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STANDSTILL AND AMENDMENT AGREEMENT

This Standstill and Amendment Agreement (this “Agreement”) is made and entered into as of March 11, 2020, by and among UNIT CORPORATION, a Delaware corporation (“Unit”), UNIT DRILLING COMPANY, an Oklahoma corporation (“Unit Drilling”), UNIT PETROLEUM COMPANY, an Oklahoma corporation (“Unit Petroleum”), and each of their respective successors and permitted assigns, is each, individually, called a “Borrower”, and, collectively, jointly and severally, the “Borrowers”), the Lenders party to the Existing Credit Agreement (as defined below) (each, individually a "Lender" and, collectively, the "Lenders") party hereto, and BOKF, NA dba Bank of Oklahoma, as administrative agent for the Lenders (the "Administrative Agent").

RECITALS:

A. The Borrowers, the signatory Lenders and the Administrative Agent signed a Senior Credit Agreement dated as of September 13, 2011, as amended by the: First Amendment and Consent to Senior Credit Agreement dated as of September 5, 2012; Second Amendment and Consent to Senior Credit Agreement dated as of April 10, 2015; Third Amendment to Senior Credit Agreement dated as of April 8, 2016; Fourth Amendment to Senior Credit Agreement dated as of April 2, 2018, and Fifth Amendment to Senior Credit Agreement dated October 18, 2018 (and as the same has been further amended, modified or supplemented prior to the date hereof, collectively, the "Existing Credit Agreement"). Under the Existing Credit Agreement, the Lenders severally established the Elected Commitments for the benefit of the Borrowers, subject to the Aggregate Maximum Credit Amounts and then-determined Borrowing Base.

B.Subject to the terms and conditions of this Agreement, the Administrative Agent and the Lenders have agreed to temporarily standstill from exercising certain rights and/or remedies under the Credit Agreement and other Loan Documents, provided that Administrative Agent and the Lenders hereby expressly reserve and preserve all of their respective rights and remedies (whether pursuant to the Credit Agreement or any other Loan Document, the UCC, at law, in equity or otherwise) with respect thereto and/or otherwise.

C.Each of the Credit Parties will receive substantial and valuable consideration and economic benefits from the agreements being made by Administrative Agent and the Lenders hereunder, upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by each of the Credit Parties, each of the undersigned parties hereby agrees as follows:

ARTICLE I
Definitions

Section 1.1. Terms Defined in Credit Agreement. Capitalized terms used in this Agreement and not otherwise defined herein have the meanings assigned to them in the Existing Credit Agreement.

Section 1.2. Certain Definitions. The following capitalized terms (a) for the purposes of this Agreement, shall have the following meanings and (b) are hereby added to Section 1.1. of the Credit Agreement where alphabetically appropriate:

 “Standstill Agreement” shall mean that certain Standstill and Amendment Agreement dated March 11, 2020 among the Credit Parties, Administrative Agent and the Lenders party thereto (as the same may be amended, modified, replaced, amended and restated and supplemented form time to time). 

"Standstill Effective Date" shall mean the date on which all of the conditions precedent set forth in Article 5 of the Standstill Agreement shall have been satisfied by the Credit Parties as determined by the Administrative Agent and Required Lenders or waived by the Administrative Agent and the Required Lenders in writing,.

"Standstill Period" shall mean the period commencing on the Standstill Effective Date and continuing until the earlier of: (i) the receipt by any Credit Party from the Administrative Agent of notice of the occurrence of any Termination Event and (ii) 3:00 p.m. Central time on April 15, 2020.

"Termination Event" shall mean the occurrence of any one or more of the following: (i) any representation or warranty made or deemed made by any Credit Party in this Agreement shall be false, misleading or erroneous in any material respect when made or deemed to have been made; (ii) any Credit Party shall fail to perform, observe or comply with any covenant, agreement or term contained in this Agreement or (iii) any (1) Default which is not cured within five (5) Business Days or (2) Event of Default shall occur under the Existing Credit Agreement or any of the other Loan Documents.

ARTICLE II
Nature and Standstill; Amendments to Existing Credit Agreement

Section 2.1. Standstill by Lenders. Subject to the terms, conditions and limitations of this Agreement and during the Standstill Period, the Administrative Agent and the Lenders hereby agree to temporarily standstill from making any final determination in connection with the pending Scheduled Redetermination of the Borrowing Base that was, pursuant to the Existing Credit Agreement, otherwise scheduled to be made on or about April 1, 2020, and from otherwise exercising their respective rights and remedies under the Existing Credit Agreement and the other Loan Documents. Notwithstanding any of the foregoing, the standstill granted by the Administrative Agent and the Lenders pursuant to this Agreement shall not constitute and shall not be deemed to constitute a waiver or release of (x) any Default, Event of Default, or occurrence of any Material Adverse Event, or (y) any other fact, event or occurrence under the Credit Agreement or any other Loan Document (whether now or hereafter existing, and whether or not now or hereafter known by Administrative Agent or any Lender to be existing). Administrative Agent and the Lenders hereby expressly reserve and preserve all of their respective rights and remedies (whether pursuant to the Credit Agreement or any other Loan Document, the UCC, at law, in equity or otherwise) respecting any and/or all such Defaults, Events of Default and/or other facts, events, occurrences and other matters, subject only to the applicable terms and conditions of this Agreement.

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Section 2.2. No Assurances or Other Arrangements. No assurances or commitments which are not expressly contained in this Agreement have been made by the Administrative Agent or any Lender on any issue, matter or resolution with respect to the Credit Agreement, the other Loan Documents, or otherwise. No agreements or modifications which are not expressly contained herein shall be binding or enforceable against the Administrative Agent and/or the Lenders unless set out in a subsequent written amendment or modification to the Credit Agreement, the other Loan Documents, or other agreement signed by the Borrowers (and/or other applicable Credit Parties), Administrative Agent and the requisite Lenders (or the Administrative Agent with the requisite consent of the Lenders, in accordance with the Credit Agreement), and nothing contained in this Agreement shall be construed as a binding commitment or impose any obligation on the Administrative Agent or any Lender to agree to any such terms or potential modifications, except for the Administrative Agent and the Lenders’ commitment as and to the extent expressly provided for herein to standstill during the Standstill Period, subject to the applicable terms, conditions and limitations as set forth in this Agreement.

Section 2.3. Intent of Parties. The parties hereto confirm their intention during the Standstill Period to discuss proposals for addressing various credit matters, with a view to possibly entering into further modifications to the Credit Agreement and other Loan Documents, but no assurances have been given to the Credit Parties that such discussions will be successful and no commitments (other than those commitments expressly contained in this Agreement) have been made by the Administrative Agent and/or any Lender on any issue, matter or resolution, whether with respect to the Credit Agreement, the other Loan Documents, or otherwise. Each Credit Party understands and hereby acknowledges that the terms of any potential modifications would be dependent, in part, upon various facts and circumstances, including any factual matters and related conditions that the Administrative Agent and the requisite Lenders may deem necessary or desirable to require as conditions (whether precedent and/or subsequent) to granting any such potential modifications. No modifications or waivers shall be binding or enforceable unless set out in a subsequent written amendment to the Credit Agreement, the other Loan Documents or other agreement signed by the Borrowers (and/or other applicable Credit Parties), the Administrative Agent and the Lenders (or the Administrative Agent with the requisite consent of the Lenders, in accordance with the Credit Agreement), and nothing contained in this Agreement shall be construed as a binding commitment or impose any obligation on the Administrative Agent or any Lender to agree to any such potential modifications or waivers. 

Section 2.4. Amendments to Existing Credit Agreement. Effective as of the Standstill Effective Date:

A.The following is hereby added as a new Section 5.26 to the Credit Agreement 

“5.26   Accounts. The Accounts Schedule to this Agreement (in the form attached as the Accounts Schedule to the Standstill Agreement) accurately sets forth, as of the Standstill Effective Date, each bank account of the Credit Parties (whether an operating account, a Deposit Account (as defined in Section 6.11(a)(v)), a Securities Account (as defined in Section 6.11(a)(v)), a Commodity Account (as defined in 
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Section 6.11(a)(v)), or otherwise) maintained by such Credit Party (including the respective account number) and the name of the respective financial institution with which each such account is maintained. Without limitation of the foregoing (i) on or before the Standstill Effective Date, and as a condition precedent to the Standstill Agreement becoming effective in accordance with its terms, the Credit Parties shall have moved all of the accounts that are required by Section 6.11(a)(v) to be maintained with Administrative Agent over to the Administrative Agent, and (ii) within thirty (30) days after the Standstill Effective Date (or such later date as Administrative Agent may reasonably agree), the Credit Parties shall have obtained and delivered to Administrative Agent a Control Agreement from each applicable Permitted Third Party Bank (as defined in Section 6.11(a)(v)) with respect to each of the accounts for which a Control Agreement is required by Section 6.11(a)(v). From and after the Standstill Effective Date, the Credit Parties shall, at all times, remain in compliance with Section 6.11(a)(v).”

B.The following is hereby added as a new Section 6.11(a)(v) to the Credit Agreement: 

“(v) To facilitate the Credit Parties’ grant of a perfected first priority Lien in favor of the Administrative Agent (for the ratable benefit of the Lenders) in each of the accounts more particularly described herein (and in all monies and properties held therein), on or before the Standstill Effective Date, and as a condition precedent to the Standstill Agreement becoming effective in accordance with its terms, and at all times thereafter, each of the Credit Parties shall maintain the following accounts with the Administrative Agent: (i) all primary operating, collection and deposit accounts (including, but not limited to, all such Deposit Accounts (as defined below), Commodity Accounts (as defined below) and Securities Accounts (as defined below)), regardless of the balances thereof; and (ii) excepting only that certain credit card collateral account maintained at BBVA Compass Bank and holding, at all times, not more than Five Hundred Thousand and No/100THS Dollars ($500,000.00) in the aggregate, all other accounts with a balance of at least Two Hundred and Fifty Thousand and NO/100THS Dollars ($250,000.00) (including, but not limited to, all such Deposit Accounts, Commodity Accounts and Securities Accounts). Except for those accounts more particularly described within the immediately preceding sentence, from and after the Standstill Effective Date, each other account (except for (1) payroll accounts, (2) withholding tax, trust, and fiduciary accounts, and (3) employee wage and benefits accounts, all of which the Credit Parties may maintain without restriction) that is maintained by any Credit Party shall be maintained with either the Administrative Agent, or with a Permitted Third Party Bank (as defined below) subject to a Control Agreement (as defined below) in favor of the Administrative Agent (for the ratable benefit of the Lenders). The Credit Parties shall cause a fully signed Control Agreement with respect to each 
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such existing account maintained with any Permitted Third Party Bank to be delivered to Administrative Agent within thirty (30) days after the Standstill Effective Date (or such later date as Administrative Agent may reasonably agree), and the Credit Parties shall cause a fully signed Control Agreement with respect to each newly created account maintained with any Permitted Third Party Bank to be delivered to Administrative Agent prior to deposit of any funds in any such new account. Notwithstanding anything to the contrary set forth herein, if, after the use of commercially reasonable efforts, any Credit Party believes that it will be unable to timely obtain and deliver to Administrative Agent any required Control Agreement respecting any account maintained with any Permitted Third Party Bank, then such Credit Party shall immediately (and, in all events, prior to the required outside delivery date to Administrative Agent for each such Control Agreement) close each such applicable account with the bank or financial institution then-maintaining same and cause all of the amounts and/or other properties (including, as applicable, securities) deposited in each such account to be moved to an account that is either maintained by Administrative Agent or maintained with a Permitted Third Party Bank that is already subject to an existing Control Agreement in favor of the Administrative Agent (for the ratable benefit of the Lenders). 

For purposes of this Agreement, the following capitalized terms shall have the following meanings: (i) “Permitted Third Party Bank” shall mean any bank or other financial institution (including any Lender or its Affiliate, other than Administrative Agent) with whom a Credit Party maintains an account for which a Control Agreement has (whether now or hereafter) been executed and delivered in favor of Administrative Agent; (ii) “Control Agreement” means a control agreement, in form and substance reasonably satisfactory to the Administrative Agent, providing for, after the occurrence of any Event of Default, the Administrative Agent’s exclusive control of a Deposit Account, Securities Account or Commodity Account, as applicable, after notice, executed and delivered by the applicable Credit Party and the applicable securities intermediary (with respect to a Securities Account), bank or other financial institution (with respect to a Deposit Account) or commodity intermediary (with respect to a Commodity Account), in each case at which such relevant account is maintained, together with all amendments, modifications, replacements, reaffirmations and supplements thereto; (iii) “Deposit Account” has the meaning assigned to such term in the applicable UCC; (iv) “Securities Account” has the meaning assigned to such term in the applicable UCC; (v) “Commodity Account” has the meaning assigned to such term in the applicable UCC; and (vi) “UCC” means the Uniform Commercial Code as the same may be in force and effect from time to time, including as hereafter modified or re-enacted, in the State of Delaware, or in the State of Oklahoma, or in any one or more of any other jurisdictions in which any of the Property or other Collateral securing the Obligations, or any 
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portion of any of the foregoing, is now or hereafter situated, as applicable.”

C.The following is hereby added as a new Section 6.12 to the Credit Agreement: 

“6.12   Letters in Lieu. On or before the Standstill Effective Date, and as a condition precedent to the Standstill Agreement becoming effective in accordance with its terms, the Borrowers shall, and shall cause each applicable Credit Party, to execute and deliver counterparts (in such number as may be reasonably requested by the Administrative Agent) of any Letters in Lieu (as defined below) as may be required at such time by the Administrative Agent. 

For purposes of this Section 6.12, the term “Letters in Lieu” shall mean, collectively, those letters in lieu of transfer orders in form and substance reasonably satisfactory to the Administrative Agent and executed by a Borrower or any other Credit Party executing a Mortgage.”

D.The following is hereby added as a new Section 6.13 to the Credit Agreement: 

“6.13 Further Assurances. Without limitation of anything set forth elsewhere in this Agreement, Borrowers shall, and shall cause each other Credit Party, at Borrowers’ sole expense, to promptly execute and deliver to the Administrative Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of any Credit Party, as the case may be, in the Loan Documents, including the Letters in Lieu, or to further evidence and more fully describe the Collateral intended as security for the Obligations, or to correct any omissions in this Agreement or the Security Instruments, or to state more fully the Obligations secured therein, or to perfect, protect or preserve any Liens created pursuant to this Agreement or any of the Security Instruments or the priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be necessary or appropriate, in the reasonable discretion of the Administrative Agent, in connection therewith.”

E.The following is hereby added as new Section 6.14 to the Credit Agreement:

“6.14 Anti-Cash Hoarding. On (a) the last Business Day of each calendar week, and (b) if a Default, Event of Default or Deficiency has occurred and is continuing, on any Business Day (such day, whether pursuant to clause (a) or (b), the “Excess Cash Test Day”), if the Consolidated Cash Balance exceeds Fifteen Million and NO/100THS Dollars 
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($15,000,000.00) (the amount of such excess being referred to as the “Excess Cash”) at the end of such Excess Cash Test Day, then the Borrowers, on each such Excess Cash Test Day, shall make a mandatory prepayment in respect of the outstanding amount of the  Loans in an amount equal to the amount of all such Excess Cash. Without limitation of the foregoing, no such prepayment shall result in the reduction of the Aggregate Elected Commitment Amounts in effect hereunder at such time. Concurrently with the making of such prepayment the Borrowers shall furnish to the Administrative Agent a report in reasonable detail (in form and substance reasonably acceptable to Administrative Agent) setting forth the computation of Excess Cash on such Excess Cash Test Day.  For purposes of this Agreement, the following capitalized terms shall have the following meanings: 

i.“Cash Equivalents” means: (a) marketable securities issued or fully guaranteed or insured by the United States Government or any agency thereof and backed by the full faith and credit of the United States having maturities of not more than twelve (12) months from the date of acquisition; (b) certificates of deposit, time deposits, or Eurodollar time deposits, having in each case a tenor of not more than twelve (12) months from the date of acquisition issued by any Lender or any U.S. commercial bank or any branch or agency of a non-U.S. commercial bank licensed to conduct business in the U.S. having combined capital and surplus of not less than Five Hundred Million and NO/100THS Dollars ($500,000,000.00) and having a rating of “A” or better by a nationally recognized rating agency; (c) commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody’s at the time of acquisition, and in either case having a tenor of not more than twelve (12) months; (d) repurchase obligations with a term of not more than one-hundred eighty (180) days for underlying securities of the types described in clauses (a) and (b) entered into with any financial institution or recognized securities dealer meeting the qualifications specified in clause (b) above; and (e) deposits in money market funds and investments investing exclusively in investments described in clauses (a), (b), (c), and (d) above; 

ii.“Consolidated Cash Balance” means, as of any date, the aggregate amount of cash and Cash Equivalents of the Credit Parties as of such date (other than Excluded Cash); and

iii.“Excluded Cash” means, as of any date (a) any cash set aside to pay obligations incurred during the ordinary course of business of the Credit Parties that either (i) are then due and owing to third parties, as permitted under this Agreement, and for which the Credit Parties have issued checks or have initiated wires or ACH transfers in order to pay such amounts or (ii) will be paid 
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within five (5) Business Days of such date, and (b) any cash contained in any escrow accounts, payroll accounts, credit card collateral accounts, withholding tax, trust, or fiduciary accounts, or employee wage and benefits accounts.”

F.Section 7.1 of the Existing Credit Agreement is hereby amended by adding the following at the end thereof: 

“Notwithstanding any of the foregoing, during the Standstill Period: (x) no Restricted Payment (as defined below) shall be made by any Borrower, any Subsidiary or any Guarantor, other than (A) such Restricted Payments that are made under and in strict accordance with preceding clause (i) herein above (relating to certain dividends and distributions made by Subsidiaries), and (B) Restricted Payments permitted to be made during the Standstill Period as set forth in any Approved TWCG Budget (which Approved TWCF Budget and permitted Restricted Payments shall be subject to the reasonable prior written approval of the Administrative Agent and, if applicable, the Required Lenders); and (y) no Borrower, nor any Subsidiary nor any Guarantor shall, directly or indirectly, pay any bonus, incentive, performance pay or similar payment or compensation to or increase the compensation or other similar payments paid (other than regularly scheduled increases in compensation made in the ordinary course of business), directly or indirectly, to (A) any officer (at or above the level of vice president), director, partner, member, manager, shareholder or other equity holder of any Borrower, any Subsidiary or any Guarantor, or (B) any other direct or indirect family member of any of the foregoing Persons, including, without limitation, any direct or lineal descendent thereof, provided, (1) Borrowers shall be permitted to pay the previously negotiated executive compensation package to Larry Pinkston upon his March 31, 2020 departure as Chief Executive Officer of Unit and (2) Borrowers shall be permitted to make payments with respect to the items set forth in clause (y) above to the extent set forth in any Approved TWCG Budget (which Approved TWCF Budget and permitted payments shall be subject to the reasonable prior written approval of the Administrative Agent and, if applicable, the Required Lenders).

For purposes of this Section 7.1, “Restricted Payments” shall mean, collectively, any declaration, payment (whether of any dividend or otherwise), distribution on, or the making of any payment on account of, or the setting aside of any assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Equity Interest of any Borrower, any Subsidiary or any Guarantor, whether now or hereafter outstanding, or the making of any other dividend or distribution in respect of any Equity Interest in any Borrower, any Subsidiary or any Guarantor or otherwise, either directly or indirectly, whether in cash or property or in obligations of any Borrower, any Subsidiary or any Guarantor, or the making or offering to make any 
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payment or prepayment of principal, premium (if any), interest, fees (including, without limitation, fees to obtain any waiver or consent or any other fees) or other charges on, or otherwise effect any repurchase, redemption, purchase, exchange, retirement, defeasance, sinking fund or similar payment with respect to any Permitted Senior Notes and/or Permitted Subordinated Notes. For the avoidance of doubt, nothing contained herein shall prohibit the Borrowers, any Subsidiary or any Guarantor from (i) making or offering to make any payment or prepayment of principal, interest, fees or other charges on the Obligations and with respect to scheduled payments required on other Indebtedness which is expressly permitted to be outstanding and/or incurred under this Agreement in the ordinary course of such Persons’ business (provided, during the Standstill Period, in no event shall Borrowers be permitted to make any such payments or prepayments with respect to any Permitted Senior Notes, any Permitted Subordinated Notes and/or any redemption, refinancing, exchange, modification or other event or transaction therewith howsoever classified) and (ii) during the Standstill Period, making payments (but not prepayments) on the account of the then due and payable fees and expenses of the advisors and legal professionals of the Borrowers and the holders of the Permitted Subordinated Notes, in each case that are payable by Borrowers in connection with Borrowers’ ongoing negotiations with the holders of the Permitted Subordinated Notes and such permitted payments shall not be deemed to constitute Restricted Payments for purposes of the foregoing, subject to the applicable terms and conditions of the Standstill Agreement.”

ARTICLE III
Covenants of Credit Parties During Standstill Period

Notwithstanding anything to the contrary set forth in the Existing Credit Agreement or any other Loan Document, during the Standstill Period, the Credit Parties covenant and agree with the Lenders as follows:

Section 3.1. Compliance with Credit Agreement. Each Credit Party will abide by and comply with all covenants and agreements set forth in the Existing Credit Agreement and the other Loan Documents, as amended and modified by this Agreement. In the event of any express conflict between this Agreement and the Existing Credit Agreement or any of the other Loan Documents, this Agreement shall govern and be controlling. This Agreement shall be deemed to constitute: (i) one of the Loan Documents; and (ii) an amendment and modification to the Existing Credit Agreement. All references to the “Credit Agreement” appearing in any of the Loan Documents shall hereafter be deemed references to the Existing Credit Agreement, as amended, modified and supplemented by this Agreement, and as the same may be further amended by the Administrative Agent and the Borrowers (in accordance with the Credit Agreement).

Section 3.2. Thirteen Week Cash Flow (“TWCF”). 

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A.On or before 3:00 p.m. Central time on March 17, 2020, the Borrowers shall have furnished to the Administrative Agent a thirteen week cash flow budget, in form and substance acceptable to the Administrative Agent and the Required Lenders, together with such related information and/or materials as the Administrative Agent may deem reasonably necessary or desirable in connection therewith, all as certified by Unit’s chief financial officer as being true and correct in all material respects (the “Approved TWCF Budget”).

B.No later than 12:00 p.m. on the first Wednesday following week 1 of the Approved TWCF Budget, and on a weekly basis thereafter (each a “Test Date”), the Borrowers shall deliver to the Administrative Agent a weekly variance report (the “TWCF Variance Report”).  The TWCF Variance Report shall measure performance, on a cumulative basis for (i) all disbursements made in such prior week against the amount budgeted therefor in the Approved TWCF Budget and (ii) all disbursements made in the prior four weeks (or, if applicable, such shorter number of weeks elapsed since the delivery of the initial Approved TWCF Budget) against the amount budgeted therefor in the Approved TWCF Budget, and shall include calculations that demonstrate that the Borrowers are in compliance with the Permitted Variance (as defined below).

C.On each Test Date, the Borrowers shall demonstrate in each such TWCF Variance Report that, in the period covered by such TWCF Variance Report, the aggregate actual disbursements for the applicable time period, excluding (i) any professional fees and (ii) any fluctuations in the amount (but not the quantum of interest) of royalty payments, payments to working interest holders, or similar payments or ad valorem or other taxes due on account of production of oil and gas interests that are attributable to changes in commodity prices, shall not exceed the sum of the aggregate amount budgeted therefor in the Approved TWCF Budget for the applicable time period set forth in Section 3.2(B)(ii) above by more than ten percent (10%) of the budgeted amount (the “Permitted Variance”) on a cumulative basis for all disbursements made during the applicable time period.  Certification of compliance with this Section 3.2 shall be provided on such Test Date, concurrently with delivery of each TWCF Variance Report, and shall have been certified by Unit’s chief financial officer as being true and correct in all material respects, and be in a form and substance reasonably satisfactory to the Administrative Agent.

D.No later than 12:00 p.m. on the first Wednesday following week 1 of the Approved TWCF Budget, and on a weekly basis thereafter (or at such other times as the Borrowers may elect), the Borrowers may elect to propose an updated TWCF budget (the “Proposed TWCF Budget”) to the Administrative Agent accompanied by a certificate from Unit’s chief financial officer as being true and correct in all material respects and consistent in form and substance in all material respects to the Approved TWCF Budget. The Administrative Agent  may approve such Proposed TWCF Budget, which will then become the “Approved TWCF Budget” then in effect in Administrative Agent’s sole and absolute discretion; provided that (i) if the Administrative Agent does not provide notice of approval or disapproval of the Proposed TWCF Budget within three (3) Business Days, Administrative Agent will be deemed to have disapproved such Proposed TWCF Budget and (ii) if the Proposed TWCF Budget is not approved by the Administrative Agent (or deemed disapproved), the Approved TWCF Budget that was last approved by the Administrative Agent and, if applicable, the Required Lenders shall continue to be in effect.

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E.For the avoidance of doubt, no TWCF Variance Report or Proposed TWCF Budget shall require the Borrowers to “roll forward” any TWCF to have an end date later than the end date of the initial Approved TWCF Budget.

Section 3.3. No Advances in Excess of Amounts Permitted Hereunder. Notwithstanding anything to the contrary otherwise set forth elsewhere in the Credit Agreement, from and after the Standstill Effective Date and until the expiration of the Standstill Period (such period, the “Advance Reduction Period”), the Credit Parties shall not submit any one or more draw requests for any Advance(s) (and/or any other disbursement otherwise made in connection with any Credit Extension, but excluding for the avoidance of doubt any issuance of a Letter of Credit contained in an Approved TWCF Budget and otherwise permitted under the Credit Agreement) other than for operating expenses and other general corporate purposes incurred by Borrowers and their Subsidiaries in the ordinary course of business (including, without limitation, for purposes of drilling, exploration or other related activities and acquisitions of any property or assets, as expressly provided in an Approved TWCF Budget, subject to any Permitted Variance), provided, in no event during the Advance Reduction Period shall: (x) any Advance be requested for the purpose of making any payment in violation of Section 7.1 of the Credit Agreement (as amended hereby) or in violation of any other provision of the Credit Agreement; (y) any Advance be requested which exceeds One Million Five Hundred Thousand Dollars and No/100THS Dollars ($1,500,000) on an individual basis (unless otherwise expressly approved in an Approved TWCF Budget) and (z) the aggregate amount of all Advances that Borrowers may request during such Advance Reduction Period exceed the aggregate sum of (i) Fifteen Million and No/100THS Dollars ($15,000,000.00), plus (ii) any additional sum approved by the Administrative Agent and, if applicable, the Required Lenders in the final Approved TWCF Budget (calculated, with respect to this clause (z), net of any repayments or prepayments of the principal amount of any Loans made on or after the Standstill Effective Date). Lenders shall have no obligation to make any Advances to Borrower during the Advance Reduction Period in excess of the aggregate amount permitted by this Section 3.3, or for any purpose other than those that are expressly permitted in accordance with this Section 3.3, and all such Advances shall be subject to Borrowers’ satisfaction of the conditions set forth in Section 4.2 of, and otherwise under, the Credit Agreement.

Section 3.4. Weekly Status Updates. The Borrowers shall, and shall cause their financial advisors to, provide weekly status updates to the Administrative Agent and its financial advisors regarding the note holders and the unsecured notes and any discussions and/or agreements therewith, the Borrowers’ financial condition, operations and prospects whether via in-person meetings or telephone calls, and Borrowers shall deliver (or cause to be delivered) such information, documents and/or materials relating to the foregoing or otherwise as the Administrative Agent and its financial advisor may reasonably request from time to time.

ARTICLE IV
Representations and Warranties

To induce the Administrative Agent and the Lenders to enter into this Agreement, each Credit Party hereby represents and warrants to the Administrative Agent and the Lenders that: (i) this Agreement has been duly authorized, executed and delivered by such Credit Party in accordance with its applicable organizational documents, and constitutes its valid, legal and 
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binding obligation, enforceable against it in accordance with the terms hereof and thereof, respectively (subject only to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other Debtor Relief Laws (as defined below) relating to or affecting creditors’ rights generally and general principles of equity); (ii) no Event of Default or Default has occurred and is continuing under the Credit Agreement or any other Loan Document; (iii) the representations and warranties set forth in the Credit Agreement and in each other Loan Document are true and correct in all material respects on and as of the Standstill Effective Date as if made on and as of the Standstill Effective Date (except for any such representation and warranty which expressly relates to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects as of such earlier date), subject to any materiality qualifiers contained therein; (iv) each Credit Party as of the Standstill Effective Date, has neither opened nor maintains any accounts, including, without limitation, any Deposit Accounts, Securities Accounts or Commodity Accounts other than those listed in the Accounts Schedule attached hereto, and upon the taking of actions required in Section 5.3 hereof, with respect to each such required account, including, without limitation, each such required Control Agreement, as applicable, the Administrative Agent (for the ratable benefit of the Lenders) will have a valid, enforceable and perfected first priority Lien and security interest in all such accounts, if required, including, without limitation, all such Deposit Accounts, Securities Accounts and Commodity Accounts, if required; and (v) other than the Obligations owing as of the Standstill Effective Date, no Credit Party owes any other Indebtedness to any other Person, except to the extent otherwise permitted by the Existing Credit Agreement. For purposes of this Agreement and the Credit Agreement, the capitalized term "Debtor Relief Laws" means, collectively, the bankruptcy code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

ARTICLE V
Conditions Precedent

The (a) amendments contained in Section 2.4 of this Agreement will become effective and (b) Standstill Period shall commence, in each case on the date each of the following conditions precedent shall have been duly fulfilled by the Credit Parties (unless waived by the Administrative Agent in writing in accordance with the Credit Agreement):

Section 5.1. Execution and Delivery of Agreement. Each Credit Party and the Required Lenders shall have executed and delivered its signed counterpart to this Agreement to the Administrative Agent.

Section 5.2. Certificate of Officer. The Administrative Agent shall have received a certificate of an authorized officer of Unit, dated as of the Standstill Effective Date, stating that, to the best of such authorized officer’s knowledge, after due investigation, all representations and warranties of the Credit Parties contained in the Credit Agreement, the other Loan Documents and this Agreement are true and correct in all material respects as of the Standstill Effective Date (except for any such representation and warranty that expressly relates to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all 
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material respects as of such earlier date), and that no Default or Event of Default exists as of the Standstill Effective Date.

Section 5.3. Accounts and Letters in Lieu. The Credit Parties shall have duly satisfied their obligations respecting: (i) all accounts (as set forth on the Accounts Schedule attached hereto), including as required in accordance with Section 6.11(a)(v) of the Credit Agreement (as set forth in this Agreement) other than those obligations of Credit Parties which are to be performed after the Standstill Effective Date as provided in Section 6.11(a)(v) of the Credit Agreement (as set forth in this Agreement); and (ii) all Letters in Lieu, as required in accordance with Section 6.12 of the Credit Agreement (as set forth in this Agreement). 

Section 5.4. Legal Matters. All legal matters incident to this Agreement shall be satisfactory to the Administrative Agent and its legal counsel.

Section 5.5. Payment of Standstill Fee. In consideration for the agreements of the Administrative Agent and the Lenders signatory hereto as set forth herein, the receipt and sufficiency of which are hereby acknowledged by each Credit Party, on or before the Standstill Effective Date, the Borrowers shall have made a one-time, lump-sum payment to the Administrative Agent (for the ratable benefit of the Lenders signatory hereto) of a standstill fee in the amount of Thirty-Five Thousand and NO/100THS Dollars ($35,000.00), which fee shall be fully earned by the requisite Lenders on such payment date and shall be non-refundable to Borrowers under any circumstances.

Section 5.6. Payment of Outstanding Expenses. On or before the Standstill Effective Date, the Credit Parties shall have provided to the Administrative Agent evidence that the Credit Parties have paid, in cash and in full, all outstanding amounts theretofore invoiced by, and thereby due and owing to, Western Land Services, for its title review services rendered prior to the Standstill Effective Date.

Section 5.7. Payment of Fees/Costs. On or before the Standstill Effective Date, the Credit Parties shall have reimbursed the Administrative Agent and the Lenders for all reasonable costs and expenses, including attorneys’ fees in accordance with Section 12.6.1. of the Existing Credit Agreement.

ARTICLE VI
Ratifications and Remedies

Section 6.1. Ratification of Loan Documents/Collateral. Each Credit Party hereby acknowledges, ratifies, and reaffirms and agrees that the Notes, each Security Instrument, and each of the other Loan Documents, as well as the first priority (subject to Permitted Encumbrances), perfected Liens and security interests created pursuant thereto in the Collateral (as defined below), are and shall remain in full force and effect and binding on each Credit Party that is party thereto, and each Loan Document is enforceable in accordance with its respective terms and applicable law. Each Credit Party hereby acknowledges, ratifies, and reaffirms all of the terms and provisions of the Loan Documents, except as modified herein, which are incorporated by reference as of the Standstill Effective Date as if set forth herein including, without limitation, all promises, agreements, warranties, representations, covenants, releases, and 
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indemnifications contained therein. For purposes hereof, the capitalized term “Collateral” means, collectively, all Property that is encumbered by a Security Instrument or otherwise subject to a Lien in favor of the Administrative Agent (for the ratable benefit of the Lenders) to secure the Obligations.

Section 6.2. Status Upon Expiration of Standstill Period. Upon the expiration of the Standstill Period: (i) the Administrative Agent and the Lenders’ agreement hereunder to standstill as and to the extent expressly set forth in this Agreement shall terminate automatically without further act or action by the Administrative Agent, any Lender, or any other Person and (ii) the Administrative Agent (on behalf of the Lenders) shall be entitled to exercise any and all rights and remedies available under the Loan Documents (including this Agreement) or the UCC, at law, in equity, or otherwise including, without limitation, determining the Scheduled Redetermination of the Borrowing Base that was, pursuant to the Existing Credit Agreement, otherwise scheduled to be made on or about April 1, 2020.

Section 6.3. Inspection of Books and Records. Each Credit Party hereby agrees to allow any agent or representative of Administrative Agent to visit and inspect the Credit Parties’ respective Properties and operations, but exclusive of records subject in good faith to attorney work product or privileged communications rules and standards, to examine their respective books of record and accounts, and to discuss their respective affairs, finances and accounts with their respective officers, employees, representatives and agents, all at such reasonable times after prior written notice to any Credit Party and as often as the Administrative Agent may reasonably request.

Section 6.4. General Release. IN CONSIDERATION OF, INTER ALIA, THE ADMINISTRATIVE AGENT’S AND THE LENDERS’ AGREEMENTS AND CONSIDERATION AS SET FORTH IN THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ADMINISTRATIVE AGENT’S AND THE LENDERS’ AGREEMENTS TO MODIFY THE CREDIT AGREEMENT AS DESCRIBED HEREIN, EACH CREDIT PARTY HEREBY, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, FULLY AND WITHOUT RESERVE, RELEASES AND FOREVER DISCHARGES EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS, CO-SYNDICATION AGENTS, LC ISSUER, AND EACH OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, TRUSTEES, ATTORNEYS, AGENTS, ADVISORS (INCLUDING ATTORNEYS, ACCOUNTANTS AND EXPERTS) AND AFFILIATES (COLLECTIVELY THE “RELEASED PARTIES” AND INDIVIDUALLY A “RELEASED PARTY”) FROM ANY AND ALL ACTIONS, CLAIMS, DEMANDS, CAUSES OF ACTION, JUDGMENTS, EXECUTIONS, SUITS, DEBTS, LIABILITIES, COSTS, DAMAGES, EXPENSES OR OTHER OBLIGATIONS OF ANY KIND AND NATURE WHATSOEVER, KNOWN OR UNKNOWN, DIRECT AND/OR INDIRECT, AT LAW OR IN EQUITY, WHETHER NOW EXISTING OR HEREAFTER ASSERTED (INCLUDING, WITHOUT LIMITATION, ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITH RESPECT TO THE NEGLIGENCE OF ANY RELEASED PARTY), FOR OR BECAUSE OF ANY MATTERS OR THINGS OCCURRING, EXISTING OR ACTIONS DONE, OMITTED TO BE DONE, OR SUFFERED TO BE DONE BY ANY OF THE RELEASED PARTIES, IN EACH CASE, ON OR PRIOR TO THE STANDSTILL EFFECTIVE DATE, AND 
14

ARE IN ANY WAY DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY CONNECTED TO ANY OF THIS AGREEMENT, THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (COLLECTIVELY, THE “RELEASED MATTERS”). THE BORROWERS, BY EXECUTION HEREOF, ON BEHALF OF THEMSELVES AND ON BEHALF OF EACH OTHER CREDIT PARTY, EACH HEREBY ACKNOWLEDGES AND AGREES THAT THE AGREEMENTS IN THIS SECTION 6.4 ARE INTENDED TO COVER AND BE IN FULL SATISFACTION FOR ALL OR ANY ALLEGED INJURIES OR DAMAGES ARISING IN CONNECTION WITH THE RELEASED MATTERS. THE PROVISIONS OF THIS SECTION 6.4 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE LOAN DOCUMENTS. 
ARTICLE VII 
Miscellaneous

Section 7.1. No Course of Conduct. No failure or delay on the part of the Administrative Agent or any Lender in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 

Section 7.2. Survival of Representations and Warranties. All representations and warranties made in this Agreement or any other Loan Document shall survive the execution and delivery of this Agreement. No investigation by the Administrative Agent or any Lender shall affect the representations and warranties or the right of the Administrative Agent and the Lenders to rely upon them.

Section 7.3. Review and Construction of Documents. Each Credit Party hereby acknowledges, represents and warrants to the Administrative Agent and the Lenders that such Credit Party has: (a) had the opportunity to consult with legal counsel of its own choice and has been afforded an opportunity to review this Agreement with its legal counsel; (b) reviewed this Agreement and fully understands the effects thereof and all terms and provisions contained herein, and (c) executed this Agreement of its own free will and volition and without duress or coercion. The recitals contained in this Agreement shall be construed to be part of the operative terms and provisions of this Agreement.

Section 7.4. ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT REPRESENTS THE FINAL, ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO REGARDING THE SUBJECT MATTER SET FORTH HEREIN, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or waived only by an instrument in writing signed by the parties hereto (or some of them), in accordance with the Credit Agreement. The 
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Credit Agreement and the other Loan Documents, as modified by this Agreement, continue to evidence the agreement of the parties with respect to the subject matter thereof.

Section 7.5. Notices. All notices, requests, demands and other communications under this Agreement shall be given in accordance with the provisions of the Credit Agreement.

Section 7.6. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto, and their respective heirs, legal representatives, successors and permitted assigns, provided that the Credit Parties may not assign any rights or obligations under this Agreement without the prior written consent of the Administrative Agent and the Required Lenders. No Person, other than the parties hereto, the Released Parties and the foregoing Persons’ respective heirs, legal representatives, successors and permitted assigns, shall be entitled to any of the benefits conferred by this Agreement.

Section 7.7. Reaffirmation. Each Credit Party hereby acknowledges that it expects to receive substantial direct and indirect benefits as a result of this Agreement and the transactions contemplated hereby. Each Credit Party hereby consents to this Agreement and the transactions contemplated hereby, and hereby confirms its respective guarantees, pledges and grants of security interests, as applicable, under each of the Loan Documents (after giving effect to this Agreement) to which it is party, and agrees that, notwithstanding the effectiveness of this Agreement and the transactions contemplated hereby, such guarantees, pledges and grants of security interests shall continue to be in full force and effect and shall accrue to the benefit of the Administrative Agent (for the ratable benefit of the Lenders). Each Credit Party hereby reaffirms its obligations under each provision of each Loan Document to which it is party, as amended hereby.

Section 7.8. Arm's-Length/Good Faith. This Agreement has been negotiated at arm's-length and in good faith by the parties hereto.

Section 7.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF LAWS) OF THE STATE OF OKLAHOMA AND SHALL BE PERFORMABLE IN TULSA COUNTY, OKLAHOMA. The provisions of Article 17 of the Existing Credit Agreement shall apply to this Agreement, mutatis mutandis.

Section 7.10. Interpretation; Application. The rules of construction and the other provisions as set forth in the Existing Credit Agreement (except to the extent otherwise expressly modified hereby) shall apply to this Agreement, mutatis mutandis.

Section 7.11. Severability. The unenforceability or invalidity of any provision of this Agreement shall not affect the enforceability or validity of any other provisions herein, and the invalidity or unenforceability of any provision herein as to any Person or circumstance shall not affect the enforceability or validity of such provision as it may apply to any other Persons or circumstance.

Section 7.12. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other 
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Loan Documents, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or digital or electronic transmission shall be effective as delivery of a manually executed original counterpart of this Agreement for all intents and purposes. 
[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
BORROWERS:

UNIT CORPORATION, a Delaware corporation, UNIT PETROLEUM COMPANY, an Oklahoma corporation, UNIT DRILLING COMPANY, an Oklahoma corporation,

By:_________________________________
[______________], as President of each of  UNIT CORPORATION,  UNIT PETROLEUM COMPANY, and  UNIT DRILLING COMPANY

8200 South Unit Drive 
Tulsa, Oklahoma 74132-5300 
Attention:  _______________ 
Telephone:  (918) ______________ 
Facsimile:  (918) 493-7711

Signature Page to Standstill Agreement

BOKF, NA dba Bank of Oklahoma, as LC Issuer, as Administrative Agent, and as a Lender

By:__________________________________ 
Matt Chase 
Senior Vice President   

 

101 East Second Street 
Bank of Oklahoma Tower - 8th floor/Energy Department 
One Williams Center 
Tulsa, Oklahoma  74172 
Telephone:  (918) 588-6641 
Facsimile:  (918) 588-6880

Signature Page to Standstill Agreement

BBVA COMPASS BANK, a Lender

By:_______________________________ 
Kathleen J. Bowen 
Managing Director   

2200 Post Oak Blvd. 
17th Floor 
Houston, Texas 77056 
Telephone:  (713) 968-8273  

Signature Page to Standstill Agreement

BANK OF AMERICA, N.A., a Lender

By:________________________________ 
Bryan Heller 
Director   

One Bryant Park, NY1-100-18-07 
New York, New York 10036 
Telephone:  (646) 855-1833  

Signature Page to Standstill Agreement

BMO HARRIS FINANCING, INC., a Lender

By:_________________________________ 
Kevin Utsey  
Director

BMO Capital Markets/Houston Agency 
700 Louisiana Street, Suite 2100 
Houston, Texas 77002 
Telephone:  (713) 546-9720 
Facsimile:  (713) 223-4007

Signature Page to Standstill Agreement

COMERICA BANK, a Lender

By:_____________________________ 
Jeff LaBauve 
Vice President   
 

1717 Main Street 
Dallas, Texas 75201 
Telephone:  (214) 462-4418  

Signature Page to Standstill Agreement

CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK BRANCH, a Lender

By:_____________________________ 
Trudy W. Nelson  
Authorized Signatory  

By:_____________________________ 
Scott Danvers  
Authorized Signatory   

1001 Fannin Street, Suite 4450
Houston, Texas 77002 
Telephone:  (713) 210-4108
Facsimile: (713) 210-4129  

Signature Page to Standstill Agreement

TORONTO-DOMINION BANK, NEW YORK BRANCH, a Lender

By:_____________________________ 
Name: 
Title:     

Toronto-Dominion Bank, New York Branch
31 West 52nd Street, 21st Floor
New York, NY 10019-6101
Telephone: (416) 983-5700
Facsimile:  (416) 983-000

Signature Page to Standstill Agreement

BRANCH BANKING & TRUST, a Lender

By:_________________________________ 
Parul June  
Senior Vice President

200 West 2nd Street 
Winston Salem, NC 27101 
Telephone:  (713) 797-2142  
Facsimile:  (888) 707-4162

Signature Page to Standstill Agreement

ARVEST BANK, a Lender

By:_________________________________             
Matt Condry
Vice President

502 S. Main Street
Tulsa, Oklahoma 74103
Telephone:  (918) 382-2604  
Facsimile:  (918) 631-1003

Signature Page to Standstill Agreement

IBERIABANK, a Lender

By:_________________________________ 
Moni Collins  
Senior Vice President

11 East Greenway Plaza, Suite 2700
Houston, TX  77046 
Telephone:  (713) 624-7735  
Facsimile:  (713) 965-0276

Signature Page to Standstill Agreement

ACCOUNTS SCHEDULEExhibit

Exhibit 4.5

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

DESCRIPTION OF THE COMMON UNITS
The following description of the common units representing limited partner interests in CSI Compressco LP, a Delaware limited partnership (the “partnership,” “we,” “us,” and “our”), is based upon our Second Amended and Restated Agreement of Limited Partnership, as amended, which we refer to as our “partnership agreement,” and applicable provisions of law.  The following summary does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to our partnership agreement.  References to our “general partner” refer to CSI Compressco GP Inc., a Delaware limited liability company and our general partner.
The Common Units
The common units (“common units”) represent limited partner interests in us. The holders of common units are entitled to participate in partnership distributions and exercise the rights or privileges available to limited partners under our partnership agreement. For a description of the rights and privileges of limited partners under our partnership agreement, including voting rights, please read “The Partnership Agreement.”
Transfer of Common Units
By executing and delivering a transfer application, the transferee of common units:
 
	
				
	 
	•
	 
	becomes the record holder of the common units and is entitled to be admitted into our partnership as a substituted limited partner;

 
	
				
	 
	•
	 
	automatically requests admission as a substituted limited partner in our partnership;

 
	
				
	 
	•
	 
	executes and agrees to be bound by the terms and conditions of our partnership agreement;

 
	
				
	 
	•
	 
	represents that the transferee has the capacity, power and authority to become bound by our partnership agreement; and

 
	
				
	 
	•
	 
	gives the consents, waivers and approvals contained in our partnership agreement.

A transferee that executes and delivers a properly completed transfer application will become a substituted limited partner of our partnership for the transferred common units automatically upon the recording of the transfer on our books and records. Our general partner will cause any transfers to be recorded on our books and records no less frequently than quarterly.
A transferee’s broker, agent or nominee may, but is not obligated to, complete, execute and deliver a transfer application. We may, at our discretion, treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holder’s rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.
 
Common units are securities and any transfers are subject to the laws governing the transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the transferee the right to become a substituted 

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limited partner in our partnership for the transferred common units. A purchaser or transferee of common units who does not execute and deliver a properly completed transfer application obtains only:
 
	
				
	 
	•
	 
	the right to assign the common unit to a purchaser or other transferee; and

 
	
				
	 
	•
	 
	the right to transfer the right to seek admission as a substituted limited partner in our partnership for the transferred common units.

Thus, a purchaser or transferee of common units who does not execute and deliver a properly completed transfer application:
 
	
				
	 
	•
	 
	will not receive cash distributions;

 
	
				
	 
	•
	 
	will not be allocated any of our income, gain, deduction, losses or credits for federal income tax or other tax purposes; and

 
	
				
	 
	•
	 
	may not receive some federal income tax information or reports furnished to record holders of common units;

unless the common units are held in a nominee or “street name” account and the nominee or broker has executed and delivered a transfer application and certification as to itself and any beneficial holders.
The transferor does not have a duty to ensure the execution of the transfer application by the transferee and has no liability or responsibility if the transferee neglects or chooses not to execute and deliver a properly completed transfer application to the transfer agent. Please read “The Partnership Agreement — Status as Limited Partner.”
Until a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.

PROVISIONS OF OUR PARTNERSHIP AGREEMENT RELATING TO CASH DISTRIBUTIONS
Set forth below is a summary of the significant provisions of our partnership agreement that relate to cash distributions.
Set forth below is a summary of the significant provisions of our partnership agreement that relate to cash distributions.
Distributions of Available Cash
General. Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to unitholders of record on the applicable record date.
Definition of available cash. Available cash, for any quarter, consists of all cash on hand at the end of that quarter:
 
	
				
	 
	•
	 
	less, the amount of cash reserves established by our general partner to:

 
	
				
	 
	•
	 
	provide for the proper conduct of our business after the end of the quarter;

 

2

	
				
	 
	•
	 
	comply with applicable law, any of our debt instruments or other agreements; and

 
	
				
	 
	•
	 
	provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters (provided that our general partner may not establish cash reserves for future distributions unless it determines that the establishment of reserves will not prevent us from distributing the minimum quarterly distribution on all common units);

 
	
				
	 
	•
	 
	plus, if our general partner so determines, all or a portion of cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter.

The purpose and effect of the last bullet point above is to allow our general partner, if it so decides, to use cash from working capital borrowings made after the end of the quarter but on or before the date of determination of available cash for that quarter to pay distributions to unitholders. Under our partnership agreement, working capital borrowings are borrowings that are made under a credit agreement, commercial paper facility or similar financing arrangement, and in all cases are used solely for working capital purposes or to pay distributions to partners and with the intent of the borrower to repay such borrowings within twelve months from sources other than additional working capital borrowings. We may borrow funds to pay quarterly distributions to our unitholders.
Operating Surplus and Capital Surplus
General. All cash distributed will be characterized as either “operating surplus” or “capital surplus.” Our partnership agreement requires that we distribute available cash from operating surplus differently than available cash from capital surplus.
 
Operating surplus. Operating surplus for any period consists of:
 
	
				
	 
	•
	 
	$15 million (as described below); plus

 
	
				
	 
	•
	 
	all of our cash receipts beginning June 20, 2011, the closing date of our IPO, excluding cash from interim capital transactions, which include the following:

 
	
				
	 
	•
	 
	borrowings (including sales of debt securities) that are not working capital borrowings;

 
	
				
	 
	•
	 
	sales of equity interests;

 
	
				
	 
	•
	 
	sales or other dispositions of assets outside the ordinary course of business; and

 
	
				
	 
	•
	 
	capital contributions received; plus

 
	
				
	 
	•
	 
	working capital borrowings made after the end of the period but on or before the date of determination of operating surplus for the period; plus

 

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	•
	 
	cash distributions paid on equity issued (including incremental distributions on incentive distribution rights) to finance all or a portion of the construction, acquisition or improvement of a capital improvement (such as equipment or facilities) in respect of the period beginning on the date that we enter into a binding obligation to commence the construction, acquisition or improvement of a capital improvement and ending on the earlier to occur of the date the capital improvement or capital asset commences commercial service and the date that it is abandoned or disposed of; plus

 
	
				
	 
	•
	 
	cash distributions paid on equity issued (including incremental distributions on incentive distribution rights) to pay the construction period interest on debt incurred, or to pay construction period distributions on equity issued, to finance the capital improvements referred to above; less

 
	
				
	 
	•
	 
	all of our operating expenditures (as defined below) after the closing of our IPO; less

 
	
				
	 
	•
	 
	the amount of cash reserves established by our general partner to provide funds for future operating expenditures; less

 
	
				
	 
	•
	 
	all working capital borrowings not repaid within twelve months after having been incurred; less

 
	
				
	 
	•
	 
	any loss realized on disposition of an investment capital expenditure.

As described above, operating surplus does not reflect actual cash on hand that is available for distribution to our unitholders and is not limited to cash generated by our operations. For example, it includes a basket of $15 million that will enable us, if we choose, to distribute as operating surplus cash we receive in the future from non-operating sources such as asset sales, issuances of securities and long-term borrowings that would otherwise be distributed as capital surplus. In addition, the effect of including, as described above, certain cash distributions on equity interests in operating surplus will be to increase operating surplus by the amount of any such cash distributions. As a result, we may also distribute as operating surplus up to the amount of any such cash that we receive from non-operating sources.
The proceeds of working capital borrowings increase operating surplus and repayments of working capital borrowings are generally operating expenditures, as described below, and thus reduce operating surplus when made. However, if a working capital borrowing is not repaid during the twelve-month period following the borrowing, it will be deemed repaid at the end of such period, thus decreasing operating surplus at such time. When such working capital borrowing is in fact repaid, it will be excluded from operating expenditures because operating surplus will have been previously reduced by the deemed repayment.
 
We define operating expenditures in the partnership agreement, and it generally means all of our cash expenditures, including, but not limited to, taxes, reimbursement of expenses to our general partner and its affiliates, officer compensation, repayment of working capital borrowings, debt service payments and maintenance capital expenditures (as defined below), provided that operating expenditures will not include:
 
	
				
	 
	•
	 
	repayment of working capital borrowings deducted from operating surplus pursuant to the penultimate bullet point of the definition of operating surplus above when such repayment actually occurs;

 
	
				
	 
	•
	 
	payments (including prepayments and prepayment penalties) of principal of and premium on indebtedness, other than working capital borrowings;

 
	
				
	 
	•
	 
	expansion capital expenditures (as defined below);

 

4

	
				
	 
	•
	 
	investment capital expenditures (as defined below);

 
	
				
	 
	•
	 
	payment of transaction expenses relating to interim capital transactions;

 
	
				
	 
	•
	 
	distributions to our partners (including distributions in respect of our incentive distribution rights); or

 
	
				
	 
	•
	 
	repurchases of equity interests except to fund obligations under employee benefit plans.

Capital surplus. Capital surplus is defined in our partnership agreement as any distribution of available cash in excess of our cumulative operating surplus. Accordingly, capital surplus would generally be generated by:
 
	
				
	 
	•
	 
	borrowings other than working capital borrowings;

 
	
				
	 
	•
	 
	sales of our equity and debt securities; and

 
	
				
	 
	•
	 
	sales or other dispositions of assets for cash, other than inventory, accounts receivable and other assets sold in the ordinary course of business or as part of normal retirement or replacement of assets.

Characterization of cash distributions. Our partnership agreement requires that we treat all available cash distributed as coming from operating surplus until the sum of all available cash distributed since June 20, 2011, the closing date of our IPO, equals the operating surplus from June 20, 2011 through the end of the quarter immediately preceding that distribution. Our partnership agreement requires that we treat any amount distributed in excess of operating surplus, regardless of its source, as capital surplus. We do not anticipate that we will make any distributions from capital surplus.
Capital Expenditures
Estimated maintenance capital expenditures reduce operating surplus, but expansion capital expenditures, actual maintenance capital expenditures and investment capital expenditures do not. Maintenance capital expenditures are those capital expenditures required to maintain our long-term operating capacity and/or operating income. Capital expenditures made solely for investment purposes will not be considered maintenance capital expenditures.
Expansion capital expenditures are those capital expenditures that we expect will increase our operating capacity or operating income over the long term. Expansion capital expenditures will also include interest (and related fees) on debt incurred to finance all or any portion of the construction of such capital improvement in respect of the period that commences when we enter into a binding obligation to commence construction of a capital improvement and ending on the earlier to occur of the date any such capital improvement commences commercial service and the date that it is abandoned or disposed of. Capital expenditures made solely for investment purposes will not be considered expansion capital expenditures.
Investment capital expenditures are those capital expenditures that are neither maintenance capital expenditures nor expansion capital expenditures. Investment capital expenditures largely will consist of capital expenditures made for investment purposes. Examples of investment capital expenditures include traditional capital expenditures for investment purposes, such as purchases of securities, as well as other capital expenditures that might be made in lieu of such traditional investment capital expenditures, such as the acquisition of a capital asset for investment purposes or development of assets that are in excess of the maintenance of our existing operating capacity, but which are not expected to expand, for more than the short term, our operating capacity.

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As described above, neither investment capital expenditures nor expansion capital expenditures will be included in operating expenditures, and thus will not reduce operating surplus. Because expansion capital expenditures include interest payments (and related fees) on debt incurred to finance all or a portion of the construction, replacement or improvement of a capital asset (such as gathering compressors) in respect of the period that begins when we enter into a binding obligation to commence construction of the capital asset and ending on the earlier to occur of the date the capital asset commences commercial service or the date that it is abandoned or disposed of, such interest payments are also not subtracted from operating surplus. Losses on disposition of an investment capital expenditure will reduce operating surplus when realized and cash receipts from an investment capital expenditure will be treated as a cash receipt for purposes of calculating operating surplus only to the extent the cash receipt is a return on principal.
Capital expenditures that are made in part for maintenance capital purposes, investment capital purposes and/or expansion capital purposes will be allocated as maintenance capital expenditures, investment capital expenditures or expansion capital expenditure by our general partner.
Distributions of Available Cash From Operating Surplus
Our partnership agreement requires that we make distributions of available cash from operating surplus for any quarter in the following manner:
 
	
				
	 
	•
	 
	first, 98.590% to the common unitholders, pro rata, and 1.410% to our general partner, until we distribute for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter; and

 
	
				
	 
	•
	 
	thereafter, in the manner described in “—General Partner Interest and Incentive Distribution Rights” below.

The preceding discussion is based on the assumptions that our general partner has maintained, and will continue to maintain, its 1.410% general partner interest and that we do not issue additional classes of equity interests.
General Partner Interest and Incentive Distribution Rights
Our partnership agreement provides that our general partner was initially entitled to 2.0% of all quarterly distributions that we make prior to our liquidation. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its initial 2.0% general partner interest. Our general partner has not elected to make sufficient additional capital contributions to maintain its initial 2.0% interest.  Accordingly, our general partner’s initial 2.0% interest in our distributions has been reduced to approximately 1.410% and may be further reduced if we issue additional limited partner units in the future and our general partner does not contribute a proportionate amount of capital to us to maintain its current general partner interest.
Our general partner also holds incentive distribution rights ("Incentive Distribution Rights") that entitle it to receive increasing percentages, up to a maximum of 50.0%, of the cash we distribute from operating surplus in excess of $0.445625 per common unit per quarter. The maximum distribution of 50.0% does not include any distributions that our general partner may receive on any limited partner units that it owns.
General Partner’s Right to Reset Incentive Distribution Levels
Our general partner, as the holder of our incentive distribution rights, has the right under our partnership agreement to elect to relinquish the right to receive incentive distribution payments based on the initial cash target distribution levels and to reset, at higher levels, the minimum quarterly distribution amount and cash target distribution levels upon which the incentive distribution payments to our general partner would be set. Our general 

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partner’s right to reset the minimum quarterly distribution amount and the target distribution levels upon which the incentive distributions payable to our general partner are based may be exercised, without approval of our unitholders or the conflicts committee of our general partner, at any time when we have made cash distributions to the holders of the incentive distribution rights at the highest level of incentive distribution for each of the prior four consecutive fiscal quarters. The reset minimum quarterly distribution amount and target distribution levels will be higher than the minimum quarterly distribution amount and the target distribution levels prior to the reset such that our general partner will not receive any incentive distributions under the reset target distribution levels until cash distributions per unit following this event are above the reset first target distribution described below. We anticipate that our general partner would exercise this reset right in order to facilitate acquisitions or internal growth projects that would otherwise not be sufficiently accretive to cash distributions per common unit, taking into account the existing levels of incentive distribution payments being made to our general partner.
 
In connection with the resetting of the minimum quarterly distribution amount and the target distribution levels and the corresponding relinquishment by our general partner of incentive distribution payments based on the target cash distributions prior to the reset, our general partner will be entitled to receive a number of newly issued common units based on a predetermined formula described below that takes into account the “cash parity” value of the average cash distributions related to the incentive distribution rights received by our general partner for the two quarters prior to the reset event as compared to the average cash distributions per common unit during this period. Our general partner’s general partner interest in us will be maintained at the percentage immediately prior to the reset election.
The number of common units that our general partner would be entitled to receive from us in connection with a resetting of the minimum quarterly distribution amount and the target distribution levels then in effect would be equal to the quotient determined by dividing (i) the average amount of cash distributions received by our general partner in respect of its incentive distribution rights during the two consecutive fiscal quarters ended immediately prior to the date of such reset election by (ii) the average of the amount of cash distributed per common unit during each of these two quarters.
Following a reset election by our general partner, the minimum quarterly distribution amount will be reset to an amount equal to the average cash distribution amount per unit for the two fiscal quarters immediately preceding the reset election (which amount we refer to as the “reset minimum quarterly distribution”) and the target distribution levels will be reset to be correspondingly higher amounts such that we would distribute all of our available cash from operating surplus for each quarter thereafter as follows:
 
	
				
	 
	•
	 
	first, 98.590% to all common unitholders, pro rata, and 1.410% to our general partner, until each common unitholder receives an amount per unit equal to 115.0% of the reset minimum quarterly distribution for that quarter;

 
	
				
	 
	•
	 
	second, 85.590% to all common unitholders, pro rata, and 14.410% to our general partner, until each common unitholder receives an amount per unit equal to 125.0% of the reset minimum quarterly distribution for the quarter;

 
	
				
	 
	•
	 
	third, 75.590% to all common unitholders, pro rata, and 24.410% to our general partner, until each common unitholder receives an amount per unit equal to 150.0% of the reset minimum quarterly distribution for the quarter; and

 
	
				
	 
	•
	 
	thereafter, 50.590% to all common unitholders, pro rata, and 49.410% to our general partner.

The preceding discussion is based on the assumptions that our general partner has maintained, and will continue to maintain, its 1.410% general partner interest and that we do not issue additional classes of equity interests.

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Our general partner is entitled to cause the minimum quarterly distribution amount and the target distribution levels to be reset on more than one occasion, provided that it may not make a reset election except at a time when it has received incentive distributions for the prior four consecutive fiscal quarters based on the highest level of incentive distributions that it is entitled to receive under our partnership agreement.
Distributions From Capital Surplus
How distributions from capital surplus will be made. Our partnership agreement requires that we make distributions of available cash from capital surplus, if any, in the following manner:
 
	
				
	 
	•
	 
	first, to common unitholders, our general partner and the Series A Preferred Unitholders, pro rata, until the minimum quarterly distribution is reduced to zero, as described below;

 
	
				
	 
	•
	 
	thereafter, we will make all distributions of available cash from capital surplus as if they were from operating surplus.

The preceding discussion assumes that our general partner has maintained, and will continue to maintain, its 1.410% general partner interest and that we do not issue additional classes of equity securities.

Effect of a distribution from capital surplus. Our partnership agreement treats a distribution of capital surplus as the repayment of the initial unit price, which is a return of capital. Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion as the distribution had in relation to the fair market value of the common units prior to the announcement of the distribution. Because distributions of capital surplus will reduce the minimum quarterly distribution and target distribution levels after any of these distributions are made, it may be easier for our general partner to receive incentive distributions. However, any distribution of capital surplus before the minimum quarterly distribution is reduced to zero cannot be applied to the payment of the minimum quarterly distribution.
If we reduce the minimum quarterly distribution to zero, all future distributions will be made such that 50.590% will be paid to the holders of units and 49.410% to our general partner. The percentage interests shown for our general partner include its 1.410% general partner interest and assume our general partner has not transferred the incentive distribution rights.
Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels
In addition to adjusting the minimum quarterly distribution and target distribution levels to reflect a distribution of capital surplus, if we combine our units into fewer units or subdivide our units into a greater number of units, our partnership agreement specifies that the following items will be proportionately adjusted:
 
	
				
	 
	•
	 
	the minimum quarterly distribution;

 
	
				
	 
	•
	 
	the target distribution levels; and

 
	
				
	 
	•
	 
	the initial unit price as described below.

For example, if a two-for-one split of the units should occur, the minimum quarterly distribution, the target distribution levels and the initial unit price would each be reduced to 50.0% of its initial level. Our partnership agreement provides that we do not make any adjustment by reason of the issuance of additional units for cash or property.

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In addition, if, as a result of a change in law or interpretation thereof, we or any of our subsidiaries is treated as an association taxable as a corporation or is otherwise subject to additional taxation as an entity for U.S. federal, state, local or non-U.S. income or withholding tax purposes, our general partner may, in its sole discretion, reduce the minimum quarterly distribution and the target distribution levels for each quarter by multiplying each distribution level by a fraction, the numerator of which is available cash for that quarter (after deducting our general partner’s estimate of our additional aggregate liability for the quarter for such income and withholding taxes payable by reason of such change in law or interpretation) and the denominator of which is the sum of (i) available cash for that quarter, plus (ii) our general partner’s estimate of our additional aggregate liability for the quarter for such income and withholding taxes payable by reason of such change in law or interpretation thereof. To the extent that the actual tax liability differs from the estimated tax liability for any quarter, the difference will be accounted for in distributions with respect to subsequent quarters.
Distributions of Cash Upon Liquidation
General. If we dissolve in accordance with the partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation. We will first apply the proceeds of liquidation to the payment of our creditors. Next, the holders of Series A Preferred Units shall be entitled to receive, prior and in preference to any distribution to the record holders of any other class or series of the Partnership’s equity interests, the positive value in each such holder’s capital account in respect of such Series A Preferred Units, after taking into account all capital account adjustments. We will then distribute any remaining proceeds to the unitholders and the general partner, in accordance with their capital account balances, as adjusted to reflect any gain or loss upon the sale or other disposition of our assets in liquidation.
If the sale of our assets in liquidation would be impracticable or would cause undue loss, the sale may be deferred for a reasonable amount of time or the assets (except those necessary to satisfy liabilities) may be distributed to our limited partners in lieu of cash in the same manner as cash or proceeds of a sale would have been distributed.

THE PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our partnership agreement that relate to ownership of our common units.

Capital Contributions
Unitholders are not obligated to make additional capital contributions, except as described below under “—Limited Liability.”
For a discussion of our general partner’s right to contribute capital to maintain its current general partner interest if we issue additional units, please read  “—Issuance of Additional Partnership Interests.”
Voting Rights
The following is a summary of the unitholder vote required for approval of the matters specified below.

In voting their units, our general partner and its affiliates have no fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners.
 

9

	
			
	 
	 
	 

	Issuance of additional units
	 
	No approval right.

	 
	 

	Amendment of our partnership agreement
	 
	Certain amendments may be made by our general partner without the approval of the unitholders. Other amendments generally require the approval of a unit majority or at least the requisite percentage of the type or class of limited partner interests materially and adversely affected by the amendment. . Please read “—Amendment of the Partnership Agreement.”

	 
	 

	Merger of our partnership or the sale of all or substantially all of our assets
	 
	Unit majority in certain circumstances. Please read “—Merger, Sale or Other Disposition of Assets.”

	 
	 

	Dissolution of our partnership
	 
	Unit majority. Please read “—Dissolution.”

	 
	 

	Continuation of our business upon dissolution
	 
	Unit majority. Please read “—Dissolution.”

	 
	 

	Withdrawal of our general partner
	 
	Under most circumstances, the approval of a majority of the outstanding common units, excluding common units held by our general partner and its affiliates, is required for the withdrawal of our general partner prior to December 31, 2022 in a manner that would cause a dissolution of our partnership. Please read “—Withdrawal or Removal of Our General Partner.”

	 
	 

	Removal of our general partner
	 
	Not less than 66 2/3% of the outstanding units, voting as a single class, including units held by our general partner and its affiliates. Please read “—Withdrawal or Removal of Our General Partner.”

	 
	 

	Transfer of our general partner interest
	 
	Our general partner may transfer all, but not less than all, of its general partner interest in us without a vote of our unitholders to an affiliate or another person in connection with its merger or consolidation with or into, or sale of all or substantially all of its assets to, such person. The approval of a majority of the outstanding common units, excluding common units held by our general partner and its affiliates, is required in other circumstances for a transfer of the general partner interest to a third party prior to December 31, 2022. Please read “—Transfer of General Partner Interest.”

	 
	 

	Transfer of incentive distribution rights
	 
	No approval right.

	 
	 

	Transfer of ownership interests in our general partner
	 
	No approval right. Please read “—Transfer of Ownership Interests in the General Partner.”

If any person or group other than our general partner and its affiliates acquires beneficial ownership of 20% or more of any class of units, that person or group loses voting rights on all of its units. This loss of voting rights does not apply to any person or group that acquires the units from our general partner, its affiliates, their direct transferees and their indirect transferees approved by our general partner in its sole discretion or to any person or group who acquires the units with the specific prior approval of our general partner.

Applicable Law; Forum, Venue and Jurisdiction
Our partnership agreement is governed by Delaware law. Our partnership agreement requires that any claims, suits, actions or proceedings:
 
	
				
	 
	•
	 
	arising out of or relating in any way to the partnership agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of the partnership agreement), any partnership interest or the duties, obligations or liabilities among limited partners or of limited partners, or the rights or powers of, or restrictions on, the limited partners or us;

 

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	•
	 
	asserting a claim arising pursuant to any provision of the Delaware Revised Uniform Limited Partnership Act, or the Delaware Act, or other similar applicable statutes;

 
	
				
	 
	•
	 
	asserting a claim arising out of any other instrument, document, agreement or certificate contemplated by any provision of the Delaware Act relating to the Partnership or the partnership agreement; and

 
	
				
	 
	•
	 
	arising out of the federal securities laws of the U.S. or securities or antifraud laws of any governmental authority;

shall be exclusively brought in the Court of Chancery of the State of Delaware or if such court does not have subject matter jurisdiction, any other court located in the State of Delaware with subject matter jurisdiction, regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims. By purchasing a common unit, a limited partner is irrevocably consenting to these limitations and provisions regarding claims, suits, actions or proceedings and submitting to the exclusive jurisdiction of the Court of Chancery of the State of Delaware or if such court does not have subject matter jurisdiction, any other court located in the State of Delaware with subject matter jurisdiction in connection with any such claims, suits, actions or proceedings.  This provision would not apply to claims brought to enforce a duty or liability created by the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any other claim for which the federal courts have exclusive jurisdiction.  To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.  Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.  
Limited Liability
Assuming that a limited partner does not participate in the control of our business within the meaning of the Delaware Act and that he otherwise acts in conformity with the provisions of the partnership agreement, his liability under the Delaware Act is limited, subject to possible exceptions, to the amount of capital he is obligated to contribute to us for his common units plus his share of any undistributed profits and assets. However, if a court were to determine that the right, or exercise of the right, by the limited partners as a group to take any action under the partnership agreement constituted “participation in the control” of our business for the purposes of the Delaware Act, then the limited partners could be held personally liable for our obligations under the laws of Delaware, to the same extent as our general partner. This liability would extend to persons who transact business with us under the reasonable belief that the limited partner is a general partner. Neither our partnership agreement nor the Delaware Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our general partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for this type of a claim in Delaware case law.
Under the Delaware Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of the limited partnership. For the purpose of determining the fair value of the assets of a limited partnership, the Delaware Act provides that the fair value of property subject to liability for which recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the nonrecourse liability. The Delaware Act provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Delaware Act shall be liable to the limited partnership for the amount of the distribution for three years. Under the Delaware Act, a substituted limited partner of a limited partnership is liable for the obligations of his assignor to make contributions to the partnership, except that such person is not obligated for liabilities unknown to him at the time he became a limited partner and that could not be ascertained from the partnership agreement.

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Our subsidiaries conduct business in several states and foreign countries and we may have subsidiaries that conduct business in other states and foreign countries in the future. Maintenance of our limited liability as a member of the operating company may require compliance with legal requirements in the jurisdictions in which the operating company conducts business, including qualifying our subsidiaries to do business there.

Limitations on the liability of members or limited partners for the obligations of a limited liability company or limited partnership have not been clearly established in many jurisdictions. If, by virtue of our ownership interest in our operating company or otherwise, it were determined that we were conducting business in any state without compliance with the applicable limited partnership or limited liability company statute, or that the right or exercise of the right by the limited partners as a group to remove or replace our general partner, to approve some amendments to our partnership agreement, or to take other action under our partnership agreement constituted “participation in the control” of our business for purposes of the statutes of any relevant jurisdiction, then the limited partners could be held personally liable for our obligations under the law of that jurisdiction to the same extent as our general partner under the circumstances. We will operate in a manner that our general partner considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners.
Issuance of Additional Partnership Interests
Our partnership agreement authorizes us to issue an unlimited number of additional partnership interests for the consideration and on the terms and conditions determined by our general partner without the approval of the unitholders, subject to certain restrictions.
It is possible that we will fund acquisitions through the issuance of additional common units or other partnership interests. Holders of any additional common units we issue will be entitled to share equally with the then-existing holders of common units in our distributions of available cash. In addition, the issuance of additional common units or other partnership interests may dilute the value of the interests of the then-existing holders of common units in our net assets.
In accordance with Delaware law and the provisions of our partnership agreement, we may also issue additional partnership interests that, as determined by our general partner, may have special voting rights to which the common units are not entitled. In addition, our partnership agreement does not prohibit our subsidiaries from issuing equity interests, which may effectively rank senior to the common units.
Upon issuance of additional partnership interests (other than the issuance of common units upon a reset of the incentive distribution rights) our general partner is entitled, but not required, to make additional capital contributions to the extent necessary to maintain its general partner interest in us. Our general partner’s interest in us will be reduced if we issue additional units in the future (other than in those circumstances described above) and our general partner does not contribute a proportionate amount of capital to us to maintain its general partner interest. Since our initial public offering, our general partner has not elected to make sufficient additional capital contributions to maintain its 2.0% general partner interest. Moreover, our general partner will have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase common units or other partnership interests whenever, and on the same terms that, we issue those interests to persons other than our general partner and its affiliates and beneficial owners, to the extent necessary to maintain the percentage interest of the general partner and its affiliates, including such interest represented by common units, that existed immediately prior to each issuance. The holders of common units will not have preemptive rights under our partnership agreement to acquire additional common units or other partnership interests.
Amendment of the Partnership Agreement
General. Amendments to our partnership agreement may be proposed only by our general partner. However, our general partner has no duty or obligation to propose any amendment and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. In order to adopt a proposed amendment, other than the amendments discussed below, our general partner is required to seek written approval of the holders of the number of units 

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required to approve the amendment or to call a meeting of the limited partners to consider and vote upon the proposed amendment. Except as described below, an amendment must be approved by a majority of the outstanding common units.
Prohibited amendments. No amendment may be made that would:
 
	
				
	 
	•
	 
	enlarge the obligations of any limited partner without its consent, unless approved by a majority of the type or class of limited partner interests so affected;

 
	
				
	 
	•
	 
	enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us to our general partner or any of its affiliates without the consent of our general partner, which consent may be given or withheld in its sole discretion; or

 
	
				
	 
	•
	 
	change, modify or amend, whether or not such change, modification or amendment would have a material adverse effect on, the rights or preferences of the Series A Preferred Units, unless approved by the affirmative vote or prior written consent of holders of a majority of the outstanding Series A Preferred Units voting separately as a class.

The provision of our partnership agreement preventing the amendments having the effects described in the bullets above can be amended upon the approval of the holders of at least 90.0% of the outstanding units, voting as a single class (including units owned by our general partner and its affiliates).
No unitholder approval. Our general partner may generally make amendments to our partnership agreement without the approval of any limited partner to reflect:
a)    a change in our name, the location of our principal place of business, our registered agent or our registered office;
b)    the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement;
c)    a change that our general partner determines to be necessary or appropriate to qualify or continue our qualification as a limited partnership or other entity in which the limited partners have limited liability under the laws of any state or to ensure that neither we nor any of our subsidiaries will be treated as an association taxable as a corporation or otherwise taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed);
d)    any amendments that our general partner determines:
 
	
				
	 
	•
	 
	do not adversely affect the limited partners considered as a whole (or any particular class of limited partners) in any material respect;

 
	
				
	 
	•
	 
	are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;

 
	
				
	 
	•
	 
	are necessary or appropriate to facilitate the trading of limited partner interests or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the limited partner interests are or will be listed for trading;

 
	
				
	 
	•
	 
	are necessary or appropriate for any action taken by our general partner relating to splits or combinations of units under the provisions of our partnership agreement; or

 

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	•
	 
	are required to effect the intent expressed in the prospectus used in our IPO or the intent of the provisions of our partnership agreement or are otherwise contemplated by our partnership agreement;

e)    a change in our fiscal year or taxable year and related changes;
f)    an amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors, officers, agents or trustees from in any manner being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisers Act of 1940 or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, or ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed;
 
g)    an amendment that our general partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of additional partnership interests or the right to acquire partnership interests;
h)    any amendment expressly permitted in our partnership agreement to be made by our general partner acting alone;
i)    an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our partnership agreement;
j)    any amendment that our general partner determines to be necessary or appropriate for the formation by us of, or our investment in, any corporation, partnership or other entity, as otherwise permitted by our partnership agreement;
k)    conversions into, mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the conversion, merger or conveyance other than those it receives by way of the conversion, merger or conveyance; or
l)    any other amendments substantially similar to any of the matters described above.
Opinion of counsel and unitholder approval. Any amendment that our general partner determines adversely affects in any material respect one or more particular classes of limited partners requires the approval of at least a majority of the class or classes so affected, but no vote is required by any class or classes of limited partners that our general partner determines are not adversely affected in any material respect. Any amendment that would have a material adverse effect on the rights or preferences of any type or class of outstanding units in relation to other classes of units requires the approval of at least a majority of the type or class of units so affected. Any amendment that reduces the voting percentage required to take any action, other than to remove the general partner or call a meeting, is required to be approved by the affirmative vote of limited partners whose aggregate outstanding units constitute not less than the voting requirement sought to be reduced. Any amendment that increases the voting percentage required to remove the general partner or call a meeting of unitholders must be approved by the affirmative vote of limited partners whose aggregate outstanding units constitute not less than the voting requirement sought to be increased. For amendments of the type not requiring unitholder approval, our general partner is not required to obtain an opinion of counsel that an amendment will neither result in a loss of limited liability to the limited partners nor result in our being treated as a taxable entity for federal income tax purposes in connection with any of the amendments. No other amendments to our partnership agreement will become effective without the approval of holders of at least 90% of the outstanding units, voting as a single class, unless we first obtain an opinion of counsel to the effect that the amendment will not affect the limited liability under applicable law of any of our limited partners.
Merger, Sale or Other Disposition of Assets
A merger, consolidation or conversion of us requires the prior consent of our general partner. However, our general partner has no duty or obligation to consent to any merger, consolidation or conversion and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interest of us or the limited partners.

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In addition, our partnership agreement generally prohibits our general partner, without the prior approval of the holders of a unit majority, from causing us to sell, exchange or otherwise dispose of all or substantially all of our assets in a single transaction or a series of related transactions. Our general partner may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without such approval. Our general partner may also sell all or substantially all of our assets under a foreclosure or other realization upon those encumbrances without such approval. Finally, our general partner may consummate any merger without the prior approval of our unitholders if we are the surviving entity in the transaction, our general partner has received an opinion of counsel regarding limited liability and tax matters, the transaction would not result in a material amendment to the partnership agreement (other than an amendment that the general partner could adopt without the consent of the limited partners), each of our units will be an identical unit of our partnership following the transaction and the partnership interests to be issued do not exceed 20% of our outstanding partnership interests (other than the incentive distribution rights) immediately prior to the transaction.
If the conditions specified in our partnership agreement are satisfied, our general partner may convert us or any of our subsidiaries into a new limited liability entity or merge us or any of our subsidiaries into, or convey all of our assets to, a newly formed entity, if the sole purpose of that conversion, merger or conveyance is to effect a mere change in our legal form into another limited liability entity, our general partner has received an opinion of counsel regarding limited liability and tax matters and the governing instruments of the new entity provide the limited partners and our general partner with the same rights and obligations as contained in our partnership agreement. Our unitholders are not entitled to dissenters’ rights of appraisal under our partnership agreement or applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of our assets or any other similar transaction or event.
Dissolution
We will continue as a limited partnership until dissolved under our partnership agreement. We will dissolve upon:
 
	
				
	 
	•
	 
	the election of our general partner to dissolve us, if approved by the holders of units representing a unit majority;

 
	
				
	 
	•
	 
	there being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;

 
	
				
	 
	•
	 
	the entry of a decree of judicial dissolution of our partnership; or

 
	
				
	 
	•
	 
	the withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner other than by reason of a transfer of its general partner interest in accordance with our partnership agreement or its withdrawal or removal following the approval and admission of a successor.

Upon a dissolution under the last clause above, the holders of a unit majority may also elect, within specific time limitations, to continue our business on the same terms and conditions described in our partnership agreement by appointing as a successor general partner an entity approved by the holders of units representing a unit majority, subject to our receipt of an opinion of counsel to the effect that:
 
	
				
	 
	•
	 
	the action would not result in the loss of limited liability under Delaware law of any limited partner; and

 
	
				
	 
	•
	 
	neither our partnership, our operating company nor any of our other subsidiaries would be treated as an association taxable as a corporation or otherwise be taxable as an entity for federal income tax purposes upon the exercise of that right to continue (to the extent not already so treated or taxed).

Liquidation and Distribution of Proceeds

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Upon our dissolution, unless our business is continued, the liquidator authorized to wind up our affairs will, acting with all of the powers of our general partner that are necessary or appropriate, liquidate our assets and apply the proceeds of the liquidation as described in “How We Make Cash Distributions—Distributions of Cash Upon Liquidation.” The liquidator may defer liquidation or distribution of our assets for a reasonable period of time or distribute assets to partners in-kind if it determines that a sale would be impractical or would cause undue loss to our partners.
Withdrawal or Removal of Our General Partner
Except as described below, our general partner has agreed not to withdraw voluntarily as our general partner prior to June 30, 2021 without obtaining the approval of the holders of a majority of the outstanding common units, excluding common units held by our general partner and its affiliates, and furnishing an opinion of counsel regarding limited liability and tax matters. On or after June 30, 2021 our general partner may withdraw as general partner without first obtaining approval of any unitholder by giving 90 days’ written notice, and that withdrawal will not constitute a violation of our partnership agreement. Notwithstanding the information above, our general partner may withdraw without unitholder approval upon 90 days’ notice to the limited partners if at least 50% of the outstanding common units are held or controlled by one person and its affiliates, other than our general partner and its affiliates. In addition, our partnership agreement permits our general partner, in some instances, to sell or otherwise transfer all of its general partner interest in us without the approval of the unitholders. Please read “—Transfer of General Partner Interest.”
Upon withdrawal of our general partner under any circumstances, other than as a result of a transfer by our general partner of all or a part of its general partner interest in us, the holders of a unit majority may select a successor to that withdrawing general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability and tax matters cannot be obtained, we will be dissolved, wound up and liquidated, unless within a specified period after that withdrawal, the holders of a unit majority agree in writing to continue our business and to appoint a successor general partner. Please read “—Dissolution.”
Our general partner may not be removed unless that removal is approved by the vote of the holders of not less than 66 2/3% of the outstanding common units, voting as a class, including units held by our general partner and its affiliates, and we receive an opinion of counsel regarding limited liability and tax matters. Any removal of our general partner is also subject to the approval of a successor general partner by the vote of the holders of a majority of the outstanding common units, voting as a class. The ownership of more than 33 1/3% of the outstanding common units by our general partner and its affiliates gives them the ability to prevent our general partner’s removal.
In the event of the removal of our general partner under circumstances where cause exists or withdrawal of our general partner where that withdrawal violates our partnership agreement, a successor general partner will have the option to purchase the general partner interest and incentive distribution rights of the departing general partner for a cash payment equal to the fair market value of those interests. Under all other circumstances where our general partner withdraws or is removed by the limited partners, the departing general partner has the option to require the successor general partner to purchase the general partner interest and the incentive distribution rights of the departing general partner or its affiliates for fair market value. In each case, this fair market value will be determined by agreement between the departing general partner and the successor general partner. If no agreement is reached, an independent investment banking firm or other independent expert selected by the departing general partner and the successor general partner will determine the fair market value. Or, if the departing general partner and the successor general partner cannot agree upon an expert, then an expert chosen by agreement of the experts selected by each of them will determine the fair market value.
If the option described above is not exercised by either the departing general partner or the successor general partner, the departing general partner’s general partner interest and all of its or its affiliates’ incentive distribution rights will automatically convert into common units equal to the fair market value of those interests as determined by an investment banking firm or other independent expert selected in the manner described in the preceding paragraph.

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In addition, we will be required to reimburse the departing general partner for all amounts due the departing general partner, including, without limitation, all employee-related liabilities, including severance liabilities incurred as a result of the termination of any employees employed for our benefit by the departing general partner or its affiliates.
Transfer of General Partner Interest
Except for transfer by our general partner of all, but not less than all, of its general partner interest to:
 
	
				
	 
	•
	 
	an affiliate of our general partner (other than an individual); or

 
	
				
	 
	•
	 
	another entity as part of the merger or consolidation of our general partner with or into another entity or the transfer by our general partner of all or substantially all of its assets to another entity,

our general partner may not transfer all or any of its general partner interest to another person prior to June 30, 2021 without the approval of the holders of a majority of the outstanding common units, excluding common units held by
 our general partner and its affiliates. As a condition of this transfer, the transferee must, among other things, assume the rights and duties of our general partner, agree to be bound by the provisions of our partnership agreement and furnish an opinion of counsel regarding limited liability and tax matters.
Our general partner and its affiliates may, at any time, transfer its common units to one or more persons, without unitholder approval.
Transfer of Ownership Interests in the General Partner
At any time, the owners of our general partner may sell or transfer all or part their ownership interests in our general partner to an affiliate or a third party without the approval of our unitholders.

Change of Management Provisions
Our partnership agreement contains specific provisions that are intended to discourage a person or group from attempting to remove our general partner or otherwise change our management. Please read “—Withdrawal or Removal of Our General Partner” for a discussion of certain consequences of the removal of our general partner. If any person or group other than our general partner and its affiliates acquires beneficial ownership of 20% or more of any class of partnership units, that person or group loses voting rights on all of its partnership units. This loss of voting rights does not apply in certain circumstances. Please read “— Meetings; Voting.”
Our partnership agreement also provides that, if our general partner is removed under circumstances where cause does not exist and the general partner interest held by our general partner and its affiliates are not voted in favor of that removal, our general partner will have the right to convert its general partner interest into common units or to receive cash in exchange for that interest based on the fair market value of that interest at that time.
 
Limited Call Right
If at any time our general partner and its affiliates own more than 90% of the then-issued and outstanding limited partner interests of any class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or beneficial owners thereof or to us, to acquire all, but not less than all, of the limited partner interests of the class held by unaffiliated persons as of a record date to be selected by our general partner, on at least 10, but not more than 60, days’ notice. The purchase price in the event of this purchase is the greater of:
 
	
				
	 
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	the highest price paid by our general partner or any of its affiliates for any limited partner interests of the class purchased within the 90 days preceding the date on which our general partner first mails notice of its election to purchase those limited partner interests; and

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	the current market price as of the date three days before the date the notice is mailed.

As a result of our general partner’s right to purchase outstanding limited partner interests, a holder of limited partner interests may have his limited partner interests purchased at an undesirable time or a price that may be lower than market prices at various times prior to such purchase or lower than a unitholder may anticipate the market price to be in the future. The tax consequences to a unitholder of the exercise of this call right are the same as a sale by that unitholder of his common units in the market. 
Meetings; Voting
Except as described below regarding a person or group owning 20% or more of any class of partnership units then outstanding, record holders of partnership units on the record date will be entitled to notice of, and to vote at, meetings of our limited partners and to act upon matters for which approvals may be solicited. In the case of common units held by our general partner on behalf of non-citizen assignees, our general partner will distribute the votes on those common units in the same ratios as the votes of limited partners on other units are cast.
Any action that is required or permitted to be taken by the unitholders may be taken either at a meeting of the unitholders or without a meeting, if consents in writing describing the action so taken are signed by holders of the number of units necessary to authorize or take that action at a meeting. Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of the class for which a meeting is proposed. Unitholders may vote either in person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has been called, represented in person or by proxy, will constitute a quorum, unless any action by the unitholders requires approval by holders of a greater percentage of the units, in which case the quorum will be the greater percentage.
Each record holder of a unit has a vote according to his percentage interest in us, although additional limited partner interests having special voting rights could be issued. Please read “—Issuance of Additional Partnership Interests.” However, if at any time any person or group, other than our general partner and its affiliates, or a direct or subsequently approved (at the time of transfer) transferee of our general partner or its affiliates and purchasers specifically approved by our general partner in its sole discretion, acquires, in the aggregate, beneficial ownership of 20% or more of any class of units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, determining the presence of a quorum or for other similar purposes, subject to certain exceptions in our partnership, including that the foregoing limitation shall not apply to the initial purchasers of the Series A Preferred Units. Common units held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise.
Any notice, demand, request, report or proxy material required or permitted to be given or made to record holders of common units under our partnership agreement will be delivered to the record holder by us or by the transfer agent.
Status as Limited Partner
By transfer of a limited partner interest in accordance with our partnership agreement, each transferee of a limited partner interest shall be admitted as a limited partner with respect to the limited partner interest transferred when such transfer and admission are reflected in our books and records. Except as described under “—Limited Liability,” the limited partner interests will be fully paid, and unitholders will not be required to make additional contributions.

Books and Reports

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Our general partner is required to keep appropriate books of our business at our principal offices. These books are maintained for both tax and financial reporting purposes on an accrual basis. For tax and financial reporting purposes, our fiscal year is the calendar year.
We will furnish or make available to record holders of our common units, within 90 days (or such shorter time as required by SEC rules) after the close of each fiscal year, an annual report containing audited consolidated financial statements and a report on those consolidated financial statements by our independent public accountants. Except for our fourth quarter, we will also furnish or make available summary financial information within 45 days (or such shorter time as required by SEC rules) after the close of each quarter. We will be deemed to have made any such report available if we file such report with the SEC on EDGAR or make the report available on a publicly available website which we maintain.
We will furnish each record holder with information reasonably required for federal and state tax reporting purposes within 90 days after the close of each calendar year. This information is expected to be furnished in summary form so that some complex calculations normally required of partners can be avoided. Our ability to furnish this summary information to our unitholders will depend on their cooperation in supplying us with specific information. Every unitholder will receive information to assist him in determining his federal and state tax liability and in filing his federal and state income tax returns, regardless of whether he supplies us with the necessary information.
Right to Inspect Our Books and Records
Our partnership agreement provides that a limited partner can, for a purpose reasonably related to his interest as a limited partner, upon reasonable written demand stating the purpose of such demand and at his own expense, have furnished to him:
 
	
				
	 
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	a current list of the name and last known address of each record holder;

 
	
				
	 
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	a copy of our tax returns;

 
	
				
	 
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	information as to the amount of cash, and a description and statement of the agreed value of any other property or services, contributed or to be contributed by each partner and the date on which each partner became a partner;

 
	
				
	 
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	copies of our partnership agreement, our certificate of limited partnership and related amendments and any powers of attorney under which they have been executed;

 
	
				
	 
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	information regarding the status of our business and our financial condition; and

 
	
				
	 
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	any other information regarding our affairs as the general partner determines in its sole discretion is just and reasonable.

Our general partner may, and intends to, keep confidential from the limited partners trade secrets or other information the disclosure of which our general partner believes in good faith is not in our best interests or that we are required by law or by agreements with third parties to keep confidential.

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