Document:

Exhibit 10.1 

Execution Version 

 

 

THIRD AMENDMENT 

TO 

AMENDED AND RESTATED CREDIT AGREEMENT 

AMONG 

REX ENERGY CORPORATION, 

as Borrower, 

THE GUARANTORS, 

KEYBANK NATIONAL ASSOCIATION, 

as Administrative Agent, 

ROYAL BANK OF CANADA, 

as Syndication Agent, 

SUNTRUST BANK, 

as Documentation Agent, 

KEYBANK NATIONAL ASSOCIATION, 

ROYAL BANK OF CANADA, 

AND 

SUNTRUST BANK, 

as Joint Lead Arrangers and Joint Bookrunners, 

AND 

THE LENDERS SIGNATORY HERETO 

DATED AS OF JULY 11, 2014 

 

 

 

 

 

 

 

THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT 

This THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Third Amendment”) dated as of July 11, 2014 is among REX ENERGY CORPORATION, a corporation formed under the laws of the State of Delaware (the “Borrower”); each of the undersigned guarantors (the “Guarantors”, and together with the Borrower, the “Obligors”); KEYBANK NATIONAL ASSOCIATION, as administrative agent for the Lenders (in such capacity, together with its successors, the “Administrative Agent”); and the Lenders signatory hereto. 

RECITALS 

A. The Borrower, the Administrative Agent and the Lenders are parties to that certain Amended and Restated Credit Agreement dated as of March 27, 2013 (as amended by the First Amendment to Amended and Restated Credit Agreement dated January 14, 2013 and the Second Amendment to Amended and Restated Credit Agreement dated as of March 26, 2014, the “Credit Agreement”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower. 

B. The Borrower and Guarantors are parties to that certain Amended and Restated Guaranty and Collateral Agreement dated as of March 27, 2013 made by each of the Grantors (as defined therein) in favor of the Administrative Agent (the “Guaranty”). 

C. KeyBank, in its capacity as Administrative Agent (in such capacity, the “Existing Agent”) desires to resign as Administrative Agent under the Credit Agreement, the other Loan Documents and any other documents referred to in the Credit Agreement as to which the Existing Agent is acting as an administrative agent thereunder; 

D. The Lenders and the Borrower, by entering into this Third Amendment, desire to appoint Royal Bank of Canada (“RBC”) as successor Administrative Agent (in such capacity, the “Successor Agent”) under the Credit Agreement and the other Loan Documents and the Successor Agent desires to accept such appointment; 

E. KeyBank serves as the Issuing Bank (the “Existing Issuing Bank”) under the Credit Agreement and desires to resign as the Issuing Bank thereunder; 

F. The Borrower, the Successor Agent and the Existing Issuing Bank, desire to appoint RBC as successor Issuing Bank (in such capacity, the “Successor Issuing Bank”) under the Credit Agreement and the Successor Issuing Bank desires to accept such appointment; and 

G. The Borrower, the Administrative Agent and the Lenders have agreed to amend certain provisions of the Credit Agreement as more fully set forth herein. 

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

Section 1. Defined Terms. Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Third Amendment, shall have the meaning ascribed such term in the Credit Agreement. Unless otherwise indicated, all article and section references in this Third Amendment refer to articles and sections of the Credit Agreement. 

Section 2. Amendment to Cover. The cover of the Credit Agreement is hereby amended as follows: 

2.1 the phrase “KeyBank National Association, as Administrative Agent” is hereby deleted and replaced with the phrase “Royal Bank of Canada, as Administrative Agent”. 

2.2 the phrase “Royal Bank of Canada, as Syndication Agent” is hereby deleted and replaced with the phrase “KeyBank National Association, as Syndication Agent”. 

2.3 the phrase “KeyBank National Association, Royal Bank of Canada, and SunTrust Bank” is hereby deleted and replaced with the phrase “RBC Capital Markets, KeyBank National Association and SunTrust Bank”. 

Section 3. Amendment to Section 1.02 – Certain Defined Terms. 

3.1 The following definitions are hereby amended and restated in their entirety to read as follows: 

“Arrangers” means, collectively, RBC Capital Markets, KeyBank National Association, and SunTrust Bank, in their capacities as the joint lead arrangers and joint bookrunners hereunder. 

Page 1

 

“Issuing Bank” means RBC, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.08(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. 

“LIBO Rate” means, for any Interest Period with respect to a Eurodollar Borrowing, the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time), on the date that is two Business Days prior to the commencement of such Interest Period by reference to the rate set by ICE Benchmark Administration for deposits in dollars (as set forth by any service selected by the Administrative Agent that has been nominated by ICE Benchmark Administration as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided, however, that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period. 

 “Prime Rate” means the rate of interest per annum publicly announced from time to time by RBC as its prime rate in effect at its principal office in Toronto, Canada; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. Such rate is set by RBC as a general reference rate of interest, taking into account such factors as RBC may deem appropriate; it being understood that many of RBC’s commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that RBC may make various commercial or other loans at rates of interest having no relationship to such rate. 

3.2 The definition of “Alternate Base Rate” is hereby amended by deleting the phrase “of $5,000,000” therefrom. 

3.3 The following definition is hereby added to Section 1.01 of the Credit Agreement where alphabetically appropriate to read as follows: 

“RBC” means Royal Bank of Canada. 

Section 4. Other Amendments to the Credit Agreement. 

4.1 Amendments to Section 2.03. Section 2.03 is hereby amended as follows: 

(a) the phrase “by telephone” is deleted therefrom. 

(b) the sentence “Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in substantially the form of Exhibit B and signed by the Borrower” is hereby deleted and replaced with the following sentence “Each such Borrowing Request shall be irrevocable.” 

(c) the phrase “Each such telephonic and written Borrowing Request shall specify the following information:” is hereby deleted and replaced with the following phrase “Each such written Borrowing Request shall be in substantially the form of Exhibit B and signed by the Borrower and shall specify the following information:” 

4.2 Amendments to Section 2.04(b). Section 2.04(b) is hereby amended as follows: 

(a) the phrase by “by telephone,” is deleted therefrom. 

(b) the sentence “Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in substantially the form of Exhibit C and signed by the Borrower.” is hereby deleted and replaced with the following sentence “Each such written Interest Election Request shall be irrevocable and shall be in substantially the form of Exhibit C and signed by the Borrower. 

4.3 Amendment to Section 2.04(c). Section 2.04(c) is hereby amended by deleting the phrase “telephonic,” therefrom. 

4.4 Amendment to Section 2.08(b). Section 2.08(b) is hereby amended by deleting the sentence “If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit.” therefrom and replacing such sentence with “The Borrower shall submit each such notice on a form reasonably satisfactory to the Issuing Bank.” 

4.5 Amendment to Section 3.04(b). Section 3.04(b) is hereby amended by deleting the phrase “by telephone (confirmed by telecopy)” therefrom. 

4.6 Amendment to Section 9.02(i). Section 9.02(i) is hereby amended by deleting the phrase “, the principal amount of which does not exceed $500,000,000 in the aggregate at any one time outstanding” therefrom. 

Page 2

 

4.7 Amendments to Section 12.01(a). Section 12.01(a) is hereby amended by amending and restating sub-sections 12.01(a)(ii), 12.01(a)(iii) and 12.01(a)(iv) thereof in their entirety to read as follows: 

(ii) if to the Administrative Agent or the Issuing Bank, to it at 20 King Street West, 4th Floor, Toronto, Ontario M5H1C4, Attention: Manager, Agency Services Group (Telecopy No. 416-842-4023); email ann.hurley@rbccm.com; and 

(iii) the Administrative Agent will forward all relevant notices from the Borrower to the Lenders. 

Section 5. Resignation of Existing Agent, Appointment and Acceptance by Successor Agent; Resignation of Existing Issuing Bank and Appointment and Acceptance by Successor Issuing Bank; Further Assurances; Waiver of Notices; Return of Payments. 

5.1 Resignation, Consent and Appointment. 

(a) As of the Third Amendment Effective Date (as defined below) (i) the Existing Agent hereby resigns as the Administrative Agent as provided under the Credit Agreement and shall have no further obligations in such capacity under the Credit Agreement and the other Loan Documents, except to the extent of any obligation expressly stated in the Credit Agreement or other Loan Documents as surviving any such resignation; (ii) the Lenders appoint RBC as successor Administrative Agent under the Credit Agreement and the other Loan Documents, and the Borrower hereby consents to such appointment; (iii) RBC hereby accepts its appointment as Successor Agent under the Credit Agreement and the other Loan Documents; and (iv) the parties hereto authorize each of the Existing Agent and the Successor Agent to prepare, enter into, execute, record and/or file any and all notices, certificates, instruments, Uniform Commercial Code financing statements and/or other documents or agreements (including, without limitation, filings in respect of any collateral, and assignments, amendments or supplements to any UCC financing statements, mortgages, deeds of trust, security agreements, pledge agreements, intellectual property security agreements, certificates of title, stock powers, account control agreements, intercreditor agreements, or other Loan Documents), as either the Existing Agent or the Successor Agent deems reasonably necessary or desirable to effect or evidence (of public record or otherwise) the transactions herein contemplated, including but not limited to the resignation of the Existing Agent and the appointment of the Successor Agent and any amendments to the Credit Agreement and Loan Documents set forth herein, and to maintain the validity, perfection, priority, of, or assign to the Successor Agent, any and all liens and security interests in respect of any and all collateral, and each of the Borrower, the Existing Agent and the Successor Agent hereby agrees to execute and deliver (and the Borrower agrees to cause each applicable guarantor or grantor of collateral to execute and deliver) any documentation reasonably necessary or reasonably requested by the Existing Agent or the Successor Agent to evidence such resignation and appointment or such amendments or to maintain the validity, perfection or priority of, or to assign to the Successor Agent, any such liens or security interests, or to maintain the rights, powers and privileges afforded to the Administrative Agent under any of the Loan Documents. 

(b) As of the Third Amendment Effective Date (i) KeyBank hereby resigns as an Issuing Bank as provided under the Credit Agreement and shall have no further obligations in such capacity under the Credit Agreement and the other Loan Documents, except (A) to the extent of any obligation expressly stated in the Credit Agreement or other Loan Documents as surviving any such resignation and (B) with respect to any Letter of Credit issued by it that is outstanding on the Third Amendment Effective Date (as set forth on Schedule 1 hereto, collectively, the “Residual Letters of Credit”), which until such Residual Letter of Credit is replaced, terminated or otherwise expired shall remain the obligation of the Existing Issuing Bank in accordance with the terms of the Credit Agreement; (ii) the Borrower, the Successor Agent and the Existing Issuing Bank consent to the appointment of RBC as a successor Issuing Bank under the Credit Agreement; and (iii) RBC hereby accepts its appointment as Successor Issuing Bank under the Credit Agreement. 

(c) The parties hereto hereby confirm that the Successor Agent succeeds to the rights and obligations of the Administrative Agent under the Credit Agreement and the other Loan Documents and becomes vested with all of the rights, powers, privileges and duties of the Administrative Agent under the Credit Agreement and the other Loan Documents, and the Existing Agent is discharged from all of its duties and obligations as the Administrative Agent under the Credit Agreement and the other Loan Documents (except to the extent of any obligation expressly stated in the Credit Agreement or other Loan Document as surviving any such resignation), in each case as of the Third Amendment Effective Date. 

(d) The parties hereto hereby confirm that the Successor Issuing Bank succeeds to the rights and obligations of the Existing Issuing Bank under the Credit Agreement and becomes vested with all of the rights, powers, privileges and duties of the Existing Issuing Bank under the Credit Agreement, and the Existing Issuing Bank is discharged from all of its duties and obligations as an Issuing Bank under the Credit Agreement and the other Loan Documents (except (i) to the extent of any obligation expressly stated in the Credit Agreement or other Loan Document as surviving any such resignation and (ii) with respect to any Residual Letter of Credit, which until such Residual Letter of Credit is replaced, terminated or otherwise expired shall remain the obligation of the Existing Issuing Bank in accordance with the terms of the Credit Agreement), in each case as of the Third Amendment Effective Date. 

(e) The parties hereto hereby confirm that, as of the Third Amendment Effective Date, all of the protective provisions, indemnities, and expense obligations under the Credit Agreement and the other Loan Documents continue in effect for the benefit of the Existing Agent and its Related Parties in respect of any actions taken or omitted to be taken by any of them while the Existing Agent was acting as Administrative Agent or thereafter pursuant to or in furtherance of the provisions of this Section 5, and inure to the benefit of the Existing Agent. The parties hereto agree that the Successor Agent shall have no liability for any actions taken or 

Page 3

 

omitted to be taken by the Existing Agent while it served as the Administrative Agent under the Credit Agreement and the other Loan Documents or for any other event or action related to the Credit Agreement that occurred prior to the effectiveness of this Third Amendment. The parties hereto agree that the Existing Agent shall have no liability for any actions taken or omitted to be taken by the Successor Agent as the Administrative Agent under the Credit Agreement and the other Loan Documents, except to the extent any such liability is determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of, or violation of law by, the Existing Agent. 

(f) The parties hereto hereby confirm that, as of the Third Amendment Effective Date, all of the protective provisions, indemnities, and expense obligations under the Credit Agreement and the other Loan Documents continue in effect for the benefit of the Existing Issuing Bank and its Related Parties in respect of any actions taken or omitted to be taken by any of them while the Existing Issuing Bank was acting as an Issuing Bank (including following the Third Amendment Effective Date until such time as no Residual Letters of Credit remain issued and outstanding) and inure to the benefit of the Existing Issuing Bank. The parties hereto agree that the Successor Issuing Bank shall have no liability for any actions taken or omitted to be taken by the Existing Issuing Bank while the Existing Issuing Bank served as an Issuing Bank under the Credit Agreement and the other Loan Documents or for any other event or action related to the Credit Agreement that occurred prior to the effectiveness of this Third Amendment. The parties hereto agree that the Existing Issuing Bank shall have no liability for any actions taken or omitted to be taken by the Successor Issuing Bank as an Issuing Bank under the Credit Agreement and the other Loan Documents, except to the extent any such liability is determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of, or violation of law by, the Existing Issuing Bank. 

(g) The Existing Agent hereby assigns to the Successor Agent, effective on and after the Third Amendment Effective Date, any powers of attorney, liens, or security interests and all other rights and interests granted to the Existing Agent, for the ratable benefit of the Lenders and any other secured parties on whose behalf it may be acting under any security documents included within the Loan Documents (collectively, the “Secured Parties”), under the Credit Agreement and other Loan Documents, and the Successor Agent hereby accepts the benefit of all such powers of attorney, liens and security interests and other rights and interests, for its benefit and for the ratable benefit of the Secured Parties. 

(h) On and after the Third Amendment Effective Date, all possessory collateral held by the Existing Agent for the benefit of the Secured Parties shall be deemed to be held by the Existing Agent as agent and bailee for the Successor Agent for the benefit and on behalf of the Successor Agent and the Secured Parties until such time as such possessory collateral has been delivered to the Successor Agent. Without limiting the generality of the foregoing, any reference to the Existing Agent in any publicly filed document, to the extent such filing relates to the liens and security interests in any collateral assigned hereby and until such filing is modified to reflect the interests of the Successor Agent, shall, with respect to such liens and security interests, constitute a reference to the Existing Agent as collateral representative of the Successor Agent (provided that the parties hereto agree that the Existing Agent’s role as such collateral representative shall impose no further duties, obligations or liabilities on the Existing Agent, including, without limitation, any duty to take any type of direction regarding any action to be taken against such collateral, whether such direction comes from the Successor Agent, the Secured Parties or otherwise, and the Existing Agent shall have the full benefit of all of the protective provisions of Article XI (The Agents) and Section 12.03 (Expenses, Indemnity; Damage Waiver) of the Credit Agreement, while serving in such capacity). The Existing Agent agrees to deliver all possessory collateral to the Successor Agent on or promptly following the Third Amendment Effective Date, and the Successor Agent agrees to take possession thereof upon such tender by the Existing Agent. 

5.2 Further Assurances. The Borrower hereby agrees to execute and deliver (and to cause each applicable guarantor or grantor of collateral to execute and deliver) any amendments to any other Loan Document that the Successor Agent or Existing Agent deems reasonably necessary or desirable in order to effectuate or evidence (of public record or otherwise) the amendments to the Credit Agreement and Loan Documents set forth above or to replicate the substance thereof in such other Loan Document, each of such amendments to be in form and substance reasonably satisfactory to the Borrower, the Existing Agent and the Successor Agent. The Majority Lenders hereby consent to the Successor Agent’s execution and delivery on their behalf of any amendments entered into in accordance with the foregoing sentence. 

5.3 Waiver of Notices. The Borrower and the Majority Lenders hereby waive any notice, timing or other requirement of the Credit Agreement or the other Loan Documents (including, without limitation, pursuant to Section 2.08(i) and Section 11.06 of the Credit Agreement) related to the resignation of the Existing Agent and/or the Existing Issuing Bank or the appointment or designation of the Successor Agent and/or the Successor Issuing Bank. 

5.4 Return of Payments. In the event that, after the Third Amendment Effective Date, the Existing Agent receives any principal, interest or other amount owing to any Lender or the Successor Agent under the Credit Agreement or any other Loan Document, or receives any instrument, agreement, report, financial statement, insurance policy, notice or other document in its capacity as Existing Agent, the Existing Agent agrees to promptly forward the same to the Successor Agent and to hold the same in trust for the Successor Agent until so forwarded. The parties hereto agree that any provision of any of the Loan Documents directing the Borrower to make payment to the Existing Agent shall be hereby amended to direct the Borrower to make payment to the account designated by the Successor Agent to the Borrower from time to time. 

Page 4

 

Section 6. Conditions Precedent. This Third Amendment shall become effective on the date on which each of the following conditions is satisfied (or waived in accordance with Section 12.02) (the “Third Amendment Effective Date”): 

6.1 Third Amendment. The Administrative Agent shall have received multiple counterparts as requested of this Third Amendment from the Borrower, each other Obligor and the Majority Lenders. 

6.2 Payment of Outstanding Invoices. Payment by the Borrower to the Administrative Agent of all fees and other amounts due and payable on or prior to the Third Amendment Effective Date, including, to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Borrower (including, but not limited to the reasonable fees of Paul Hastings LLP). 

6.3 No Default. No Default or Event of Default shall be continuing as of the Third Amendment Effective Date. 

Section 7. Limited Waivers related to Senior Debt Issuance. Pursuant to a letter dated July 10, 2014 (the “Senior Debt Offering Notice Letter”), the Borrower, pursuant to Section 8.01(s), has notified the Administrative Agent and the Lenders of an offering of Senior Debt referred to therein and provided certain documents relating thereto. The Administrative Agent and the Lenders: 

(a) waive the five (5) days prior notice requirement in Section 8.01(s) related to the Senior Debt offering referenced in the Senior Debt Offering Notice Letter; 

(b) waive the requirement in Section 8.01(s) that the Borrower provide the Lenders with any document relating to such Senior Debt other than the documents described in the Senior Debt Offering Notice Letter (provided that the Borrower shall promptly (i) notify the Administrative Agent upon the issuance of such Senior Debt and the amount and final pricing terms thereof and (ii) deliver to the Administrative Agent when available copies of the final preliminary offering memorandum, the offering memorandum, the indenture and the note purchase agreement relating to such Senior Debt); 

(c) have determined, pursuant to Section 9.02(i)(ix), that, so long as (i) such Senior Debt is on the same or substantially similar terms as those contained in the draft preliminary offering memorandum referred to in the Senior Debt Offering Notice Letter, (ii) the non-default interest rate per annum on such Senior Debt does not exceed 13% per annum, and (iii) the closing of the issuance of such Senior Debt occurs on or before July 31, 2014, such Senior Debt and any guarantees thereof are on terms, taken as a whole, at least as favorable to the Borrower and the Subsidiaries as market terms for issuers of similar size and credit quality given prevailing market conditions; and 

(d) confirm that for purposes of Section 9.02(i)(x), the change-of-control and asset-sale-tender-offer provisions described in the documents accompanying the Senior Debt Offering Notice Letter are customary. 

Section 8. Representations and Warranties; Etc. Each Obligor hereby affirms: (a) that as of the date of execution and delivery of this Third Amendment, after giving effect to the terms of this Third Amendment, all of the representations and warranties made by it contained in each Loan Document to which it is a party are true and correct in all material respects as though made on and as of the Third Amendment Effective Date (unless made as of a specific earlier date, in which case, was true and correct in all material respects as of such date); and (b) that after giving effect to this Third Amendment and to the transactions contemplated hereby, no Default exists or will exist under any Loan Document to which it is a party. 

Section 9. Miscellaneous. 

9.1 Confirmation. The provisions of the Credit Agreement (as amended by this Third Amendment) shall remain in full force and effect in accordance with its terms following the effectiveness of this Third Amendment. 

9.2 Ratification and Affirmation of the Obligors. Each Obligor hereby expressly (a) acknowledges the terms of this Third Amendment; (b) ratifies and affirms its obligations under, and acknowledges, renews and extends its continued liability under, each Loan Document to which it is a party, and agrees that each Loan Document to which it is a party remains in full force and effect, as amended hereby; and (c) agrees that from and after the Third Amendment Effective Date each reference to the Credit Agreement in the Guaranty and the other Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Third Amendment. 

9.3 Loan Document. This Third Amendment is a “Loan Document” as defined and described in the Credit Agreement and all of the terms and provisions of the Credit Agreement relating to Loan Documents shall apply hereto. 

9.4 Severability. Any provision of this Third Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 

9.5 Successors and Assigns. This Third Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 

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9.6 Counterparts. This Third Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Third Amendment by telecopy, facsimile or email transmission shall be effective as delivery of a manually executed counterpart of this Third Amendment. 

9.7 No Oral Agreement. THIS WRITTEN THIRD AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

9.8 Governing Law. THIS THIRD AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. 

[Signatures Begin on Next Page] 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed effective as of the Third Amendment Effective Date. 

 

	
BORROWER:
	
 
	
 
	
 
	
REX ENERGY CORPORATION

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
By:
	
 
	
/s/ Michael L. Hodges

	
 
	
 
	
 
	
 
	
 
	
 
	
Michael L. Hodges

	
 
	
 
	
 
	
 
	
 
	
 
	
Chief Financial Officer

	
 
	
 
	
 

	
GUARANTORS:
	
 
	
 
	
 
	
REX ENERGY OPERATING CORP.

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
By:
	
 
	
/s/ Michael L. Hodges

	
 
	
 
	
 
	
 
	
 
	
 
	
Michael L. Hodges

	
 
	
 
	
 
	
 
	
 
	
 
	
Chief Financial Officer

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
REX ENERGY I, LLC

	
 
	
 
	
 
	
 
	
PENNTEX RESOURCES ILLINOIS, INC.

	
 
	
 
	
 
	
 
	
REX ENERGY IV, LLC

	
 
	
 
	
 
	
 
	
R.E. GAS DEVELOPMENT, LLC

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
By:
	
 
	
/s/ Michael L. Hodges

	
 
	
 
	
 
	
 
	
 
	
 
	
Michael L. Hodges

	
 
	
 
	
 
	
 
	
 
	
 
	
Chief Financial Officer

 

 

 

Third Amendment

Signature Page

 

 

	
EXISTING ADMINISTRATIVE AGENT, EXISTING ISSUING BANK, SYNDICATION AGENT AND LENDER
	
 
	
 
	
 
	
KEYBANK NATIONAL ASSOCIATION,

as Existing Administrative Agent, Existing Issuing Bank, Syndication Agent and as Lender

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
By:
	
 
	
/s/ John Dravenstott

	
 
	
 
	
 
	
 
	
Name:
	
 
	
John Dravenstott

	
 
	
 
	
 
	
 
	
Title:
	
 
	
Vice President

 

 

 

Third Amendment

Signature Page

 

 

	
SUCCESSOR ADMINISTRATIVE AGENT:
	
 
	
 
	
 
	
ROYAL BANK OF CANADA,

as Successor Administrative Agent

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
By:
	
 
	
/s/ Ann Hurley

	
 
	
 
	
 
	
 
	
Name:
	
 
	
Ann Hurley

	
 
	
 
	
 
	
 
	
Title:
	
 
	
Manager, Agency

	
 
	
 
	
 

	
SUCCESSOR ISSUING BANK:
	
 
	
 
	
 
	
ROYAL BANK OF CANADA,

as Successor Issuing Bank and as Lender

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
By:
	
 
	
/s/ Evans Swann Jr.

	
 
	
 
	
 
	
 
	
Name:
	
 
	
Evans Swann Jr.

	
 
	
 
	
 
	
 
	
Title:
	
 
	
Authorized Signatory

 

 

 

Third Amendment

Signature Page

 

 

	
DOCUMENTATION AGENT AND LENDER:
	
 
	
 
	
 
	
SUNTRUST BANK

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
By:
	
 
	
/s/ Shannon Juhan 

	
 
	
 
	
 
	
 
	
Name:
	
 
	
Shannon Juhan 

	
 
	
 
	
 
	
 
	
Title:
	
 
	
Vice President

 

 

 

Third Amendment

Signature Page

 

 

	
LENDERS:
	
 
	
 
	
 
	
BMO HARRIS FINANCING, INC. 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
By:
	
 
	
/s/ James V. Ducote

	
 
	
 
	
 
	
 
	
Name:
	
 
	
James V. Ducote 

	
 
	
 
	
 
	
 
	
Title:
	
 
	
Managing Director

 

 

 

Third Amendment

Signature Page

 

 

	
WELLS FARGO BANK, NATIONAL ASSOCIATION

	
 
	
 

	
By:
	
 
	
/s/ Suzanne Ridenhour

	
Name:
	
 
	
Suzanne Ridenhour

	
Title:
	
 
	
Director

 

 

 

Third Amendment

Signature Page

 

 

	
UNION BANK, N.A.

	
 
	
 

	
By:
	
 
	
/s/ Lara Sorokolit

	
Name:
	
 
	
Laura Sorokolit

	
Title:
	
 
	
Vice President

 

 

 

Third Amendment

Signature Page

 

 

	
CAPITAL ONE, NATIONAL ASSOCIATION

	
 
	
 

	
By:
	
 
	
/s/ Victor Ponce de Leon

	
Name:
	
 
	
Victor Ponce de Leon

	
Title:
	
 
	
Vice President

 

 

 

Third Amendment

Signature Page

 

 

	
M&T BANK

	
 
	
 

	
By:
	
 
	
/s/ David Ladori

	
Name:
	
 
	
David Ladori

	
Title:
	
 
	
Vice President

 

 

 

Third Amendment

Signature Page

 

 

	
U.S. BANK NATIONAL ASSOCIATION

	
 
	
 

	
By:
	
 
	
/s/ Todd S. Anderson

	
Name:
	
 
	
Todd S. Anderson

	
Title:
	
 
	
Vice President

 

 

 

Third Amendment

Signature Page

 

 

	
THE HUNTINGTON NATIONAL BANK

	
 
	
 

	
By:
	
 
	
/s/ Christopher Renyi

	
Name:
	
 
	
Christopher Renyi

	
Title:
	
 
	
Vice President

 

 

 

Third Amendment

Signature Page

 

 

	
ONE WEST BANK, FSB

	
 
	
 

	
By:
	
 
	
/s/ Sean Murphy

	
Name:
	
 
	
Sean Murphy

	
Title:
	
 
	
Executive Vice President

 

 

 

Third Amendment

Signature Page

 

Schedule 1 to Third Amendment 

Residual Letters of Credit 

 

	
 
	
  
	
 
	
 
	
  
	
 
	
  
	
Actual 
	
  
	
Adjusted 
	
  
	
Financial or

	
L/C No.
	
  
	
Stated  Amount
	
 
	
  
	
Issued Date
	
  
	
Expiry
	
  
	
Expiry
	
  
	
Performance

	
S313417
	
  
	
$
	
600,000.00
	
  
	
  
	
1/31/2008
	
  
	
1/31/2015
	
  
	
2/2/2015
	
  
	
Financial

	
S313418
	
  
	
$
	
32,971.00
	
  
	
  
	
1/31/2008
	
  
	
1/30/2015
	
  
	
1/30/2015
	
  
	
Perfoming

	
S314063
	
  
	
$
	
150,000.00
	
  
	
  
	
10/16/2008
	
  
	
9/1/2015
	
  
	
9/1/2015
	
  
	
Financial

	
S322604
	
  
	
$
	
520,000.00
	
  
	
  
	
3/8/2013
	
  
	
3/8/2015
	
  
	
3/9/2015
	
  
	
Financial

	
S322835
	
  
	
$
	
300,000.00
	
  
	
  
	
9/9/2013
	
  
	
9/5/2014
	
  
	
9/5/2014
	
  
	
Financial

	
S322937
	
  
	
$
	
144,278.42
	
  
	
  
	
11/27/2013
	
  
	
11/27/2014
	
  
	
11/28/2014
	
  
	
Perfoming

	
S323099
	
  
	
$
	
219,845.00
	
  
	
  
	
3/24/2014
	
  
	
3/24/2015
	
  
	
3/24/2015
	
  
	
Perfoming

 

 

Schedule 1 to Third AmendmentExhibit 10.2 

*THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS. ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. OMITTED PORTIONS ARE INDICATED BY “[REDACTED]*”. 

AMENDED AND RESTATED 

GAS GATHERING, COMPRESSION AND PROCESSING AGREEMENT 

This Amended and Restated Gas Gathering, Compression and Processing Agreement (“Agreement”) is made and entered into this 22nd day of August, 2014, by and among MarkWest Liberty Bluestone, L.L.C., a Delaware limited liability company (“MarkWest”), R.E. Gas Development, LLC, a Delaware limited liability company (“Rex”), and, solely for the purposes of Article 18 of the Agreement, REX ENERGY CORPORATION, a Delaware corporation (the “Guarantor”). Rex may be referred to herein as “Producer” and MarkWest and Rex may be referred to herein individually as a “Party” and collectively as the “Parties.” 

RECITALS: 

A. Rex and MarkWest are parties to that certain Gas Gathering, Compression and Processing Agreement dated December 21, 2009, as amended by the First Amendment to the Gas Gathering, Compression and Processing Agreement dated April, 2011, by the Second Amendment to the Gas Gathering, Compression and Processing Agreement dated May 29, 2012, by the Third Amendment to the Gas Gathering, Compression and Processing Agreement dated May 2, 2014, and by the Fourth Amendment to the Gas Gathering, Compression and Processing Agreement dated August 22, 2014 (the “Original Agreement”); and 

B. The Original Agreement requires the Parties to execute a separate mutually agreeable NGL exchange agreement (the “NGL Exchange Agreement”); and 

C. In connection with the execution of the NGL Exchange Agreement, which the Parties will execute concurrently herewith, the Parties desire to amend and restate the Original Agreement on the terms set forth herein. 

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree the Original Agreement is amended and restated in its entirety as follows: 

ARTICLE 1: DEFINITIONS 

Accounting Period. The period commencing at 9:00 a.m., Central Clock Time, on the first day of a calendar month and ending at 9:00 a.m., Central Clock Time, on the first day of the next succeeding month. 

Affiliate. Any (a) Person directly or indirectly controlling, controlled by, or under common control with such Person, (b) Person owning or controlling fifty percent (50%) or more of the outstanding voting interests of such Person, (c) officer, director, manager, or general partner of such Person, or (d) Person who is an officer, director, manager, general partner, trustee, or holder of fifty percent (50%) or more of the voting interests of any Person described in clauses (a) through (c) of this sentence. For purposes of this definition, the term “control,” “controls,” “controlling,” “controlled by,” or “under common control with’ 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 the ownership of voting securities, by contract or otherwise. 

Bluestone Plant. That certain cryogenic gas processing plant commonly referred to as “Bluestone Plant” operated by MarkWest on a site located in Jackson Township, in Butler County, Pennsylvania. 

Bluestone 2 Plant. The first expansion of the Bluestone Plant by MarkWest that has been designed and constructed to have the capability to process at least [REDACTED]*. 

Bluestone 3 Plant. The second expansion of the Bluestone Plant by MarkWest that, once constructed and operational, will have the capability to process at least [REDACTED]*. 

Bluestone 3 Plant In-Service Date. The later of [REDACTED]* or the first day of the Accounting Period following the Accounting Period in which the Bluestone 3 Plant is constructed and made operational. 

Bluestone 4 Plant. The third expansion of the Bluestone Plant by MarkWest that, once constructed and operational, will have the capability to process at least [REDACTED]*. 

Bluestone 4 Plant In-Service Date. The later of [REDACTED]* or the first day of the Accounting Period following the Accounting Period in which the Bluestone 4 Plant is constructed and made operational. 

Btu. A British Thermal Unit, which is the quantity of heat required to raise the temperature of one (1) pound avoirdupois of pure water from fifty-eight and five tenths degrees Fahrenheit (58.5°F) to fifty-nine and five tenths degrees Fahrenheit (59.5°F) at a pressure of fourteen and six hundred ninety-six thousandths pounds per square inch absolute (14.696 psia). 

Business Day. Any day other than Saturday, Sunday, or a legal holiday in the State of Pennsylvania. 

Bypass Gas. Gas delivered by Producer or by a third party to the Receipt Point(s) that is bypassed around the Processing Plant and is therefore not processed, and is the portion thereof remaining for redelivery to a Redelivery Point. 

Bypass Point. As defined in Section 9.1. 

Central Clock Time. The time observed in the Central Time Zone of the United States. 

Dedication Area. All acreage in the area described on Exhibit A, attached hereto. 

Downstream Ethane Pipeline(s). The Mariner East Pipeline, the Mariner West Pipeline and/or the Enterprise ATEX Pipeline, each as defined in the NGL Exchange Agreement. 

Drip. Liquids, including water and liquid hydrocarbons, whether or not of commercial value, which are separated from Producer’s Gas in the Gathering System as a result of standard Gathering System operations, including the compression of gas and pigging of pipelines. 

Dry Gas. Producer’s Gas produced from an individual well that has a Thermal Content of [REDACTED]* or less. 

Entity. Any general partnership (including a limited liability partnership), limited partnership (including a limited liability limited partnership), limited liability company, corporation, joint venture, trust, business trust, cooperative, association, foreign trust, or foreign business organization. 

Ethane Service Commencement Date. [REDACTED]*. 

Existing Plants. The Sarsen Plant (based on a processing capacity of [REDACTED]* and not any subsequent expansion thereof), the Bluestone Plant (based on a processing capacity of [REDACTED]* and not any subsequent expansion thereof), and the Bluestone 2 Plant (based on a processing capacity of [REDACTED]* and not any subsequent expansion thereof). 

Facilities. The Gathering System together with the Processing Plant. 

Fractionated Products. The “Fractionated Products” as defined in the NGL Exchange Agreement. 

Fuel. All Gathering System Fuel and Plant Fuel measured and utilized as fuel in the Facilities. 

Fuel Point. A point on or at the Facilities where Fuel is consumed or used. 

Gas. All hydrocarbon and non-hydrocarbon substances produced from gas and/or oil wells in a gaseous state at the relevant Receipt Point(s). 

Gathering Boundary. That certain boundary identified as the “Gathering Boundary” as shown on Exhibit B, attached hereto. 

Gathering System. Gas gathering and compression facilities, from the Receipt Point(s) to the inlet of the Processing Plant, as may be expanded from time to time. 

Gathering System Fuel. All Gas and electric power measured and utilized as fuel or power for the Gathering System, including Gas and electric power utilized as fuel or power for compressor stations. 

GPA. Gas Processor’s Association. 

Page 2 of 20

GPM. The number of gallons of Plant Products per 1,000 cubic feet of Gas. 

Gross Heating Value. The number of Btus produced by the combustion, on a dry basis and at a constant pressure, of the amount of Gas that would occupy a volume of 1 cubic foot at a temperature of sixty degrees Fahrenheit (60°F) and at a pressure of fourteen and seventy three hundredths pounds per square inch absolute (14.73 psia), with air of the same temperature and pressure as the Gas, when the products of combustion are cooled to the initial temperature of the Gas and air and when the water formed by combustion is condensed to the liquid state. Hydrogen sulfide shall be deemed to have no heating value. 

Indemnifying Party and Indemnified Parties. As defined in Article 13, below. 

Interest(s). Any right, title, or interest of any nature in and to oil and gas leases and mineral fee interests together with any pooling, unitization or communitization of any of the foregoing rights. 

Losses. Any actual loss, cost, expense, liability, damage, demand, suit, sanction, claim, judgment, lien, fine or penalty asserted by a third party (unaffiliated with Indemnified Party) incurring such, and which are asserted against the applicable Indemnified Party on account of injuries (including death) to any person or damage to or destruction of any property, sustained or alleged to have been sustained in connection with or arising out of the matters for which the Indemnifying Party has indemnified the applicable Indemnified Party. 

Lost and Unaccounted For Gas. Any Gas lost or otherwise not accounted for incident to or occasioned by the gathering, treating, processing, or compressing and redelivery, as applicable, of Gas, including Gas released through leaks, instrumentation, relief valves, unmeasured flares, ruptured pipelines, and blow downs of pipelines, vessels, and equipment. 

Mcf. 1,000 cubic feet of Gas, measured at Standard Base Conditions. 

MMBtu. 1,000,000 Btus. 

MMcf. 1,000,000 cubic feet of Gas, measured at Standard Base Conditions. 

NGL Exchange Agreement. That certain Natural Gas Liquids Fractionation, Exchange and Marketing Agreement (Bluestone) dated as of the date hereof, between Producer and MarkWest Liberty Midstream & Resources, L.L.C., as amended or restated from time to time, and as referred to in the Recitals of this Agreement. 

NGL Receipt Point. The “Receipt Point” as defined in the NGL Exchange Agreement. 

Person. Any individual or Entity, and the heirs, executors, administrators, legal representatives, successors, and assigns of such “Person” where the context so permits. 

Plant Fuel. All Gas, Plants Products and electric power measured and utilized as fuel in the Processing Plant. 

Plant Products. Propane, iso-butane, normal butane, iso-pentane, normal pentane, hexanes plus, any other liquid hydrocarbon product except for a liquefied methane product, or any mixtures thereof, and any incidental methane or ethane (to the extent sold as propane) included in any Plant Products, which are separated, extracted, recovered or condensed, and saved, from Gas processed in the Processing Plant. After the Ethane Service Commencement Date, Plant Products shall be as defined above but shall also include ethane that is recovered and sold as a purity product. 

PPI. The Producer Price Index [REDACTED]* as published by the Department of Labor or, if such index is no longer published or if the composition or calculation of such index is materially changed from its composition or calculation as of the date hereof, such other index as the Parties shall mutually agree in writing. 

Priority Capacity Rights. Subject to the provisions of this Agreement, the rights to use certain specified capacity of the Processing Plant, superior to the rights of other parties that do not hold Priority Capacity Rights, and which rights provide that in the event that available capacity is curtailed or reduced, or insufficient for the needs of all parties desiring to utilize the capacity, that the gas available from all parties other than the holder(s) of the Priority Capacity Rights will be curtailed or interrupted prior to any curtailments of the holder(s) of the Priority Capacity Rights. Producer’s Priority Capacity Rights are as provided in Article 6. 

Page 3 of 20

Processing Plant. In the aggregate, the Existing Plants, any expansions, extensions, improvements or additions thereto, the Bluestone 3 Plant, the Bluestone 4 Plant and any other Gas processing facility installed and constructed by MarkWest or its Affiliates where Producer’s Gas is delivered for processing, including in each case, to the extent installed: cryogenic, refrigeration and chilling equipment, absorption vessels, and product separation vessels, product storage vessels, associated condensing, heating, compressing, pumping, conveying, dehydration and other equipment and instrumentation; any inlet compression required to boost Gas to processing pressure; any recompression required by Processing Plant operations; any refrigeration compression required by Processing Plant operations; all structures associated with those facilities; and including all easements, rights-of-way, and other property rights pertaining to the construction and operation of those facilities, wherever those facilities, structures, easements, rights-of-way, and other property rights are located. 

Producer’s Gas. All gas that is attributable to Interests now owned or hereafter acquired by Producer or any of its Affiliates within any portion of the Dedication Area, or is attributable to third parties that is produced from a well that is operated by Producer or any of its Affiliates within the Dedication Area from which well Producer or any of its Affiliates has the right to control, market or deliver the Gas for processing. 

Property Rights. As defined in Section 3.4. 

Receipt Point(s). The point(s) of delivery from Producer’s wells or other sources of Producer’s Gas supply into the Facilities. 

receipt point(s). All points at which Gas is delivered to the Facilities, including the Receipt Point(s) and all other points at which third party Gas is delivered to the Facilities. 

Receipt Point Thermal Content. The Thermal Content of the Gas delivered by or on behalf of Producer at a Receipt Point. 

Redelivery Point. Each point at which Residue Gas is redelivered by MarkWest to Dominion Transmission, Inc., or any other third party transporter, for the account of Producer. 

Residue Gas. That portion of the Gas delivered to any Redelivery Point, including Bypass Gas, that remains after processing at the Processing Plant (if processed) and after Fuel deductions and Lost and Unaccounted For Gas. 

Sarsen Plant. That certain cryogenic gas processing plant commonly referred to as “Sarsen” operated by MarkWest on a site located in Butler County, Pennsylvania. 

Shrinkage. As defined in Section 9.1. 

Standard Base Conditions. A pressure of fourteen and seventy three hundredths pounds per square inch absolute (14.73 psia) at a temperature of sixty degrees Fahrenheit (60°F). 

Taxes. All gross production, severance, conservation, ad valorem and similar or other taxes measured by or based upon production, together with all taxes on the right or privilege of ownership of the Gas, or upon the handling, transmission, compression, processing, treating, conditioning, distribution, sale, delivery or redelivery of the Gas, including, without limitation, gross receipts taxes, and including all of the foregoing now existing or in the future imposed or promulgated. 

Theoretical Gallons. As defined in Section 9.2. 

Theoretical Residue Gas Thermal Content. As defined in Section 9.6. 

Thermal Content. For Gas, the product of the measured volume in Mcfs multiplied by the Gross Heating Value per Mcf, adjusted to the same pressure base and expressed in MMBtus; and for a liquid, the product of the measured volume in gallons multiplied by the gross heating value per gallon. 

Trigger Date. [REDACTED]*. 

ARTICLE 2: TERM 

2.1 This Agreement shall remain in full force and effect for a “Primary Term” commencing on the date of execution and continuing until [REDACTED]*, and shall continue thereafter year to year, until terminated by either MarkWest or Producer upon at least twelve (12) months written notice to the other Party in advance of the expiration of the Primary Term or any extension thereof. 

Page 4 of 20

ARTICLE 3: PRODUCER COMMITMENTS 

3.1 Producer hereby commits and agrees to deliver or cause to be delivered at the Receipt Point(s) all of Producer’s Gas, subject to the following: 

a. Producer reserves the right to withhold from delivery any Gas (i) that Producer or its Affiliates are required to deliver to its lessor(s) under the terms of any leases included within the Dedication Area; or (ii) that Producer or its Affiliates require for oil and Gas producing operations within the Dedication Area. 

b. With respect to Interests in the Dedication Area hereafter acquired by Producer or its Affiliates that are, at the time of acquisition, dedicated to an unaffiliated third party and such third party dedication is not granted in connection with the acquisition of such Interests, then Producer’s Gas attributable to such Interests shall not be dedicated hereunder during the pendency of the dedication to the third party. The commitment to the third party shall continue only for the period specified at the time the Interests are acquired by Producer or its Affiliates, and Producer and its Affiliates will take no action to extend, and will not omit to take any action the omission of which would have the effect of extending, the duration of the third party commitment. Thereafter, such Interests and Producer’s Gas attributable thereto will be dedicated hereunder. 

c. With respect to Producer’s Dry Gas produced from wells in the Dedication Area, the Parties will work together in good faith to mutually agree on the fees, terms and conditions pursuant to which MarkWest would gather such Dry Gas and, if the Parties cannot mutually agree upon such fees, terms and conditions, Producer shall have the right, at its sole expense, to construct such facilities or connect to a third party’s facilities as may be necessary to gather such Dry Gas so long as such Dry Gas is not processed by Producer, any of Producer’s Affiliates, or any other third party for recovery of liquid or liquefiable hydrocarbons or other hydrocarbon products, other than to separate liquid hydrocarbons and free water from the Dry Gas using mechanical type gas-liquid field separators commonly used in the industry installed by or on behalf of Producer or its Affiliates. 

3.2 The provisions of Section 3.1, above, shall be covenants running with the land, and Producer and its Affiliates shall ensure that any conveyance, assignment, sale or other transfer of all or a portion of the Interests owned by Producer or its Affiliates covered by this Agreement shall be subject thereto. Producer and its Affiliates shall require any purchaser, assignee, or other transferee of any portion of those Interests to ratify this Agreement and expressly assume and agree to the terms hereof, to the extent of the portion of those Interests acquired from Producer or its Affiliates by that party, in a manner consistent with the provisions of Article 16. 

3.3 Any separation equipment installed by or on behalf of Producer or its Affiliates to separate liquid hydrocarbons and free water from Producer’s Gas prior to the delivery at the Receipt Points shall be only conventional mechanical type gas-liquid field separators commonly used in the industry. Except for the foregoing and the conditions set forth in Section 3.1 hereof, Producer and its Affiliates shall not process, or cause or permit another party to process, Producer’s Gas for recovery of liquid or liquefiable hydrocarbons or other products prior to delivery to MarkWest. 

ARTICLE 4: MARKWEST’S COMMITMENTS 

4.1 Subject to the terms of this Agreement, MarkWest shall receive all of Producer’s Gas delivered at the Receipt Point(s), gather that Gas to the Processing Plant, compress the Gas for processing, process the Gas for recovery of Plant Products (not including liquefied methane) and redeliver Producer’s Residue Gas at a pressure sufficient to enter the Redelivery Point(s). 

4.2 MarkWest shall use diligent efforts to construct and install the Bluestone 3 Plant prior to [REDACTED]* and the Bluestone 4 Plant prior to [REDACTED]*. Except as expressly set forth herein, MarkWest or its Affiliates shall own all the appurtenances, additions, extensions, improvements, or expansions of or to the Facilities that are constructed by them, which additions shall become a part of the Facilities and shall be subject to this Agreement. 

4.3 At such time that Producer desires to connect a well or wells located within the Dedication Area (each such well, a “New Well”) to the Facilities, Producer will furnish MarkWest with information regarding the location of such New Well, the anticipated in-service date for such New Well and all available test results for such New Well. Except as expressly set forth herein, MarkWest shall install, own and operate extensions of the Gathering System as necessary to connect New Wells in accordance with the following provisions: 

a. If the New Well is within the Gathering Boundary, then MarkWest will use commercially reasonable efforts to connect such New Well as soon as reasonably practicable. 

Page 5 of 20

b. If the New Well is outside of the Gathering Boundary, then Producer may, at its option, (x) request that MarkWest install and operate the necessary connection, pipelines and related facilities to connect such well to the Facilities; or (y) install, own and operate, or engage a third party to install, own and operate, the necessary facilities to connect the well to the Facilities, and in either case to deliver the Gas from such well to MarkWest hereunder. If Producer requests that MarkWest install and operate the connection to the Facilities, and MarkWest determines that the connection of such well will be economic under the terms of this Agreement, then MarkWest will use commercially reasonable efforts to connect such well as soon as reasonably practicable. If MarkWest determines that the connection of that well will not be economic under the terms of this Agreement, MarkWest may either propose terms on which such connection would be economic or decline to provide such terms. If (i) Producer elects to proceed with the well connection independently under Section 4.3.b.(y), or (ii) MarkWest declines to offer terms for the well connection pursuant to the preceding sentence or the Parties are unable to agree on the terms provided to Producer for the well connection pursuant to the preceding sentence and Producer elects to proceed with the well connection independently, then Producer shall not be charged and shall have no obligation to pay any gathering or other transportation fees for Gas being transported through such facilities installed, owned and operated by Producer or a third party but shall pay MarkWest a gathering and/or processing fee in accordance with the following provisions and the terms of this Agreement: 

i. If Producer elects to connect the well to the Gathering System, [REDACTED]*. For Producer’s Gas processed at the Processing Plant from any well connected to the Gathering System pursuant to the terms of this Section 4.3.b.i., Producer shall pay MarkWest a processing fee of [REDACTED]* for the processing of Producer’s Gas from such well; and 

ii. If Producer elects to connect the well directly to the Processing Plant, then Producer shall pay MarkWest a processing fee of [REDACTED]* for the processing of Producer’s Gas from such well but Producer shall have no obligation to pay any gathering or other transportation fees for such Gas being transported. 

iii. Notwithstanding anything in this Section 4.3 to the contrary, unless the Parties agree otherwise in writing, to the extent that Producer elects to gather production from its recently acquired acreage in Butler County, Pennsylvania (the “Shell Acreage”), then: [REDACTED]*. 

The point of interconnection between the facilities installed, owned and operated by Producer and the Facilities shall be the Receipt Point for Producer’s Gas from any well connected pursuant to this Section 4.3.b. Producer acknowledges and agrees that the nature of any gathering facilities installed, owned and operated by Producer or its designee pursuant to the terms of this Section 4.3.b. (e.g. the diameter of gathering pipeline) and the manner in which Producer or its designee operates such facilities will affect, and may adversely impact, MarkWest’s ability to receive Producer’s Gas. 

4.4 MarkWest shall ensure that Producer’s Gas with Priority Capacity Rights that is delivered to the Processing Plant is given priority to the available capacity of the Processing Plant in accordance with such Priority Capacity Rights. 

4.5 It is understood and agreed that either Party hereto may, without liability to the other Party, interrupt the operations of its facilities for the purpose of making necessary alterations, maintenance or repairs thereto or to comply with applicable regulatory requirements. MarkWest will exercise due diligence to schedule routine repair and maintenance so as to minimize disruption of service hereunder, and except in situations reasonably perceived by MarkWest to be emergencies, shall use commercially reasonable efforts to provide at least fourteen (14) days prior notice to Producer of such scheduled routine repair and maintenance. It is further understood and agreed that Producer shall, at all times, have the right to regulate the rate of production from any well as Producer determines, in its sole discretion, necessary to optimize reservoir characteristics, maximize long-term production, or otherwise improve the economic performance of such well. 

ARTICLE 5: RECEIPT POINT AND CONDITIONS 

5.1 Producer shall deliver or shall cause to be delivered Gas to MarkWest at the Receipt Point(s). 

5.2 Under normal operating conditions, Producer shall deliver or shall cause to be delivered Gas hereunder to the Receipt Point(s) at a pressure not greater than 600 psig and not less than 100 psig, or such lower pressure as exists in the Gathering System at the Receipt Point(s). Notwithstanding anything to the contrary herein, Producer shall have no obligation to compress Gas prior to delivery of such Gas at the Receipt Point(s). 

ARTICLE 6: GAS PROCESSING 

6.1 Following the execution of this Agreement, and subject to the other provisions of this Agreement, MarkWest shall design, engineer, procure, construct, install and operate the Processing Plant. 

6.2 Producer will have Priority Capacity Rights at the Processing Plant as follows: 

a. Commencing on the Trigger Date and until [REDACTED]*, an aggregate of [REDACTED]* of processing capacity at the Processing Plant; 

b. Beginning [REDACTED]* and until [REDACTED]*, an aggregate of [REDACTED]* of processing capacity at the Processing Plant; 

Page 6 of 20

c. Beginning [REDACTED]* and until [REDACTED]*, an aggregate of [REDACTED]* of processing capacity at the Processing Plant. In addition, to the extent that MarkWest determines in good faith that it can, safely and without unreasonable cost or risk to MarkWest, operate Bluestone 2 in a manner that allows for processing a volume of Gas in excess of [REDACTED]*, then Producer shall be granted the right to utilize such excess capacity on a priority basis; 

d. Beginning on the [REDACTED]* and until [REDACTED]* of processing capacity at the Processing Plant; 

e. Beginning on the [REDACTED]* and continuing for [REDACTED]*, an aggregate of [REDACTED]* of processing capacity at the Processing Plant; and 

f. Beginning on the [REDACTED]* and for the remainder of the term of the Agreement, an aggregate of [REDACTED]* of processing capacity at the Processing Plant. 

If Producer determines that it requires capacity in excess of its Priority Capacity Rights, and in addition to any additional capacity that results from the Additional Processing Facilities (as defined below) previously installed by MarkWest in accordance with this Section 6.2 (collectively referred to as “Increased Capacity”), Producer will provide timely written notice to MarkWest of its Increased Capacity requirements and will attempt to provide MarkWest with such notice at least eighteen (18) months in advance. Producer shall reasonably demonstrate to MarkWest Producer’s drilling plans to support the amount of Increased Capacity, and MarkWest will propose a schedule for providing such Increased Capacity. Subject to the remaining provisions of this Section 6.2, if the terms, fees and schedule relating to such Increased Capacity are mutually agreed upon by the Parties in writing, MarkWest will, at its sole cost and expense, design, construct and install expanded or new processing facilities (“Additional Processing Facilities”) to meet Producer’s Increased Capacity requirements and will complete the Additional Processing Facilities as soon as reasonably practicable. Following the completion of the Additional Processing Facilities, Producer will have Priority Capacity Rights to the Increased Capacity in such Additional Processing Facilities so requested by Producer pursuant to this Section 6.2, subject to the remaining terms of this Agreement. [REDACTED]* 

6.3 RESERVED. 

6.4 MarkWest may grant third parties Priority Capacity Rights to the processing capacity in the Processing Plant so long as the aggregate amount of Priority Capacity Rights granted to Producer and all third parties does not exceed the total processing capacity of the Processing Plant. The Parties acknowledge and agree that during any period when (x) all or any portion of the Facilities is shut down because of mechanical failure, maintenance or repairs, non-routine operating conditions, or Force Majeure; or (y) Producer’s Gas available for receipt together with Gas of third parties, exceeds the then current capacity of the Facilities; or (z) MarkWest determines reasonably and in good faith that the operation of all or any portion of the Facilities will cause injury or harm to persons or property or to the integrity of the Facilities, Producer’s Gas may be curtailed or, if applicable, bypassed around the affected Facilities. In such event, Producer and any other third party whose Gas is delivered to the Processing Plant would be cut back on a pro rata basis based upon Priority Capacity Rights. 

6.5 Should Producer desire any new Redelivery Point(s) other than Dominion Transmission, Inc., the Parties will work together in good faith to mutually agree upon the manner in which any costs to be incurred in connection with the construction and connection of such new Redelivery Point(s) will be allocated among the Parties. If the Parties cannot mutually agree upon an allocation of such costs, Producer shall have the right, at its sole expense, to construct such facilities as may be necessary to connect to such new Redelivery Point(s). 

6.6 The Parties will work together in good faith to keep the other Party informed in respect of issues of mutual concern including, but not limited to, Producer’s drilling plans and programs and MarkWest’s ongoing operations, construction efforts and plans, and plans for future expansion, in each case in the Dedication Area. 

ARTICLE 7: GAS QUALITY 

7.1 As measured at each Receipt Point, Gas delivered by Producer shall be of a quality that, after processing in the Processing Plant as it then currently exists (and, after the Ethane Service Commencement Date, taking into account any nominations for the recovery of ethane made or deemed to have been made pursuant to the NGL Exchange Agreement), meets the quality specifications of pipelines receiving Gas at the Redelivery Point(s), as in effect from time to time, other than for water vapor content and hydrocarbon dew point; provided that the water content of Gas delivered by Producer to the Receipt Point(s) shall not include free water. The receiving pipeline’s existing specifications are set forth on Exhibit C, attached hereto. 

7.2 The Parties acknowledge that if the quality standards of the pipelines receiving Gas at the Redelivery Point(s) change, the Parties will consider whether such change is material to this Agreement and, if material, will cooperate with each other to address such change in a manner that preserves the business and economic objectives of this Agreement. 

7.3 If Gas tendered by Producer should fail to meet any one or more of the above specifications from time to time, then: 

a. MarkWest may take receipt of the non-conforming Gas, and that receipt shall not be construed as a waiver or change of standards for future Gas volumes; or 

Page 7 of 20

b. MarkWest may, at its sole discretion, cease receiving the non-conforming Gas from Producer, and shall notify Producer that it will cease receiving the non-conforming Gas. Upon such notice to Producer, the non-conforming Gas shall not be deemed Gas delivered to MarkWest by Producer for the purpose of calculating the Demand Fee in Section 10.1.b of this Agreement. If MarkWest refuses to accept such non-conforming Gas from Producer, the Parties shall negotiate in good faith with respect to the services and facilities necessary to remedy the non-conforming gas and the fees for MarkWest to provide such services and facilities. If the Parties are unable to agree on such facilities, services and fees within thirty (30) days and if MarkWest refuses to accept non-conforming Gas from Producer, then all (but only that) Gas that MarkWest refuses to accept for processing shall be released from this Agreement, and the Parties shall have no further obligations to each other with respect to such non-conforming Gas. 

c. If the Gas as delivered contains contaminants not in conformance with the specifications as described in Section 7.1, then Producer shall be responsible for, and shall reimburse MarkWest for, all actual expenses, damages and costs resulting from MarkWest’s receipt of such non-conforming Gas prior to the time MarkWest becomes aware of such non-conforming Gas. MarkWest shall be responsible for all actual expenses, damages and costs resulting from all non-conforming Gas accepted by MarkWest after MarkWest becomes aware of such non-conforming Gas. In addition, the Parties acknowledge and agree that, notwithstanding anything herein to the contrary, (i) “contaminants” as used in this Article 7 shall include, without limitation, toxic substances and polychlorinated biphenyls (collectively, “PCBs”) and (ii) the expenses, damages, and costs set forth in Section 7.3.c. for which Producer shall be liable in connection with delivering Gas or Raw Make contaminated with PCBs shall include the costs of PCB treating facilities and the costs associated with treating third party Gas contaminated as a result of Producer’s breach of this Article 7. 

7.4 As long as Gas delivered by Producer at each Receipt Point meets the foregoing specifications, or if it does not meet the foregoing specifications but MarkWest nevertheless continues to receive such Gas after becoming aware of the non-conforming Gas, the Residue Gas redelivered by MarkWest at the Redelivery Point(s) shall meet the quality specifications of the pipelines receiving Gas at the Redelivery Point(s). 

ARTICLE 8: MEASUREMENT EQUIPMENT AND PROCEDURES 

8.1 All Gas measurements required hereunder shall be made with equipment of standard make to be furnished, installed, operated, and maintained by MarkWest in accordance with the recommendations contained in ANSI/API 2530 as then published. Producer, or others having Producer’s consent, may, at its option and expense, install and operate check measuring equipment upstream of the measuring equipment to check the measuring equipment, provided the installation of the check measuring equipment in no way interferes with the operation of the measuring equipment. 

8.2 All Gas volume measurements shall be based on an assumed atmospheric pressure of 14.4 psia, regardless of actual atmospheric pressure at which the Gas is measured. The factors used in computing Gas volumes from orifice meter measurements shall be the latest factors published by the AGA. These factors shall include: 

a. Basic orifice factor. 

b. Pressure base factor based on a pressure base of 14.73 psia. 

c. Temperature base factor based on a temperature base of sixty degrees Fahrenheit (60°F). 

d. Flowing temperature factor, based on the flowing temperature as measured by an industry accepted recording device, if, at MarkWest’s option, a recording device has been installed, otherwise the temperature shall be assumed to be sixty degrees Fahrenheit (60°F). 

e. Super compressibility factor, obtained from the latest AGA Manual for the Determination of Super Compressibility Factors for Natural Gas (AGA 8). 

f. Specific gravity factor, based on the specific gravity of the Gas as determined under the provisions set forth below. 

8.3 MarkWest shall test the accuracy of its measuring equipment at least once every calendar quarter. Additional test(s) shall be promptly performed upon notification by either Party to the other. If any additional test requested by Producer indicates that no inaccuracy of more than two percent (2%) exists, at a recording rate corresponding to the average rate of flow for the period since the last preceding test, then Producer shall reimburse MarkWest for all its direct costs in connection with that additional test within fifteen (15) days following receipt of a detailed invoice and supporting documentation setting forth those costs. 

Page 8 of 20

8.4 If, upon test, any measuring equipment is found to be in error by an amount not exceeding two percent (2%), at a recording rate corresponding to the average rate of flow for the period since the last preceding test, previous recordings of that equipment shall be considered correct in computing deliveries hereunder. If the measuring equipment shall be found to be in error by an amount exceeding two percent (2%), at a recording rate corresponding to the average rate of flow for the period since the last preceding test, then any preceding recordings of that equipment since the last preceding test shall be corrected to zero error for any period which is known definitely or agreed upon. If the period is not known definitely or agreed upon, the correction shall be for a period extending back one-half of the time elapsed since the last test. In the event a correction is required for previous deliveries, the volumes delivered shall be calculated by the first of the following methods which is feasible: (i) by using the registration of any check meter or meters if installed and accurately registering; or (ii) by correcting the error if the percentage of error is ascertainable by calibration, test, or mathematical calculations; or (iii) by estimating the quantity of delivery by deliveries during periods of similar conditions when the meter was registering accurately. 

8.5 The composition and Gross Heating Value of any Gas stream required to be measured shall be determined by MarkWest at least once each calendar quarter, or more often if deemed necessary by MarkWest, by spot samples, or by using a proportionate to flow sampler located at the point where the measurement equipment is located, by chromatographic analysis, or by some other method mutually acceptable to the Parties. Should Producer request more frequent determinations, the cost of those determinations will be paid by Producer. 

8.6 Each Party, at its sole risk and liability, shall have access at all reasonable hours to all facilities which are related to Gas measurement and sampling. Each Party, at its sole risk and liability, shall have the right to be present for any installing, reading, cleaning, changing, repairing, testing, calibrating and/or adjusting of either Party’s measuring equipment. The Parties shall cooperate in obtaining and providing telemetry and similar equipment and systems to provide measurement information to the Parties. 

ARTICLE 9: ALLOCATIONS 

9.1. Allocations required for determining payments or fees due under this Agreement shall be made by MarkWest in accordance with accepted industry standards and the following provisions and shall be based upon the measurements taken and quantities determined for the applicable Accounting Period. In addition to other terms defined in this Agreement, the following definitions shall be applicable: 

Bypass Point means a point at the Processing Plant where Gas is redirected to bypass the Processing Plant. 

Shrinkage means the total Thermal Content of all Plant Products and Gas used as Fuel, as calculated using GPA 2145 standards. 

Allocations shall be made to each Receipt Point in the manner set forth in this Article 9. For the purposes of this Article 9, it is recognized that Producer may have more than one Receipt Point and allocations will be made separately to each such Receipt Point. 

9.2 For purposes of determining Plant Products attributable to Producer’s Gas, MarkWest shall multiply the volume in Mcf of Producer’s Gas at each Receipt Point by the GPM of each Plant Product contained in the Gas stream at that Receipt Point. The GPM shall be determined by MarkWest using generally accepted industry standards utilizing chromatograph analysis taken on Gas samples from the Receipt Points. The resulting value will be the “Theoretical Gallons” of that Plant Product in the Gas received at a receipt point. The “Total Theoretical Gallons” of that Plant Product is the summation of all receipt points Theoretical Gallons of that Plant Product.

9.3 Subject, in the case of ethane, to the provisions of the NGL Exchange Agreement, each Plant Product shall be allocated to each Receipt Point by multiplying the total volume, expressed in gallons, of each Plant Product saved and sold by a fraction, the numerator of which shall be the Theoretical Gallons of that Plant Product contained in the Gas at such Receipt Point, excluding Bypass Gas, and the denominator of which shall be the Total Theoretical Gallons of that Plant Product, excluding Bypass Gas. The Thermal Content of each Plant Product that is allocated to the Receipt Point shall be determined in accordance with the GPA standards. 

9.4 Gas that is used as Fuel shall be allocated to each receipt point by multiplying the total Thermal Content of the Fuel by a fraction, the numerator of which is the Receipt Point Thermal Content attributable to such receipt point, excluding Bypass Gas, and the denominator of which is the Thermal Content of the gas attributable to all receipt points, excluding Bypass Gas. 

9.5 In the event that any Gas is bypassed in accordance with Section 6.4, Bypass Gas Thermal Content for such Gas shall be allocated to each Receipt Point upstream of the applicable Bypass Point by multiplying the total Bypass Gas Thermal Content at the Bypass Point by a fraction, the numerator of which is the Thermal Content attributable to such Receipt Point and the denominator of which is the Thermal Content of Bypass Gas attributable to all receipt points upstream of the Bypass Point. 

9.6 “Theoretical Residue Gas Thermal Content” means the thermal content of Gas at each receipt point less the thermal content of the Bypass Gas and Shrinkage allocated to the receipt point. Residue Gas Thermal Content available for redelivery at the Redelivery Point(s) shall be allocated to each receipt point by multiplying that Residue Gas Thermal Content by a fraction, the numerator of which is the Theoretical Residue Gas Thermal Content attributable to such receipt point and the denominator of which is the Theoretical Residue Gas Thermal Content attributable to all Gas delivered at all receipt points. 

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9.7 Lost and Unaccounted For Gas shall be allocated to each measurement point pro rata based upon the Thermal Content of all Gas received at all measurement points during the applicable Accounting Period. Total Lost and Unaccounted For Gas shall be determined by subtracting from the sum of the total Thermal Content of Gas received at all measurement points during such Accounting Period the sum of (i) the Thermal Content of Gas actually delivered to the Redelivery Point(s) during such Accounting Period and (ii) the Thermal Content of Gas consumed as Fuel measured at all Fuel Points during such Accounting Period, and (iii) the Thermal Content of all Drip recovered during such Accounting Period. Lost and Unaccounted For Gas for each Accounting Period shall be allocated to each measurement point based upon a fraction, the numerator of which is the total Thermal Content of Gas measured at such measurement point during such Accounting Period, and the denominator of which is the total Thermal Content of Gas measured at all measurement points during such Accounting Period. As used in this Section 9.7, “measurement point” shall mean each point at or on the Facilities at which measurement is performed, including the measurement points for Producer’s Gas and all other points at which measurement is performed for the Gas of third parties that is delivered into the Facilities. 

9.8 Drip will be handled, recovered and disposed of by MarkWest, at its expense, and MarkWest will be entitled to retain all drip and the proceeds thereof without accounting to Producer for such. 

9.9 It is anticipated that compression and compression cooling, not including the propane condenser, in the Facilities shall initially be engine-driven, fueled by Gas. Prior to the Ethane Service Commencement Date, upon the mutual agreement of the Parties, which agreement will not be unreasonably withheld or delayed, MarkWest may replace some engines with electrical motors. Following the Ethane Service Commencement Date, MarkWest may, without consent from but with prior notice to Producer, utilize electricity and electrical motors at its election. Costs for electric power consumed by the electric motors, together with all other electric power consumed by the Facilities, will be allocated to all Gas delivered to the Facilities, and the portion allocated to Producer shall be deducted from Producer’s compensation under this Agreement. The allocation shall be made to each Receipt Point upstream of the applicable Fuel Point by multiplying the total electric power cost for the Accounting Period by a fraction, the numerator of which is the Receipt Point volume (in Mcf) attributable to such Receipt Point and the denominator of which is the receipt point volume (in Mcf) attributable to all receipt points delivering Gas to the Facilities during the Accounting Period. 

ARTICLE 10: FEES AND CONSIDERATION 

10.1 The amounts described in this Section 10.1 shall be paid to MarkWest by Producer, or by MarkWest to Producer, as applicable. Any amounts payable to Producer by MarkWest pursuant this Agreement that are based upon Producer’s Gas shall be based on the measurement and allocation procedures set forth in this Agreement. Notwithstanding any provision in this Agreement to the contrary, the Parties agree that there will be no duplication of any fees, costs, expenses or other charges set forth in this Agreement. 

a. Subject to the remaining provisions of this Section 10.1 and the provisions of Section 10.3 below, Producer shall pay MarkWest [REDACTED]* the following (the “Gathering and Processing Fee”): 

    [REDACTED]*, as measured at the Receipt Point(s). 

b. [REDACTED]* 

c. [REDACTED]* 

d. The Parties acknowledge that, as of the date hereof, Producer is taking Residue Gas in kind pursuant to Section 10.2 and Producer shall continue to take all of Producer’s Residue Gas in kind unless and until the Parties mutually agree for MarkWest to market Producer’s Residue Gas and, until such time, MarkWest shall have no obligation to market Producer’s Residue Gas. The Parties will work together in good faith to develop, and will agree upon in writing, the process and procedures that the Parties will follow in connection with the nomination and scheduling of Producer’s Residue Gas, including, without limitation, the deadlines for submitting nominations and changes thereto and procedures for minimizing imbalances (such procedures, the “Residue Gas Nomination Procedures”). The Parties recognize that MarkWest shall be designated by the downstream pipeline carriers at the Redelivery Point(s) as the point operator and shall be considered by such pipeline carriers to be responsible for the operation of MarkWest’s pipeline interconnections to the pipeline carriers at the Redelivery Point(s). Upon MarkWest entering into operational balancing agreements (“OBAs”) with such pipeline carriers, MarkWest shall be responsible for the administration of all such OBAs and for all terms and conditions of any such OBA. The Parties recognize that certain Residue Gas imbalances may occur, and each calendar month, the Parties agree to actively communicate and cooperate with each other, and with any interconnecting pipeline at the Redelivery Point(s), to review appropriate data to identify any imbalance, and to eliminate or remedy any imbalance as soon as either Party becomes aware of an imbalance. The Parties further agree to manage daily receipts and deliveries so that the imbalances shall be kept as near to zero as practicable. MarkWest will use efforts in accordance with industry standards to manage any imbalances with interconnecting pipeline(s) at the Redelivery Point(s) physically, but to the extent that any such imbalances are balanced by payments between MarkWest and any such interconnecting pipeline(s) at the Redelivery Point(s), the actual amount of such payment (whether paid by or to MarkWest) will be passed through to Producer to the extent such imbalances are attributable or related to Producer or Producer’s Gas. Each Party will indemnify and hold harmless the other Party and its Indemnified Parties from any and all costs, expenses, liabilities, or damages (including without limitation, pipeline imbalances, penalties, court costs, and attorney fees) arising due to any such pipeline imbalances caused by such Party’s failure to comply with the Residue Gas Nomination Procedures; provided, however, MarkWest shall not be responsible for eliminating any imbalances between Producer and any third party, and MarkWest shall not be required to deviate from MarkWest’s standard operating and accounting procedures to reduce or eliminate any such imbalances. 

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10.2 Producer shall have the right to take all or a portion of Residue Gas in kind, subject to the requirements set forth in this Section 10.2. Producer must provide MarkWest with at least six (6) months prior written notice of its election to take Residue Gas in kind, provided that if MarkWest has, before it receives Producer’s notice, entered into any contractual arrangements for the sale of any of the Residue Gas for a term that ends after the end of the six (6) month notice period (“Prior Sales Arrangement”), then Producer’s right to take such Residue Gas in kind shall not begin until the end of such Prior Sales Arrangement with respect to the applicable Residue Gas. Such notice shall identify the effective date of such election, provided that the effective date shall be the first day of a calendar month. Once the election is made and becomes effective, such election shall remain in effect, and Producer shall be required to continue to take such portion of the Residue Gas in kind, continuously for at least twelve (12) months. 

[REDACTED]* 

ARTICLE 11: PAYMENTS 

11.1 MarkWest shall provide Producer with a statement explaining fully how all consideration due (including deductions) under the terms of this Agreement was determined not later than the last day of the Accounting Period following the Accounting Period for which the consideration is due. 

11.2 MarkWest shall deduct fees owed by Producer under this Agreement from amounts otherwise due Producer for Residue Gas, if any, and the net amount remaining will be paid no later than the last day of the Accounting Period following the Accounting Period during which the Gas was delivered hereunder. During any Accounting Period, if no amounts are otherwise due Producer hereunder, then Producer shall pay MarkWest within thirty (30) days of receipt of the statement setting forth such amount. 

11.3 Either Party, on thirty (30) days prior written notice, shall have the right at its expense, at reasonable times during business hours, to audit the books and records of the other Party to the extent necessary to verify the accuracy of any statement, allocation, measurement, computation, charge, or payment made under or pursuant to this Agreement. The scope of any audit shall be limited to the twenty four (24) month period immediately prior to the month in which notice is given (“Audit Period”). However, no audit may include any time period for which a prior audit hereunder was conducted, and no audit may occur more frequently than once each twelve (12) months. Except in the case of material misrepresentation or fraud, all statements, allocations, measurements, computations, charges, or payments made in any period prior to the Audit Period shall be conclusively deemed true and correct and shall be final for all purposes. To the extent that the foregoing varies from any applicable statute of limitations, the Parties expressly waive all such other applicable statutes of limitations. The Parties acknowledge and agree that, in connection with any audit hereunder, MarkWest shall not be required to disclose to Producer the names of other MarkWest customers but shall disclose to Producer the settlement terms for those customers to enable Producer to determine whether MarkWest has complied with its agreement under Section 10.3. 

ARTICLE 12: FORCE MAJEURE 

12.1 In the event a Party is rendered unable, wholly or in part, by Force Majeure (as hereinafter defined), to carry out its obligations under this Agreement, other than the obligation to make any payments due hereunder, the obligations of that Party, so far as they are affected by Force Majeure, shall be suspended from the inception and during the continuance of the inability, and the cause of the Force Majeure, as far as possible, shall be remedied with reasonable diligence. The Party affected by Force Majeure shall provide the other Party with written notice of the Force Majeure event, with reasonably full detail of the Force Majeure and with a reasonable plan for attempting to overcome or mitigate the effect of any such Force Majeure (to the extent such Force Majeure can be overcome or mitigated) within a reasonable time after the affected Party learns of the occurrence of the Force Majeure event. The settlement of strikes, lockouts, and other labor difficulty shall be entirely within the discretion of the Party having the difficulty, and nothing herein shall require the settlement of strikes, lockouts, or other labor difficulty. As used herein, “Force Majeure” shall mean any cause or condition not within the control of the Party claiming suspension (to the extent such cause or condition was not caused by such Party’s gross negligence or willful misconduct) and which, by the exercise of commercially reasonable diligence, such Party is unable to prevent or overcome, and, without limiting the generality of the foregoing, includes major equipment failures; inabilities or delays, despite commercially reasonable efforts, in obtaining requisite permits, consents and authorizations; and delays occasioned by governmental actions. Notwithstanding anything to the contrary herein, in the event any Party claims suspension of its obligations under this Agreement due to an event of Force Majeure for more than 180 days during any 365-day period, then the Party not claiming such event of Force Majeure shall be entitled to terminate this Agreement upon ten (10) days written notice to the Party claiming such event of Force Majeure. 

ARTICLE 13: LIABILITY AND INDEMNIFICATION 

13.1 As among the Parties hereto, Producer and any of its designees shall be in custody, control and possession of the Gas hereunder, including, without limitation, any portion thereof which accumulates as liquids, until that Gas is delivered to the Receipt Point(s) and after any portion of the Gas is redelivered to Producer or for Producer’s account at a Redelivery Point. 

Page 11 of 20

13.2 As among the Parties hereto, MarkWest and any of its designees shall be in custody, control and possession of (i) the Gas hereunder, including, without limitation, any portion thereof which accumulates as liquids, from the delivery of that Gas at the Receipt Point(s) until the Gas is redelivered to Producer at a Redelivery Point and (ii) the Plant Products and the Fractionated Products to the extent set forth in the NGL Exchange Agreement. 

13.3 Each Party (“Indemnifying Party”) hereby covenants and agrees with the other Party, and its Affiliates, and each of their directors, officers and employees (“Indemnified Parties”), that except to the extent caused by an Indemnified Party’s gross negligence or willful conduct, the Indemnifying Party shall protect, defend, indemnify and hold harmless the Indemnified Parties from, against and in respect of any and all Losses incurred by the Indemnified Parties to the extent those Losses (i) arise from claims brought by any of the Indemnifying Party’s employees, its contractors or subcontractors, or their employees for Losses due to bodily injury, death, or damage to property or (ii) are not covered by clause (i) and arise from or are related to: (a) the Indemnifying Party’s facilities and the ownership or operation thereof; or (b) the Indemnifying Party’s possession and control of the Gas and Plant Products. 

ARTICLE 14: TITLE 

14.1 Producer represents and warrants that it owns, or has the right to commit, all Gas committed under this Agreement and to deliver that Gas to the Receipt Point(s) for the purposes of this Agreement, free and clear of all liens, encumbrances and adverse claims. If the title to Gas delivered by Producer hereunder is disputed or is involved in any legal action, MarkWest shall have the right to withhold payment (without interest), or cease receiving the Gas, to the extent of the interest disputed or involved in legal action, during the pendency of the action or until title is freed from the dispute, or until Producer furnishes, or causes to be furnished, indemnification to save MarkWest harmless from all claims arising out of the dispute or action, with surety reasonably acceptable to MarkWest. Producer hereby indemnifies MarkWest against and holds MarkWest harmless from any and all Losses arising out of or related to any breach of the foregoing representation and warranty. 

14.2 Title to all Gas shall remain in Producer until such time as the Gas is sold. Except as may otherwise be agreed to in writing by the Parties, title to the Plant Products shall remain in Producer until such time as the Plant Products are delivered to the NGL Receipt Point. Title to the Fractionated Products allocated to Producer under the NGL Exchange Agreement shall transfer to Producer as set forth in the NGL Exchange Agreement. 

ARTICLE 15: ROYALTY AND TAXES 

15.1 Producer shall have the sole and exclusive obligation and liability for the payment of all persons due any proceeds derived from the Gas delivered under this Agreement, including royalties, overriding royalties, and similar interests, in accordance with the provisions of the leases or agreements creating those rights to proceeds. In no event will MarkWest have any obligation to those persons due any of those proceeds of production attributable to the Gas under this Agreement. 

15.2 Producer shall pay and be responsible for all Taxes levied against or with respect to Producer’s Gas delivered or services provided to Producer under this Agreement, except for any MarkWest local, state or federal income taxes. Except for MarkWest local, state or federal income taxes, MarkWest shall under no circumstances become liable for Taxes, unless designated to remit Taxes on behalf of Producer by any duly constituted jurisdictional agency having authority to impose such obligations on MarkWest, in which event the amount of Taxes remitted on Producer’s behalf shall be (a) reimbursed by Producer upon receipt of invoice, with corresponding documentation from MarkWest setting forth such payments, or (b) deducted from amounts otherwise due Producer under this Agreement. 

15.3 Producer hereby agrees to defend and indemnify and hold MarkWest harmless from and against any and all Losses arising from the payments made by Producer in accordance with Sections 15.1 and 15.2, above, including, without limitation, Losses arising from claims for the nonpayment, mispayment, or wrongful calculation of those payments. 

ARTICLE 16: ASSIGNMENTS 

16.1 This Agreement shall extend to and be binding upon the Parties hereto, their successors, and assigns. Subject to the provisions below, this Agreement and the rights, duties or obligations of the Parties hereunder may be assigned or conveyed in whole; provided, however, that except as set forth in the following sentence, neither Party shall assign or transfer this Agreement and any rights, duties or obligations hereunder, without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Either Party may make such an assignment or transfer to an Affiliate without seeking the prior written consent of the other Party. A reasonable basis for withholding consent may include (i) the financial condition of the assignee raising reasonable concern relating to its ability to perform under this Agreement, or (ii) concerns regarding the administration of this Agreement among multiple assignees of Producer unless the assignees appoint an agent to represent them in connection with this Agreement in a manner reasonably satisfactory to the other Party. All assignments and conveyances of either the wells and leaseholds that are covered by this Agreement or the Facilities shall be subject to this Agreement, including the foregoing provisions of this Article 16. No assignment shall relieve the assignor of any of its duties or liabilities hereunder which arose prior to such assignment, but the assignee shall assume all duties and obligations of the assignor arising from and after such assignment and the assignor shall be relieved of such duties and obligations arising from and after such assignment. No transfer of, or succession to, the interest of any Party hereto, either in whole or partially, shall affect or bind the other Party until the first day of the month following the month in which the other Party shall have received written notification thereof. 

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ARTICLE 17: MISCELLANEOUS 

17.1 The failure of any Party hereto to exercise any right granted hereunder shall not impair nor be deemed a waiver of that Party’s privilege of exercising that right at any subsequent time or times. 

17.2 This Agreement shall be governed by, construed, and enforced in accordance with the laws of the Commonwealth of Pennsylvania without regard to choice of law principles. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT. Any litigation arising out of or in any way related to this Agreement shall be brought and maintained in the state and federal courts having jurisdiction in Pennsylvania. 

17.3 This Section 17.3 shall apply to all disputes between the Parties arising under this Agreement except for disputes pertaining to claims for indemnification which arise in connection with or grow out of claims asserted against either Party by a third party. A dispute that is subject to this Section 17.3 is referred to herein as a “Dispute.” When a Dispute has arisen, either Party may give the other Party written notice of the Dispute (“Dispute Notice”). In the event a Dispute Notice is given, the Parties shall attempt to resolve the Dispute promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for the matter. Within ten (10) days after delivery of the Dispute Notice, the receiving Party shall submit to the other a written response. Thereafter, the executives shall confer in person or by telephone promptly to attempt to resolve the Dispute. All reasonable requests for information made by one Party to the other will be honored. All negotiations and proceedings pursuant to this Section 17.3 are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence and any additional confidentiality protections provided by applicable law. If the Parties have not resolved the Dispute within forty-five (45) days following submission of the Dispute Notice, either Party may file a claim with the American Arbitration Association (the “AAA”) and such Dispute will then be subject to binding arbitration pursuant to the Commercial Dispute Resolution Rules of the AAA. All in-person arbitration proceedings will be held in Pittsburgh, Pennsylvania. Subject to Section 17.8, the arbitrator(s) may award costs, including without limitation attorneys’ fees, arbitrator fees, and fees paid to the AAA, to the prevailing Party and shall maintain jurisdiction over the Parties in order to award further costs in connection with seeking any judgment to enforce the award or in collecting any amount due under the award. 

17.4 The Parties agree that (a) MarkWest shall keep confidential all information provided by Producer to MarkWest pertaining to Producer’s exploration and development plans, production forecasts, acreage positions and other non-public information of Producer, and (b) the Parties shall keep the terms of this Agreement confidential and not disclose the same to any other persons, firms or entities without prior written consent (of Producer in the case of (a) or the other Party in the case of (b)); provided, the foregoing shall not apply to disclosures compelled by law or court order; or to disclosures to a Party’s Affiliates or such Party’s or its Affiliates’ employees, directors, officers, partners, prospective partners or financing sources, financial advisors, consultants, attorneys, banks, or institutional investors provided those persons, firms or entities likewise agree to keep this Agreement confidential. 

17.5 Any change, modification or alteration of this Agreement shall be in writing, signed by the Parties; and, no course of dealing between the Parties shall be construed to alter the terms of this Agreement. 

17.6 All exhibits and appendices to this Agreement are hereby incorporated into and made part of this Agreement for all purposes. This Agreement, including all exhibits and appendices, contain the entire agreement between the Parties with respect to the subject matter hereof, and there are no oral or other promises, agreements, warranties, obligations, assurances, or conditions precedent, affecting it. 

17.7 The terms and provisions of this Agreement are for the sole benefit of MarkWest and Producer, and no third party is intended to benefit herefrom other than the Indemnified Parties. 

17.8 NO BREACH OF THIS AGREEMENT OR CLAIM FOR LOSSES UNDER ANY INDEMNITY OBLIGATION CONTAINED IN THIS AGREEMENT SHALL CAUSE ANY PARTY TO BE LIABLE FOR, NOR SHALL LOSSES INCLUDE, ANY DAMAGES OTHER THAN ACTUAL AND DIRECT DAMAGES, AND EACH PARTY EXPRESSLY WAIVES ANY RIGHT TO CLAIM ANY OTHER DAMAGES, INCLUDING, WITHOUT LIMITATION, CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES. 

17.9 This Agreement shall be subject to all applicable federal, state, and local laws, rules, regulations, and orders affecting either Producer or MarkWest and that pertain to the Facilities or the operation thereof. In the event any one or more of the provisions of this Agreement shall be found to be violative of any applicable order, rule, or regulation of any regulatory body having jurisdiction, or of any valid law of the United States or any state or other governmental entity having jurisdiction, such provision or provisions shall be deemed to be modified to the extent necessary to comply with such order, rule, regulation, or law; provided, however, that in the event that a material term under this Agreement is so modified, the Parties will, timely and in good faith, revise and amend this Agreement in a manner which preserves, as closely as possible, each Party’s business and economic objectives as expressed by the Agreement prior to such modification. 

Page 13 of 20

17.10 Unless otherwise provided herein, any notice, request or demand which either Party desires to serve upon the other regarding this Agreement shall be made in writing and shall be considered as delivered when hand delivered, or when delivery is confirmed by pre-paid delivery service (such as FedEx, UPS, DHL or a similar delivery service), or when sent via email, or, if mailed by United States certified mail, postage prepaid, three (3) days after mailing, or, if sent by facsimile transmission, when receipt is confirmed by the equipment of the transmitting Party; provided, if sent by email after normal business hours or if receipt of a facsimile transmission is confirmed after normal business hours, receipt shall be deemed to be the next Business Day. Such notice shall be given to the other Party at the following address, or to such other address as either Party shall designate by written notice to the other: 

If to Producer: 

R.E. Gas Development, LLC 

366 Walker Drive 

State College, PA 16801 

Attention: Director, Marketing 

Phone: 814.278.7777 

Facsimile: 814.278.7286 

Email: dspringinatic@rexenergycorp.com 

With a copy to: 

R.E. GAS DEVELOPMENT, LLC 

366 Walker Drive 

State College, PA 16801 

Attention: Office of the General Counsel 

Phone: 814.278.7113 

Facsimile: 814.278.7286 

Email: jmcdonough@rexenergycorp.com 

If to MarkWest: 

MarkWest Liberty Bluestone, L.L.C. 

1515 Arapahoe Street 

Tower 1, Suite 1600 

Denver, CO 80202 

Attn: Chief Operating Officer 

Phone: (303) 925-9200 

Facsimile: (303) 925-9305 

Email: jmollenkopf@markwest.com 

With a copy to: 

MARKWEST LIBERTY BLUESTONE, L.L.C. 

1515 Arapahoe Street 

Tower 1, Suite 1600 

Denver, CO 80202 

Attn: General Counsel 

Phone: (303) 925-9200 

Facsimile: (303) 925-9308 

Email: cbromley@markwest.com 

17.11 This Agreement may be executed in any number of counterparts, each of which shall be considered an original, and all of which shall be considered one instrument. This Agreement shall not become effective unless and until executed by all Parties. 

17.12 Rex shall serve as administrator (“Administrator”) during the Term of this Agreement for all matters involving administration of this Agreement and Producer’s Gas hereunder, including, but not limited to, (i) nominations, scheduling, allocations and measurement of Producer’s Gas, elections to take Producer’s Gas in kind, and, after the Ethane Service Commencement Date, nominations for the recovery of ethane, (ii) giving and receiving notices, statements, invoices, correspondence and communications hereunder, and (iii) making payments to and receiving payments from MarkWest under this Agreement. Administrator hereby accepts and agrees to the terms of such administrative relationship. MarkWest is hereby directed to comply with the instructions of Administrator with respect to this Agreement and Producer’s Gas. Administrator acknowledges and agrees that MarkWest shall incur no costs with respect to the administrative services to be performed by Administrator pursuant hereto and MarkWest shall not incur any liability for complying with Administrator’s instructions with respect to the Agreement pursuant to this Section 17.12. 

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17.13 If requested, each Party will partially assign to the other Party at no cost, insofar as the granting Party has the right to do so, single line easements or rights-of-way over, across, and under the lands covered by the granting Party’s leases, right-of-way agreements, or property owned in fee, with full right of ingress and egress, for the purposes of exercising such requesting Party’s rights or obligations under this Agreement; provided that, (i) the exercise of the rights by the requesting Party under this Section 17.13 will not unreasonably interfere with the granting Party’s operations or with the rights of owners in fee and (ii) the requesting Party shall make such payments, bear such costs and expenses and assume such obligations as are set forth in the assigned lease or right-of-way agreement. All facilities and other equipment acquired, placed, or installed by a Party pursuant to the provisions of this Section 17.13, shall remain the property of such Party and may be removed by that Party at any time. From time to time, each Party shall execute, acknowledge and deliver to the other Party such further instruments and take such other action as may be reasonably requested in order to accomplish more effectively the purposes of the transactions contemplated by this Agreement, including executing assignment instruments in a form to be filed of record to effectuate the Parties’ respective rights under this Section 17.3. 

ARTICLE 18: PRODUCER GUARANTY 

18.1 Payment Guaranty. Guarantor unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to MarkWest the punctual and complete payment in full when due of all amounts due from Rex under the Agreement (collectively, the “Rex Payment Obligations”). Guarantor agrees that MarkWest shall be entitled to enforce directly against Guarantor any of the Rex Payment Obligations. 

18.2 Guaranty Absolute. Guarantor hereby guarantees that the Rex Payment Obligations will be paid strictly in accordance with the terms of the Agreement. The obligations of the Guarantor under this Agreement constitute a present and continuing guaranty of payment, and not of collection or collectability. The liability of the Guarantor under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of: 

a.any assignment or other transfer of the Agreement or any of the rights thereunder of MarkWest; 

b. any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to the Agreement; 

a. any acceptance by MarkWest of partial payment or performance from Producer; 

b. any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to MarkWest or any action taken with respect to the Agreement by any trustee or receiver, or by any court, in any such proceeding; 

c. any absence of any notice to, or knowledge of, the Guarantor, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (a) through (d); or 

d. any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor. 

18.3 Waiver. Guarantor hereby waives promptness, diligence, presentments, protests and notice of acceptance and any other notice relating to any of the Rex Payment Obligations and any requirement for MarkWest to protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against the Producer, any other entity or any collateral. 

18.4 Continuing Guaranty. This Article 18 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment in full of all the Rex Payment Obligations for which the Guarantor is responsible, (ii) be binding upon the Guarantor and each of its successors and assigns and (iii) inure to the benefit of and be enforceable by MarkWest and its successors, transferees and assigns. 

[signature page follows] 

 

 

 

Page 15 of 20

IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first set forth above. 

 

	
R.E. Gas Development, LLC
	
 
	
MarkWest Liberty Bluestone, L.L.C.

	
 
	
 
	
 
	
 
	
 

	
By:
	
  
	
 /s/ Thomas C. Stabley
	
 
	
By:
	
  
	
/s/ Frank M. Semple

	
Name:
	
 
	
 Thomas C. Stabley
	
 
	
Name:
	
 
	
Frank M. Semple

	
Title:
	
 
	
 Chief Executive Officer
	
 
	
Title:
	
 
	
Chairman, President & CEO

	
 
	
 
	
 
	
 
	
 

	
Guarantor: 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
REX ENERGY CORPORATION
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
 /s/ Thomas C. Stabley
	
 
	
 
	
 
	
 

	
Name:
	
 
	
 Thomas C. Stabley
	
 
	
 
	
 
	
 

	
Title:
	
 
	
 Chief Executive Officer
	
 
	
 
	
 
	
 

 

 

 

Signature Page to Amended and Restated Gas Gathering, 

Compression and Processing Agreement

LIST OF EXHIBITS 

Exhibit A - Dedication Area 

Exhibit B - Gathering Boundary 

Exhibit C - Dominion Transmission, Inc. Specifications 

 

 

 

 

 

 

EXHIBIT A 

DEDICATION AREA 

[REDACTED]* 

 

 

 

A-1

EXHIBIT B 

GATHERING BOUNDARY 

(see attached) 

[REDACTED]* 

 

 

 

B-1

EXHIBIT C 

DOMINION TRANSMISSION, INC. SPECIFICATIONS 

Quality Specifications of the downstream pipeline receiving Residue Gas from MarkWest: 

A. Hydrogen Sulfide and Total Sulfur: The gas shall contain not more than one quarter (1/4) grain of hydrogen sulfide per one hundred cubic feet and not more than twenty grains total sulfur or sulfur compounds per one hundred cubic feet. 

B. Carbon Dioxide and Nitrogen: The gas shall contain not more than three percent by volume of carbon dioxide, not more than four percent by volume of nitrogen, and shall contain not more than five percent by volume of combined non-hydrocarbon gases including, but not limited to, carbon dioxide, nitrogen and oxygen. 

C. Oxygen: The gas shall not contain in excess of two-tenths of one percent by volume of oxygen, and the Parties agree to exercise every reasonable effort to keep the gas completely free of oxygen. 

D. Dust, Gums, etc.: The gas shall be free of objectionable odors, dust, gum, dirt, impurities and other solid or liquid or hazardous matter which might interfere with its merchantability or cause injury to or interfere with proper operation of the Facilities, lines, regulators, meters or other appliances through which it flows. 

E. Bacteria: The gas and any associated liquids shall not contain any active bacteria or bacterial agent capable of contributing to or causing operational problems. Bacteria or bacterial agents include, but are not limited to, sulfate reducing bacteria (SRB) and acid producing bacteria (APB). If evidence of bacteria is discovered, Producer shall, upon MarkWest’s request, test for bacteria or bacterial agents. Such tests shall be conducted on samples taken from the meter run or other appurtenant piping using American Petroleum Institute (API) test method API-RP38 or any other test method acceptance to MarkWest which is currently available or may become available at any time during the term. 

C-1

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