisions of the applicable Group Member Agreement or governing, organizational or similar
documents) of all property owned by (x) any other Group Member that is classified as a
partnership for federal income tax purposes and (y) any other partnership, limited liability
company, unincorporated business or other entity classified as a partnership for federal
income tax purposes of which a Group Member is, directly or indirectly, a partner.




     (ii) All fees and other expenses incurred by the Partnership to promote the sale of (or
to sell) a Partnership Interest that can neither be deducted nor amortized under Section 709
of the Code, if any, shall, for purposes of Capital Account maintenance, be treated as an
item of deduction at the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1.




     (iii) Except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m),
the computation of all items of income, gain, loss and deduction shall be made without
regard to any election under Section 754 of the Code which may be made by the Partnership
and, as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
without regard to the fact that such items are not includable in gross income or are neither
currently deductible nor capitalized for federal income tax purposes. To the extent an
adjustment to the adjusted tax basis of any Partnership 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 in the Capital Accounts shall be treated as an item of gain or loss.




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




     (v) In accordance with the requirements of Section 704(b) of the Code, any deductions
for depreciation, cost recovery or amortization attributable to any Contributed Property
shall be determined as if the adjusted basis of such property on the date it was acquired by
the Partnership were equal to the Agreed Value of such property. Upon an adjustment pursuant
to Section 5.5(d) to the Carrying Value of any Partnership property



29









 







subject to depreciation, cost recovery or amortization, any further deductions for such
depreciation, cost recovery or amortization attributable to such property shall be
determined as if the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment.




     (vi) If the Partnership’s adjusted basis in a depreciable or cost recovery property is
reduced for federal income tax purposes pursuant to Section 48(q)(1) or 48(q)(3) of the
Code, the amount of such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such property is placed in
service and shall be allocated among the Partners pursuant to Section 6.1. Any restoration
of such basis pursuant to Section 48(q)(2) of the Code shall, to the extent possible, be
allocated in the same manner to the Partners to whom such deemed deduction was allocated.



     (c) A transferee of a Partnership Interest shall succeed to a pro rata portion of the Capital
Account of the transferor relating to the Partnership Interest so transferred.



     (d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an issuance of
additional Partnership Interests for cash or Contributed Property, the issuance of Partnership
Interests as consideration for the provision of services or the conversion of the General Partner’s
Combined Interest to Common Units pursuant to Section 11.3(b), the Capital Account of all Partners
and the Carrying Value of each Partnership property immediately prior to such issuance shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized on an
actual sale of each such property for an amount equal to its fair market value immediately prior to
such issuance. In accordance with Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(2),
upon any exercise of a warrant, the Capital Account of all Partners and the Carrying Value of each
Partnership property shall immediately after such exercise be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each such property
for an amount equal to its fair market value immediately prior to such exercise. Any Unrealized
Gain or Unrealized Loss (or items thereof) shall first be allocated to the Partners who were the
initial holders of a Warrant Exercised Common Unit until the Capital Account in respect of each
such Warrant Exercised Common Unit is equal to the Per Unit Capital Amount for a then Outstanding
Common Unit (other than a Warrant Exercised Common Unit) if the operation of this sentence is
triggered by the exercise of a warrant, and regardless of whether the operation of this sentence is
triggered by the exercise of a warrant, any remaining Unrealized Gain or Unrealized Loss shall be
allocated among the Partners pursuant to Section 6.1(c) in the same manner as any item of gain or
loss actually recognized following an event giving rise to the dissolution of the Partnership would
have been allocated. If the Unrealized Gain or Unrealized Loss allocated as a result of the
exercise of a warrant is not sufficient to cause the Capital Account of each Warrant Exercised
Common Unit to equal the Per Unit Capital Amount for a then Outstanding Common Unit (other than a
Warrant Exercised Common Unit), then Capital Account balances shall be reallocated between the
Partners holding Warrant Exercised Common Units and the Partners holding Common Units (other than
Warrant Exercised Common Units) so as to cause the Capital



30









 







Account of each Warrant Exercised Common Unit to equal the Per Unit Capital Amount for a then
Outstanding Common Unit (other than a Warrant Exercised Common Unit), in accordance with Proposed
Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(3). In determining such Unrealized Gain or
Unrealized Loss, the aggregate cash amount and fair market value of all Partnership assets
(including cash or cash equivalents) immediately prior to the issuance of additional Partnership
Interests, or immediately after the exercise of a warrant, shall be determined by the General
Partner using such method of valuation as it may adopt; provided, however, that the General
Partner, in arriving at such valuation, must take fully into account the fair market value of the
Partnership Interests of all Partners at such time. The General Partner shall allocate such
aggregate value among the assets of the Partnership (in such manner as it determines) to arrive at
a fair market value for individual properties.




     (ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately
prior to any actual or deemed distribution to a Partner of any Partnership property (other
than a distribution of cash that is not in redemption or retirement of a Partnership
Interest), the Capital Accounts of all Partners and the Carrying Value of all Partnership
property shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized
Loss attributable to such Partnership property, as if such Unrealized Gain or Unrealized
Loss had been recognized in a sale of such property immediately prior to such distribution
for an amount equal to its fair market value, and had been allocated to the Partners, at
such time, pursuant to Section 6.1 in the same manner as any item of gain or loss actually
recognized during such period would have been allocated. In determining such Unrealized Gain
or Unrealized Loss the aggregate cash amount and fair market value of all Partnership assets
(including cash or cash equivalents) immediately prior to a distribution shall (A) in the
case of an actual distribution that is not made pursuant to Section 12.4 or in the case of a
deemed distribution, be determined and allocated in the same manner as that provided in
Section 5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to Section 12.4,
be determined and allocated by the Liquidator using such method of valuation as it may
adopt.



     Section 5.6 Issuances of Additional Partnership Securities.



     (a) The Partnership may issue additional Partnership Securities and options, rights, warrants
and appreciation rights relating to the Partnership Securities for any Partnership purpose at any
time and from time to time to such Persons for such consideration and on such terms and conditions
as the General Partner shall determine, all without the approval of any Limited Partners.



     (b) Each additional Partnership Security authorized to be issued by the Partnership pursuant
to Section 5.6(a) 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 Partnership Securities), as shall be fixed by the General Partner, including
(i) the right to share in Partnership profits and losses or items thereof; (ii) the right to share
in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership;
(iv) whether, and the terms and conditions upon which, the Partnership may redeem the Partnership
Security; (v) whether such Partnership Security is issued with the privilege of conversion or
exchange and, if so, the terms and conditions of such conversion or exchange; (vi)



31









 







the terms and conditions upon which each Partnership Security will be issued, evidenced by
certificates and assigned or transferred; (vii) the method for determining the Percentage Interest
as to such Partnership Security; and (viii) the right, if any, of each such Partnership Security to
vote on Partnership matters, including matters relating to the relative rights, preferences and
privileges of such Partnership Security.



     (c) The General Partner shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Partnership Securities and options, rights,
warrants and appreciation rights relating to Partnership Securities pursuant to this Section 5.6,
(ii) the conversion of the General Partner Interest (represented by General Partner Units) into
Units pursuant to the terms of this Agreement, (iii) reflecting admission of such additional
Limited Partners in the books and records of the Partnership as the Record Holder of such Limited
Partner Interest and (iv) all additional issuances of Partnership Securities. The General Partner
shall determine the relative rights, powers and duties of the holders of the Units or other
Partnership Securities being so issued. The General Partner 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 Partnership Securities or in
connection with the conversion of the General Partner Interest into Units pursuant to the terms of
this Agreement, including compliance with any statute, rule, regulation or guideline of any
federal, state or other governmental agency or any National Securities Exchange on which the Units
or other Partnership Securities are listed or admitted to trading.



     (d) No fractional Units shall be issued by the Partnership.



     Section 5.7 [Reserved.]



     Section 5.8 Limited Preemptive Right. Except as provided in this Section 5.8 and in
Section 5.2, no Person shall have any preemptive, preferential or other similar right with respect
to the issuance of any Partnership Security, whether unissued, held in the treasury or hereafter
created. Prior to the consummation of the GP Acquisition, the General Partner shall have the right,
which it may from time to time assign in whole or in part to any of its Affiliates, to purchase
Partnership Securities from the Partnership whenever, and on the same terms that, the Partnership
issues Partnership Securities to Persons other than the General Partner and its Affiliates, to the
extent necessary to maintain the Percentage Interests of the General Partner and its Affiliates
equal to that which existed immediately prior to the issuance of such Partnership Securities. The
right of the General Partner to purchase Partnership Securities pursuant to this Section 5.8 shall
automatically terminate upon the consummation of the GP Acquisition.



     Section 5.9 Splits, Combinations and Other Pro Rata Distributions.



     (a) Subject to Section 5.9(d), the Partnership may make a Pro Rata distribution of Partnership
Securities and any options, rights, warrants or appreciation rights relating to any Partnership
Security to all Record Holders or may effect a subdivision or combination of Partnership Securities
so long as, after any such event (but before giving effect to the exercise of any options, rights,
warrants or appreciation rights relating to any Partnership Securities distributed in connection
with such event), each Partner shall have the same Percentage Interest



32









 







in the Partnership as before such event, and any amounts calculated on a per Unit basis or
stated as a number of Units are proportionately adjusted.



     (b) Whenever such a distribution, subdivision or combination of Partnership Securities or any
options, rights, warrants or appreciation rights relating to any Partnership Securities is
declared, the General Partner shall select a Record Date as of which the distribution, subdivision
or combination shall be effective and shall send notice thereof at least 20 days prior to such
Record Date to each Record Holder as of a date not less than 10 days prior to the date of such
notice. The General Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Partnership Securities or any options, rights, warrants or appreciation
rights relating to any Partnership Securities to be held by each Record Holder after giving effect
to such distribution, subdivision or combination. The General Partner shall be entitled to rely on
any certificate provided by such firm as conclusive evidence of the accuracy of such calculation.



     (c) Promptly following any such distribution, subdivision or combination, the Partnership may
issue Certificates to the Record Holders of Partnership Securities as of the applicable Record Date
representing the new number of Partnership Securities held by such Record Holders, or the General
Partner may adopt such other procedures that it determines to be necessary or appropriate to
reflect such changes. If any such combination results in a smaller total number of Partnership
Securities Outstanding, the Partnership shall require, as a condition to the delivery to a Record
Holder of such new Certificate, the surrender of any Certificate held by such Record Holder
immediately prior to such Record Date.



     (d) The Partnership shall not issue fractional Units upon any distribution, subdivision or
combination of Units. If a distribution, subdivision or combination of Units would result in the
issuance of fractional Units but for the provisions of this Section 5.9(d), each fractional Unit
shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to the next higher
Unit).



     Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests. All
Limited Partner Interests issued pursuant to, and in accordance with the requirements of, this
Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Section 17-607 and Section 17-804 of the
Delaware Act and any successor or other applicable provisions of the Delaware Act.



ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS




     Section 6.1 Allocations for Capital Account Purposes. For purposes of maintaining the
Capital Accounts and in determining the rights of the Partners among themselves, the Partnership’s
items of income, gain, loss and deduction (computed in accordance with Section 5.5(b)) shall be
allocated among the Partners in each taxable year (or portion thereof) as provided herein below.



     (a) Net Income Prior to GP Acquisition Date. After giving effect to the special allocations
set forth in Section 6.1(e), Net Income for each taxable year (or portion thereof)



33









 







ending on or prior to the GP Acquisition Date and all items of income, gain, loss and
deduction taken into account in computing Net Income for such taxable year shall be allocated as
follows:




     (i) First, 100% to the General Partner, in an amount equal to the aggregate Net Losses
allocated to the General Partner pursuant to Section 6.1(b)(iii) for all previous taxable
years until the aggregate Net Income allocated to the General Partner pursuant to this
Section 6.1(a)(i) for the current taxable year and all previous taxable years is equal to
the aggregate Net Losses allocated to the General Partner pursuant to Section 6.1(b)(iii)
for all previous taxable years;




     (ii) Second, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests, until the aggregate Net Income allocated to such Partners
pursuant to this Section 6.1(a)(ii) for the current taxable year and all previous taxable
years is equal to the aggregate Net Losses allocated to such Partners pursuant to Section
6.1(b)(ii) for all previous taxable years; and




     (iii) Third, the balance, if any, 100% to the General Partner and the Unitholders, in
accordance with their respective Percentage Interests.



     (b) Net Losses Prior to GP Acquisition Date. After giving effect to the special allocations
set forth in Section 6.1(e), Net Losses for each taxable year (or portion thereof) ending on or
prior to the GP Acquisition Date and all items of income, gain, loss and deduction taken into
account in computing Net Losses for such taxable period shall be allocated as follows:




     (i) First, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests, until the aggregate Net Losses allocated pursuant to this
Section 6.1(b)(i) for the current taxable year and all previous taxable years is equal to
the aggregate Net Income allocated to such Partners pursuant to Section 6.1(a)(iii) for all
previous taxable years, provided that the Net Losses shall not be allocated pursuant to this
Section 6.1(b)(i) to the extent that such allocation would cause any Unitholder to have a
deficit balance in its Adjusted Capital Account at the end of such taxable year (or increase
any existing deficit balance in its Adjusted Capital Account);




     (ii) Second, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests; provided, that Net Losses shall not be allocated pursuant
to this Section 6.1(b)(ii) to the extent that such allocation would cause any Unitholder to
have a deficit balance in its Adjusted Capital Account at the end of such taxable year (or
increase any existing deficit balance in its Adjusted Capital Account); and




     (iii) Third, the balance, if any, 100% to the General Partner.



     (c) Net Termination Gains and Losses Prior to the GP Acquisition Date. For periods prior to
the GP Acquisition Date, after giving effect to the special allocations set forth in Section
6.1(e), all items of income, gain, loss and deduction taken into account in computing Net
Termination Gain or Net Termination Loss for such taxable period shall be allocated in the same
manner as such Net Termination Gain or Net Termination Loss is allocated hereunder. All



34









 







allocations under this Section 6.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 6.1 and after all distributions of
Available Cash provided under Section 6.3 have been made; provided, however, that solely for
purposes of this Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.




     (i) If a Net Termination Gain is recognized (or deemed recognized pursuant to Section
5.5(d)) prior to the GP Acquisition Date, such Net Termination Gain shall be allocated among
the Partners in the following manner (and the Capital Accounts of the Partners shall be
increased by the amount so allocated in each of the following subclauses, in the order
listed, before an allocation is made pursuant to the next succeeding subclause):




     (A) First, to each Partner having a deficit balance in its Capital Account, in
the proportion that such deficit balance bears to the total deficit balances in the
Capital Accounts of all Partners, until each such Partner has been allocated Net
Termination Gain equal to any such deficit balance in its Capital Account;




     (B) Second, 100% to the General Partner and the Unitholders, in accordance with
their respective Percentage Interests;




     (ii) If a Net Termination Loss is recognized (or deemed recognized pursuant to Section
5.5(d)) prior to the GP Acquisition Date, such Net Termination Loss shall be allocated among
the Partners in the following manner:




     (A) First, (x)  to the General Partner in accordance with its Percentage Interest
and (y) to all Unitholders holding Common Units, Pro Rata, a percentage equal to
100% less the percentage applicable to subclause (x) of this clause (A) until the
Capital Account in respect of each Common Unit then Outstanding has been reduced to
zero; and




     (B) Second, the balance, if any, 100% to the General Partner.



     (d) Allocations After the GP Acquisition Date. After giving effect to the special allocations
set forth in Section 6.1(e), Net Income and Net Loss for each taxable year (or portion thereof)
after the GP Acquisition Date and all items of income, gain, loss and deduction taken into account
in computing Net Income and Net Loss for such taxable year shall be allocated to the Unitholders,
in accordance with their respective Percentage Interests.



     (e) Special Allocations. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:




     (i) Partnership Minimum Gain Chargeback. Notwithstanding any other provision of this
Section 6.1, if there is a net decrease in Partnership Minimum Gain during any Partnership
taxable period, each Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the




35












 






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. For purposes of this Section
6.1(e), each Partner’s Adjusted Capital Account balance shall be determined, and the
allocation of income or gain required hereunder shall be effected, prior to the application
of any other allocations pursuant to this Section 6.1(e) with respect to such taxable period
(other than an allocation pursuant to Section 6.1(e)(vi) and Section 6.1(e)(vii)). This
Section 6.1(e)(i) is intended to comply with the Partnership Minimum Gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently
therewith.




     (ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding the other
provisions of this Section 6.1 (other than Section 6.1(e)(i)), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain during any Partnership taxable period, any Partner with a share of Partner
Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall be allocated
items of Partnership income and gain for such period (and, if necessary, subsequent periods)
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. For purposes of this Section 6.1(e), each
Partner’s Adjusted Capital Account balance shall be determined, and the allocation of income
or gain required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1(e), other than Section 6.1(e)(i) and other than an
allocation pursuant to Section 6.1(e)(vi) and Section 6.1(e)(vii), with respect to such
taxable period. This Section 6.1(e)(ii) 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.




     (iii) [Reserved.]




     (iv) Qualified Income Offset. In the event any Partner 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
Partnership income and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the Treasury Regulations
promulgated under Section 704(b) of the Code, the deficit balance, if any, in its Adjusted
Capital Account created by such adjustments, allocations or distributions as quickly as
possible unless such deficit balance is otherwise eliminated pursuant to Section 6.1(e)(i)
or Section 6.1(e)(ii).




     (v) Gross Income Allocations. In the event any Partner has a deficit balance in its
Capital Account at the end of any Partnership taxable period in excess of the sum of (A) the
amount such Partner is required to restore pursuant to the provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as possible; provided,
that an allocation pursuant to this Section 6.1(e)(v) shall be made only if and to the
extent that such Partner would have a deficit balance in its Capital



36









 







Account as adjusted after all other allocations provided for in this Section 6.1 have
been tentatively made as if this Section 6.1(e)(v) were not in this Agreement.




     (vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period shall be
allocated to the Partners in accordance with their respective Percentage Interests. If the
General Partner determines that the Partnership’s Nonrecourse Deductions should be allocated
in a different ratio to satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized, upon notice
to the other Partners, to revise the prescribed ratio to the numerically closest ratio that
does satisfy such requirements.




     (vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable
period shall be allocated 100% to the Partner that bears the Economic Risk of Loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(i). If more than one
Partner bears the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such
Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share such Economic Risk of Loss.




     (viii) Nonrecourse Liabilities. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in excess
of the sum of (A) the amount of Partnership Minimum Gain and (B) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.




     (ix) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Partnership 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 Partners 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.




     (x) Economic Uniformity.




     (A) With respect to any taxable period ending after a right is exercised, all
or a portion of the remaining items of Partnership gross income or gain for such
taxable period shall be allocated 100% to each Partner who was the initial holder of
a Right Exercised Common Unit until each such Partner has been allocated an amount
of gross income or gain that increases the Capital Account maintained with respect
to such Right Exercised Common Units to an amount equal to the product of (A) the
number of Right Exercised Common Units held by such Partner and (B) the Per Unit
Capital Amount for a Common Unit (other than a Right Exercised Common Unit).



37









 






     (B) With respect to any taxable period of the Partnership ending upon, or
after, an event that triggers an adjustment to the Carrying Value of Partnership
property pursuant to Section 5.5(d) and during which the Per Unit Capital Amount of
an NGP Common Unit is less than the Per Unit Capital Amount of Common Units that are
not NGP Common Units, any Unrealized Gains and Unrealized Losses shall be allocated
among the Limited Partners so that each Unit, including each NGP Common Unit, has
the same Per Unit Capital Amount.




     (C) With respect to any taxable period during which an NGP Common Unit is
transferred to any Person who is not an Affiliate of the transferor, all or a
portion of the remaining items of Partnership gross income or gain for such taxable
period shall be allocated 100% to the transferor Partner of such transferred NGP
Common Units until such transferor Partner has been allocated an amount of gross
income or gain that increases the Capital Account maintained with respect to such
transferred NGP Common Unit to an amount equal to the Per Unit Capital Amount for a
Common Unit.




(xi) Curative Allocation.




     (A) Notwithstanding any other provision of this Section 6.1, other than the
Required Allocations, the Required Allocations shall be taken into account in making
the Agreed Allocations so that, to the extent possible, the net amount of items of
income, gain, loss and deduction allocated to each Partner pursuant to the Required
Allocations and the Agreed Allocations, together, shall be equal to the net amount
of such items that would have been allocated to each such Partner under the Agreed
Allocations had the Required Allocations and the related Curative Allocation not
otherwise been provided in this Section 6.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partnership Minimum
Gain and (2) Partner Nonrecourse Deductions shall not be taken into account except
to the extent that there has been a decrease in Partner Nonrecourse Debt Minimum
Gain. Allocations pursuant to this Section 6.1(e)(xi)(A) shall only be made with
respect to Required Allocations to the extent the General Partner determines that
such allocations will otherwise be inconsistent with the economic agreement among
the Partners. Further, allocations pursuant to this Section 6.1(e)(xi)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and (2) hereof to the
extent the General Partner determines that such allocations are likely to be offset
by subsequent Required Allocations.




     (B) The General Partner shall, with respect to each taxable period, (1) apply
the provisions of Section 6.1(e)(xi)(A) in whatever order is most likely to minimize
the economic distortions that might otherwise result from the Required Allocations,
and (2) divide all allocations pursuant to Section 6.1(e)(xi)(A) among the Partners
in a manner that is likely to minimize such economic distortions.




Section 6.2 Allocations for Tax Purposes.



38









 





     (a) Except as otherwise provided herein, for federal income tax purposes, each item of income,
gain, loss and deduction shall be allocated among the Partners in the same manner as its
correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.1.



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




     (i) (A) In the case of a Contributed Property, such items attributable thereto shall be
allocated among the Partners in the manner provided under Section 704(c) of the Code that
takes into account the variation between the Agreed Value of such property and its adjusted
basis at the time of contribution; and (B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the Partners in the same
manner as its correlative item of “book” gain or loss is allocated pursuant to Section 6.1.




     (ii) (A) In the case of an Adjusted Property, such items shall (1) first, be allocated
among the Partners in a manner consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss attributable to such property
and the allocations thereof pursuant to Section 5.5(d)(i) or Section 5.5(d)(ii), and (2)
second, in the event such property was originally a Contributed Property, be allocated among
the Partners in a manner consistent with Section 6.2(b)(i)(A); and (B) any item of Residual
Gain or Residual Loss attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of “book” gain or loss is allocated
pursuant to Section 6.1.




     (iii) The General Partner shall apply the principles of Treasury Regulation Section
1.704-3(d) to eliminate Book-Tax Disparities, except as otherwise determined by the General
Partner with respect to goodwill.



     (c) For the proper administration of the Partnership and for the preservation of uniformity of
the Limited Partner Interests (or any class or classes thereof), the General Partner shall (i)
adopt such conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions, (ii) make special allocations for federal income tax
purposes of income (including gross income), gains, losses, deductions, Unrealized Gains or
Unrealized Losses, and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury Regulations under Section 704(b) or Section 704(c) of the
Code (including, if necessary to accomplish the intent of this Agreement, the finalization of
Treasury Regulations that may differ from the Proposed Treasury Regulations relied upon in Section
5.5(d)(i) and Section 6.2(i) hereof), or (y) otherwise to preserve or achieve uniformity of the
Limited Partner Interests (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as provided in this
Section 6.2(c) only if such conventions, allocations or amendments would not have a material
adverse effect on the Partners, the holders of any class or classes of Limited Partner Interests
issued and Outstanding or the Partnership, and if such allocations are consistent with the
principles of Section 704 of the Code.



39









 





     (d) The General Partner may determine to depreciate or amortize the portion of an adjustment
under Section 743(b) of the Code attributable to unrealized appreciation in any Adjusted Property
(to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived from the
depreciation or amortization method and useful life applied to the Partnership’s common basis of
such property, despite any inconsistency of such approach with Treasury Regulation Section
1.167(c)-l(a)(6), Treasury Regulation Section 1.197-2(g)(3), the legislative history of Section 743
of the Code or any successor regulations thereto. If the General Partner determines that such
reporting position cannot reasonably be taken, the General Partner may adopt depreciation and
amortization conventions under which all purchasers acquiring Limited Partner Interests in the same
month would receive depreciation and amortization deductions, based upon the same applicable rate
as if they had purchased a direct interest in the Partnership’s property. If the General Partner
chooses not to utilize such aggregate method, the General Partner may use any other depreciation
and amortization conventions to preserve the uniformity of the intrinsic tax characteristics of any
Limited Partner Interests, so long as such conventions would not have a material adverse effect on
the Limited Partners or the Record Holders of any class or classes of Limited Partner Interests.



     (e) In accordance with Treasury Regulation Section 1.1245-1(e), any gain allocated to the
Partners upon the sale or other taxable disposition of any Partnership asset shall, to the extent
possible, after taking into account other required allocations of gain pursuant to this Section
6.2, be characterized as Recapture Income in the same proportions and to the same extent as such
Partners (or their predecessors in interest) have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as Recapture Income.



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



     (g) Each item of Partnership income, gain, loss and deduction, for federal income tax
purposes, shall be determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the Nasdaq Global Market on the first Business Day
of each month; provided, however, that gain or loss on a sale or other disposition of any assets of
the Partnership or any other extraordinary item of income or loss realized and recognized other
than in the ordinary course of business, as determined by the General Partner, shall be allocated
to the Partners as of the opening of the Nasdaq Global Market on the first Business Day of the
month in which such gain or loss is recognized for federal income tax purposes. The General Partner
may revise, alter or otherwise modify such methods of allocation to the extent permitted or
required by Section 706 of the Code and the regulations or rulings promulgated thereunder.



     (h) Allocations that would otherwise be made to a Limited Partner under the provisions of this
Article VI shall instead be made to the beneficial owner of Limited Partner Interests held by a
nominee in any case in which the nominee has furnished the identity of such owner to the
Partnership in accordance with Section 6031(c) of the Code or any other method determined by the
General Partner.



40









 





     (i) If Capital Account balances are reallocated between the Partners in accordance with
Section 5.5(d)(i) hereof and Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(4),
beginning with the year of reallocation and continuing until the allocations required are fully
taken into account, the Partnership shall make corrective allocations (allocations of items of
gross income or gain or loss or deduction for federal income tax purposes that do not have a
corresponding book allocation) to take into account the Capital Account reallocation, as provided
in Proposed Treasury Regulation Section 1.704-1(b)(4)(x).



     Section 6.3 Distributions.



     (a) Within 45 days following the end of each Quarter, an amount equal to 100% of Available
Cash with respect to such Quarter shall, subject to Section 17-607 of the Delaware Act, be
distributed in accordance with this Article VI by the Partnership to the Partners as of the Record
Date selected by the General Partner in accordance with each Partner’s Percentage Interest.



     (b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the Liquidation Date occurs
shall be applied and distributed solely in accordance with, and subject to the terms and conditions
of, Section 12.4.



     (c) The General Partner may treat taxes paid by the Partnership on behalf of, or amounts
withheld with respect to, all or less than all of the Partners, as a distribution of Available Cash
to such Partners.



     (d) Each distribution in respect of a Partnership Interest shall be paid by the Partnership,
directly or through the Transfer Agent or through any other Person or agent, only to the Record
Holder of such Partnership Interest as of the Record Date set for such distribution. Such payment
shall constitute full payment and satisfaction of the Partnership’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.



ARTICLE VII

MANAGEMENT AND OPERATION OF BUSINESS




     Section 7.1 Management.



     (a) The General Partner shall conduct, direct and manage all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited
Partner shall have any management power over the business and affairs of the Partnership. In
addition to the powers now or hereafter granted a general partner of a limited partnership under
applicable law or that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do
all things and on such terms as it determines to be necessary or appropriate to conduct the
business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the
purposes set forth in Section 2.4, including the following:



41









 






     (i) the making of any expenditures, the lending or borrowing of money, the assumption
or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness, including indebtedness that is convertible into Partnership
Securities, and the incurring of any other obligations;




     (ii) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of
the Partnership;




     (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership or the merger or other combination
of the Partnership with or into another Person (the matters described in this clause (iii)
being subject, however, to any prior approval that may be required by Section 7.3 and
Article XIV);




     (iv) the use of the assets of the Partnership (including cash on hand) for any purpose
consistent with the terms of this Agreement, including the financing of the conduct of the
operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to
other Persons (including other Group Members); the repayment or guarantee of obligations of
any Group Member; and the making of capital contributions to any Group Member;




     (v) the negotiation, execution and performance of any contracts, conveyances or other
instruments (including instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the Partnership, with the other
party to the contract to have no recourse against the General Partner or its assets other
than its interest in the Partnership, even if same results in the terms of the transaction
being less favorable to the Partnership than would otherwise be the case);




     (vi) the distribution of Partnership cash;




     (vii) the selection and dismissal of employees (including employees having titles such
as “president,” “vice president,” “secretary” and “treasurer”) and agents, outside
attorneys, accountants, consultants and contractors and the determination of their
compensation and other terms of employment or hiring;




     (viii) the maintenance of insurance for the benefit of the Partnership Group, the
Partners and Indemnitees;




     (ix) the formation of, or acquisition of an interest in, and the contribution of
property and the making of loans to, any further limited or general partnerships, joint
ventures, corporations, limited liability companies or other relationships (including the
acquisition of interests in, and the contributions of property to, any Group Member from
time to time) subject to the restrictions set forth in Section 2.4;




     (x) the control of any matters affecting the rights and obligations of the Partnership,
including the bringing and defending of actions at law or in equity and



42









 







otherwise engaging in the conduct of litigation, arbitration or mediation and the
incurring of legal expense and the settlement of claims and litigation;




     (xi) the indemnification of any Person against liabilities and contingencies to the
extent permitted by law;




     (xii) the entering into of listing agreements with any National Securities Exchange and
the delisting of some or all of the Limited Partner Interests from, or requesting that
trading be suspended on, any such exchange (subject to any prior approval that may be
required under Section 4.8);




     (xiii) the purchase, sale or other acquisition or disposition of Partnership
Securities, or the issuance of options, rights, warrants and appreciation rights relating to
Partnership Securities;




     (xiv) the undertaking of any action in connection with the Partnership’s participation
in any Group Member; and




     (xv) the entering into of agreements with any of its Affiliates to render services to a
Group Member or to itself in the discharge of its duties as General Partner of the
Partnership.



     (b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the
Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and
each other Person who may acquire an interest in Partnership Securities hereby (i) approves,
ratifies and confirms the execution, delivery and performance by the parties thereto of this
Agreement and the Group Member Agreement of each other Group Member, the Underwriting Agreement,
the Omnibus Agreement, the Contribution Agreement, any Group Member Agreement and the other
agreements described in or filed as exhibits to the Registration Statement or Proxy Statement that
are related to the transactions contemplated by the Registration Statement or the Proxy Statement;
(ii) agrees that the General Partner (on its own or through any officer of the Partnership) is
authorized to execute, deliver and perform the agreements referred to in clause (i) of this
sentence and the other agreements, acts, transactions and matters described in or contemplated by
the Registration Statement or Proxy Statement on behalf of the Partnership without any further act,
approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest
in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the
General Partner, any Group Member or any Affiliate of any of them of this Agreement or any
agreement authorized or permitted under this Agreement (including the exercise by the General
Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV)
shall not constitute a breach by the General Partner of any duty that the General Partner may owe
the Partnership or the Limited Partners or any other Persons under this Agreement (or any other
agreements) or of any duty stated or implied by law or equity.



     Section 7.2 Certificate of Limited Partnership. The General Partner has caused the
Certificate of Limited Partnership to be filed with the Secretary of State of the State of Delaware
as required by the Delaware Act. The General Partner shall use all reasonable efforts to cause to



43









 







be filed such other certificates or documents that the General Partner determines to be
necessary or appropriate for the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited liability) in the State of
Delaware or any other state in which the Partnership may elect to do business or own property. To
the extent the General Partner determines such action to be necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a partnership or other entity
in which the limited partners have limited liability) under the laws of the State of Delaware or of
any other state in which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.4(a), the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or any
amendment thereto to any Limited Partner.



     Section 7.3 Restrictions on the General Partner’s Authority. Except as provided in
Article XII and Article XIV, the General Partner may not sell, exchange or otherwise dispose of all
or substantially all of the assets of the Partnership Group, taken as a whole, in a single
transaction or a series of related transactions (including by way of merger, consolidation, other
combination or sale of ownership interests of the Partnership’s Subsidiaries) without the approval
of holders of a Unit Majority; provided, however, that this provision shall not preclude or limit
the General Partner’s ability to mortgage, pledge, hypothecate or grant a security interest in all
or substantially all of the assets of the Partnership Group and shall not apply to any forced sale
of any or all of the assets of the Partnership Group pursuant to the foreclosure of, or other
realization upon, any such encumbrance. Without the approval of holders of a Unit Majority, the
General Partner shall not, on behalf of the Partnership, except as permitted under Section 4.6,
11.1 and Section 11.2, elect or cause the Partnership to elect a successor general partner of the
Partnership.



     Section 7.4 Reimbursement of the General Partner.



     (a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of any
Group Member.



     (b) The General Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership Group (including salary, bonus, incentive compensation and other
amounts paid to any Person, including Affiliates of the General Partner to perform services for the
Partnership Group or for the General Partner in the discharge of its duties to the Partnership
Group, which amounts shall also include reimbursement for any Common Units purchased to satisfy
obligations of the Partnership under any of its equity compensation plans), and (ii) all other
expenses allocable to the Partnership Group or otherwise incurred by the General Partner in
connection with operating the Partnership Group’s business (including expenses allocated to the
General Partner by its Affiliates). The General Partner shall determine the expenses that are
allocable to the Partnership Group. Reimbursements pursuant to this Section 7.4 shall be in
addition to any reimbursement to the General Partner as a result of indemnification pursuant to
Section 7.7.




44












 





     (c) The General Partner and its Affiliates may charge any member of the Partnership Group a
management fee to the extent necessary to allow the Partnership Group to reduce the amount of any
state franchise or income tax or any tax based upon the revenues or gross margin of any member of
the Partnership Group if the tax benefit produced by the payment of such management fee or fees
exceeds the amount of such fee or fees.



     (d) The General Partner, without the approval of the Limited Partners (who shall have no right
to vote in respect thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices (including plans, programs and practices involving
the issuance of Partnership Securities or options to purchase or rights, warrants or appreciation
rights relating to Partnership Securities), or cause the Partnership to issue Partnership
Securities in connection with, or pursuant to, any employee benefit plan, employee program or
employee practice maintained or sponsored by the General Partner or any of its Affiliates, in each
case for the benefit of employees of the General Partner, any Group Member or any Affiliate or any
of them, in respect of services performed, directly or indirectly, for the benefit of the
Partnership Group. The General Partner may cause the Partnership to issue and sell to the General
Partner or any of its Affiliates any Partnership Securities that the General Partner or such
Affiliates are obligated to provide to any employees pursuant to any such employee benefit plans,
employee programs or employee practices. Expenses incurred by the General Partner in connection
with any such plans, programs and practices (including the net cost to the General Partner or such
Affiliates of Partnership Securities purchased by the General Partner or such Affiliates from the
Partnership to fulfill options or awards under such plans, programs and practices) shall be
reimbursed in accordance with Section 7.4(b). Any and all obligations of the General Partner under
any employee benefit plans, employee programs or employee practices adopted by the General Partner
as permitted by this Section 7.4(c) shall constitute obligations of the General Partner hereunder
and shall be assumed by any successor General Partner approved pursuant to Section 11.1 or Section
11.2 or the transferee of or successor to all of the General Partner’s General Partner Interest
(represented by General Partner Units) pursuant to Section 4.6.



     Section 7.5 Outside Activities.



     (a) The General Partner (i) agrees that its sole business will be to act as a general partner
or managing member, as the case may be, of the Partnership and any other partnership or limited
liability company of which the Partnership is, directly or indirectly, a partner or member and to
undertake activities that are ancillary or related thereto (including being a limited partner in
the Partnership) and (ii) shall not engage in any business or activity or incur any debts or
liabilities except in connection with or incidental to (A) its performance as general partner or
managing member, if any, of one or more Group Members as described in or contemplated by the
Registration Statement or (B) the acquiring, owning or disposing of debt or equity securities in
any Group Member.



     (b) Each Indemnitee (other than the General Partner) 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 any Group Member, independently or with
others, including business interests and activities in direct competition with the business and



45









 







activities of any Group Member, and none of the same shall constitute a breach of this
Agreement or any duty expressed or implied by law to any Group Member or any Partner or Assignee.
None of any Group Member, any Limited Partner or any other Person shall have any rights by virtue
of this Agreement, any Group Member Agreement, or the partnership relationship established hereby
in any business ventures of any Indemnitee.



     (c) Notwithstanding anything to the contrary in this Agreement, (i) the engaging in
competitive activities by any Indemnitees (other than the General Partner) in accordance with the
provisions of this Section 7.5 is hereby approved by the Partnership and all Partners, (ii) it
shall be deemed not to be a breach of any fiduciary duty or any other obligation of any type
whatsoever of any Indemnitee for the Indemnitees (other than the General Partner) to engage in such
business interests and activities in preference to or to the exclusion of the Partnership and (iii)
the Indemnitees shall have no obligation hereunder or as a result of any duty expressed or implied
by law to present business opportunities to the Partnership. Notwithstanding anything to the
contrary in this Agreement, the doctrine of corporate opportunity, or any analogous doctrine, shall
not apply to any Indemnitee (including the General Partner). No Indemnitee (including the General
Partner) who acquires knowledge of a potential transaction, agreement, arrangement or other matter
that may be an opportunity for the Partnership, shall have any duty to communicate or offer such
opportunity to the Partnership, and such Indemnitee (including the General Partner) shall not be
liable to the Partnership, to any Limited Partner or any other Person for breach of any fiduciary
or other duty by reason of the fact that such Indemnitee (including the General Partner) pursues or
acquires for itself, directs such opportunity to another Person or does not communicate such
opportunity or information to the Partnership.



     (d) The General Partner and each of its Affiliates may acquire Units or other Partnership
Securities and, except as otherwise provided in this Agreement, shall be entitled to exercise, at
their option, all rights relating to all Units or other Partnership Securities acquired by them.
The term “Affiliates” when used in this Section 7.5(d) with respect to the General Partner shall
not include any Group Member.



     (e) Notwithstanding anything to the contrary in this Agreement, to the extent that any
provision of this Section 7.5 purports or is interpreted to have the effect of restricting,
eliminating or otherwise modifying the fiduciary duties that might otherwise, as a result of
Delaware or other applicable law, be owed by the General Partner to the Partnership and its Limited
Partners, or to constitute a waiver or consent by the Limited Partners to any such fiduciary duty,
such provisions in this Section 7.5 shall be deemed to have been approved by the Partners.



     Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or
Group Members.



     (a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group
Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the General Partner may determine;
provided, however, that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing party or impose terms
less favorable to the borrowing party than would be charged or



46









 







imposed on the borrowing party by unrelated lenders on comparable loans made on an
arm’s-length basis (without reference to the lending party’s financial abilities or guarantees),
all as determined by the General Partner. The borrowing party shall reimburse the lending party for
any costs (other than any additional interest costs) incurred by the lending party in connection
with the borrowing of such funds. For purposes of this Section 7.6(a) and Section 7.6(b), the term
“Group Member” shall include any Affiliate of a Group Member that is controlled by the Group
Member.



     (b) The Partnership may lend or contribute to any Group Member, and any Group Member may
borrow from the Partnership, funds on terms and conditions determined by the General Partner. Prior
to the consummation of the GP Acquisition, no Group Member may lend funds to the General Partner or
any of its Affiliates (other than another Group Member).



     Section 7.7 Indemnification.



     (a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership 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 claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, 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; provided, that the
Indemnitee shall not be indemnified and held harmless 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 Section 7.7, the Indemnitee
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 7.7 shall be available to the General Partner or its
Affiliates (other than a Group Member) with respect to its or their obligations incurred pursuant
to the Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement or the Transaction
Agreement (other than obligations incurred by the General Partner on behalf of the Partnership).
Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership, it being agreed that the General Partner shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.



     (b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior
to a determination that the Indemnitee is not entitled to be indemnified upon receipt by the
Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as authorized in this Section
7.7.



     (c) The indemnification provided by this Section 7.7 shall be in addition to any other rights
to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law or otherwise, both as to



47









 







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



     (e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership 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 7.7(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 Partnership.



     (f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.



     (g) An Indemnitee shall not be denied indemnification in whole or in part under this Section
7.7 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.



     (h) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons.



     (i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be
indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.7 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.



     Section 7.8 Liability of Indemnitees.



     (a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall
be liable for monetary damages to the Partnership, the Limited Partners, or any other Persons who
have acquired interests in the Partnership Securities, for losses sustained or



48









 







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 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) Subject to its obligations and duties as General Partner set forth in Section 7.1(a), the
General Partner may exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its agents, and the General
Partner shall not be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.



     (c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner
and any other Indemnitee acting in connection with the Partnership’s business or affairs shall not
be liable to the Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement.



     (d) Any amendment, modification or repeal of this Section 7.8 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 7.8 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.



     Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of
Duties.



     (a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement,
whenever a potential conflict of interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership, any Group Member or any Partner, on the
other, any resolution or course of action by the General Partner or its Affiliates in respect of
such conflict of interest shall be permitted and deemed approved by all Partners, and shall not
constitute a breach of this Agreement, of any Group Member Agreement, of any agreement contemplated
herein or therein, or of any duty stated or implied by law or equity, if the resolution or course
of action in respect of such conflict of interest is (i) approved by Special Approval, (ii)
approved by the vote of a majority of the Common Units (excluding Common Units owned by the General
Partner and its Affiliates), (iii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties or (iv) fair and reasonable
to the Partnership, taking into account the totality of the relationships between the parties
involved (including other transactions that may be particularly favorable or advantageous to the
Partnership). The General Partner shall be authorized but not required in connection with its
resolution of such conflict of interest to seek Special Approval of such resolution, and the
General Partner may also adopt a resolution or course of action that has not received Special
Approval. If Special Approval is not sought and the Board of Directors determines that the
resolution or course of action taken with respect to a conflict of interest satisfies either of the
standards set forth in clauses (iii) or (iv) above, then it shall be presumed that, in making its



49









 







decision, the Board of Directors acted in good faith, and in any proceeding brought by any
Limited Partner or by or on behalf of such Limited Partner or any other Limited Partner or the
Partnership challenging such approval, the Person bringing or prosecuting such proceeding shall
have the burden of overcoming such presumption. Notwithstanding anything to the contrary in this
Agreement or any duty otherwise existing at law or equity, the existence of the conflicts of
interest described in the Registration Statement or the Proxy Statement are hereby approved by all
Partners and shall not constitute a breach of this Agreement.



     (b) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its capacity as the general partner of the
Partnership as opposed to in its individual capacity, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then, unless another
express standard is provided for in this Agreement, the General Partner, or such Affiliates causing
it to do so, shall make such determination or take or decline to take such other action in good
faith and shall not be subject to any other or different standards imposed by this Agreement, any
Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any
other law, rule or regulation or at equity. In order for a determination or other action to be in
“good faith” for purposes of this Agreement, the Person or Persons making such determination or
taking or declining to take such other action must believe that the determination or other action
is in the best interests of the Partnership.



     (c) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in
its capacity as the general partner of the Partnership, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then the General Partner,
or such Affiliates causing it to do so, are entitled to make such determination or to take or
decline to take such other action free of any fiduciary duty or obligation whatsoever to the
Partnership, any Limited Partner, and the General Partner, or such Affiliates causing it to do so,
shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity. By way of illustration and not of
limitation, whenever the phrase, “at the option of the General Partner,” or some variation of that
phrase, is used in this Agreement, it indicates that the General Partner is acting in its
individual capacity. For the avoidance of doubt, whenever the General Partner votes or transfers
its Partnership Interests, or refrains from voting or transferring its Partnership Interests, it
shall be acting in its individual capacity. The General Partner’s organizational documents may
provide that determinations to take or decline to take any action in its individual, rather than
representative, capacity may or shall be determined by its members, if the General Partner is a
limited liability company, stockholders, if the General Partner is a corporation, or the members or
stockholders of the General Partner’s general partner, if the General Partner is a partnership.



     (d) Notwithstanding anything to the contrary in this Agreement, the General Partner and its
Affiliates shall have no duty or obligation, express or implied, to (i) sell or otherwise dispose
of any asset of the Partnership Group other than in the ordinary course of business or (ii) permit
any Group Member to use any facilities or assets of the General Partner and its Affiliates, except
as may be provided in contracts entered into from time to time specifically dealing with



50









 







such use. Any determination by the General Partner or any of its Affiliates to enter into such
contracts shall be at its option.



     (e) Except as expressly set forth in this Agreement, neither the General Partner nor any other
Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or
any Limited Partner, and the provisions of this Agreement, to the extent that they restrict,
eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of the
General Partner or any other Indemnitee otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of the General Partner or such other
Indemnitee.



     (f) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a
partner or member of a Group Member, to approve of actions by the general partner or managing
member of such Group Member similar to those actions permitted to be taken by the General Partner
pursuant to this Section 7.9.



     Section 7.10 Other Matters Concerning the General Partner.



     (a) The General Partner may rely 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 General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the General Partner reasonably believes 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 opinion.



     (c) The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership.



     Section 7.11 Purchase or Sale of Partnership Securities. The General Partner may
cause the Partnership to purchase or otherwise acquire Partnership Securities, including the
Subordinated Units and the Incentive Distribution Rights as contemplated by Section 5.1. Such
Partnership Securities shall be held by the Partnership as treasury securities unless they are
expressly cancelled by action of an appropriate officer of the General Partner or by the
Partnership as contemplated by Section 5.1. As long as Partnership Securities are held by any Group
Member, such Partnership Securities shall not be considered Outstanding for any purpose, except as
otherwise provided herein. The General Partner or any Affiliate of the General Partner may also
purchase or otherwise acquire and sell or otherwise dispose of Partnership Securities for its own
account, subject to the provisions of Articles IV and X.



     Section 7.12 Registration Rights of the General Partner and its Affiliates.



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     (a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes
of this Section 7.12, any Person that was an Affiliate of the General Partner as of the date of the
First Amended and Restated Agreement or is an Affiliate of the General Partner on the date hereof
(notwithstanding that it may later cease to be an Affiliate of the General Partner)) holds
Partnership Securities that it desires to sell and (ii) Rule 144 of the Securities Act (or any
successor rule or regulation to Rule 144) or another exemption from registration is not available
to enable such holder of Partnership Securities (the “Holder”) to dispose of the number of
Partnership Securities it desires to sell at the time it desires to do so without registration
under the Securities Act, then at the option and upon the request of the Holder, the Partnership
shall file with the Commission as promptly as practicable after receiving such request, and use all
commercially reasonable efforts to cause to become effective and remain effective for a period of
not less than six months following its effective date or such shorter period as shall terminate
when all Partnership Securities covered by such registration statement have been sold, a
registration statement under the Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder; provided, however, that (i) the Partnership shall
not be required to effect more than three registrations pursuant to Section 7.12(a) and Section
7.12(b); (ii) if the Conflicts Committee determines in good faith that the requested registration
would be materially detrimental to the Partnership and its Partners because such registration would
(x) materially interfere with a significant acquisition, reorganization or other similar
transaction involving the Partnership, (y) require premature disclosure of material information
that the Partnership has a bona fide business purpose for preserving as confidential or (z) render
the Partnership unable to comply with requirements under applicable securities laws, then the
Partnership shall have the right to postpone such requested registration for a period of not more
than six months after receipt of the Holder’s request, such right pursuant to this Section 7.12(a)
or Section 7.12(b) not to be utilized more than once in any twelve-month period and (iii) neither
the General Partner nor any of its Affiliates shall be entitled to any registration rights pursuant
to this Section 7.12 until the earlier to occur of the termination of the Existing Registration
Rights Agreement or such time as there ceases to be any Registrable Securities (as defined in the
Existing Registration Rights Agreement). Except as provided in the preceding sentence, the
Partnership shall be deemed not to have used all commercially reasonable efforts to keep the
registration statement effective during the applicable period if it voluntarily takes any action
that would result in Holders of Partnership Securities covered thereby not being able to offer and
sell such Partnership Securities at any time during such period, unless such action is required by
applicable law. In connection with any registration pursuant to the first sentence of this Section
7.12(a), the Partnership shall (i) promptly prepare and file (A) such documents as may be necessary
to register or qualify the securities subject to such registration under the securities laws of
such states as the Holder shall reasonably request; provided, however, that no such qualification
shall be required in any jurisdiction where, as a result thereof, the Partnership would become
subject to general service of process or to taxation or qualification to do business as a foreign
corporation or partnership doing business in such jurisdiction solely as a result of such
registration, and (B) such documents as may be necessary to apply for listing or to list the
Partnership Securities subject to such registration on such National Securities Exchange as the
Holder shall reasonably request, and (ii) do any and all other acts and things that may be
necessary or appropriate to enable the Holder to consummate a public sale of such Partnership
Securities in such states. Except as set forth in Section 7.12(d), all costs and expenses of any



52









 







such registration and offering (other than the underwriting discounts and commissions) shall
be paid by the Partnership, without reimbursement by the Holder.



     (b) If any Holder holds Partnership Securities that it desires to sell and Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such Holder to dispose of the number of Partnership
Securities it desires to sell at the time it desires to do so without registration under the
Securities Act, then at the option and upon the request of the Holder, the Partnership shall file
with the Commission as promptly as practicable after receiving such request, and use all reasonable
efforts to cause to become effective and remain effective for a period of not less than two years
following its effective date or such shorter period as shall terminate when all Partnership
Securities covered by such shelf registration statement have been sold, a “shelf” registration
statement covering the Partnership Securities specified by the Holder on an appropriate form under
Rule 415 under the Securities Act, or any similar rule that may be adopted by the Commission;
provided, however, that the Partnership shall not be required to effect more than three
registrations pursuant to Section 7.12(a) and this Section 7.12(b); and provided further, however,
that if the Conflicts Committee determines in good faith that any offering under, or the use of any
prospectus forming a part of, the shelf registration statement would be materially detrimental to
the Partnership and its Partners because such offering or use would (x) materially interfere with a
significant acquisition, reorganization or other similar transaction involving the Partnership, (y)
require premature disclosure of material information that the Partnership has a bona fide business
purpose for preserving as confidential or (z) render the Partnership unable to comply with
requirements under applicable securities laws, then the Partnership shall have the right to suspend
such offering or use for a period of not more than six months after receipt of the Holder’s
request, such right pursuant to Section 7.12(a) or this Section 7.12(b) not to be utilized more
than once in any twelve-month period. Except as provided in the preceding sentence, the Partnership
shall be deemed not to have used all reasonable efforts to keep the shelf registration statement
effective during the applicable period if it voluntarily takes any action that would result in
Holders of Partnership Securities covered thereby not being able to offer and sell such Partnership
Securities at any time during such period, unless such action is required by applicable law. In
connection with any shelf registration pursuant to this Section 7.12(b), the Partnership shall (i)
promptly prepare and file (A) such documents as may be necessary to register or qualify the
securities subject to such shelf registration under the securities laws of such states as the
Holder shall reasonably request; provided, however, that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Partnership would become subject to general
service of process or to taxation or qualification to do business as a foreign corporation or
partnership doing business in such jurisdiction solely as a result of such shelf registration, and
(B) such documents as may be necessary to apply for listing or to list the Partnership Securities
subject to such shelf registration on such National Securities Exchange as the Holder shall
reasonably request, and (ii) do any and all other acts and things that may be necessary or
appropriate to enable the Holder to consummate a public sale of such Partnership Securities in such
states. Except as set forth in Section 7.12(d), all costs and expenses of any such shelf
registration and offering (other than the underwriting discounts and commissions) shall be paid by
the Partnership, without reimbursement by the Holder.



53









 





     (c) If the Partnership shall at any time propose to file a registration statement under the
Securities Act for an offering of equity securities of the Partnership for cash (other than an
offering relating solely to an employee benefit plan), the Partnership shall use all reasonable
efforts to include such number or amount of securities held by the Holder in such registration
statement as the Holder shall request; provided, that the Partnership is not required to make any
effort or take any action to so include the securities of the Holder once the registration
statement is declared effective by the Commission or otherwise becomes effective, including any
registration statement providing for the offering from time to time of securities pursuant to Rule
415 of the Securities Act. If the proposed offering pursuant to this Section 7.12(c) shall be an
underwritten offering, then, in the event that the managing underwriter or managing underwriters of
such offering advise the Partnership and the Holder in writing that in their opinion the inclusion
of all or some of the Holder’s Partnership Securities would adversely and materially affect the
success of the offering, the Partnership shall include in such offering only that number or amount,
if any, of securities held by the Holder that, in the opinion of the managing underwriter or
managing underwriters, will not so adversely and materially affect the offering. Except as set
forth in Section 7.12(d), all costs and expenses of any such registration and offering (other than
the underwriting discounts and commissions) shall be paid by the Partnership, without reimbursement
by the Holder.



     (d) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants, opinions
and other assurance to the underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the Partnership’s obligation under
Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold
harmless the Holder, its officers, directors and each Person who controls the Holder (within the
meaning of the Securities Act) and any agent thereof (collectively, “Indemnified Persons”) 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 claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnified Person may be involved, or is threatened
to be involved, as a party or otherwise, under the Securities Act or otherwise (hereinafter
referred to in this Section 7.12(d) as a “claim” and in the plural as “claims”) based upon, arising
out of or resulting from any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any Partnership Securities were registered
under the Securities Act or any state securities or Blue Sky laws, in any preliminary prospectus
(if used prior to the effective date of such registration statement), or in any summary or final
prospectus or in any amendment or supplement thereto (if used during the period the Partnership is
required to keep the registration statement current), or arising out of, based upon or resulting
from the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading; provided, however, that
the Partnership shall not be liable to any Indemnified Person to the extent that any such claim
arises out of, is based upon or results from an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, such preliminary, summary or
final prospectus or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of such Indemnified Person specifically
for use in the preparation thereof.



54









 





     (e) The provisions of Section 7.12(a), Section 7.12(b) and Section 7.12(c) shall continue to
be applicable with respect to the General Partner (and any of the General Partner’s Affiliates)
after it ceases to be a general partner of the Partnership, during a period of two years subsequent
to the effective date of such cessation and for so long thereafter as is required for the Holder to
sell all of the Partnership Securities with respect to which it has requested during such two-year
period inclusion in a registration statement otherwise filed or that a registration statement be
filed; provided, however, that the Partnership shall not be required to file successive
registration statements covering the same Partnership Securities for which registration was
demanded during such two-year period. The provisions of Section 7.12(d) shall continue in effect
thereafter.



     (f) The rights to cause the Partnership to register Partnership Securities pursuant to this
Section 7.12 may be assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such Partnership Securities, provided (i) the Partnership is, within a reasonable time
after such transfer, furnished with written notice of the name and address of such transferee or
assignee and the Partnership Securities with respect to which such registration rights are being
assigned; and (ii) such transferee or assignee agrees in writing to be bound by and subject to the
terms set forth in this Section 7.12.



     (g) Any request to register Partnership Securities pursuant to this Section 7.12 shall (i)
specify the Partnership Securities intended to be offered and sold by the Person making the
request, (ii) express such Person’s present intent to offer such Partnership Securities for
distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership
Securities, and (iv) contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the Partnership to comply with
all applicable requirements in connection with the registration of such Partnership Securities.



     Section 7.13 Reliance by Third Parties. Notwithstanding anything to the contrary in
this Agreement, any Person dealing with the Partnership shall be entitled to assume that the
General Partner and any officer of the General Partner authorized by the General Partner to act on
behalf of and in the name of the Partnership has full power and authority to encumber, sell or
otherwise use in any manner any and all assets of the Partnership and to enter into any authorized
contracts on behalf of the Partnership, and such Person shall be entitled to deal with the General
Partner or any such officer as if it were the Partnership’s sole party in interest, both legally
and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that
may be available against such Person to contest, negate or disaffirm any action of the General
Partner or any such officer in connection with any such dealing. In no event shall any Person
dealing with the General Partner or any such officer or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire into the necessity
or expedience of any act or action of the General Partner or any such officer or its
representatives. Each and every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive evidence in favor of
any and every Person relying thereon or claiming thereunder that (a) at the time of the execution
and delivery of such certificate, document or instrument, this Agreement was in full force and
effect, (b) the Person executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (c) such




55












 




certificate, document or instrument was duly executed and delivered in accordance with the
terms and provisions of this Agreement and is binding upon the Partnership.




ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS




     Section 8.1 Records and Accounting. The General Partner shall keep or cause to be
kept at the principal office of the Partnership appropriate books and records with respect to the
Partnership’s business, including all books and records necessary to provide to the Limited
Partners any information required to be provided pursuant to Section 3.4(a). Any books and records
maintained by or on behalf of the Partnership in the regular course of its business, including the
record of the Record Holders and assignees of Units or other Partnership Securities, books of
account and records of Partnership proceedings, may be kept on, or be in the form of, computer
disks, hard drives, punch cards, magnetic tape, photographs, micrographics or any other information
storage device; provided, that the books and records so maintained are convertible into clearly
legible written form within a reasonable period of time. The books of the Partnership shall be
maintained, for financial reporting purposes, on an accrual basis in accordance with U.S. GAAP.



     Section 8.2 Fiscal Year. The fiscal year of the Partnership shall be a fiscal year
ending December 31.



     Section 8.3 Reports.



     (a) As soon as practicable, but in no event later than 120 days after the close of each fiscal
year of the Partnership, the General Partner shall cause to be mailed or made available, by any
reasonable means (including posting on or accessible through the Partnership’s website) to each
Record Holder of a Unit as of a date selected by the General Partner, an annual report containing
financial statements of the Partnership for such fiscal year of the Partnership, presented in
accordance with U.S. GAAP, including a balance sheet and statements of operations, Partnership
equity and cash flows, such statements to be audited by a firm of independent public accountants
selected by the General Partner.



     (b) As soon as practicable, but in no event later than 90 days after the close of each Quarter
except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made
available, by any reasonable means (including posting on or accessible through the Partnership’s
website) to each Record Holder of a Unit, as of a date selected by the General Partner, a report
containing unaudited financial statements of the Partnership and such other information as may be
required by applicable law, regulation or rule of any National Securities Exchange on which the
Units are listed or admitted to trading, or as the General Partner determines to be necessary or
appropriate.



ARTICLE IX

TAX MATTERS




     Section 9.1 Tax Returns and Information. The Partnership shall timely file all
returns of the Partnership that are required for federal, state and local income tax purposes on
the basis



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of the accrual method and a taxable year ending on December 31. The tax information reasonably
required by Record Holders for federal and state income tax reporting purposes with respect to a
taxable year shall be furnished to them within 90 days of the close of the calendar year in which
the Partnership’s taxable year ends. The classification, realization and recognition of income,
gain, losses and deductions and other items shall be on the accrual method of accounting for
federal income tax purposes.



     Section 9.2 Tax Elections.



     (a) The Partnership shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder, subject to the reservation of the right to seek to revoke any
such election upon the General Partner’s determination that such revocation is in the best
interests of the Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the General Partner shall
be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a
Limited Partner Interest will be deemed to be the lowest quoted closing price of the Limited
Partner Interests on any National Securities Exchange on which such Limited Partner Interests are
listed or admitted to trading during the calendar month in which such transfer is deemed to occur
pursuant to Section 6.2(g) without regard to the actual price paid by such transferee.



     (b) Except as otherwise provided herein, the General Partner shall determine whether the
Partnership should make any other elections permitted by the Code.



     Section 9.3 Tax Controversies. Subject to the provisions hereof, for all periods
ending prior to the GP Acquisition Date, the General Partner is designated as the Tax Matters
Partner and for all periods after the GP Acquisition Date the Board of Directors shall designate
one officer of the Partnership, the General Partner or its general partner who is a Partner as the
Tax Matters Partner. The Tax Matters Partner is authorized and required to represent the
Partnership (at the Partnership’s expense) in connection with all examinations of the Partnership’s
affairs by tax authorities, including resulting administrative and judicial proceedings, and to
expend Partnership funds for professional services and costs associated therewith. Each Partner
agrees to cooperate with the Tax Matters Partner and to do or refrain from doing any or all things
reasonably required by the Tax Matters Partner to conduct such proceedings.



     Section 9.4 Withholding. Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that may be required to cause the Partnership and
other Group Members to comply with any withholding requirements established under the Code or any
other federal, state or local law including pursuant to Sections 1441, 1442, 1445 and 1446 of the
Code. To the extent that the Partnership is required or elects to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of income to any Partner
or Assignee (including by reason of Section 1446 of the Code), the General Partner may treat the
amount withheld as a distribution of cash pursuant to Section 6.3 in the amount of such withholding
from such Partner.



ARTICLE X

ADMISSION OF PARTNERS




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     Section 10.1 Admission of Limited Partners.



     (a) By acceptance of the transfer of any Limited Partner Interests in accordance with Article
IV or the acceptance of any Limited Partner Interests issued pursuant to Article V or pursuant to a
merger or consolidation pursuant to Article XIV, and except as provided in Section 4.9, each
transferee of, or other such Person acquiring, a Limited Partner Interest (including any nominee
holder or an agent or representative acquiring such Limited Partner Interests for the account of
another Person) (i) shall be admitted to the Partnership as a Limited Partner with respect to the
Limited Partner Interests so transferred or issued to such Person when any such transfer, issuance
or admission is reflected in the books and records of the Partnership and such Limited Partner
becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall become bound
by the terms of this Agreement, (iii) represents that the transferee has the capacity, power and
authority to enter into this Agreement, (iv) grants the powers of attorney set forth in this
Agreement and (v) makes the consents and waivers contained in this Agreement, all with or without
execution of this Agreement by such Person. The transfer of any Limited Partner Interests and the
admission of any new Limited Partner shall not constitute an amendment to this Agreement. A Person
may become a Limited Partner or Record Holder of a Limited Partner Interest without the consent or
approval of any of the Partners. A Person may not become a Limited Partner without acquiring a
Limited Partner Interest and until such Person is reflected in the books and records of the
Partnership as the Record Holder of such Limited Partner Interest. The rights and obligations of a
Person who is a Non-citizen Assignee shall be determined in accordance with Section 4.9 hereof.



     (b) The name and mailing address of each Limited Partner shall be listed on the books and
records of the Partnership maintained for such purpose by the Partnership or the Transfer Agent.
The General Partner shall update the books and records of the Partnership from time to time as
necessary to reflect accurately the information therein (or shall cause the Transfer Agent to do
so, as applicable). A Limited Partner Interest may be represented by a Certificate, as provided in
Section 4.1 hereof.



     (c) Any transfer of a Limited Partner Interest shall not entitle the transferee to share in
the profits and losses, to receive distributions, to receive allocations of income, gain, loss,
deduction or credit or any similar item or to any other rights to which the transferor was entitled
until the transferee becomes a Limited Partner pursuant to Section 10.1(a).



     Section 10.2 Admission of Successor General Partner. A successor General Partner
approved pursuant to Section 11.1 or Section 11.2 or the transferee of or successor to all of the
General Partner Interest (represented by General Partner Units) pursuant to Section 4.6 who is
proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the
General Partner, effective immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner, pursuant to Section 11.1 or 11.2 or the transfer of the General
Partner Interest (represented by General Partner Units) pursuant to Section 4.6, provided, however,
that no such successor shall be admitted to the Partnership until compliance with the terms of
Section 4.6 has occurred and such successor has executed and delivered such other documents or
instruments as may be required to effect such admission. Any such successor shall, subject to the
terms hereof, carry on the business of the members of the Partnership Group without dissolution.



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     Section 10.3 Amendment of Agreement and Certificate of Limited Partnership. To effect
the admission to the Partnership of any Partner, the General Partner shall take all steps necessary
or appropriate under the Delaware Act to amend the records of the Partnership to reflect such
admission and, if necessary, to prepare as soon as practicable an amendment to this Agreement and,
if required by law, the General Partner shall prepare and file an amendment to the Certificate of
Limited Partnership, and the General Partner may for this purpose, among others, exercise the power
of attorney granted pursuant to Section 2.6.



ARTICLE XI

WITHDRAWAL OR REMOVAL OF PARTNERS




     Section 11.1 Withdrawal of the General Partner.



     (a) Subject to Section 11.1(c), the General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each such event herein referred
to as an “Event of Withdrawal”);




     (i) The General Partner voluntarily withdraws from the Partnership by giving written
notice to the other Partners;




     (ii) The General Partner transfers all of its rights as General Partner pursuant to
Section 4.6;




     (iii) The General Partner is removed pursuant to Section 11.2;




     (iv) The General Partner (A) makes a general assignment for the benefit of creditors;
(B) files a voluntary bankruptcy petition for relief under Chapter 7 of the United States
Bankruptcy Code; (C) files a petition or answer seeking for itself a liquidation,
dissolution or similar relief (but not a reorganization) under any law; (D) files an answer
or other pleading admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described in clauses (A)-(C)
of this Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in the appointment of a
trustee (but not a debtor-in-possession), receiver or liquidator of the General Partner or
of all or any substantial part of its properties;




     (v) A final and non-appealable order of relief under Chapter 7 of the United States
Bankruptcy Code is entered by a court with appropriate jurisdiction pursuant to a voluntary
or involuntary petition by or against the General Partner; or




     (vi) (A) in the event the General Partner is a corporation, a certificate of
dissolution or its equivalent is filed for the General Partner, or 90 days expire after the
date of notice to the General Partner of revocation of its charter without a reinstatement
of its charter, under the laws of its state of incorporation; (B) in the event the General
Partner is a partnership or a limited liability company, the dissolution and commencement of
winding up of the General Partner; (C) in the event the General Partner is acting in such
capacity by virtue of being a trustee of a trust, the termination of the trust; (D) in the
event the General Partner is a natural person, his death or



59









 






     adjudication of incompetency; and (E) otherwise in the event of the termination of the
General Partner.


If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E) occurs,
the withdrawing General Partner shall give notice to the Limited Partners within 30 days after such
occurrence. The Partners hereby agree that only the Events of Withdrawal described in this Section
11.1 shall result in the withdrawal of the General Partner from the Partnership.




     (b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of
Withdrawal that is not in violation of Section 11.1(c) shall not constitute a breach of this
Agreement under the following circumstances: (i) prior to 12:00 midnight, Central Standard Time, on
September 30, 2016, the General Partner voluntarily withdraws by giving at least 90 days’ advance
notice of its intention to withdraw to the Limited Partners; provided, that prior to the effective
date of such withdrawal, the withdrawal is approved by Unitholders holding at least a majority of
the Outstanding Common Units (excluding Common Units held by the General Partner and its
Affiliates) and the General Partner delivers to the Partnership an Opinion of Counsel (“Withdrawal
Opinion of Counsel”) that such withdrawal (following the selection of the successor General
Partner) would not result in the loss of the limited liability of any Limited Partner or any Group
Member or cause any Group Member 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); (ii) at any time after 12:00 midnight, Central Standard Time, on September 30,
2016, the General Partner voluntarily withdraws by giving at least 90 days’ advance notice to the
Unitholders, such withdrawal to take effect on the date specified in such notice; (iii) at any time
that the General Partner ceases to be the General Partner pursuant to Section 11.1(a)(ii) or is
removed pursuant to Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any time
that the General Partner voluntarily withdraws by giving at least 90 days’ advance notice of its
intention to withdraw to the Limited Partners, such withdrawal to take effect on the date specified
in the notice, if at the time such notice is given one Person and its Affiliates (other than the
General Partner and its Affiliates) own beneficially or of record or control at least 50% of the
Outstanding Units. The withdrawal of the General Partner from the Partnership upon the occurrence
of an Event of Withdrawal that is not in violation of Section 11.1(c) shall also constitute the
withdrawal of the General Partner as general partner or managing member, if any, to the extent
applicable, of the other Group Members. If the General Partner gives a notice of withdrawal
pursuant to Section 11.1(a)(i), the holders of a Unit Majority, may, prior to the effective date of
such withdrawal, elect a successor General Partner. The Person so elected as successor General
Partner shall automatically become the successor general partner or managing member, to the extent
applicable, of the other Group Members of which the General Partner is a general partner or a
managing member. If, prior to the effective date of the General Partner’s withdrawal, a successor
is not selected by the Unitholders as provided herein or the Partnership does not receive a
Withdrawal Opinion of Counsel, the Partnership shall be dissolved in accordance with Section 12.1.
Any successor General Partner elected in accordance with the terms of this Section 11.1 shall be
subject to the provisions of Section 10.2.



     (c) After the consummation of the GP Acquisition, the General Partner may not withdraw as
general partner of the Partnership at any time for any reason whatsoever. Any



60









 







attempt of withdrawal by the General Partner shall, to the fullest extent permitted by law, be
null and void. The General Partner may only be removed pursuant to Section 11.2.



     (d) Notwithstanding Section 11.1(c), if the General Partner withdraws as general partner of
the Partnership after the consummation of the GP Acquisition in violation of this Agreement
pursuant to Section 17-602 of the Delaware Act:




     (i) The withdrawing General Partner shall give 90 days prior notice of such withdrawal
to the Limited Partners.




     (ii) A successor General Partner shall be elected by a plurality of the votes of the
Limited Partners cast at a special meeting or an annual meeting where a quorum is present.




     (iii) A successor General Partner elected pursuant to Section 11.1(d)(ii) shall be
admitted to the Partnership as the General Partner, effective as of the date immediately
prior to the withdrawal of the predecessor General Partner; provided, however, that no such
successor shall be admitted to the Partnership until such successor has executed and
delivered this Agreement and such other documents or instruments as may be required to
effect such admission. Any such successor is hereby authorized to and shall, subject to the
terms hereof, carry on the business of the Partnership without dissolution.




     (iv) The Person so elected as successor General Partner shall automatically become the
successor general partner or managing member, as the case may be, of the other Group Members
of which the General Partner is a general partner or a managing member.




     (v) Upon the withdrawal of the General Partner, if a successor General Partner is
elected pursuant to Section 11.1(d)(ii), the Partnership shall not be dissolved and such
successor General Partner shall continue the business of the Partnership.



     Section 11.2 Removal of the General Partner. The General Partner may be removed (a)
if such removal is prior to the GP Acquisition Date and is approved by the Unitholders holding at
least 66 2/3% of the Outstanding Units (including Units held by the General Partner and its
Affiliates) voting as a single class or (b) if such removal is on or after the GP Acquisition Date
and is approved by the Unitholders holding 100% of the Outstanding Units (including Units held by
the General Partner and its Affiliates) voting as a single class. Any such action by such holders
for removal of the General Partner must also provide for the election of a successor General
Partner by the Unitholders holding a majority of the Outstanding Common Units voting as a single
class (including Units held by the General Partner and its Affiliates). Such removal shall be
effective immediately following the admission of a successor General Partner pursuant to Section
10.2. The removal of the General Partner shall also automatically constitute the removal of the
General Partner as general partner or managing member, to the extent applicable, of the other Group
Members of which the General Partner is a general partner or a managing member. If a Person is
elected as a successor General Partner in accordance with the terms of this Section 11.2, such
Person shall, upon admission pursuant to Section 10.2, automatically become a successor general
partner or managing member, to the extent applicable, of the other



61









 







Group Members of which the General Partner is a general partner or a managing member. The
right of the holders of Outstanding Units to remove the General Partner shall not exist or be
exercised unless the Partnership has received an opinion opining as to the matters covered by a
Withdrawal Opinion of Counsel. Any successor General Partner elected in accordance with the terms
of this Section 11.2 shall be subject to the provisions of Section 10.2.



     Section 11.3 Interest of Departing General Partner and Successor General Partner.



     (a) In the event of (i) withdrawal of the General Partner under circumstances where such
withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of
Outstanding Units under circumstances where Cause does not exist, if the successor General Partner
is elected in accordance with the terms of Section 11.1 or Section 11.2, the Departing General
Partner shall have the option, exercisable prior to the effective date of the departure of such
Departing General Partner, to require its successor to purchase its General Partner Interest
(represented by General Partner Units) and its general partner interest (or equivalent interest),
if any, in the other Group Members (collectively, the “Combined Interest”) in exchange for an
amount in cash equal to the fair market value of such Combined Interest, such amount to be
determined and payable as of the effective date of its departure. If the General Partner is removed
by the Unitholders under circumstances where Cause exists or if the General Partner withdraws under
circumstances where such withdrawal violates this Agreement, and if a successor General Partner is
elected in accordance with the terms of Section 11.1 or Section 11.2 (or if the business of the
Partnership is continued pursuant to Section 12.2 and the successor General Partner is not the
former General Partner), such successor shall have the option, exercisable prior to the effective
date of the departure of such Departing General Partner (or, in the event the business of the
Partnership is continued, prior to the date the business of the Partnership is continued), to
purchase the Combined Interest for such fair market value of such Combined Interest of the
Departing General Partner. In either event, the Departing General Partner shall be entitled to
receive all reimbursements due such Departing General Partner pursuant to Section 7.4, including
any employee-related liabilities (including severance liabilities), incurred in connection with the
termination of any employees employed by the Departing General Partner or its Affiliates (other
than any Group Member) for the benefit of the Partnership or the other Group Members.



     For purposes of this Section 11.3(a), the fair market value of the Departing General Partner’s
Combined Interest shall be determined by agreement between the Departing General Partner and its
successor or, failing agreement within 30 days after the effective date of such Departing General
Partner’s departure, by an independent investment banking firm or other independent expert selected
by the Departing General Partner and its successor, which, in turn, may rely on other experts, and
the determination of which shall be conclusive as to such matter. If such parties cannot agree upon
one independent investment banking firm or other independent expert within 45 days after the
effective date of such departure, then the Departing General Partner shall designate an independent
investment banking firm or other independent expert, the Departing General Partner’s successor
shall designate an independent investment banking firm or other independent expert, and such firms
or experts shall mutually select a third independent investment banking firm or independent expert,
which third independent investment banking firm or other independent expert shall determine the
fair market value of the Combined Interest



62









 







of the Departing General Partner. In making its determination, such third independent
investment banking firm or other independent expert may consider the then current trading price of
Units on any National Securities Exchange on which Units are then listed or admitted to trading,
the value of the Partnership’s assets, the rights and obligations of the Departing General Partner
and other factors it may deem relevant.



     (b) If the Combined Interest is not purchased in the manner set forth in Section 11.3(a), the
Departing General Partner (or its transferee) shall become a Limited Partner and its Combined
Interest shall be converted into Common Units pursuant to a valuation made by an investment banking
firm or other independent expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the admission of its
successor). Any successor General Partner shall indemnify the Departing General Partner (or its
transferee) as to all debts and liabilities of the Partnership arising on or after the date on
which the Departing General Partner (or its transferee) becomes a Limited Partner. For purposes of
this Agreement, conversion of the Combined Interest of the Departing General Partner to Common
Units will be characterized as if the Departing General Partner (or its transferee) contributed its
Combined Interest to the Partnership in exchange for the newly issued Common Units.



     (c) If a successor General Partner is elected in accordance with the terms of Section 11.1 or
Section 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2 and the
successor General Partner is not the former General Partner) and the option described in Section
11.3(a) is not exercised by the party entitled to do so, the successor General Partner shall, at
the effective date of its admission to the Partnership, contribute to the Partnership cash in the
amount equal to the product of the Percentage Interest of the Departing General Partner and the Net
Agreed Value of the Partnership’s assets on such date. In such event, such successor General
Partner shall, subject to the following sentence, be entitled to its Percentage Interest of all
Partnership allocations and distributions to which the Departing General Partner was entitled. In
addition, the successor General Partner shall cause this Agreement to be amended to reflect that,
from and after the date of such successor General Partner’s admission, the successor General
Partner’s interest in all Partnership distributions and allocations shall be its Percentage
Interest.



     Section 11.4 [Reserved.]



     Section 11.5 Withdrawal of Limited Partners. No Limited Partner shall have any right
to withdraw from the Partnership; provided, however, that when a transferee of a Limited Partner’s
Limited Partner Interest becomes a Record Holder of the Limited Partner Interest so transferred,
such transferring Limited Partner shall cease to be a Limited Partner with respect to the Limited
Partner Interest so transferred.



ARTICLE XII

DISSOLUTION AND LIQUIDATION




     Section 12.1 Dissolution. The Partnership shall not be dissolved by the admission of
additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a



63









 







successor General Partner is elected pursuant to Section 11.1 or Section 11.2, the Partnership
shall not be dissolved and such successor General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its affairs shall be
wound up, upon:



     (a) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other than
Section 11.1(a)(ii)), unless a successor is elected and an Opinion of Counsel is received as
provided in Section 11.1(b) or 11.2 and such successor is admitted to the Partnership pursuant to
Section 10.2;



     (b) the General Partner withdraws as general partner as provided in Section 11.1(d)(i), unless
a successor is elected as provided in Section 11.1(d)(ii) and such successor is admitted to the
Partnership pursuant to Section 10.2 and Section 11.1(d)(iii);



     (c) an election to dissolve the Partnership by the General Partner that is approved by the
holders of a Unit Majority;



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



     (e) at any time there are no Limited Partners, unless the Partnership is continued without
dissolution in accordance with the Delaware Act.



     Section 12.2 Continuation of the Business of the Partnership After Dissolution. Upon
(a) dissolution of the Partnership following an Event of Withdrawal caused by the withdrawal or
removal of the General Partner as provided in Section 11.1(a)(i) or (iii) and the failure of the
Partners to select a successor to such Departing General Partner pursuant to Section 11.1 or
Section 11.2, then within 90 days thereafter, (b) dissolution of the Partnership upon (i) an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi), or (ii) the
withdrawal or removal of the General Partner as provided in Section 11.1(d) or Section 11.2 and the
failure of the Partners to select a successor to such Departing General Partner pursuant to Section
11.1 or Section 11.2, then, to the maximum extent permitted by law, within 180 days thereafter, the
holders of a Unit Majority may elect to continue the business of the Partnership on the same terms
and conditions set forth in this Agreement by appointing as a successor General Partner a Person
approved by the holders of a Unit Majority. Unless such an election is made within the applicable
time period as set forth above, the Partnership shall conduct only activities necessary to wind up
its affairs. If such an election is so made, then:




     (i) the Partnership shall continue without dissolution unless earlier dissolved in
accordance with this Article XII;




     (ii) if the successor General Partner is not the former General Partner, then the
interest of the former General Partner shall be treated in the manner provided in Section
11.3; and




     (iii) the successor General Partner shall be admitted to the Partnership as General
Partner, effective as of the Event of Withdrawal, by agreeing in writing to be



64









 






bound by this Agreement; provided, that the right of the holders of a Unit Majority to
approve a successor General Partner and to continue the business of the Partnership shall
not exist and may not be exercised unless the Partnership has received an Opinion of Counsel
that (x) the exercise of the right would not result in the loss of limited liability of any
Limited Partner and (y) neither the Partnership nor any Group Member would be treated as an
association taxable as a corporation or otherwise be taxable as an entity for federal income
tax purposes upon the exercise of such right to continue (to the extent not already so
treated or taxed).



     Section 12.3 Liquidator. Upon dissolution of the Partnership, unless the business of
the Partnership is continued pursuant to Section 12.2, the General Partner shall select one or more
Persons to act as Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by holders of at least a Unit
Majority. The Liquidator (if other than the General Partner) shall agree not to resign at any time
without 15 days’ prior notice and may be removed at any time, with or without cause, by notice of
removal approved by holders of at least a Unit Majority. Upon dissolution, removal or resignation
of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights,
powers and duties of the original Liquidator) shall within 30 days thereafter be approved by
holders of at least a Unit Majority. The right to approve a successor or substitute Liquidator in
the manner provided herein shall be deemed to refer also to any such successor or substitute
Liquidator approved in the manner herein provided. Except as expressly provided in this Article
XII, the Liquidator approved in the manner provided herein shall have and may exercise, without
further authorization or consent of any of the parties hereto, all of the powers conferred upon the
General Partner 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 sale set forth in Section 7.3) 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 Partnership as provided for herein.



     Section 12.4 Liquidation. The Liquidator shall proceed to dispose of the assets of
the Partnership, discharge its liabilities, and otherwise wind up its affairs in such manner and
over such period as determined by the Liquidator, subject to Section 17-804 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 Partners on such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be deemed for purposes of
Section 12.4(c) to have received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other Partners. The Liquidator may
defer liquidation or distribution of the Partnership’s assets for a reasonable time if it
determines that an immediate sale or distribution of all or some of the Partnership’s assets would
be impractical or would cause undue loss to the Partners. The Liquidator may distribute the
Partnership’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 Partners.



     (b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation for
serving in such capacity (subject to the terms of Section 12.3) and amounts to



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Partners otherwise than in respect of their distribution rights under Article VI. 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 12.4(b) shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after taking into account
all Capital Account adjustments (other than those made by reason of distributions pursuant to this
Section 12.4(c)) for the taxable year of the Partnership during which the liquidation of the
Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulation
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable year
(or, if later, within 90 days after said date of such occurrence).



     Section 12.5 Cancellation of Certificate of Limited Partnership. Upon the completion
of the distribution of Partnership cash and property as provided in Section 12.4 in connection with
the liquidation of the Partnership, the Certificate of Limited Partnership and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than the State of
Delaware shall be canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.



     Section 12.6 Return of Contributions. The General Partner shall not be personally
liable for, and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate, the return of the Capital Contributions of the Limited
Partners or Unitholders, or any portion thereof, it being expressly understood that any such return
shall be made solely from Partnership assets.



     Section 12.7 Waiver of Partition. To the maximum extent permitted by law, each
Partner hereby waives any right to partition of the Partnership property.



     Section 12.8 Capital Account Restoration. No Limited Partner shall have any
obligation to restore any negative balance in its Capital Account upon liquidation of the
Partnership. If such liquidation occurs prior to the consummation of the GP Acquisition, the
General Partner shall be obligated to restore any negative balance in its Capital Account upon
liquidation of its interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the date of such
liquidation.



ARTICLE XIII

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE




     Section 13.1 Amendments to be Adopted Solely by the General Partner. Each Partner
agrees that the General Partner, without the approval of any Partner, may amend any provision of
this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may
be required in connection therewith, to reflect:



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     (a) a change in the name of the Partnership, the location of the principal place of business
of the Partnership, the registered agent of the Partnership or the registered office of the
Partnership;



     (b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;



     (c) a change that the General Partner determines to be necessary or appropriate to qualify or
continue the qualification of the Partnership as a limited partnership or a partnership in which
the Limited Partners have limited liability under the laws of any state or to ensure that the Group
Members will not be treated as associations taxable as corporations or otherwise taxed as entities
for federal income tax purposes;



     (d) a change that the General Partner determines, (i) does not adversely affect the Limited
Partners (including any particular class of Partnership Interests as compared to other classes of
Partnership Interests) in any material respect, (ii) to be necessary or appropriate to (A) satisfy
any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any federal or state agency or judicial authority or contained in any federal or
state statute (including the Delaware Act) or (B) facilitate the trading of the Units (including
the division of any class or classes of Outstanding Units into different classes to facilitate
uniformity of tax consequences within such classes of Units) or comply with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are or will be
listed or admitted to trading, (iii) to be necessary or appropriate in connection with action taken
by the General Partner pursuant to Section 5.9 or (iv) is required to effect the intent expressed
in the Registration Statement or Proxy Statement or the intent of the provisions of this Agreement
or is otherwise contemplated by this Agreement;



     (e) a change in the fiscal year or taxable year of the Partnership and any other changes that
the General Partner determines to be necessary or appropriate as a result of a change in the fiscal
year or taxable year of the Partnership including, if the General Partner shall so determine, a
change in the definition of “Quarter” and the dates on which distributions are to be made by the
Partnership;



     (f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, or
the General Partner or its directors, officers, trustees or agents from in any manner being
subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment
Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are substantially similar to
plan asset regulations currently applied or proposed by the United States Department of Labor;



     (g) an amendment that the General Partner determines to be necessary or appropriate in
connection with the authorization of issuance of any class or series of Partnership Securities
pursuant to Section 5.6;



     (h) any amendment expressly permitted in this Agreement to be made by the General Partner
acting alone;



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     (i) an amendment effected, necessitated or contemplated by a Merger Agreement approved in
accordance with Section 14.3;



     (j) an amendment that the General Partner determines to be necessary or appropriate to reflect
and account for the formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other entity, in connection
with the conduct by the Partnership of activities permitted by the terms of Section 2.4;



     (k) a merger, conveyance or conversion pursuant to Section 14.3(d); or



     (l) any other amendments substantially similar to the foregoing.



     Section 13.2 Amendment Procedures. Except as provided in Section 13.1 and Section
13.3, all amendments to this Agreement shall be made in accordance with the following requirements.
Amendments to this Agreement may be proposed only by the General Partner; provided, however, that
the General Partner shall have no duty or obligation to propose any amendment to this Agreement and
may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership or any
Limited Partner and, in declining to propose an amendment, to the fullest extent permitted by law
shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity. A proposed amendment shall be
effective upon its approval by the General Partner and the holders of a Unit Majority, unless a
greater or different percentage is required under this Agreement or by Delaware law. Each proposed
amendment that requires the approval of the holders of a specified percentage of Outstanding Units
shall be set forth in a writing that contains the text of the proposed amendment. If such an
amendment is proposed, the General Partner shall seek the written approval of the requisite
percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote on such
proposed amendment. The General Partner shall notify all Record Holders upon final adoption of any
such proposed amendments.



     Section 13.3 Amendment Requirements.



     (a) Notwithstanding the provisions of Section 13.1 and Section 13.2, no provision of this
Agreement that establishes a percentage of Outstanding Units (including Units deemed owned by the
General Partner) required to take any action shall be amended, altered, changed, repealed or
rescinded in any respect that would have the effect of reducing such voting percentage unless such
amendment is approved by the written consent or the affirmative vote of holders of Outstanding
Units whose aggregate Outstanding Units constitute not less than the voting requirement sought to
be reduced.



     (b) Notwithstanding the provisions of Section 13.1 and Section 13.2, no amendment to this
Agreement may (i) enlarge the obligations of any Limited Partner without its consent, unless such
shall be deemed to have occurred as a result of an amendment approved pursuant to Section 13.3(c),
or (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in
any way the amounts distributable, reimbursable or otherwise payable to, the General



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Partner or any of its Affiliates without its consent, which consent may be given or withheld
at its option.



     (c) Except as provided in Section 14.3, and without limitation of the General Partner’s
authority to adopt amendments to this Agreement without the approval of any Partners or Assignees
as contemplated in Section 13.1, any amendment that would have a material adverse effect on the
rights or preferences of any class of Partnership Interests in relation to other classes of
Partnership Interests must be approved by the holders of not less than a majority of the
Outstanding Partnership Interests of the class affected.



     (d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of the Outstanding Units voting as a
single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment
will not affect the limited liability of any Limited Partner under applicable partnership law of
the state under whose laws the Partnership is organized.



     (e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with the
approval of the holders of at least 90% of the Outstanding Units.



     Section 13.4 Common Unitholder Meetings. (a) All acts of Limited Partners to be taken
pursuant to this Agreement shall be taken in the manner provided in this Article XIII.



     (b) Special meetings of the Limited Partners may be called by the General Partner or by
Limited Partners owning 20% or more of the Outstanding Units of the class or classes for which a
meeting is proposed. Limited Partners shall call a special meeting by delivering to the General
Partner one or more requests in writing stating that the signing Limited Partners wish to call a
special meeting and indicating the general or specific purposes for which the special meeting is to
be called. Within 60 days after receipt of such a call from Limited Partners or within such greater
time as may be reasonably necessary for the Partnership to comply with any statutes, rules,
regulations, listing agreements or similar requirements governing the holding of a meeting or the
solicitation of proxies for use at such a meeting, the General Partner shall send a notice of the
meeting to the Limited Partners either directly or indirectly through the Transfer Agent. A meeting
shall be held at a time and place determined by the General Partner on a date not less than 10 days
nor more than 60 days after the mailing of notice of the meeting. Limited Partners shall not vote
on matters that would cause the Limited Partners to be deemed to be taking part in the management
and control of the business and affairs of the Partnership so as to jeopardize the Limited
Partners’ limited liability under the Delaware Act or the law of any other state in which the
Partnership is qualified to do business.



     (c) (i) During each calendar year beginning on or after the GP Acquisition Date, an annual
meeting of the Limited Partners for the election of the Elected Directors and such other matters as
the Board of Directors shall submit to a vote of the Limited Partners shall be held at such date
and time as may be fixed from time to time by the General Partner at such place within or without
the State of Delaware as may be fixed from time to time by the General Partner and all as stated in
the notice of the meeting. Notice of the annual meeting shall be given in accordance with Section
13.5 not less than 10 days nor more than 60 days prior to the date of



69









 







such meeting (unless such requirement conflicts with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Units are listed or admitted to
trading, in which case the rule, regulation, guideline or requirement of such National Securities
Exchange shall govern).




     (ii) The Limited Partners entitled to vote at the annual meeting shall vote together as
a single class. The Limited Partners entitled to vote shall elect by a plurality of the
votes cast at such meeting a number of individuals to serve as Elected Directors as is
determined in accordance with Section 13.13(b) solely from the individuals nominated in
accordance with the provisions of this Section 13.4(c). The exercise by a Limited Partner
of the right to elect the Elected Directors and any other rights afforded to such Limited
Partner under this Section 13.4(c) shall be in such Limited Partner’s capacity as a limited
partner of the Partnership and shall not cause a Limited Partner to be deemed to be taking
part in the management and control of the business and affairs of the Partnership so as to
jeopardize such Limited Partner’s limited liability under the Delaware Act or the law of any
other state in which the Partnership is qualified to do business.




     (iii) Each Limited Partner entitled to vote shall be entitled to one vote for each
Outstanding Unit that is registered in the name of such Limited Partner on the Record Date
for such meeting; provided, however, that prior to the Final NGP Voting Termination Event,
no NGP Party shall be entitled to vote Units otherwise entitled to vote at the annual
meeting in connection with any election of Elected Directors pursuant to this Section
13.4(c), and any such Units that are not entitled to be voted pursuant to this provision
shall not be deemed to be Outstanding for purposes of determining a quorum under Section
13.9.




     (iv) Nominations of Persons for election as Elected Directors to the Board of
Directors may be made at an annual meeting only (A) by or at the direction of a majority of
the Elected Directors on the Board of Directors, or (B) by any Limited Partner (other than
any NGP Party prior to the Final NGP Voting Termination Event) who was a Record Holder of at
least 20% of Outstanding Units at the time of giving notice provided for in this Agreement,
who is entitled to vote at the meeting and who complies with the notice procedures set forth
below; provided, however, that such nominations shall be subject to the requirement that the
Board of Directors have and maintain at least three Elected Directors meeting the
independence and experience requirements as set forth most recently by any National
Securities Exchange on which any Units or other Partnership Securities are listed or quoted.
For nominations by a Limited Partner pursuant to clause (B) above, the Limited Partner must
have given timely notice thereof in writing to the General Partner. To be timely, a Limited
Partner’s notice shall be delivered to the General Partner at the principal executive
offices of the General Partner not later than the close of business on the 120th calendar
day, nor earlier than the close of business on the 135th calendar day, prior to the first
anniversary of the preceding year’s annual meeting (which, for the first calendar year
beginning on or after the GP Acquisition Date, shall be deemed to be May 1 of the
immediately preceding year), provided, however, that if the annual meeting is called for a
date that is more than 30



70









 






days earlier or more than 60 days after such anniversary date, to be timely, the
Limited Partner’s notice must be so received not earlier than the close of business on the
135th day before the meeting and not later than the later to occur of (x) the close of
business on the 120th day before the meeting and (y) the close of business on the 10th day
following the day on which public announcement of the date of the annual meeting is first
made by the Partnership. The adjournment of an annual meeting shall not commence a new time
period for the giving of a Limited Partner’s notice as described above. Such Limited
Partner’s notice shall set forth (Y) as to each person whom the Limited Partner proposes to
nominate for election or reelection as an Elected Director all information relating to such
person that is required to be disclosed in solicitations of proxies for the election of
directors in an election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act (including such person’s written consent to
being named in the proxy statement as a nominee and to serving as a Director if elected);
and (Z) as to the Limited Partner giving the notice (1) the name and address of such Limited
Partner, and the name and address of (x) any Person controlling, directly or indirectly, or
acting in concert with, such Limited Partner, (y) any beneficial owner of Units owned of
record or beneficially by such Limited Partner, and (z) any Person controlling, controlled
by or under common control with such Person referred to in the preceding clauses (x) and (y)
(such person described in (x), (y) and (z), a “Limited Partner Associated Person”), (2) the
class or series and number of Units that are owned of record or directly or indirectly owned
beneficially by such Limited Partner and any Limited Partner Associated Person, (3) any
option, warrant, convertible security, unit appreciation right, swap or similar right with
an exercise or conversion privilege or a settlement payment or mechanism at a price related
to any class or series of Units or with a value derived in whole or in part from the value
of any class or series of Units, whether or not such instrument or right is subject to
settlement in the underlying class or series of Units or otherwise (a “Derivative
Instrument”) directly or indirectly owned beneficially by such Limited Partner or Limited
Partner Associated Person and any other direct or indirect opportunity of such Limited
Partner or any Limited Partner Associated Person to profit or share in any profit derived
from any increase or decrease in the value of the Units, (4) any proxy (other than a
revocable proxy given in response to a solicitation made pursuant to Section 14(a) of the
Securities Exchange Act by way of a solicitation statement filed on Schedule 14A), contract,
arrangement, understanding or relationship pursuant to which such Limited Partner or any
Limited Partner Associated Person has a right to vote any Units, (5) any short interest in
any Units held by such Limited Partner or any Limited Partner Associated Person (for
purposes of this subclause a Person shall be deemed to have a short interest in a Unit if
such Person directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has the opportunity to profit or share in any profit derived from
any decrease in the value of the subject Unit), (6) any rights beneficially owned, directly
or indirectly, by such Limited Partner or Limited Partner Associated Person to distributions
of the Partnership that are separated or separable from the underlying Units, (7) any
proportionate interest in the Units or Derivative Instruments held, directly or indirectly,
by a general or limited partnership in which such Limited Partner or any Limited Partner
Associated Person is a general partner or, directly or indirectly, beneficially owns an
interest in a general partner, (8) any performance-related fees (other than an asset-based
fee) that such Limited Partner or any



71









 







Limited Partner Associated Person is entitled to based on any increase or decrease in
the value of the Units or Derivative Instruments, if any, including without limitation any
such interests held by members of such Limited Partner’s or any Limited Partner Associated
Person’s immediate family sharing the same household, (9) a description of all agreements,
arrangements or understandings (written or oral) between or among such Limited Partner, any
Limited Partner Associated Person, any proposed nominee or any other Person or Persons
(including their names) pursuant to which the nomination or nominations are to be made by
such Limited Partner, (10) a representation that such Limited Partner intends to appear in
person or by proxy at the meeting to nominate the persons named in its notice, (11) any
other information relating to such Limited Partner and any Limited Partner Associated Person
that would be required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors pursuant to
Regulation 14A under the Securities Exchange Act, (12) a description of all direct and
indirect compensation and other material monetary agreements, arrangements and
understandings during the past three years, and any other material relationships, between or
among such Limited Partner or any Limited Partner Associated Person, or others acting in
concert therewith, on the one hand, and each proposed nominee, and his or her respective
affiliates and associates, or others acting in concert therewith, on the other hand, and
(13) a statement of whether such Limited Partner or any Limited Partner Associated Person
intends, or is part of a group that intends, to solicit proxies for the election of the
proposed nominee. Other than as provided in Section 13.13, only such persons who are
nominated in accordance with the procedures set forth in this provision shall be eligible to
serve as Elected Directors. The chairman of the meeting shall have the power and duty to
determine whether a nomination was made in accordance with the procedures set forth above
and to declare that such defective nomination shall be disregarded.




     (v) The General Partner shall use its reasonable efforts to take such action as shall
be necessary or appropriate to give effect to and implement the provisions of this Section
13.4(c), including, without limitation, amending the limited partnership agreement of the
General Partner and the limited liability company agreement of the general partner of the
General Partner. The General Partner or, if the General Partner is a limited partnership,
its general partner, shall be governed by organizational documents that permit the
effectuation of the relevant provisions of this Agreement, including, without limitation,
the provisions of this Article XIII and the provisions relating to the Conflicts Committee.




     (vi) This Section 13.4(c) may not be amended except as permitted pursuant to Section
13.1(d) or upon the prior approval of Limited Partners that hold two-thirds of the
Outstanding Units; provided that, prior to the Final NGP Voting Termination Event, any Units
beneficially owned by any NGP Party shall not be voted and shall not be considered
Outstanding for the purposes of such approval.




     (vii) The provisions of this Section 13.4(c) shall have no effect prior to the
consummation of the GP Acquisition.



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     Section 13.5 Notice of a Meeting. Notice of a meeting called pursuant to Section 13.4
shall be given to the Record Holders of the class or classes of Units for which a meeting is
proposed in writing by mail or other means of written communication in accordance with Section
16.1. The notice shall be deemed to have been given at the time when deposited in the mail or sent
by other means of written communication.



     Section 13.6 Record Date. For purposes of determining the Limited Partners entitled
to notice of or to vote at a meeting of the Limited Partners or to give approvals without a meeting
as provided in Section 13.11 the General Partner may set a Record Date, which shall not be less
than 10 nor more than 60 days before (a) the date of the meeting (unless such requirement conflicts
with any rule, regulation, guideline or requirement of any National Securities Exchange on which
the Units are listed or admitted to trading, in which case the rule, regulation, guideline or
requirement of such National Securities Exchange shall govern) or (b) in the event that approvals
are sought without a meeting, the date by which Limited Partners are requested in writing by the
General Partner to give such approvals. If the General Partner does not set a Record Date, then (a)
the Record Date for determining the Limited Partners entitled to notice of or to vote at a meeting
of the Limited Partners shall be the close of business on the day next preceding the day on which
notice is given, and (b) the Record Date for determining the Limited Partners entitled to give
approvals without a meeting shall be the date the first written approval is deposited with the
Partnership in care of the General Partner in accordance with Section 13.11.



     Section 13.7 Adjournment. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting and a new Record Date need not be fixed, if the
time and place thereof are announced at the meeting at which the adjournment is taken, unless such
adjournment shall be for more than 45 days. At the adjourned meeting, the Partnership may transact
any business which might have been transacted at the original meeting. If the adjournment is for
more than 45 days or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article XIII.



     Section 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes. The
transactions of any meeting of Limited Partners, however called and noticed, and whenever held,
shall be as valid as if it had occurred at a meeting duly held after regular call and notice, if a
quorum is present either in person or by proxy. Attendance of a Limited Partner at a meeting shall
constitute a waiver of notice of the meeting, except when the Limited Partner attends the meeting
for the express purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened; and except that attendance at a
meeting is not a waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval is expressly made at
the meeting.



     Section 13.9 Quorum and Voting. Except as otherwise provided in this Agreement, the
holders of a majority of the Outstanding Units of the class or classes for which a meeting has been
called (including Outstanding Units deemed owned by the General Partner) represented in person or
by proxy shall constitute a quorum at a meeting of Limited Partners of such class or classes unless
any such action by the Limited Partners requires approval by holders of a greater percentage of
such Units, in which case the quorum shall be such greater percentage. At any meeting of the
Limited Partners duly called and held in accordance with this Agreement at which



73









 







a quorum is present, the act of Limited Partners holding Outstanding Units that in the
aggregate represent a majority of the Outstanding Units entitled to vote and be present in person
or by proxy at such meeting shall be deemed to constitute the act of all Limited Partners, unless a
greater or different percentage is required with respect to such action under the provisions of
this Agreement, applicable law, or the rules of an applicable National Securities Exchange, in
which case the act of the Limited Partners holding Outstanding Units that in the aggregate
represent at least such greater or different percentage shall be required. The Limited Partners
present at a duly called or held meeting at which a quorum is present may continue to transact
business until adjournment, notwithstanding the withdrawal of enough Limited Partners to leave less
than a quorum, if any action taken (other than adjournment) is approved by the required percentage
of Outstanding Units specified in this Agreement (including Outstanding Units deemed owned by the
General Partner). In the absence of a quorum any meeting of Limited Partners may be adjourned from
time to time by the affirmative vote of holders of at least a majority of the Outstanding Units
entitled to vote at such meeting (including Outstanding Units deemed owned by the General Partner)
represented either in person or by proxy, but no other business may be transacted, except as
provided in Section 13.7.



     Section 13.10 Conduct of a Meeting. The General Partner shall have full power and
authority concerning the manner of conducting any meeting of the Limited Partners or solicitation
of approvals in writing, including the determination of Persons entitled to vote, the existence of
a quorum, the satisfaction of the requirements of Section 13.4, the conduct of voting, the validity
and effect of any proxies and the determination of any controversies, votes or challenges arising
in connection with or during the meeting or voting and adjournment of any meeting. The General
Partner shall designate a Person to serve as chairman of any meeting and shall further designate a
Person to take the minutes of any meeting. All minutes shall be kept with the records of the
Partnership maintained by the General Partner. The General Partner may make such other regulations
consistent with applicable law and this Agreement as it may deem advisable concerning the conduct
of any meeting of the Limited Partners or solicitation of approvals in writing, including
regulations in regard to the appointment of proxies, the appointment and duties of inspectors of
votes and approvals, the submission and examination of proxies and other evidence of the right to
vote, and the revocation of approvals in writing.



     Section 13.11 Action Without a Meeting. If authorized by the General Partner, any
action that may be taken at a meeting of the Limited Partners may be taken without a meeting if an
approval in writing setting forth the action so taken is signed by Limited Partners owning not less
than the minimum percentage of the Outstanding Units (including Units deemed owned by the General
Partner) that would be necessary to authorize or take such action at a meeting at which all the
Limited Partners were present and voted (unless such provision conflicts with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are listed or
admitted to trading, in which case the rule, regulation, guideline or requirement of such National
Securities Exchange shall govern). Prompt notice of the taking of action without a meeting shall be
given to the Limited Partners who have not approved in writing. The General Partner may specify
that any written ballot submitted to Limited Partners for the purpose of taking any action without
a meeting shall be returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner. If a ballot returned to the Partnership does not vote
all of the Units held by the Limited Partners, the



74









 







Partnership shall be deemed to have failed to receive a ballot for the Units that were not
voted. If approval of the taking of any action by the Limited Partners is solicited by any Person
other than by or on behalf of the General Partner, the written approvals shall have no force and
effect unless and until (a) they are deposited with the Partnership in care of the General Partner,
(b) approvals sufficient to take the action proposed are dated as of a date not more than 90 days
prior to the date sufficient approvals are deposited with the Partnership and (c) an Opinion of
Counsel is delivered to the General Partner to the effect that the exercise of such right and the
action proposed to be taken with respect to any particular matter (i) will not cause the Limited
Partners to be deemed to be taking part in the management and control of the business and affairs
of the Partnership so as to jeopardize the Limited Partners’ limited liability, and (ii) is
otherwise permissible under the state statutes then governing the rights, duties and liabilities of
the Partnership and the Partners.



     Section 13.12 Right to Vote and Related Matters.



     (a) Only those Record Holders of the Units on the Record Date set pursuant to Section 13.6
(and also subject to the limitations contained in the definition of “Outstanding”) shall be
entitled to notice of, and to vote at, a meeting of Limited Partners or to act with respect to
matters as to which the holders of the Outstanding Units have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Units
shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding
Units.



     (b) With respect to Units that are held for a Person’s account by another Person (such as a
broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing),
in whose name such Units are registered, such other Person shall, in exercising the voting rights
in respect of such Units on any matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial
owner, and the Partnership shall be entitled to assume it is so acting without further inquiry. The
provisions of this Section 13.12(b) (as well as all other provisions of this Agreement) are subject
to the provisions of Section 4.3.



     Section 13.13 Board of Directors.



     (a) On or promptly after the GP Acquisition Date, the NGP Representative shall designate three
members of the Board of Directors as Appointed Directors. As soon as reasonably practicable
following the GP Acquisition Date, the Conflicts Committee shall appoint by a resolution adopted by
a majority of the members of the Conflicts Committee, two additional Directors meeting the
independence and experience requirements as set forth most recently by any National Securities
Exchange on which any Units or other Partnership Securities are listed or quoted. The two
additional Directors so appointed by the Conflicts Committee shall constitute Elected Directors.
Following the appointment of such Directors, the Board of Directors shall consist of five Elected
Directors, three Appointed Directors and one Management Director, subject to adjustment pursuant to
Sections 13.13(d) or (e). The Directors shall be classified with respect to their terms of office
by dividing them into three classes established pursuant to the limited liability company agreement
of the General Partner (or the general partner thereof, as



75









 







applicable), each class to be as nearly equal in number as possible; provided, however, that
no class shall contain more than one Appointed Director.



     (b) At each annual meeting of the Limited Partners held after the GP Acquisition Date, a
number of individuals equal to the number of Elected Directors whose terms expire at such annual
meeting (including any Elected Director whose term would have expired at such meeting but for the
fact of such individual’s death, resignation or removal, unless the vacancy caused by such
individual’s death, resignation or removal has already been filled prior to such annual meeting)
shall be elected to hold office as Elected Directors until the third succeeding annual meeting.
Each Elected Director shall hold office for the term for which such Elected Director is elected and
thereafter until such Elected Director’s successor shall have been duly elected and qualified, or
until such Elected Director’s earlier death, resignation or removal. Following the appointment by
the Conflicts Committee of the two Elected Directors in accordance with Section 13.13(a), any
vacancies in Elected Directors (whether due to death, resignation or removal of an Elected Director
or an increase in the total number of Elected Directors in accordance with Section 13.13(e)) may be
filled, until the next annual meeting at which the term of such class expires, by a majority of the
remaining Elected Directors then in office. An Elected Director may be removed only for Cause for
Removal and only upon a vote of the majority of the remaining Elected Directors then in office.



     (c) At each annual meeting of the Limited Partners, a number of individuals equal to the
number of Appointed Directors whose terms expire at such annual meeting (including any Appointed
Director whose term would have expired at such meeting but for the fact of such individual’s death,
resignation or removal (other than pursuant to Section 13.13(e)), unless the vacancy caused by such
individual’s death, resignation or removal has already been filled prior to such annual meeting)
shall be appointed by the NGP Representative to hold office as Appointed Directors until the third
succeeding annual meeting. Each Appointed Director shall hold office for the term for which such
Appointed Director is appointed and thereafter until such Appointed Director’s successor shall have
been duly appointed and qualified, or until such Appointed Director’s earlier death, resignation or
removal. Any vacancies in Appointed Directors may be filled by the NGP Representative in its sole
discretion. An Appointed Director may be removed (i) by the NGP Representative with or without
Cause for Removal, (ii) for Cause for Removal upon a vote of the majority of the remaining
Directors then in office, or (iii) in accordance with Section 13.13(e).



     (d) If, at any time, the NGP Parties collectively cease to be the Record Holders of 20% or
more of the Outstanding Common Units (the “First NGP Voting Termination Event”), the Board of
Directors may reduce the number of Appointed Directors to two by resolution adopted by of a
majority of the Elected Directors. If, at any time, the NGP Parties collectively cease to be the
Record Holders of 10% or more of the Outstanding Common Units (the “Second NGP Voting Termination
Event”), the Board of Directors may reduce the number of Appointed Directors to one by resolution
adopted by of a majority of the Elected Directors. If, at any time, the NGP Parties collectively
cease to be the Record Holders of 5% or more of the Outstanding Common Units (the “Final NGP Voting
Termination Event”), the Board of Directors may reduce the number of Appointed Directors to zero by
resolution adopted by of a majority of the Elected



76









 







Directors. The NGP Representative shall notify the Board of Directors in writing as promptly
as reasonably practicable following any NGP Voting Termination Event.



     (e) Upon the adoption of any resolution to reduce the number of Appointed Directors pursuant
to Section 13.13(d), the Board of Directors by resolution adopted by a majority of the Elected
Directors may elect (i) to remove a number of Appointed Directors up to the number of such
reduction; provided that if not all Appointed Directors are removed pursuant to this clause (i) the
NGP Representative shall be entitled to select which Appointed Director(s) are to be removed by
providing written notice of such selection to the Board of Directors within five Business Days
after the NGP Representative receives written notice of such resolution and/or (ii) to designate
one or more of the Appointed Directors that would otherwise be removed pursuant to clause (i) above
as an Elected Director(s) and to increase the total number of Elected Directors by the number of
Appointed Directors that are so designated. Prior to the occurrence of the Final NGP Voting
Termination Event, except as contemplated by this Section 13.13(e), the total number of Elected
Directors shall not exceed five without the approval of the Board of Directors by resolution
adopted by a majority of the Elected Directors and the written consent of the NGP Representative.
Following the Final NGP Voting Termination Event, the total number of Elected Directors shall be as
established from time to time by the Board of Directors.



     (f) Prior to the Final NGP Voting Termination Event, the Chief Executive Officer of the
General Partner (or the general partner thereof, as applicable) (or his designee) shall serve as a
Director (the “Management Director”) until such Chief Executive Officer’s successor shall have been
duly appointed, or until such Chief Executive Officer’s earlier death, resignation or removal.
Immediately following the Final NGP Voting Termination Event, the Management Director shall be
redesignated as an Elected Director under this Agreement and after such redesignation, this Section
13.13(f) shall have no effect.



     (g) This Article XIII shall not be deemed in any way to limit or impair the ability of the
Board of Directors or the General Partner to adopt a “poison pill” or unitholder or other similar
rights plan with respect to the Partnership, whether such poison pill or plan contains “dead hand”
provisions, “no hand” provisions or other provisions relating to the redemption of the poison pill
or plan, in each case as such terms are used under Delaware common law.



     (h) The General Partner shall use its reasonable efforts to take such action as shall be
necessary or appropriate to give effect to and implement the provisions of this Section 13.13,
including, without limitation, amending the limited partnership agreement of the General Partner
and the limited liability company agreement of the general partner of the General Partner.



     (i) Except as permitted by Section 13.1(d), this Section 13.13 may not be amended except upon
the prior approval of (i) Limited Partners that hold two-thirds of the Outstanding Units, provided
that, prior to the Final NGP Voting Termination Event, any Units beneficially owned by any NGP
Party shall not be voted and shall not be considered Outstanding for the purposes of such approval
and (ii) prior to the Final NGP Voting Termination Event, the NGP Representative.



     (j) The provisions of this Section 13.13 shall have no effect prior to the GP Acquisition
Date.



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ARTICLE XIV

MERGER, CONSOLIDATION OR CONVERSION




     Section 14.1 Authority. The Partnership may merge or consolidate with or into one or
more corporations, limited liability companies, statutory trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a partnership (whether
general or limited (including a limited liability partnership)) or convert into any such entity,
whether such entity is formed under the laws of the State of Delaware or any other state of the
United States of America, pursuant to a written plan of merger or consolidation (“Merger
Agreement”) or a written plan of conversion (“Plan of Conversion”), as the case may be, in
accordance with this Article XIV.



     Section 14.2 Procedure for Merger, Consolidation or Conversion.



     (a) Merger, consolidation or conversion of the Partnership pursuant to this Article XIV
requires the prior consent of the General Partner, provided, however, that, to the fullest extent
permitted by law, the General Partner shall have no duty or obligation to consent to any merger,
consolidation or conversion of the Partnership and may decline to do so free of any fiduciary duty
or obligation whatsoever to the Partnership or any Limited Partner and, in declining to consent to
a merger, consolidation or conversion, shall not be required to act in good faith or pursuant to
any other standard imposed by this Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity.



     (b) If the General Partner shall determine to consent to the merger or consolidation, the
General Partner shall approve the Merger Agreement, which shall set forth:




     (i) name and state of domicile of each of the business entities proposing to merge or
consolidate;




     (ii) the name and state of domicile of the business entity that is to survive the
proposed merger or consolidation (the “Surviving Business Entity”);




     (iii) the terms and conditions of the proposed merger or consolidation;




     (iv) the manner and basis of exchanging or converting the equity securities of each
constituent business entity for, or into, cash, property or interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any general or limited partner
interests, securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner interests,
rights, securities or obligations of the Surviving Business Entity, the cash, property or
interests, rights, securities or obligations of any general or limited partnership,
corporation, trust, limited liability company, unincorporated business or other entity
(other than the Surviving Business Entity) which the holders of such general or limited
partner interests, securities or rights are to receive in exchange for, or upon conversion
of their interests, securities or rights, and (ii) in the case of securities represented by
certificates, upon the surrender of such certificates, which cash, property or general or
limited partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited



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partnership, corporation, trust, limited liability company, unincorporated business or
other entity (other than the Surviving Business Entity), or evidences thereof, are to be
delivered;




     (v) a statement of any changes in the constituent documents or the adoption of new
constituent documents (the articles or certificate of incorporation, articles of trust,
declaration of trust, certificate or agreement of limited partnership, operating agreement
or other similar charter or governing document) of the Surviving Business Entity to be
effected by such merger or consolidation;




     (vi) the effective time of the merger, which may be the date of the filing of the
certificate of merger pursuant to Section 14.4 or a later date specified in or determinable
in accordance with the Merger Agreement (provided, that if the effective time of the merger
is to be later than the date of the filing of such certificate of merger, the effective time
shall be fixed at a date or time certain at or prior to the time of the filing of such
certificate of merger and stated therein); and




     (vii) such other provisions with respect to the proposed merger or consolidation that
the General Partner determines to be necessary or appropriate.



     (c) If the General Partner shall determine to consent to the conversion, the General Partner
shall approve the Plan of Conversion, which shall set forth:




     (i) the name of the converting entity and the converted entity;




     (ii) a statement that the Partnership is continuing its existence in the organizational
form of the converted entity;




     (iii) a statement as to the type of entity that the converted entity is to be and the
state or country under the laws of which the converted entity is to be incorporated, formed
or organized;




     (iv) the manner and basis of exchanging or converting the equity securities of each
constituent business entity for, or into, cash, property or interests, rights, securities or
obligations of the converted entity;




     (v) in an attachment or exhibit, the certificate of limited partnership of the
Partnership; and




     (vi) in an attachment or exhibit, the certificate of limited partnership, articles of
incorporation, or other organizational documents of the converted entity;




     (vii) the effective time of the conversion, which may be the date of the filing of the
articles of conversion or a later date specified in or determinable in accordance with the
Plan of Conversion (provided, that if the effective time of the conversion is to be later
than the date of the filing of such articles of conversion, the effective time shall be
fixed at a date or time certain at or prior to the time of the filing of such articles of
conversion and stated therein); and



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     (viii) such other provisions with respect to the proposed conversion that the General
Partner determines to be necessary or appropriate.



     Section 14.3 Approval by Limited Partners.



     (a) Except as provided in Section 14.3(d) or 14.3(e), the General Partner, upon its approval
of the Merger Agreement or the Plan of Conversion, as the case may be, shall direct that the Merger
Agreement or the Plan of Conversion, as applicable, be submitted to a vote of Limited Partners,
whether at a special meeting or by written consent, in either case in accordance with the
requirements of Article XIII. A copy or a summary of the Merger Agreement or the Plan of
Conversion, as the case may be, shall be included in or enclosed with the notice of a special
meeting or the written consent.



     (b) Except as provided in Section 14.3(d) or 14.3(e), the Merger Agreement or Plan of
Conversion, as the case may be, shall be approved upon receiving the affirmative vote or consent of
the holders of a Unit Majority.



     (c) Except as provided in Section 14.3(d) or 14.3(e), after such approval by vote or consent
of the Limited Partners, and at any time prior to the filing of the certificate of merger or
articles of conversion pursuant to Section 14.4, the merger, consolidation or conversion may be
abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or Plan of
Conversion, as the case may be.



     (d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the
General Partner is permitted, without Limited Partner approval, to convert the Partnership or any
Group Member into a new limited liability entity, to merge the Partnership or any Group Member
into, or convey all of the Partnership’s assets to, another limited liability entity that shall be
newly formed and shall have no assets, liabilities or operations at the time of such conversion,
merger or conveyance other than those it receives from the Partnership or other Group Member if (i)
the General Partner has received an Opinion of Counsel that the conversion, merger or conveyance,
as the case may be, would not result in the loss of the limited liability of any Limited Partner or
cause the Partnership 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 previously treated as such),
(ii) the sole purpose of such conversion, merger, or conveyance is to effect a mere change in the
legal form of the Partnership into another limited liability entity and (iii) the governing
instruments of the new entity provide the Limited Partners and the General Partner with the same
rights and obligations as are herein contained.



     (e) Additionally, notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, without Limited Partner approval, to merge or
consolidate the Partnership with or into another entity if (A) the General Partner has received an
Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the
loss of the limited liability of any Limited Partner or cause the Partnership 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 previously treated as such), (B) the merger or consolidation would not
result in an amendment to the Partnership Agreement, other than any amendments that could be
adopted pursuant to Section 13.1, (C) the Partnership is the Surviving Business Entity in such




80












 




merger or consolidation, (D) each Unit outstanding immediately prior to the effective date
of the merger or consolidation is to be an identical Unit of the Partnership after the effective
date of the merger or consolidation, and (E) the number of Partnership Securities to be issued by
the Partnership in such merger or consolidation do not exceed 20% of the Partnership Securities
Outstanding immediately prior to the effective date of such merger or consolidation.




     (f) Pursuant to Section 17-211(g) of the Delaware Act, an agreement of merger or consolidation
approved in accordance with this Article XIV may (a) effect any amendment to this Agreement or (b)
effect the adoption of a new partnership agreement for the Partnership if it is the Surviving
Business Entity. Any such amendment or adoption made pursuant to this Section 14.5 shall be
effective at the effective time or date of the merger or consolidation.



     Section 14.4 Certificate of Merger. Upon the required approval by the General Partner
and the Unitholders of a Merger Agreement or the Plan of Conversion, as the case may be, a
certificate of merger or articles of conversion, as applicable, shall be executed and filed with
the Secretary of State of the State of Delaware in conformity with the requirements of the Delaware
Act.



     Section 14.5 Effect of Merger, Consolidation or Conversion.



     (a) At the effective time of the certificate of merger:




     (i) all of the rights, privileges and powers of each of the business entities that has
merged or consolidated, and all property, real, personal and mixed, and all debts due to any
of those business entities and all other things and causes of action belonging to each of
those business entities, shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business Entity to the extent
they were of each constituent business entity;




     (ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and is not in any way impaired because of the
merger or consolidation;




     (iii) all rights of creditors and all liens on or security interests in property of any
of those constituent business entities shall be preserved unimpaired; and




     (iv) all debts, liabilities and duties of those constituent business entities shall
attach to the Surviving Business Entity and may be enforced against it to the same extent as
if the debts, liabilities and duties had been incurred or contracted by it.



     (b) At the effective time of the articles of conversion:




     (i) the Partnership shall continue to exist, without interruption, but in the
organizational form of the converted entity rather than in its prior organizational form;




     (ii) all rights, title, and interests to all real estate and other property owned by
the Partnership shall continue to be owned by the converted entity in its new organizational
form without reversion or impairment, without further act or deed, and



81









 






without any transfer or assignment having occurred, but subject to any existing liens or other encumbrances
thereon;




     (iii) all liabilities and obligations of the Partnership shall continue to be
liabilities and obligations of the converted entity in its new organizational form without
impairment or diminution by reason of the conversion;




     (iv) all rights of creditors or other parties with respect to or against the prior
interest holders or other owners of the Partnership in their capacities as such in existence
as of the effective time of the conversion will continue in existence as to those liabilities and obligations and may
be pursued by such creditors and obligees as if the conversion did not occur;




     (v) a proceeding pending by or against the Partnership or by or against any of Partners
in their capacities as such may be continued by or against the converted entity in its new
organizational form and by or against the prior partners without any need for substitution
of parties; and




     (vi) the Partnership Units that are to be converted into partnership interests, shares,
evidences of ownership, or other securities in the converted entity as provided in the Plan
of Conversion shall be so converted, and Partners shall be entitled only to the rights
provided in the Plan of Conversion.



ARTICLE XV

RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS




     Section 15.1 Right to Acquire Limited Partner Interests.



     (a) Notwithstanding any other provision of this Agreement, if at any time prior to the
consummation of the GP Acquisition the General Partner and its Affiliates hold more than 80% of the
total Limited Partner Interests of any class then Outstanding, the General Partner shall then have
the right, which right it may assign and transfer in whole or in part to the Partnership or any
Affiliate of the General Partner, exercisable at its option, to purchase all, but not less than
all, of such Limited Partner Interests of such class then Outstanding held by Persons other than
the General Partner and its Affiliates, at the greater of (x) the Current Market Price as of the
date three days prior to the date that the notice described in Section 15.1(b) is mailed and (y)
the highest price paid by the General Partner or any of its Affiliates for any such Limited Partner
Interest of such class purchased during the 90-day period preceding the date that the notice
described in Section 15.1(b) is mailed. Any right to acquire Limited Partner Interests pursuant to
this Section 15.1 shall automatically terminate upon the consummation of the GP Acquisition. As
used in this Agreement, (i) “Current Market Price” as of any date of any class of Limited Partner
Interests means the average of the daily Closing Prices (as hereinafter defined) per Limited
Partner Interest of such class for the 20 consecutive Trading Days (as hereinafter defined)
immediately prior to such date; (ii) “Closing Price” for any day means the last sale price on such
day, regular way, or in case no such sale takes place on such day, the average of the closing bid
and asked prices on such day, regular way, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal National Securities



82









 




Exchange
(other than the Nasdaq Stock Market) on which such Limited Partner Interests are listed or admitted
to trading or, if such Limited Partner Interests of such class are not listed or admitted to
trading on any National Securities Exchange (other than the Nasdaq Stock Market), the last quoted
price on such day or, if not so quoted, the average of the high bid and low asked prices on such
day in the over-the-counter market, as reported by the Nasdaq Stock Market or such other system
then in use, or, if on any such day such Limited Partner Interests of such class are not quoted by
any such organization, the average of the closing bid and asked prices on such day as furnished by
a professional market maker making a market in such Limited Partner Interests of such class
selected by the General Partner, or if on any such day no market maker is making a market in such
Limited Partner Interests of such class, the fair value of such Limited Partner Interests on such
day as determined by the General Partner; and (iii) “Trading Day” means a day on which the
principal National Securities Exchange on which such Limited Partner Interests of any class are
listed or admitted for trading is open for the transaction of business or, if Limited Partner
Interests of a class are not listed or admitted for trading on any National Securities Exchange, a
day on which banking institutions in New York City generally are open.




     (b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to
exercise the right to purchase Limited Partner Interests granted pursuant to Section 15.1(a), the
General Partner shall deliver to the Transfer Agent notice of such election to purchase (the
“Notice of Election to Purchase”) and shall cause the Transfer Agent to mail a copy of such Notice
of Election to Purchase to the Record Holders of Limited Partner Interests of such class (as of a
Record Date selected by the General Partner) at least 10, but not more than 60, days prior to the
Purchase Date. Such Notice of Election to Purchase shall also be published for a period of at least
three consecutive days in at least two daily newspapers of general circulation printed in the
English language and published in the Borough of Manhattan, New York. The Notice of Election to
Purchase shall specify the Purchase Date and the price (determined in accordance with Section
15.1(a)) at which Limited Partner Interests will be purchased and state that the General Partner, its Affiliate or the Partnership, as the case
may be, elects to purchase such Limited Partner Interests, upon surrender of Certificates
representing such Limited Partner Interests in exchange for payment, at such office or offices of
the Transfer Agent as the Transfer Agent may specify, or as may be required by any National
Securities Exchange on which such Limited Partner Interests are listed. Any such Notice of Election
to Purchase mailed to a Record Holder of Limited Partner Interests at his address as reflected in
the records of the Transfer Agent shall be conclusively presumed to have been given regardless of
whether the owner receives such notice. On or prior to the Purchase Date, the General Partner, its
Affiliate or the Partnership, as the case may be, shall deposit with the Transfer Agent cash in an
amount sufficient to pay the aggregate purchase price of all of such Limited Partner Interests to
be purchased in accordance with this Section 15.1. If the Notice of Election to Purchase shall have
been duly given as aforesaid at least 10 days prior to the Purchase Date, and if on or prior to the
Purchase Date the deposit described in the preceding sentence has been made for the benefit of the
holders of Limited Partner Interests subject to purchase as provided herein, then from and after
the Purchase Date, notwithstanding that any Certificate shall not have been surrendered for
purchase, all rights of the holders of such Limited Partner Interests (including any rights
pursuant to Article IV, Article V, Article VI, and Article XII) shall thereupon cease, except the
right to receive the purchase price (determined in accordance with Section 15.1(a)) for Limited
Partner Interests therefor, without interest, upon surrender to the Transfer Agent of the
Certificates



83









 




representing such Limited Partner Interests, and such Limited Partner Interests shall
thereupon be deemed to be transferred to the General Partner, its Affiliate or the Partnership, as
the case may be, on the record books of the Transfer Agent and the Partnership, and the General
Partner or any Affiliate of the General Partner, or the Partnership, as the case may be, shall be
deemed to be the owner of all such Limited Partner Interests from and after the Purchase Date and
shall have all rights as the owner of such Limited Partner Interests (including all rights as owner
of such Limited Partner Interests pursuant to Article IV, Article V, Article VI and Article XII).




     (c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner
Interest subject to purchase as provided in this Section 15.1 may surrender his Certificate
evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the
amount described in Section 15.1(a), therefor, without interest thereon.



ARTICLE XVI

GENERAL PROVISIONS




     Section 16.1 Addresses and Notices. Any notice, demand, request, report or proxy
materials required or permitted to be given or made to a Partner 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 the Partner at the address
described below. Any notice, payment or report to be given or made to a Partner hereunder shall be
deemed conclusively to have been given or made, and the obligation to give such notice or report or
to make such payment shall be deemed conclusively to have been fully satisfied, upon sending of
such notice, payment or report to the Record Holder of such Partnership Securities at his address
as shown on the records of the Transfer Agent or as otherwise shown on the records of the
Partnership, regardless of any claim of any Person who may have an interest in such Partnership
Securities by reason of any assignment or otherwise. An affidavit or certificate of making of any
notice, payment or report in accordance with the provisions of this Section 16.1 executed by the
General Partner, the Transfer Agent or the mailing organization shall be prima facie evidence of
the giving or making of such notice, payment or report. If any notice, payment or report addressed
to a Record Holder at the address of such Record Holder appearing on the books and records of the
Transfer Agent or the Partnership is returned by the United States Postal Service marked to
indicate that the United States Postal Service is unable to deliver it, such notice, payment or
report and any subsequent notices, payments and reports shall be deemed to have been duly given or
made without further mailing (until such time as such Record Holder or another Person notifies the
Transfer Agent or the Partnership of a change in his address) if they are available for the Partner
at the principal office of the Partnership for a period of one year from the date of the giving or
making of such notice, payment or report to the other Partners. Any notice to the Partnership shall
be deemed given if received by the General Partner at the principal office of the Partnership
designated pursuant to Section 2.3. The General Partner may rely and shall be protected in relying
on any notice or other document from a Partner or other Person if believed by it to be genuine.



     Section 16.2 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.



84









 





     Section 16.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.



     Section 16.4 Integration. This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.



     Section 16.5 Creditors. None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership.



     Section 16.6 Waiver. 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
consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant,
duty, agreement or condition.



     Section 16.7 Third-Party Beneficiaries. Each Partner agrees that any Indemnitee shall
be entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with
respect to those provisions of this Agreement affording a right, benefit or privilege to such
Indemnitee and that any Holder shall be entitled to assert rights and remedies hereunder as a
third-party beneficiary hereto with respect to those provisions of this Agreement affording a
right, benefit or privilege to such Holder.



     Section 16.8 Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute an agreement binding on all the parties hereto, 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 or, in the case of a
Person acquiring a Limited Partner Interest, pursuant to Section 10.1(a) without execution hereof.



     Section 16.9 Applicable Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the principles of conflicts of
law.



     Section 16.10 Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein shall not be affected thereby.



     Section 16.11 Consent of Partners. Each Partner hereby expressly consents and agrees
that, whenever in this Agreement it is specified that an action may be taken upon the affirmative
vote or consent of less than all of the Partners, such action may be so taken upon the concurrence
of less than all of the Partners and each Partner shall be bound by the results of such action.



     Section 16.12 Facsimile Signatures. The use of facsimile signatures affixed in the
name and on behalf of the transfer agent and registrar of the Partnership on certificates
representing Common Units is expressly permitted by this Agreement.



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[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]




86









 








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



	 	 	 	 	 
	 	GENERAL PARTNER:



EAGLE ROCK ENERGY GP, L.P.





By:  EAGLE ROCK ENERGY G&P, LLC

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	LIMITED PARTNERS:



All Limited Partners now and hereafter

Admitted as Limited Partners of the

Partnership, pursuant to powers of attorney

Now and hereafter executed in favor of, and

Granted and delivered to the General

Partner or without execution hereof

Pursuant to Section 10.1(a) hereof.





EAGLE ROCK HOLDINGS, L.P.




By:  EAGLE ROCK GP, LLC

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Signature Page to

Second Amended and Restated Agreement of Limited Partnership

















 





Exhibit C




Form of Contribution Agreement




 









 




Exhibit C



CONTRIBUTION AGREEMENT




     This Contribution Agreement (this “Agreement”) is made as of [ ], 2010, by and among
Eagle Rock Energy GP, L.P., a Delaware limited partnership (“Eagle Rock GP”) and Eagle Rock
Holdings, L.P., a Texas limited liability partnership (“ERH” and, together with Eagle Rock GP, the
“Contributors”), and Eagle Rock Energy Partners, L.P., a Delaware limited partnership (the
“Partnership”). Capitalized terms used and not defined in this Agreement shall have the meanings
ascribed to them in the SPGTA (herein defined).



     WHEREAS, in accordance with that certain Securities Purchase and Global Transactions Agreement
dated as of December 21, 2009 (the “SPGTA”) by and among the Contributors, the Partnership, Natural
Gas Partners VII, L.P., a Delaware limited partnership, Natural Gas Partners VIII, L.P., a Delaware
limited partnership, Montierra Minerals & Production, L.P., a Texas limited partnership, Montierra
Management LLC, a Texas limited liability company, and Eagle Rock Energy G&P, LLC, a Delaware
limited liability company, Contributors desire to contribute the assets described herein to the
Partnership.



     NOW, THEREFORE, for and 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 confirmed and acknowledged), the parties hereto hereby stipulate and agree as
follows:



     1. Contribution. Contributors hereby irrevocably contribute, assign and transfer to
the Partnership and the Partnership hereby irrevocably takes and accepts such contribution,
assignment and transfer, on the terms herein provided, all of the following:




	 	•	 	20,691,465 subordinated units representing limited partner interests in the
Partnership; and
	 
	 	•	 	all of the Incentive Distribution Rights (as defined in the Partnership’s
First Amended and Restated Agreement of Limited Partnership).





     2. Entire Agreement. The rights and obligations created by this Agreement are separate
and independent from any rights and obligations created by any other agreements between, including
or relating to the parties hereto (or any of their affiliates), including the SPGTA. Accordingly,
none of the representations, warranties, covenants or indemnities included in the SPGTA or any
other agreements between, including or relating to any party hereto (or any of their affiliates)
shall be merged into this Agreement or otherwise restrict or limit the effect of this Agreement,
but each shall survive as provided in each such agreement.



     3. Miscellaneous. All amendments, supplements and modifications to this Agreement
shall be in writing and signed by each of the parties hereto. This Agreement may be executed in
multiple counterparts, each of which, when executed, shall be deemed an original, and all of which
shall constitute but one and the same instrument. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and assigns. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND



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ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES.



[The remainder of this page is intentionally left blank.]




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



	 	 	 	 	 
	 	EAGLE ROCK ENERGY GP, L.P.




By its general partner,

Eagle Rock Energy G&P, LLC

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	EAGLE ROCK HOLDINGS, L.P.



By its general partner,

Eagle Rock GP, LLC

 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	EAGLE ROCK ENERGY PARTNERS, L.P.




By its general partner,

Eagle Rock Energy GP, L.P.




By its general partner,

Eagle Rock Energy G&P, LLC
 	 
	 

	 

	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 











 





Exhibit D




Form of Assignment and Assumption Agreement




 









 





Exhibit D




ASSIGNMENT AND ASSUMPTION AGREEMENT




     This Assignment and Assumption Agreement dated as of [ ], 20___is by and between Eagle
Rock Holdings, L.P., a Texas limited partnership (“Assignor”) and Eagle Rock Energy Partners, L.P.,
a Delaware limited partnership (“Assignee”) (the “Assignment”). Capitalized terms used and not
defined in this Assignment shall have the meanings ascribed to them in the SPGTA (herein defined).



     WHEREAS, Assignor owns (i) all of the issued and outstanding limited liability company
interests (the “G&P LLC Interest”) in Eagle Rock Energy G&P, LLC (“G&P LLC”) and (ii) all of the issued and outstanding limited partner interests (the “ERGP LP
Interest” and together with the G&P LLC Interest, the “General Partner Interests”) in Eagle Rock
Energy GP, L.P. (“Eagle Rock GP”);



     WHEREAS, in accordance with that certain Securities Purchase and Global Transactions Agreement
dated as of December 21, 2009 (the “SPGTA”) by and among Assignee, Assignor, Eagle Rock Energy GP,
L.P., a Delaware limited partnership, Natural Gas Partners VII, L.P., a Delaware limited
partnership, Natural Gas Partners VIII, L.P., a Delaware limited partnership, Montierra Minerals &
Production, L.P., a Texas limited partnership, Montierra Management LLC, a Texas limited liability
company, and Eagle Rock Energy G&P, LLC, a Delaware limited liability company, Assignor desires to
assign and transfer the General Partner Interests to Assignee, and Assignee desires to acquire the
General Partner Interests and assume the Assumed Obligations (defined herein), subject to the terms
set forth below;



     WHEREAS, Assignor desires to assign the G&P LLC Interest to Assignee and cease to be a member
of G&P LLC, upon the terms and subject to the conditions set forth in this Assignment and the
SPGTA; and



     WHEREAS, simultaneous with the assignment by Assignor of the G&P LLC Interest to Assignee,
Assignee desires to be admitted to G&P LLC as the sole member of G&P LLC.



     NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements contained herein and for other good and valuable consideration (the receipt and
sufficiency of which are hereby confirmed and acknowledged), the parties hereto hereby stipulate
and agree as follows:


1. Assignment. On and subject to the terms herein provided, Assignor hereby irrevocably
assigns and transfers all of its right, title, and interest in and to the General Partner Interests
to Assignee, and Assignee hereby irrevocably takes and accepts such assignment and transfer of the
General Partner Interests.



2. Assumption. Assignee hereby assumes and agrees to fully and timely pay, perform,
and discharge in accordance with their terms, any and all duties, liabilities and obligations,
whether vested, absolute or contingent, known or unknown, asserted or unasserted, accrued or
unaccrued, liquidated or unliquidated, due or to become due, and whether contractual, statutory or
otherwise, arising out of or in connection with the ownership of the General Partner Interests
by Assignee from the date hereof (the “Assumed Obligations”).




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3. Entire Agreement. The rights and obligations created by this Assignment are separate and
independent from any rights and obligations created by any other agreements between, including or
relating to the parties hereto (or any of their affiliates), including the SPGTA. Accordingly, none
of the representations, warranties, covenants or indemnities included in the SPGTA or any other
agreements between, including or relating to any party hereto (or any of their affiliates) shall be
merged into this Assignment or otherwise restrict or limit the effect of this Assignment, but each
shall survive as provided in each such agreement.



4. Miscellaneous. All amendments, supplements and modifications to this Assignment shall be
in writing and signed by each of the parties hereto. This Assignment may be executed in multiple
counterparts, each of which, when executed, shall be deemed an original, and all of which shall
constitute but one and the same instrument. This Assignment shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and assigns. THIS ASSIGNMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.




[The remainder of this page is intentionally left blank.]




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     IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date first written
above.



	 	 	 	 	 
	 	EAGLE ROCK HOLDINGS, L.P.




By its general partner,

Eagle Rock GP, LLC

 	 
	 

	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	EAGLE ROCK ENERGY PARTNERS, L.P.




By its general partner,

Eagle Rock Energy GP, L.P.




By its general partner,

Eagle Rock Energy G&P, LLC

 	 
	 

	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 


STATE OF
TEXAS            §



COUNTY OF                      §





     Personally appeared before me, the undersigned authority in and for the said county and state,
on this                      day of                                         , 2010, within my jurisdiction, the within named
                                                            , who acknowledged that he is      
                                    of Eagle Rock GP, LLC, a
limited liability company organized under the laws of                     , as general partner of Eagle Rock
Holdings, L.P, a Texas limited partnership, and that for and on behalf of and as the act and deed
of said limited liability company and as its act and deed as such partnership acting for and on
behalf of said limited liability company, he executed the above and foregoing instrument in the
capacities stated after first having been duly authorized by said limited liability company so to
do.



	 	 	 	 	 
	 

	 

	 	 
	 

	 	Notary Public in and for the State of Texas



	 	 	My commission expires: 	 	 






     (SEAL)


STATE OF TEXAS            §



COUNTY OF                      §




     Personally appeared before me, the undersigned authority in and for the said county and state,
on this                      day of                     , 2010, within my jurisdiction, the within named
                                                            , who acknowledged that he is             
                
             of Eagle Rock Energy G&P
LLC, a limited liability company organized under the laws of Delaware, as general partner of Eagle
Rock Energy GP, L.P., a Delaware limited partnership which is the general partner of Eagle Rock
Energy Partners, L.P., a Delaware limited partnership, and that for and on behalf of and as the act
and deed of said limited liability company and as its act and deed as such partnership acting for
and on behalf of said limited liability company, he executed the above and foregoing instrument in
the capacities stated after first having been duly authorized by said limited liability company so
to do.



	 	 	 	 	 
	 

	 

	 	 
	 

	 	Notary Public in and for the State of Texas



	 	 	My commission expires: 	 	 






     (SEAL)




 












 





Exhibit E




Form and Terms of Warrant





 












 




Exhibit E



No. [                    ] [ ___] Warrants


CUSIP No. [                    ]




Warrant Certificate




EAGLE ROCK ENERGY PARTNERS, L.P.




     This Warrant Certificate certifies that [                    ], or registered assigns, is the registered
holder of Warrants (the “Warrants”) expiring [                    ], 20121 (the “Expiration Date”)
to purchase common units representing limited partner interests (the “Common Units”) of Eagle Rock
Energy Partners, L.P., a Delaware limited partnership (the “Partnership”). Each Warrant entitles
the registered holder upon exercise at any time from 9:00 a.m. until 11:59 New York City Time on
each March 15, May 15, August 15 and November 15 (the “Exercise Dates”) prior to the Expiration
Date, to receive from the Partnership one fully paid and nonassessable Common Unit (the “Warrant
Unit”) at the initial exercise price (the “Exercise Price”) of $6.00 per Warrant Unit payable upon
surrender of this Warrant Certificate, with the form of election to purchase set forth herein
properly completed and executed, together with payment of the Exercise Price (or through “cashless
exercise” if permitted by the Warrant Agreement) at the office or agency of [                    ], as warrant
agent (the “Warrant Agent”), subject to the conditions set forth herein and in the Warrant
Agreement between the Partnership and the Warrant Agent. The Exercise Price and number of Warrant
Units issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.2



     No Warrant may be exercised after 5:00 p.m., New York City Time on the Expiration Date, and to
the extent not exercised by such time such Warrants shall become void.



     No fraction of a Common Unit will be issued upon any exercise of a Warrant. If the holder of
a Warrant would be entitled to receive a fraction of a Common Unit upon any exercise of a Warrant,
the Partnership shall, upon such exercise, round up or down to the nearest whole number the number
of Common Units to be issued to such holder.



     Upon any exercise of the Warrant for less than the total number of Warrant Units provided for
herein, there shall be issued to the registered holder or the registered holder’s assignee a new
Warrant Certificate covering the number of Warrant Units for which the Warrant has not been
exercised.



     Warrant Certificates, when surrendered at the office or agency of the Warrant Agent by the
registered holder hereof in person or by attorney duly authorized in writing, may be exchanged in
the manner and subject to the limitations provided in the Warrant Agreement, but without payment of
any service charge, for another Warrant Certificate or





 




			
	1	 	The Expiration Date shall be two years following the
completion of the Rights Offering.
	 
	2	 	See the attached summary terms of the Warrant
Agreement.




 









 










Warrant Certificates of like tenor and evidencing in the aggregate a like number of
Warrants.3




     Upon due presentment for registration of transfer of the Warrant Certificate at the office or
agency of the Warrant Agent, a new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange
for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without
charge except for any applicable tax or governmental charge.4



     The Partnership and the Warrant Agent may deem and treat the registered holder as the absolute
owner of this Warrant Certificate (notwithstanding any notification of ownership or other writing
hereon made by anyone) for the purpose of any exercise hereof, of any distribution to the
registered holder, and for all other purposes, and neither the Partnership nor the Warrant Agent
shall be affected by any notice to the contrary.



     This Warrant Certificate does not entitle the registered holder to any of the rights of a
unitholder of the Partnership.



     This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.



     This Warrant Certificate shall be governed by and construed in accordance with the internal
laws of the State of New York.





 




			
	3	 	See the attached summary terms of the Warrant
Agreement.
	 
	4	 	See the attached summary terms of the Warrant
Agreement.




 









 











     IN WITNESS WHEREOF, the Partnership has caused this Warrant Certificate to be signed below.


Dated:




	 	 	 	 	 
	 	EAGLE ROCK ENERGY PARTNERS, L.P.



By its general partner,

      Eagle Rock Energy GP, L.P.



By its general partner,

      Eagle Rock Energy G&P, LLC

 	 
	 

	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 


Countersigned:

Dated:     , 20



as Warrant Agent




	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Authorized Signatory 	 	 
	 	 	 	 



 









 







	 	 	 	 	 



[Form of Election to Purchase]




(To Be Executed Upon Exercise Of Warrant)





     The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant
Certificate, to receive                      Common Units and herewith tenders payment in full for such
Common Units to the order of EAGLE ROCK ENERGY PARTNERS, L.P., in the amount of $                     in
accordance with the terms hereof.



     The undersigned requests that a certificate for such Common Units be registered in the name of
                                        , whose address is                                   
       and that such Common Units be delivered to
                    , whose address is                                         . If said number of Common Units is less
than all of the Common Units purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such Common Units be registered in the name of
                                        , whose address is                                
         , and that such Warrant Certificate be
delivered to
                                        
whose address is __________________________
..



	 	 	 
	 
	 	 
	 

	 

	 	 
	 

	 	Signature
	 
	 	 
	Date:
	 	 
	 
	 	 
	 

	 	 
	 

	 	Signature






 









 







SUMMARY OF CERTAIN TERMS OF WARRANT AGREEMENT



The Warrant Agreement shall contain the following terms, together with such other terms reasonably
agreed to by the Partnership and the warrant agent:



1. Exercise of Warrants.




     Warrants may be exercised at any time from 9:00 a.m. until 5:00 p.m. New York City Time on
each of the Exercise Dates prior to the Expiration Date. In order to exercise all or any of the
Warrants represented by this Warrant Certificate, the holder must deliver this Warrant Certificate
and the form of election to purchase duly filled in and signed, which signature shall be medallion
guaranteed by an institution which is a member of a Securities Transfer Association recognized
signature guarantee program, and upon payment to the Warrant Agent for the account of the
Partnership of the Exercise Price, as adjusted as provided herein, for the number of Warrant Units
in respect of which such Warrants are then exercised.


2. Certain Adjustments.




     The Exercise Price and number of Warrant Units issuable upon exercise of the Warrants will be
subject to adjustment from time to time.



     Unit Distributions and Splits. If the Partnership, at any time while the Warrants are
outstanding, (i) makes a distribution on its Common Units that is payable in Common Units, (ii)
subdivides outstanding Common Units into a larger number, or (iii) combines outstanding Common
Units into a smaller number, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of Common Units outstanding immediately before
such event and of which the denominator shall be the number of Common Units outstanding immediately
after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of unitholders entitled to
receive such distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such subdivision or combination.
Simultaneously with any adjustment to the Exercise Price pursuant to this paragraph, the number of
Warrant Units that may be purchased upon exercise of a Warrant shall be increased or decreased
proportionately, as applicable, so that after such adjustment the aggregate Exercise Price payable
hereunder for the Warrant Units shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment.



     Fundamental Transaction. If, at any time while the Warrants are outstanding, (A) the
Partnership effects any merger or consolidation of the Partnership with or into (whether or not the
Partnership is the surviving entity) another person or (B) the Partnership effects any sale,
assignment, transfer, conveyance or other disposition of all or substantially all of its assets in
one or a series of related transactions, in each of cases (A) and (B) above, pursuant to which the
Common Units are effectively converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of Common Units described above) (in any
such case, a “Fundamental Transaction”), then the holder shall have the right thereafter to
receive, upon exercise of



 









 








a Warrant, the same amount and kind of securities, cash or property as it would have been
entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant Units then issuable upon
exercise in full of this Warrant Certificate.



     Calculations. All calculations shall be made to the nearest cent. If a distribution,
subdivision or combination of Common Units would otherwise result in the issuance of fractional
Warrant Units, each fractional Warrant Unit shall be rounded up or down to the nearest whole
Warrant Unit.



     Notice of Adjustments. Upon the occurrence of each adjustment, the Partnership at its expense
will promptly compute such adjustment in accordance with the terms of this Warrant Certificate and
prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise
Price and adjusted number or type of Warrant Units or other securities issuable upon exercise of
the Warrants (as applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. The Partnership will promptly
deliver a copy of each such certificate to the Warrant Agent.


3. Global Certificates; Exchanges.




     The Warrant Agreement shall provide for a global warrant certificate to be held by the
Depositary Trust Company (or its designee). The global certificate shall be subject to customary
exchange, transfer and registration provisions.


4. Amendments and Modifications.




     The Partnership may, without the consent of the holders, by supplemental agreement or
otherwise, make any changes or corrections in the Warrant Certificate or the Warrant Agreement that
are required to cure any ambiguity or to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein; provided that such changes or
corrections shall not adversely affect the interests of holders of then outstanding Warrants in any
material respect. The Warrant Certificate and the Warrant Agreement may also be amended or waived
with the consent of the Partnership and the holder. Further, the Partnership may, with the
consent, in writing or at a meeting, of the holders of the then outstanding Warrants exercisable
for a majority or greater of the Common Units issuable under such Warrants at that time, amend in
any way, by supplemental agreement or otherwise, the Warrant Certificate and/or all of the
outstanding Warrants; provided, however, that (i) no such amendment by its express terms shall
adversely affect any holder differently than it affects all other holders, unless such adversely
affected holder consents thereto, and (ii) no such amendment concerning the number of Warrant Units
or Exercise Price shall be made unless any holder who will be affected by such amendment consents
thereto.