Document:

EX-10.3

 Exhibit 10.3 

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

AGREEMENT 
 (Bluestone)

 This Natural Gas Liquids Fractionation, Exchange and Marketing Agreement (Bluestone) (this “Agreement”) is made and
entered into this 22nd day of August, 2014 by and between MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C., a Delaware limited liability company (“MarkWest”), and
R.E. GAS DEVELOPMENT, LLC, a Delaware limited liability company (“Rex”), and solely for purposes of Section 8 of the body of this Agreement: REX ENERGY CORPORATION, a Delaware corporation (“Producer
Guarantor”). Rex may be referred to herein as “Producer” and MarkWest and Rex may be referred to herein individually as a “Party” and collectively as the “Parties.” 

In consideration of the mutual covenants and agreements contained herein, and intending to be legally bound hereby, Producer and MarkWest
agree as follows: 
 Section 1. Scope of Agreement and General Terms and Conditions.  

A. Producer and MarkWest’s Affiliate, MarkWest Liberty Bluestone, L.L.C. (“MW Bluestone”), are parties to that certain
Amended and Restated Gas Gathering, Compression and Processing Agreement, dated as of the date hereof (as amended or restated, the “Bluestone Processing Agreement”). Under the Bluestone Processing Agreement, Raw Make that is
allocated to Producer will be made available at the Bluestone Processing Plant. 
 B. Commencing on the Effective Date, Producer agrees to
deliver, or cause to be delivered, the Raw Make to MarkWest at the Receipt Point as further described below in Section 4, and MarkWest agrees to receive and take title to the Raw Make committed to MarkWest pursuant to Section 4 of this
Agreement at the Receipt Point, exchange such Raw Make for Fractionated Products and, except for Fractionated Products taken in kind by Producer pursuant to Section 5.B. or Section 5.C. of this Agreement, market such Fractionated Products,
in each case in accordance with the terms of this Agreement, including the General Terms and Conditions attached hereto (the “General Terms and Conditions” or “GTCs”). 

C. This Agreement incorporates and is subject to all of the GTCs attached hereto as Exhibit A, together with any other Exhibits
attached hereto. Capitalized terms used but not defined in the body of this Agreement shall have the meaning ascribed to them in the GTCs. 

Section 2. Effective Date. This Agreement shall be binding as of the date set forth above (the “Effective
Date”). Subject to the remaining provisions of this Agreement, MarkWest’s obligations to provide services hereunder as of and after the Effective Date shall be based upon the portion of the Fractionation Plant that is installed and
in-service from time to time and, except as otherwise expressly set forth herein, fees shall not be charged to Producer hereunder with respect to services that cannot be provided until the applicable facilities are installed and in-service. 

Section 3. Term. This Agreement shall remain in full force and effect from the date hereof through and until the
termination or expiration of the Bluestone Processing Agreement (the “Term”). 
 Section 4. Supply and Other
Commitments.  
 A. Commencing on the Effective Date and continuing for the Term of this Agreement, Producer hereby commits and
agrees to cause to be delivered to MarkWest at the Receipt Point all of Producer’s Raw Make allocated to Producer under the Bluestone Processing Agreement. 

B. MarkWest or one or more of its Affiliates has made or will make available to Producer and shall operate, at MarkWest’s or its
Affiliates’ expense: 
 i. a purity ethane pipeline of [REDACTED]* capacity running from the Bluestone Processing Plant to the
Mariner West Pipeline (such pipeline, the “Bluestone Ethane Pipeline”); 
 ii. depropanization and debutanization facilities
at or near the Bluestone Processing Plant designed to recover [REDACTED]*; and 
 iii. truck and rail loading facilities at the
Bluestone Processing Plant for Raw Make and Fractionated Products consisting of propane and heavier components. 

 C. During any period in which capacity of the Bluestone Fractionation Plant is constrained for
any reason, MarkWest shall arrange for and schedule deliveries of Producer’s Raw Make (consisting of all propane and heavier components) that could not be fractionated at the Bluestone Fractionation Plant during such period to the Houston
Fractionation Plant or to any other part of the Fractionation Plant or to any third party fractionation plant by truck or otherwise. [REDACTED]*  

D. Following the Ethane Service Commencement Date, MarkWest will exchange Raw Make consisting of ethane delivered at the Receipt Point for
Fractionated Products consisting of ethane as further set forth in this Agreement. With respect to the recovery of ethane after the Ethane Service Commencement Date: 

i. Subject to and in accordance with the provisions of this Agreement, MarkWest shall recover from Producer’s Gas during each Delivery
Month (as defined below), and will construct deethanization facilities at or near the Bluestone Processing Plant capable of recovering a minimum of an average volume of ethane per day as reflected on Exhibit C attached hereto. 

ii. On and after the Ethane Service Commencement Date, subject to the terms of this Section 4.D., MarkWest shall deliver purity ethane to
Producer (or for Producer’s account) at the Delivery Point(s) designated by Producer in its Ethane Nomination (as defined below) and Producer shall take such ethane in kind at such point and market such ethane on its own behalf pursuant to this
Agreement. From and after the Ethane Service Commencement Date, at least two (2) Business Days before the date on which the earliest of the Downstream Ethane Pipeline(s) that Producer desires to deliver to requires monthly nominations to be
submitted (such initial month or partial month and each such subsequent month or partial month, a “Delivery Month”), Producer shall provide written notice to MarkWest of the average daily volume of ethane in barrels per day that
Producer desires to be recovered (other than ethane sold as propane) and delivered at the Delivery Point(s) during the Delivery Month, subject to and consistent with the provisions of this Section 4.D. (each such nomination, as may be modified
pursuant to the following terms of this Section 4.D., an “Ethane Nomination”). 
 iii. Except to the extent otherwise
provided in Section 4.D.iv. (with respect to volumes of ethane that Producer desires MarkWest to recover on an interruptible, space available basis and Ethane Nominations made by Producer that include such interruptible volumes);
Section 4.D.v. (relating to MarkWest’s right to reduce any Ethane Nomination that exceeds the Maximum Ethane Recovery Rate (as defined below))[REDACTED]*  

iv. The recovery of any volumes of ethane in excess of Producer’s Ethane Volume or the volume set forth in Section 4.D.viii., as
applicable, will be on an interruptible, space available basis. [REDACTED]*  
 v. [REDACTED]* 

vi. All nominations must be confirmed by MarkWest; provided that, subject to the terms of this Section 4.D., any Ethane Nomination that
MarkWest has not confirmed or rejected within one (1) Business Day after Producer has informed MarkWest that such Ethane Nomination has been submitted shall be deemed confirmed by MarkWest under this Agreement. Subject in each case to the
provisions of this Section 4.D., if Producer fails to deliver an Ethane Nomination within the time required in Section 4.D.ii., then Producer shall be deemed to have delivered an Ethane Nomination equal to the amount set forth in the
Ethane Nomination submitted or deemed submitted by Producer for the immediately preceding Delivery Month, except that if this occurs during the first Delivery Month, the Ethane Nomination for the first Delivery Month will be deemed to equal
Producer’s Ethane Volume. 
 vii. [REDACTED]* 

viii. [REDACTED]* 
 ix.
[REDACTED]* 
 a. [REDACTED]* 

b. Notwithstanding any provision in this Agreement to the contrary, MarkWest shall have no obligation to construct or install deethanization
facilities having an aggregate capacity in excess of [REDACTED]* barrels per day. 
 x. [REDACTED]* 

xi. The Parties acknowledge and agree that the amount of ethane delivered at the Delivery Point will be subject to a variety of factors,
including, without limitation, the composition and volume of Producer’s Gas, Producer’s then current Ethane Nomination, and the Maximum Ethane Recovery Rate. The Parties also acknowledge and agree that the Bluestone Processing Plant and
the Bluestone Fractionation Plant are multi-customer facilities. As a result, in order to attempt to meet Producer’s Ethane Nomination and the ethane nominations of the other customers, MarkWest may from time to time recover more or less
ethane from and/or allocate more or less ethane to Producer’s Gas relative to Producer’s Ethane Nomination, and consistent with the provisions of this Section 4.D., if MarkWest recovers ethane from Producer’s Gas in excess of
Producer’s Ethane Nomination, MarkWest will not be obligated to deliver such excess ethane to Producer under this Agreement but, in consideration for the preceding, Producer shall receive an upward adjustment in the quantity of Residue Gas
delivered or allocated to or for Producer’s account based upon the BTU value of the excess ethane not delivered to Producer. 

 xii. Notwithstanding any provision in this Agreement, the Bluestone Processing Agreement, or any
other agreement between the Parties or their Affiliates, (x) MarkWest and its Affiliates shall have no liability or obligation hereunder or thereunder for (i) any failure to recover ethane as a Fractionated Product in the Fractionation
Plant or any failure to deliver ethane at the Delivery Point in any Delivery Month, in each case in an amount equal to the Ethane Nomination provided by Producer for such Delivery Month or (ii) any failure to deliver ethane to Producer or for
Producer’s account at the applicable Delivery Point at a reasonably uniform rate of flow during such Delivery Month, in each case except to the extent resulting from MarkWest’s or its Affiliates’ failure to use commercially reasonable
efforts to recover ethane as set forth in this Section 4.D., and (y) Producer shall accept and take delivery at the applicable Delivery Point in accordance with this Agreement all of the ethane delivered by MarkWest and its Affiliates to
Producer or for Producer’s account, even if the amount delivered at such Delivery Point is less than or exceeds Producer’s Ethane Nomination for such Delivery Month. 

xiii. In the event of a Force Majeure event preventing or negatively impacting the delivery of Producer’s ethane to any Downstream Ethane
Pipeline (and involving the Bluestone Processing Plant, the Fractionation Plant or any facilities downstream thereof including, without limitation, any Downstream Ethane Pipeline), the Parties acknowledge that MarkWest will have the right to take
such actions as MarkWest may determine, in its sole discretion, to be reasonably necessary to enable the Bluestone Processing Plant and Fractionation Plant to continue operations (even if in a reduced capacity), which may include, without
limitation, adjusting the ethane recovery rate at the Bluestone Processing Plant (and in such event, the Ethane Nomination will be deemed to be modified accordingly) or injecting ethane that has been recovered under this Agreement into residue gas
at another processing complex operated by MarkWest or its Affiliates. In the event of any of the foregoing events, MarkWest will promptly notify Producer by phone, email or otherwise as soon as reasonably possible and provide Producer with
reasonably detailed information regarding such event. In addition, in the event of any injection of ethane into residue gas at another processing complex as described above, [REDACTED]*. 

xiv. If a third party constructs and installs an ethane and heavier (C2+) NGL pipeline that is connected to MarkWest’s or its
Affiliates’ facilities and can receive C2+ Raw Make allocated to Producer under this Agreement, then in the event of any Force Majeure event involving the Bluestone Processing Plant, the Fractionation Plant or any facilities downstream thereof
(including, without limitation, any Downstream Ethane Pipeline), the Parties acknowledge that MarkWest will have the right to take such actions as MarkWest may determine, in its sole discretion, to be reasonably necessary to enable the Bluestone
Processing Plant and the Fractionation Plant to continue operations (even if in a reduced capacity), which may include, without limitation, delivering Producer’s Raw Make into such third party C2+ pipeline. In such event, MarkWest will promptly
inform Producer (by email, phone or otherwise) and will use commercially reasonable efforts to minimize the additional costs or expenses that may be incurred as a result thereof. 

E. Notwithstanding anything herein to the contrary, the exchange and delivery of ethane (other than ethane sold as propane) under this
Agreement after the Ethane Service Commencement Date shall be made as follows: 
 i. MarkWest shall deliver Producer’s ethane recovered
pursuant to the terms of this Agreement [REDACTED]*. 
 ii. [REDACTED]* 

iii. As of the date hereof, the Parties contemplate that Producer will take ethane in kind pursuant to Section 5.C. of this Agreement. To
the extent that Producer desires to take ethane in kind by a pipeline other than the Mariner West Pipeline, the Mariner East Pipeline or the Enterprise ATEX Pipeline, the Parties will work together in good faith to mutually agree upon the manner in
which any costs to be incurred to connect to such other pipelines will be allocated between the Parties. If the Parties cannot mutually agree upon the allocation of such connection costs, Producer shall have the right, at its sole expense, to
construct such facilities as may be necessary to complete the connection of such pipeline to the Fractionation Plant and MarkWest will provide the third party pipeline operator with commercially reasonable access to, and with an easement or similar
access right on, the Fractionation Plant site for the point of interconnection, which interconnection shall be at a location mutually agreed upon by MarkWest and the third party pipeline operator. If such interconnection is not located at the
Bluestone Fractionation Plant, the Delivery Point for ethane shall remain as set forth in this Agreement. 
 iv. If the deethanization
facilities at the Bluestone Fractionation Plant become unavailable for the deethanization of Producer’s Raw Make for any reason, then MarkWest or its Affiliates shall use its commercially diligent efforts to bring such facilities back into
service as soon as reasonably practicable. Producer shall be responsible for the disposition of ethane as described below in Section 5.C. 

Section 5. Marketing and Consideration. 

A. Commencing on the Effective Date, MarkWest (i) shall exchange Producer’s Raw Make committed in Section 4 above for
Fractionated Products based on the volume and composition of Producer’s Raw Make as allocated to Producer under the Bluestone Processing Agreement and deliver such Fractionated Products to Producer or for Producer’s account at the Delivery
Point, (ii) shall market, as Producer’s agent, such Fractionated Products in accordance with the terms of this Agreement, other than Fractionated Products (including ethane recovered as a purity Fractionated Product after the Ethane
Service Commencement Date) that are taken in kind and marketed by Producer pursuant to Section 5.B. or Section 5.C. of the body of this Agreement and (iii) shall pay Producer, each Accounting Period, [REDACTED]* of the Net
Sales Price (as defined herein) for such Fractionated Products that are marketed by MarkWest as Producer’s agent. Producer hereby authorizes and designates MarkWest as its agent for the purpose 

 
of marketing, selling and transporting for sale the Fractionated Products, other than Fractionated Products (including ethane recovered as a purity Fractionated Product after the Ethane Service
Commencement Date) that are taken in kind and marketed by Producer pursuant to Section 5.B. or Section 5.C. of the body of this Agreement. In addition, Producer hereby authorizes and designates MarkWest as its agent to negotiate, execute
and perform one or more agreements for the purpose of delivering ethane for Producer’s account at the Delivery Point(s) designated in Producer’s Ethane Nomination. 

i. If at any time the operation of the Fractionation Plant is constrained and MarkWest is unable to fully exchange all of Producer’s Raw
Make for Fractionated Products , then any products that do not constitute Fractionated Products will be marketed and sold in accordance with this Agreement and consistent with the provisions governing the marketing and sale of Fractionated Products.
[REDACTED]*  
 ii. MarkWest shall use commercially reasonable efforts to sell Fractionated Products (including any Fractionated
Products in storage) under the most favorable terms that MarkWest can obtain, as determined in MarkWest’s judgment and taking into account all relevant factors and considerations, including, without limitation, the reliable operation of the
Fractionation Plant and the Bluestone Processing Plant. 
 iii. As used herein, the “Net Sales Price” per gallon of each
individual Fractionated Product exchanged for Raw Make allocated to Producer shall be the weighted average of the net price per gallon received by MarkWest or its Affiliates for the total volume of each individual Fractionated Product sold during
the Accounting Period at the Fractionation Plant. The net price per gallon received by MarkWest for Fractionated Products shall be determined for each individual Fractionated Product and shall be based on the average net sales price received by
MarkWest for such type of Fractionated Product sold at the Fractionation Plant. To determine the Net Sales Price, there shall be deducted from the actual gross sales price of such Fractionated Products the costs of transportation and tank car
rentals (including, without limitation, demurrage), fractionation, third-party marketing fees, offsite storage, taxes (including, without limitation, gross receipts and severance taxes, but excluding MarkWest’s income taxes), and any other
actual out of pocket expenses (other than the transportation costs described in Section 4.C. to transport Raw Make) paid by MarkWest or its Affiliates to third parties who are not Affiliates of MarkWest (unless such Affiliate expenses are
approved by Producer, which approval shall not be unreasonably withheld) prior to or in connection with the sale of Fractionated Products, as incurred to determine a net price (FOB the Fractionation Plant or netted back to the Fractionation Plant,
as applicable) for such sale. 
 iv. Notwithstanding the foregoing provisions of this Section 5, if any of the Fractionated Products
delivered for the account of Producer at the Delivery Point are stored offsite from the Fractionation Plant, then the Net Sales Price shall be paid to Producer at such time as such Fractionated Products allocated to Producer are removed from offsite
storage, based on the Net Sales Price in effect at that time. Any Fractionated Products withdrawn and sold out of storage in any calendar month will be in proportion to the inventory ownership at the beginning of such month. 

B. Subject to Section 5.C. of this Agreement, at any time during the Term, Producer may elect to market one or more types of, or all types
of, the Fractionated Products delivered hereunder for Producer’s account, by giving MarkWest at least six (6) months prior written notice of such election; provided that if MarkWest has, before it receives Producer’s notice, entered
into any contractual arrangements for the sale of any of the Fractionated Products for a term that ends after the end of the six (6) month notice period (“Prior Sales Arrangement”), then Producer’s right to take such
Fractionated Products in kind shall not begin until the end of such Prior Sales Arrangement with respect to the applicable Fractionated Product(s). [REDACTED]*. Unless otherwise agreed between the Parties in writing, any election by Producer
to market one or more types of, or all of, the Fractionated Products shall be effective for at least one (1) year or such longer period of time set forth in Producer’s written notice. While any such election is in effect, Producer shall
take delivery by rail or, subject to the terms of Section 5.B.iii., below, by pipeline, all of the Fractionated Products that are the subject of such election and delivered hereunder to or for Producer’s account. Producer shall take all
such deliveries ratably seven (7) days a week. MarkWest shall not be required to provide any storage to Producer in connection with any Fractionated Products taken in kind. If any such election is made by Producer, Producer and MarkWest will
work together in good faith to minimize imbalances. 
 i. During the period of any such election by Producer, (x) Producer shall pay the
fees set forth in Section 5.D. of this Agreement for all of the Fractionated Products that are the subject of such election and delivered hereunder to or for Producer’s account, and (y) MarkWest shall no longer be obligated to market
Producer’s Fractionated Products that Producer has elected to take in kind or to account to Producer for the Net Sales Prices therefor. 

ii. Upon the election of Producer to take Fractionated Products in kind, Producer will make arrangements for the sale, transportation or other
disposition of the Fractionated Products on a daily basis. For any day that Producer fails to make arrangements for the sale, transportation or other disposition of its Fractionated Products (“Non-Take Day”), then for a period of
five (5) Business Days after the Non-Take Day and upon notice to Producer, MarkWest shall have the right to purchase the Fractionated Products from Producer that were not disposed of during the Non-Take Day. The purchase price for those
Fractionated Products shall be the lowest Net Sales Price received for each respective Fractionated Product by MarkWest on the Non-Take Day; provided, if no sales were made by MarkWest on the Non-Take Day, then the purchase price will be the lowest
Net Sales Price received for each respective Fractionated Product by MarkWest on the day prior to and the day after the Non-Take Day. 

 iii. If Producer desires to take Fractionated Products in kind pursuant to this Section 5.B.
by an interstate pipeline other than the MarkWest TEPPCO Pipeline, the Parties will work together in good faith to mutually agree upon the terms under which such connection will be made and the facilities necessary for such connection (including
facilities to permit deliveries to such pipeline) will be constructed, provided that the costs and expenses incurred to make such connections and to construct and install such facilities will be borne by Producer. 

C. Commencing on the Ethane Service Commencement Date and for the remainder of the Term, Producer shall take in kind, and shall be responsible
for marketing and disposing of, all ethane (other than ethane sold as propane) delivered to Producer or for Producer’s account at the Delivery Point(s), and MarkWest shall have no obligation to pay Producer the Net Sales Price therefor.
Producer shall take all such ethane in kind (other than ethane sold as propane) by pipeline on a ratable basis seven (7) days per week, and MarkWest shall not be required to provide storage therefor. 

D. Commencing on the Effective Date (or such later date as provided herein), the following fees and expenses shall be deducted by MarkWest from
the amount payable to Producer for Fractionated Products, or shall otherwise be payable by Producer to MarkWest, for services provided by MarkWest in connection with the exchange of the Raw Make for Fractionated Products, whether or not the
Fractionated Products are marketed by MarkWest or are taken in kind by Producer. Any amounts payable to Producer by MarkWest pursuant this Agreement that are based upon the volume or composition of Producer’s Raw Make shall be based on the
measurement procedures set forth in this Agreement and the allocation procedures set forth in the Bluestone Processing Agreement. 
 i.
Subject to the last sentence of this Section 5.D.i., MarkWest will charge a fractionation fee (“Fractionation Fee”) equal to [REDACTED]*. 

ii. During any period in which capacity of the Bluestone Fractionation Plant is constrained for any reason [REDACTED]*. 

iii. MarkWest will charge a loading and handling fee (“[REDACTED]* Loading Fee”) equal to [REDACTED]*. 

iv. Commencing on the Ethane Service Commencement Date, MarkWest will charge an ethane fee (“Ethane Recovery Fee”) equal to
[REDACTED]*. 
 v. [REDACTED]*.  

vi. [REDACTED]* 
 vii.
Notwithstanding any provision in this Agreement to the contrary, the Parties agree that there will be no duplication of any fees, costs, expenses or other charges set forth in this Agreement. 

Section 6. Notices. Unless otherwise provided herein, any notice, request or demand that either Party desires
to serve upon the other regarding this Agreement shall be made in writing and shall be considered as delivered when hand delivered, or when delivery is confirmed by pre-paid delivery service (such as FedEx, UPS, DHL or a similar delivery service),
or when sent by email, or, if mailed by United States certified mail, postage prepaid, three (3) Business Days after mailing, or, if sent by facsimile transmission, when receipt is confirmed by the equipment of the transmitting Party; provided,
if sent by email after the recipient’s normal business hours or if receipt of a facsimile transmission is confirmed after the recipient’s normal business hours, receipt shall be deemed to be the next Business Day. Such notice shall be
given to the other Party at the following address, or to such other address as either Party shall designate by written notice to the other Party: 
 If to
Producer: 
 R.E. GAS DEVELOPMENT, LLC 

366 Walker Drive 
 State College,
PA 16801 
 Attention: Director, Marketing 

Phone: 814.278.7777 
 Facsimile:
814.278.7286 
 Email: dspringinatic@rexenergycorp.com 

With a copy to: 
 R.E. GAS
DEVELOPMENT, LLC 
 366 Walker Drive 

State College, PA 16801 

Attention: Office of the General Counsel 

Phone: 814.278.7113 
 Facsimile:
814.278.7286 
 Email: jmcdonough@rexenergycorp.com 

 If to MarkWest: 

MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C. 

1515 Arapahoe Street 
 Tower 1,
Suite 1600 
 Denver, CO 80202 

Attn: Chief Operating Officer 

Phone: (303) 925-9200 

Facsimile: (303) 925-9305 

Email: jmollenkopf@markwest.com 
 With a copy to:

 MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C. 

1515 Arapahoe Street 
 Tower 1,
Suite 1600 
 Denver, CO 80202 

Attn: General Counsel 

Phone: (303) 925-9200 

Facsimile: (303) 925-9308 

Email: cbromley@markwest.com 

Section 7. Execution. This Agreement may be executed in any number of counterparts, each of which shall be considered an
original, and all of which shall be considered one instrument. 
 Section 8. Guaranty.  

A. Producer Guarantor unconditionally, absolutely, continually and irrevocably guarantees to MarkWest, as principal and not as surety, the
punctual and complete payment in full when due of all amounts due from its subsidiary Producer under this Agreement (each, a “Producer Payment Obligation”). Producer Guarantor agrees that MarkWest shall be entitled to enforce
directly against Producer Guarantor any Producer Payment Obligation applicable to it. 
 B Producer Guarantor hereby guarantees that any
Producer Payment Obligation applicable to it will be paid strictly in accordance with the terms of the Agreement. The obligations of the Producer Guarantor under this Agreement constitute a present and continuing guaranty of payment, and not of
collection or collectability. The liability of Producer Guarantor under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of: 

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

ii. any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to the
Agreement; 
 iii. any acceptance by MarkWest of partial payment or performance from Producer; 

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

v. any absence of any notice to, or knowledge of, Producer, of the existence or occurrence of any of the matters or events set forth in the
foregoing subsections 8.B.i. through 8.B.iv.; or 
 vi. any other circumstance which might otherwise constitute a defense available to,
or a discharge of, a guarantor. 
 C. Producer Guarantor hereby waives promptness, diligence, presentments, protests, notice of dishonor or
nonpayment, notice of protest, notice of acceptance and any and all other notices relating to any applicable Producer Payment Obligation and any requirement for MarkWest to protect, secure, perfect or insure any security interest or lien or any
property subject thereto or exhaust any right or take any action against the applicable Producer, any other entity or any collateral. 
 D.
Producer Guarantor’s obligations and liabilities under this Section 8 shall continue to be effective, and/or shall automatically and retroactively be reinstated if a release or discharge has occurred, as the case may be, if at any time any
payment or part thereof to MarkWest with respect to any Producer Payment Obligation applicable to Producer Guarantor is rescinded or must otherwise be restored by MarkWest pursuant to any insolvency, bankruptcy, reorganization, receivership, or any
other debt relief granted to the Producer or to any other party. In the event that MarkWest must rescind or restore any payment received by MarkWest in satisfaction of the Producer Payment Obligations, any prior release or discharge from the terms
of this Section 8 given to the Producer Guarantor shall be without effect, and this Section 8 and the Producer Guarantor’s obligations and liabilities hereunder shall automatically be renewed or reinstated and shall remain in full
force and effect to the same degree and extent as if such a release or discharge was never granted. 

 E. This Section 8 is a continuing guaranty and shall (i) remain in full force and
effect until the first to occur of the indefeasible payment in full of all of the Producer Payment Obligations (subject to Subsections A—D of this Section 8), (ii) be binding upon Producer Guarantor and each of its successors and
assigns and (iii) inure to the benefit of and be enforceable by MarkWest and its successors, transferees and assigns. Notwithstanding the foregoing, the Producer Guarantor may not assign, transfer or convey, directly or indirectly, any of its
obligations under this Section 8 without MarkWest’s prior written consent. 
 [The remainder of this page is intentionally left
blank.] 

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

  

									
	R.E. GAS DEVELOPMENT, LLC				 MARKWEST LIBERTY MIDSTREAM &

RESOURCES, L.L.C.

					
	By:		/s/ Thomas C. Stabley				By:		/s/ Frank M. Semple
	Name:		Thomas C. Stabley				Name:		Frank M. Semple
	Title:		Chief Executive Officer				Title:		Chairman, President & CEO

 Producer Guarantor: 
  

			
	REX ENERGY CORPORATION
		
	By:		/s/ Thomas C. Stabley
	Name:		Thomas C. Stabley
	Title:		Chief Executive Officer

 EXHIBIT A 

GENERAL TERMS AND CONDITIONS 

Attached to and made a part of that certain 

Natural Gas Liquids Exchange and Marketing Agreement 

between 
 R.E. GAS
DEVELOPMENT, LLC 
 and 

MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C. 

Dated: August 22, 2014 
 ARTICLE 1:
DEFINITIONS 
 Accounting Period. Has the meaning set forth in the Bluestone Processing Agreement. 

Affiliate. Has the meaning set forth in the Bluestone Processing Agreement. 

API. American Petroleum Institute, and shall include any successor thereto. 

Audit Period. As defined in Section 5.3 of these GTCs. 

Bluestone Fractionation Plant. The portion of the Fractionation Plant now or hereafter constructed and installed at or near the Bluestone Processing
Plant. 
 Bluestone Processing Plant. The “Processing Plant” as defined in the Bluestone Processing Agreement. 

Business Day. Has the meaning set forth in the Bluestone Processing Agreement. 

Delivery Point. The outlet flange of the Fractionation Plant. In the case of ethane recovered as a purity product in accordance with the terms of this
Agreement, the Delivery Point shall be the point of interconnection between the Bluestone Ethane Pipeline and the Mariner West Pipeline and/or the outlet flange of the Houston Fractionation Plant, as specified in Producer’s Ethane Nominations.

 Downstream Ethane Pipeline. Any one or more of the Mariner East Pipeline, the Mariner West Pipeline or the Enterprise ATEX Pipeline, or any other
or future pipeline mutually agreed to by the Parties. 
 Enterprise ATEX Pipeline. The approximate 1,230-mile Appalachia to Texas ethane pipeline
that is being constructed by Enterprise Products Partners L.P. to deliver ethane from the Marcellus/Utica Shale areas of Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast. 

Ethane Service Commencement Date. [REDACTED]*. 

FERC. As defined in Section 8.9 of these GTCs. 

[REDACTED]* 
 [REDACTED]* 

Force Majeure. Any cause or condition not within the commercially reasonable control of the Party claiming suspension (to the extent such cause or
condition was not caused by such Party’s gross negligence or willful misconduct) and which, by the exercise of commercially reasonable diligence, such Party is unable to prevent or overcome, and, without limiting the generality of the
foregoing, including acts of God; strikes, lockouts, or other industrial disturbances; acts of terrorism; acts of the public enemy, wars, blockades, or military action; earthquakes, fires, storms or storm warnings, crevasses, floods, or washouts;
arrests and restraints of governments and people; civil disturbances; explosions affecting, third party damage to or accidents involving machinery or lines of pipe (including any compression or processing facilities); the necessity for testing or
making repairs or alterations to machinery or lines of pipe; freezing of wells or lines of pipe; inability or delays in obtaining easements and/or rights-of-way; inabilities or delays in obtaining necessary materials or supplies due to existing or
future rules, regulations, orders, laws, actions or proclamations of governmental authorities (both Federal and State) including both civil and military; inabilities or delays in obtaining requisite permits, authorizations and consents; and delays
occasioned by governmental actions. 
 Fractionated Products. The finished liquid products fractionated from the Raw Make, including propane,
isobutane, normal butane and natural gasoline. Prior to the Ethane Service Commencement Date, ethane that is recovered will be considered a Fractionated Product only to the extent that it is sold as propane, and any additional ethane that is
recovered will not be considered to be a Fractionated Product. Commencing on and after the Ethane Service Commencement Date, ethane will be a Fractionated Product. 

  
 A-1 

 Fractionation Fuel. All Gas, Raw Make, power, vapors or other forms of energy utilized as fuel or power in
the Fractionation Plant, and the incidental gains or losses incurred in MarkWest’s or its Affiliates’ facilities or due to variations in measurement equipment. 

Fractionation Plant. MarkWest’s or its Affiliates’ Houston Fractionation Plant, any expansion thereof and any other fractionation facilities
that MarkWest or its Affiliates have constructed or may construct in the future that are connected to, or operated in conjunction with, such fractionation facilities, including the Bluestone Fractionation Plant, and including any treating equipment,
Raw Make and Fractionated Products separation and fractionation vessels, depropanizers, debutanizers, deethanizers, splitters, all Fractionated Products storage facilities, and associated condensing, heating, pumping, conveying, and other equipment
and instrumentation; including all structures and pipelines associated with those facilities, including the MarkWest TEPPCO Pipeline and the Bluestone Ethane Pipeline; and, all Fractionated Products loading facilities, including railcar loading and
truck loading facilities and including all easements, rights-of-way, and other property rights pertaining to the construction and operation of those facilities; wherever those facilities, structures, easements, rights-of-way, and other property
rights are located. If MarkWest has installed any facilities to separate propane or butane from the Raw Make as part of a processing plant, then such facilities shall be considered part of the Fractionation Plant. 

Fuel Index Rate. The actual price during each Accounting Period by MarkWest or its Affiliates to an unaffiliated third party for Fractionation Fuel
utilized at the Fractionation Plant, including all out of pocket costs, fees and expenses incurred by MarkWest or its Affiliates in connection with the purchase, transportation and delivery of Fractionation Fuel to the Fractionation Plant, plus a
reasonable Fractionation Fuel delivery fee to MarkWest or its Affiliate in the event that Fractionation Fuel is transported to the Fractionation Plant from a processing plant by any pipeline constructed and installed by or on behalf of MarkWest or
its Affiliates, such delivery fee taking into account the cost of pipeline construction and installation, the regulation of the pipeline as a utility (or otherwise) and all other applicable factors. [REDACTED]*  

Gas. All hydrocarbon and non-hydrocarbon substances in a gaseous state. 

GPA. Gas Processor’s Association. 
 Houston
Fractionation Plant. The portion of the Fractionation Plant located near Houston, Pennsylvania. 
 Indemnifying Party and Indemnified Party.
As defined in Section 7.2 of these GTCs. 
 Losses. Subject to Section 8.6 of the GTCs, any actual loss, cost, expense, liability,
damage, demand, suit, sanction, claim, judgment, lien, fine or penalty asserted by a third party unaffiliated with the Parties incurring such, and which are incurred by the applicable Indemnified Parties on account of injuries (including death) to
any person or damage to or destruction of any property, sustained or alleged to have been sustained in connection with or arising out of the matters for which the Indemnifying Party has indemnified the applicable Indemnified Parties. 

Mariner East Pipeline. A pipeline project being developed by Sunoco Pipeline L.P. pursuant to which propane and ethane will be transported from the
Houston Fractionation Plant to Marcus Hook, Pennsylvania. 
 Mariner West Pipeline. An ethane pipeline project being developed by Sunoco Pipeline
L.P. and MarkWest pursuant to which ethane will be transported from the Houston Fractionation Plant to markets located in Sarnia, Ontario, Canada. 

MarkWest TEPPCO Pipeline. Any pipelines that MarkWest or its Affiliates have constructed, or may construct in the future, to deliver Fractionated
Products from the Fractionation Plant to the TEPPCO pipeline. 
 Measurement Point. For Raw Make attributable to Gas processed at the Bluestone
Processing Plant, the point of measurement of Raw Make shall be as set forth in the Bluestone Processing Agreement. For all other Raw Make, the point of measurement shall be the meter at or near the first inlet flange of any Raw Make pipeline owned
by MarkWest or its Affiliates or unloading facilities at the Fractionation Plant, as applicable. 
 [REDACTED]* 

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

  
 A-2 

 Producer’s Gas. Has the meaning set forth in the Bluestone Processing Agreement. 

Raw Make. A combined stream of propane, iso-butane, normal butane, iso-pentane, normal pentane, hexanes plus, any other liquid hydrocarbon product
(except for a liquefied methane product) and any mixtures thereof, and any incidental methane or ethane (to the extent sold as propane) included therein, and after the Ethane Service Commencement Date, ethane (in addition to incidental ethane sold
as propane), which in each case are separated, extracted, recovered or condensed, and saved, from Gas processed at the Bluestone Processing Plant or any third party processing plant, including the combined stream of Plant Products (as defined in the
Bluestone Processing Agreement). 
 Receipt Point. With respect to the Raw Make from the Bluestone Processing Plant that is delivered to the
Fractionation Plant by any Raw Make pipeline owned by MarkWest or its Affiliates, the inlet flange of such pipeline at or near the tailgate of the Bluestone Processing Plant. With respect to Raw Make from the Bluestone Processing Plant that is
delivered to the Fractionation Plant by truck or rail, the outlet flange of the Raw Make loading facilities at the Bluestone Processing Plant. With respect to Raw Make from any third party processing plant whereby Raw Make is delivered to the
Fractionation Plant by truck, the inlet flange of the Raw Make unloading facilities at the Fractionation Plant. With respect to any other processing plant or any third party processing plant, whereby the Raw Make is delivered to the Fractionation
Plant by a pipeline, the first inlet flange of any Raw Make pipeline or Fractionation Plant owned by MarkWest or its Affiliates. 
 ARTICLE 2: 

MARKWEST’S COMMITMENTS 
 2.1 Subject to the other
provisions of this Agreement, including, without limitation, Section 2.4 below, MarkWest agrees to accept all of Producer’s Raw Make committed under Section 4 of this Agreement and delivered to the Receipt Point, exchange such Raw
Make for Fractionated Products that shall be delivered for the account of Producer at the Delivery Point, and except as set forth above in Sections 5.B. and 5.C. of the body of this Agreement, market such Fractionated Products, in each case in
accordance with this Agreement. The Fractionated Products delivered to Producer at the Delivery Point shall be based upon the composition and volume of the Raw Make delivered at the Receipt Point. 

2.2 Fractionation Fuel shall be allocated on a pro rata basis based upon the gallons of Raw Make delivered (or deemed delivered) to the Fractionation Plant or
any portion thereof. 
 2.3 MarkWest shall, at its sole cost, risk, and expense, operate and maintain, in a workmanlike manner and in accordance with
industry standards, the Fractionation Plant and related facilities for loading Fractionated Products for shipment by highway, rail, and pipeline transportation from the vicinity of Fractionation Plant. 

2.4 If capacity at the Fractionation Plant is curtailed or reduced, or is otherwise insufficient for the needs of all parties desiring to utilize the capacity
at the Fractionation Plant, in each case due to Force Majeure or maintenance, then [REDACTED]*. 
 2.5 It is understood and agreed that either Party
may, without liability to the other Party, interrupt the operations of its facilities for the purpose of making necessary alterations, maintenance or repairs thereto or to comply with applicable regulatory requirements. MarkWest shall schedule
routine repair and maintenance so as to minimize disruption of service hereunder and, except in situations reasonably perceived by MarkWest to be emergencies, shall provide reasonable prior written notice to Producer of such scheduled routine repair
and maintenance. In each case of such routine repair and scheduled maintenance, MarkWest shall coordinate with Producer in a commercially reasonable manner prior to giving the advance notice of any such service interruption. 

ARTICLE 3: QUALITY 
 3.1 As long as the composition of
Producer’s Gas delivered to the Bluestone Processing Plant complies with the specifications set forth in the Bluestone Processing Agreement and does not contain contaminants or compounds that would otherwise cause the fractionated Raw Make to
not meet the specifications set forth in Exhibit B attached hereto, MarkWest agrees to receive and exchange the Producer’s Raw Make for Fractionated Products meeting the specifications set forth in Exhibit B attached
hereto. The Parties acknowledge and agree that, if the quality standards of the pipelines receiving Producer’s Fractionated Products change, the Parties will consider whether such change is material to this Agreement and, if material, how to
address the change going forward. 
 3.2 If the Producer’s Gas delivered to the Bluestone Processing Plant does not meet the specifications set forth
in Section 3.1 of the GTCs, then: 
 A. MarkWest may take receipt of the non-conforming Producer’s Raw Make; provided that
(i) receipt shall not be construed as a waiver or change of standards for future Raw Make deliveries by Producer, and (ii) Producer shall be responsible for the reasonable costs incurred by MarkWest to conform or treat such Raw Make; or

 B. MarkWest may, at its sole discretion, (i) cease receiving the non-conforming Raw Make from Producer, and shall notify Producer
that it will cease receiving the non-conforming Raw Make, or (ii) receive and conform such Raw Make, and any costs or 

  
 A-3 

 
expenses reasonably incurred by MarkWest to conform such Raw Make shall be reimbursed by Producer. If MarkWest ceases receiving non-conforming Raw Make from Producer pursuant to clause (i),
Producer will, at Producer’s expense, conform the Raw Make to the quality specifications provided in this Agreement as soon as reasonably practicable. The Parties agree that it is not the intent of either Party to use Raw Make quality (or
failure to comply with such quality specifications) as a means to avoid compliance with this Agreement, for economic reasons or otherwise. 

If the Raw Make as delivered contains contaminants not in conformance with the specifications in this Article 3, then [REDACTED]*. 

ARTICLE 4: MEASUREMENT EQUIPMENT AND PROCEDURES AND ANALYSES 

4.1 Raw Make shall be measured at the Measurement Point. All measurement procedures shall conform to applicable API and GPA standards for measurement. The Raw
Make and composition thereof shall be measured and determined at the Measurement Point in accordance with the practices and procedures set forth in the Bluestone Processing Agreement. 

4.2 Measurement of all Fractionated Products and deliveries shall be converted to sixty degrees Fahrenheit
(60oF) and shall conform to applicable API and GPA standards for truck, pipeline and rail car measurement: 

A. Any quantities of Fractionated Products delivered into or distributed by truck will be determined by meter, slip tube, rotary gauging
device or weighing, in accordance with all appropriate GPA and API standards and all revisions thereof.  
 B. Rail cars shall
be measured using strapping tables and liquid spew gauges. Vapor correction calculations will be made as required by applicable industry standards. 
 4.3
Analyses shall be conducted as follows: 
 A. Except for analyses to be conducted at the Measurement Point in accordance with the Bluestone
Processing Agreement, MarkWest shall, at its sole cost, risk, and expense, install, operate and maintain equipment to analyze the composition of the Raw Make and of the Fractionated Products in accordance with applicable GPA standards. 

B. Samples shall be analyzed in accordance with applicable GPA standards. The analysis shall also include the determination of the molecular
weight, density and heating value of the hexane and pentanes and heavier hydrocarbons, quarterly in accordance with industry recognized standards. Producer or MarkWest or their representatives may take samples for verification of composition and may
be present during any of the other Party’s sampling operations. 
 ARTICLE 5: PAYMENTS 

5.1 MarkWest shall provide Producer with a statement explaining fully how all amounts and fees due under the terms of this Agreement were determined not later
than the last day of the Accounting Period following the Accounting Period for which the consideration is due. The statement provided hereunder shall be combined with the statement provided to Producer by MW Bluestone under the Bluestone Processing
Agreement. 
 5.2 Any sums due MarkWest under this Agreement or due to MW Bluestone under the Bluestone Processing Agreement shall be deducted from the
amount payable hereunder to Producer for Fractionated Products and, if applicable, from any amount payable to Producer by MW Bluestone under the Bluestone Processing Agreement, and the net amount remaining will be paid to the Producer no later than
the last day of the Accounting Period following the Accounting Period for which payment is due. Producer hereby directs MarkWest to pay to MW Bluestone, on Producer’s behalf, all such amounts payable to MW Bluestone under the Bluestone
Processing Agreement which are deducted from amounts payable to Producer hereunder pursuant to the foregoing sentence. During any Accounting Period, if the amount due to Producer hereunder and, if applicable, under the Bluestone Processing Agreement
is less than the amount payable by Producer to MarkWest hereunder or to MW Bluestone under the Bluestone Processing Agreement, then Producer shall pay the net amount payable to MarkWest within thirty (30) days of receipt of the statement
setting forth such amount. Notwithstanding anything herein to the contrary, if the amount owed by one Party to another is the subject of a good faith dispute, the Party with the payment obligation shall be obligated to pay only the undisputed
portion of such amount pending the resolution of such dispute in accordance with this Agreement. Late payments of undisputed amounts shall accrue interest at a rate equal to two percent (2%) per annum, until paid. 

5.3 Either Party, on thirty (30) days’ prior written notice, shall have the right at the requesting Party’s expense, at reasonable times during
business hours, to audit the books and records of the other Party to the extent necessary to verify the accuracy of any statement, allocation, measurement, computation, charge, or payment made under or pursuant to this Agreement. The scope of any
audit shall be limited to the twenty-four (24) month period immediately prior to the month in which notice is given (“Audit Period”). However, no audit may include any time period for which a prior audit hereunder was
conducted, and no audit may occur more frequently than once each twelve (12) months. All statements, allocations, measurements, computations, charges, or payments made in any period prior to the Audit Period, or made for charges during the
Audit Period but for which a written claim for adjustments is not made within ninety (90) days after the information that has been reasonably requested in connection with such audit has been provided or made available to the requesting party,
shall be conclusively deemed true and correct and shall be final for all purposes. To the extent 

  
 A-4 

 
that the foregoing varies from any applicable statute of limitations, the Parties expressly waive all such other applicable statutes of limitations. The Parties acknowledge and agree that, in
connection with any audit hereunder, MarkWest shall not be required to disclose to Producer the names of other MarkWest customers or the settlement terms for, or confidential information of, those customers. 

ARTICLE 6: FORCE MAJEURE 
 6.1 In the event either Party
is rendered unable, wholly or in part, by Force Majeure, to carry out its obligations under this Agreement, other than the obligation to make any payments due hereunder, the obligations of that Party, so far as they are affected by Force Majeure,
shall be suspended from the inception and during the continuance of the inability, and the cause of the Force Majeure, as far as possible, shall be remedied with reasonable diligence. The Party affected by Force Majeure shall provide the other Party
with written notice of the Force Majeure event, with reasonably full detail of the Force Majeure promptly after the affected Party learns of the occurrence of the Force Majeure event. The settlement of strikes, lockouts, and other labor
difficulty shall be entirely within the discretion of the Party having the difficulty and nothing herein shall require the settlement of strikes, lockouts, or other labor difficulty. The Parties shall be under no obligation to make up performance
suspended due to Force Majeure. 
 ARTICLE 7: LIABILITY, INDEMNIFICATION AND TITLE 

7.1 As between the Parties, MarkWest and any of its designees shall be in custody, control and possession of the Raw Make hereunder after it is delivered at
the Receipt Point, and shall be in custody, control and possession of the Fractionated Products or other products delivered at the Delivery Point for Producer’s account until they are sold or, if they are taken in kind at the Delivery Point by
Producer pursuant to Sections 5.B. or 5.C. of the body of this Agreement, until they are delivered at the Delivery Point. As between the Parties, Producer shall be in custody, control and possession of the Fractionated Products or other products
taken in kind by Producer after they are delivered at the Delivery Point for Producer’s account. As between the Parties, the Party in custody, possession and control of the Raw Make or Fractionated Products or other products delivered at the
Delivery Point, as applicable, shall be liable therefor, except with respect to title matters, which are addressed in Sections 7.3 and 7.4. 
 7.2 Each
Party (“Indemnifying Party”) hereby covenants and agrees with the other Party, and its Affiliates and each of their directors, officers and employees (“Indemnified Parties”), that except to the extent caused by the
Indemnified Parties’ gross negligence or willful misconduct, the Indemnifying Party shall protect, defend, indemnify and hold harmless the Indemnified Parties from, against and in respect of any and all Losses incurred by the Indemnified
Parties to the extent those Losses (i) arise from claims brought by any of the Indemnifying Party’s employees, its contractors or subcontractors, or their employees for Losses due to bodily injury, death, or damage to property or
(ii) are not covered by clause (i) and arise from or are related to: (a) the Indemnifying Party’s facilities or operations under this Agreement; or (b) the Indemnifying Party’s possession and control of the Raw Make or
Fractionated Products, as applicable. 
 7.3 Producer represents and warrants that it owns, or has the right to commit, and has the right to deliver and
exchange, all of Producer’s Raw Make, and the components thereof, committed under this Agreement for the purposes of this Agreement, free and clear of all liens, encumbrances and adverse claims. If the title to Raw Make delivered by Producer
hereunder is disputed or is involved in any legal action, MarkWest shall have the right to withhold payment (with interest at the Prime Rate per annum as published in The Wall Street Journal, under “Money Rates”) or cease receiving
the Raw Make, to the extent of the interest disputed or involved in legal action, during the pendency of the action or until title is freed from the dispute or until Producer shall furnish or causes to be furnished indemnification to save MarkWest
harmless from all claims arising out of the dispute or action, with surety acceptable to MarkWest. Producer hereby indemnifies MarkWest and its Indemnified Parties against and holds them harmless from any and all Losses arising out of or related to
any breach of any representation and warranty made by Producer in this Section 7.3. 
 7.4 Title to all Producer’s Raw Make and the Fractionated
Products derived therefrom, shall transfer, without lien or encumbrance, to MarkWest at the Receipt Point. Title to Fractionated Products or other products delivered at the Delivery Point for Producer’s account shall transfer, without lien or
encumbrance, to Producer or its Affiliates at the Delivery Point. 
 7.5 OTHER THAN THOSE WARRANTIES EXPRESSLY SET FORTH IN THE TERMS OF THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE WHATSOEVER, EXPRESS, IMPLIED, ORAL, WRITTEN OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF
WHICH REPRESENTATIONS AND WARRANTIES ARE EXPRESSLY DISCLAIMED AND WAIVED BY THE PARTIES. 
 ARTICLE 8: MISCELLANEOUS 

8.1 The failure of any Party to exercise any right granted hereunder shall not impair nor be deemed a waiver of that Party’s privilege of exercising that
right at any subsequent time or times. 
 8.2 This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of
Pennsylvania without regard to choice of law principles. EACH OF THE PARTIES IRREVOCABLY WAIVES, TO THE FULLEST EXTENT 

  
 A-5 

 
PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT. Any litigation arising out of or in any way related to this
Agreement shall be brought and maintained in the state and federal courts having jurisdiction in Pennsylvania. 
 8.3 This Agreement shall extend to and
inure to the benefit of and be binding upon the Parties, and their respective successors and permitted assigns, including any assigns of Producer’s Interests (as defined in the Bluestone Processing Agreement) covered by this Agreement. This
Agreement may only be assigned in connection with the assignment of, and subject to compliance with the terms and conditions relating to assignments set forth in, the Bluestone Processing Agreement, and any such assignment or conveyance in
accordance with this Agreement and the Bluestone Processing Agreement shall not relieve the assignor of its duties hereunder prior to the effective date of an assignment. No transfer of, or succession to, the interest of any Party, either in whole
or partially, shall affect or bind the other Party until the first day of the month following the month in which the other Party shall have received written notification thereof. 

8.4 Any change, modification or alteration of this Agreement shall be in writing, signed by the Parties; and, no course of dealing between the Parties shall
be construed to alter the terms of this Agreement. 
 8.5 This Agreement, including all exhibits and appendices, and the Bluestone Processing Agreement
contain the entire agreement between the Parties with respect to the subject matter hereof, and there are no oral or other promises, agreements, warranties, obligations, assurances, or conditions precedent, affecting it. 

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

8.7 The Parties shall keep the terms of this Agreement confidential and not disclose the same to any other persons, firms or entities without the prior
written consent of the other Party; provided, the foregoing shall not apply to disclosures compelled by law, court order or the rules of any stock exchange on which a Party’s securities are traded; or to disclosures to a Party’s affiliates
or such Party’s or its affiliates’ employees, directors, members, managers, officers, partners, prospective partners or financing sources, financial advisors, consultants, attorneys, banks, or institutional investors provided those
persons, firms or entities likewise agree to keep this Agreement confidential. 
 8.8 Any person that is designated as an Administrator (as defined under
the Bluestone Processing Agreement) pursuant to the Bluestone Processing Agreement shall also serve in such capacity pursuant to this Agreement, on the same terms as are set forth in the Bluestone Processing Agreement. 

8.9 This Agreement shall be subject to all applicable federal, state, and local laws, rules, regulations, and orders affecting either Producer or MarkWest and
that pertain to the Raw Make or Fractionated Products or to the Fractionation Plant, the Bluestone Ethane Pipeline, or any other pipeline utilized by MarkWest in connection with the exchange of Producer’s Raw Make for Fractionated Products
hereunder, or the operation of any of the foregoing. In the event any one or more of the provisions of this Agreement shall be found to be violation of any applicable order, rule, or regulation of any regulatory body having jurisdiction, or of any
valid law of the United States or any state or other governmental entity having jurisdiction, such provision or provisions shall be deemed to be modified to the extent necessary to comply with such order, rule, regulation, or law; provided, however,
that in the event that a material term under this Agreement is so modified, the Parties will, timely and in good faith, revise and amend this Agreement in a manner which preserves, as closely as possible, each Party’s business and economic
objectives as expressed by the Agreement prior to such modification. For the avoidance of doubt, in the event that the Bluestone Ethane Pipeline or any other pipeline utilized by MarkWest in connection with the exchange of Producer’s Raw Make
for Fractionated Products pursuant to this Agreement becomes regulated by the Federal Energy Regulatory Commission (“FERC”) or other regulatory agency having jurisdiction such that MarkWest is required to establish a tariff for such
pipeline, then Producer shall be responsible for payment of such tariff rate and fuel for usage of such pipeline, provided that the other fees and fuel payable by Producer hereunder and/or under the Bluestone Processing Agreement are adjusted such
that the aggregate amount of those fees and fuel and the pipeline tariff rate and fuel does not exceed the aggregate amount of fees and fuel currently payable by Producer hereunder and under the Bluestone Processing Agreement. 

8.10 Each Party agrees that, to the extent required by applicable law to be effective, the provisions in this Agreement in bold-type font are
“conspicuous” for the purpose of any applicable law. 
 8.11 The invalidity or unenforceability of any term or provision of this Agreement in any
situation or jurisdiction shall not affect the validity or enforceability of the other terms or provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction and the
remaining terms and provisions shall remain in full force and effect, unless doing so would result in an interpretation of this Agreement which is manifestly unjust. 

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

  
 A-6 

 EXHIBIT B 

PRODUCTS QUALITY SPECIFICATIONS 

PROPANE 
 [REDACTED]*

NORMAL BUTANE 
 [REDACTED]*

ISOBUTANE 
 [REDACTED]*

NATURAL GASOLINE 
 [REDACTED]* 

ETHANE 
 [REDACTED]* 

[REDACTED]* 

  
 B-1 

 EXHIBIT C 

[REDACTED]* 
 (see
attached)  
 [REDACTED]* 

  
 C-1kblb_ex1011.htm

Exhibit 10.11

 

License Agreement

Between

The University of Notre Dame du Lac

and

Kraig Biocraft Laboratories, Inc.

This Agreement is made and entered into as of this 28th day of October, 2011 (“Effective Date”) between the University of Notre Dame du Lac, a corporation organized under the laws of the State of Indiana, (hereinafter NOTRE DAME), and Kraig Biocraft Laboratories, Inc., a for-profit corporation of the State of Wyoming, having its principal office at 120 N. Washington Square, Suite 805, Lansing, Michigan 48933 (hereinafter LICENSEE).

WHEREAS, researchers at NOTRE DAME, the United States Department of Agriculture (USDA), and the University of Florida (UFL) have developed various technologies related to piggyBac transposons and genetic transformation systems for producing transgenic organisms; and

WHEREAS, NOTRE DAME, the USDA, and UFL are the assignees and joint owners of U.S. Patent No. 6,218,185, issued on April 17, 2001, and U.S. Patent No. 6,551,825, issued on April 22, 2003, and entered into interinstitutional agreements on February 24, 2000 and December 17, 1998 providing NOTRE DAME the exclusive right to license and/or sublicense the USDA’s and UFL’s interests in U.S. Patent Nos. 6,218,185 and 6,551,825; and

WHEREAS, NOTRE DAME is the assignee of U.S. Patent No. 6,962,810 issued on November 8, 2005, U.S. Patent No. 7,105,343 issued September 12, 2006 and U.S. Patent Application No. 11/454,947, filed June 19, 2006; and

WHEREAS, NOTRE DAME and the University of Wyoming (“Wyoming”) are assignees and joint owners of international patent application PCT/US11/53760, filed September 28, 2011, and entered into an interinstitutional agreement on October 27, 2011 providing NOTRE DAME the exclusive right to license and/or sublicense Wyoming’s interests in PCT/US11/53760; and

WHEREAS, LICENSEE wishes to obtain a license under the BACKGROUND INTELLECUTAL PROPERTY, and a license to use the PROJECT INTELLECTUAL PROPERTY, according to the terms and conditions set forth in this Agreement.

Now, therefore, in consideration of the premises and mutual covenants contained herein, the parties agree as follows:

ARTICLE 1

DEFINITIONS

	
1.1  

	
“LICENSOR” means the University of Notre Dame du Lac, its officers, trustees, employees, and authorized agents.

	
1.2  

	
“LICENSEE” means Kraig Biocraft Laboratories, Inc. and any subsidiary of Kraig Biocraft Laboratories, Inc.

	
1.3  

	
“BACKGROUND INTELLECTUAL PROPERTY” means the TECHNOLOGY, the PARENT PATENTS, and the IMPROVEMENT PATENTS listed and defined in Sections 1.3a, 1.3b, and 1.3c, and any continuations, divisionals, and/or patents issuing therefrom.

 

	
a.  

	
“TECHNOLOGY” means any invention, discovery, information, technical data and/or know-how developed by or on behalf of NOTRE DAME concerning or related to NOTRE DAME File D-159, entitled “PiggyBac Transposon-based Genetic Transformation System for Insects”, and D-183, entitled “Methods and compositions for transposition using minimal segments of the eukaryotic transformation vector Piggybac.”

 

	
b.  

	
“PARENT PATENTS” means U.S. Patent No. 6,218,185, issued April 17, 2001, entitled “PiggyBac transposon-based genetic transformation system for insects” and U.S. Patent No. 6,551,825, issued April 22, 2003, entitled “PiggyBac transposon-based genetic transformation system for insects”,

 

	
c.  

	
“IMPROVEMENT PATENTS” means U.S. Patent No. 6,962,810, issued November 8, 2005, entitled “Methods and compositions for transposition using minimal segments of the eukaryotic transformation vector Piggybac”; U.S. Patent No. 7,105,343, issued September 12, 2006, entitled “Methods and compositions for transposition using minimal segments of the eukaryotic transformation vector Piggybac”; and U.S. Patent Application No. 11/454,947, filed June 19, 2006, entitled “Methods and compositions for transposition using minimal segments of the eukaryotic transformation vector Piggybac ” and any claims issuing therefrom.

 

  

1

  

 

	
1.4  

	
“PROJECT INTELLECTUAL PROPERTY” means NOTRE DAME File D-11-009, entitled “Transgenic Silkworms Capable of Producing Spider Silk”, for which international patent application PCT/US11/53760, entitled “Chimeric Spider Silk and Uses Thereof” was filed on September 28, 2011.

	
1.5

	
“LICENSED PRODUCT” means any item manufactured, used, sold, containing or utilizing the BACKGROUND INTELLECTUAL PROPERTY and/or PROJECT INTELLECTUAL PROPERTY.

	
1.6

	
“REVENUE” means the US dollar value of all consideration realized by LICENSEE for the sale, lease or other transfer or disposition of LICENSED PRODUCT.

	
1.7

	
“NET SALES” means the total REVENUE received by LICENSEE from the manufacture, use, sale, lease or transfer of LICENSED PRODUCTS, less the total of all:

 

	
a)  

	
discounts allowed in amounts customary in the trade;

	
b)  

	
sales tariffs, duties and/or taxed imposed on the LICENSED PRODUCTS;

	
c)  

	
outbound transportation prepaid or allowed; and

	
d)  

	
amounts allowed or credited on returns.

 

No deductions shall be made for commissions paid to individuals whether they be independent sales agents or persons regularly employed by LICENSEE.

	
1.8

	
“ROYALTIES” mean royalties from sale, lease or transfer or other disposition of LICENSED PRODUCTS, which are calculated as a percentage of NET SALES and will be payable by LICENSEE to NOTRE DAME under the provisions of this Agreement.

	
1.9

	
“FIELD OF USE” means the use of the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY to create transgenic silkworms for the production of recombinant silk fibers.

 

	
  

	
NOTE: FIELD OF USE shall specifically exclude the use of BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY for creating transgenic silkworms for the production of glycosolated proteins, regardless of the species or source of gene sequences used to create such transgenic silkworms.

ARTICLE 2

ACKNOWLEDGEMENT

	
2.1.  

	
LICENSEE hereby acknowledges that the PARENT PATENTS and the IMPROVEMENT PATENTS are good and valuable properties owned and controlled by NOTRE DAME and LICENSEE agrees that it has not and will not contest the validity or enforceability of such patents.

	
2.2.  

	
LICENSEE hereby acknowledges that the U.S. Government has certain rights in U.S. Patent No. 6,218,185, including an irrevocable, nonexclusive, nontransferable, royalty-free license to practice U.S. Patent No. 6,218,185 throughout the world by, or on behalf of, the U.S. Government, and on behalf of any foreign government pursuant to any existing or future treaty or agreement to which the United States is a signatory, including the right to engage in research, either alone or with one or more third parties

	
2.3.  

	
LICENSEE hereby acknowledges that NOTRE DAME is the licensor of intellectual property hereunder and is not manufacturing or otherwise providing goods or products for sale to LICENSEE, nor is NOTRE DAME directing or in any way controlling LICENSEE’s use of the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY.

 

ARTICLE 3

GRANT

	
3.1  

	
Subject to the rights as set forth in section 11.2, NOTRE DAME hereby grants to LICENSEE an exclusive license under the IMPROVEMENT PATENTS and PROJECT INTELLECTUAL PROPERTY in the FIELD OF USE.

	
3.2  

	
NOTRE DAME hereby grants to LICENSEE a non-exclusive license under the PARENT PATENTS in the FIELD OF USE.

	
3.3  

	
NOTRE DAME hereby grants to LICENSEE a right to use, and commercially exploit, the BACKGROUND INTELLECTUAL PROPERTY and/or PROJECT INTELLECTUAL PROPERTY in the FIELD OF USE.

 

  

2

  

 

	
3.4  

	
NOTRE DAME hereby agrees that it will not grant any other license under the IMRPOVEMENT PATENT and PROJECT INTELLECTUAL PROPERTY, in the FIELD OF USE during the term of this Agreement.

	
3.5  

	
Subject to the remaining provisions of this Agreement and with the prior written approval of NOTRE DAME, LICENSEE shall have the right to enter into sublicense agreements to the extent of the license granted hereunder with respect to the use of BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY in the FIELD OF USE provided that LICENSEE is not in default of its obligation hereunder. All sublicenses granted by LICENSEE hereunder shall be subject to this Agreement in all respects. Each such sublicense agreement shall:

	
a.  

	
include a covenant that the sublicensee use its best efforts to bring the subject matter of the sublicense into commercial use as quickly as is reasonably possible,

 

	
b.  

	
include or have attached copies of Articles 2, 3, 5, 7, 8, 9, 10, 11, 12, 13, 15, 17, and 18 of this Agreement, and shall provide that the obligations of LICENSEE to NOTRE DAME contained in such Articles shall be binding upon the sublicensee as if it were a party to this Agreement,

 

	
c.  

	
prohibit further sublicensing by the approved sublicensee, and

 

	
d.  

	
contain a provision stating that NOTRE DAME shall be an intended third-party beneficiary of such sublicense agreement.

A copy of each sublicense will be provided to NOTRE DAME within thirty (30) days of the effective date of each such sublicense. Upon any termination of this Agreement, each sublicensee’s rights under any sublicense agreement shall also terminate, subject to Article 14.6 hereof. No sublicense shall relieve LICENSEE of any of its obligations under this Agreement. LICENSEE shall not receive from sublicensees anything of value in lieu of cash payments in consideration for any sublicense under this Agreement, without the express prior written permission of NOTRE DAME. LICENSEE shall forward to NOTRE DAME a complete copy of each sublicense agreement (including, without limitation, all amendments and addenda) granted hereunder within thirty (30) days after execution of such agreement, amendment, or addenda by the parties thereto. LICENSEE’s failure to perform in accordance with this Article 3.5 with regard to a particular sublicense shall render such attempted sublicense void, shall constitute a material breach of this Agreement, and shall be grounds for NOTRE DAME to terminate this Agreement pursuant to Article 6 hereof.

The prior written approval of NOTRE DAME for sublicense agreements shall not be unreasonably withheld, and shall not be withheld without a commercially reasonable objection which will be provided to LICENSEE upon request.

	
3.6  

	
LICENSEE agrees that it will not conduct research with, nor use in any way, the BACKGROUND INTELLECTUAL PROPERTY or PROJECT INTELLECTUAL PROPERTY in the area of human reproduction without the express written consent of NOTRE DAME.

	
3.7  

	
NOTRE DAME reserves the right to practice the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY for University teaching and research.

	
3.8  

	
NOTRE DAME represents that, to its knowledge, it is an owner of BACKGROUND INTELLECTUAL PROPERTY and that the BACKGROUND INTELLECTUAL PROPERTY is free of any known claims, encumbrances, or liens, and that it has the right to grant this license on the terms contained herein, subject to legal restrictions imposed on NOTRE DAME by federal law respecting government-funded research.

	
3.9  

	
The provisions of this Agreement shall not be construed in such a manner as to restrict the ability of NOTRE DAME or that of its licensees or assigns to utilize BACKGROUND TECHNOLOGY outside the FIELD OF USE for any commercial or non-commercial purposes.

	
3.10  

	
The license granted hereunder shall not be construed to confer any rights upon LICENSEE or any approved sublicensee by implication or estoppel.

ARTICLE 4

DUE DILIGENCE

	
4.1

	
LICENSEE has represented to NOTRE DAME, to induce NOTRE DAME to issue this license, that LICENSEE will use all reasonable speed to create and produce a commercially marketable LICENSED PRODUCT in the FIELD OF USE.  Upon each anniversary of this Agreement, LICENSEE shall demonstrate to NOTRE DAME that it has and is continuing to develop, market, and sell LICENSED PRODUCTS in a diligent manner with all reasonable speed and that LICENSEE continues to provide appropriate funding for development of LICENSED PRODUCTS.  In the event that LICENSEE fails to continue to support the development of LICENSED PRODUCTS or to actively market LICENSED PRODUCTS during the term of this Agreement, NOTRE DAME shall have the right to terminate the Agreement.

 

  

3

  

 

	
4.2  

	
Licensee shall achieve the following milestones:

 

	
a.  

	
LICENSEE shall provide funding of at least $78,000 (plus overhead) for continued research in Dr. Malcolm Fraser’s laboratory within 180 days of the Effective Date.

 

	
b.  

	
LICENSEE shall provide evidence of outside funding of at least $100,000, whether through equity investment or other sources, for continued business operations within 180 days of the Effective Date.

 

	
c.  

	
LICENSEE shall make a first commercial sale of LICENSED PRODUCTS within three years of the Effective Date.

ARTICLE 5

ROYALTIES AND FEES

	
5.1  

	
For the rights and privileges granted under this license, LICENSEE will pay to NOTRE DAME:

 

	
a.  

	
2,200,000 shares of LICENSEE’s common stock.

 

	
b.  

	
a royalty (the “Royalty”) of  two percent (2%) of NET SALES of LICENSED PRODUCTS

Note:  Sales of LICENSED PRODUCTS made by sublicensees shall be deemed made by LICENSEE for purposes of Royalty calculations hereunder.

 

	
c.  

	
Ten percent (10%) of other payments, including, but not limited to, sublicense issue fees and milestone payments, received from sublicensees in consideration for sublicensing rights to the BACKGROUND INTELLECTUAL PROPERTY and the PROJECT INTELLECTUAL PROPERTY.

 

	
d.  

	
An Annual License Maintenance Fee in accordance with the following schedule:

On January 1, 2012: $10,000

On January 1, 2013 $15,000

On January 1, 2014 $25,000

Each January 1 thereafter $50,000

Annual License Maintenance Fees paid each year shall be creditable against Royalties earned and payable in the same calendar year. Annual License Maintenance Fees paid in excess of Royalties earned and payable in a given calendar year shall not be creditable against Royalties in future years.

	
5.3  

	
For the duration of any LICENSEE-Sponsored Research Project, LICENSEE shall not owe Annual License Maintenance Fees under this Section 5.

	
5.4  

	
All payments due hereunder shall be paid quarterly, by the end of March, June, September, and December, unless otherwise indicated.  All payments shall be made in full, without deduction of taxes or other fees which may be imposed by any government, except as otherwise provided in Article 1.7.  All  payments shall be paid in United States dollars in South Bend, Indiana, or at such other place as NOTRE DAME may reasonably designate consistent with the laws and regulations controlling in any foreign country. If any currency conversion shall be required in connection with the payment of royalties hereunder, such conversion shall be made by using the exchange rate prevailing at the Bank of America (San Francisco) foreign exchange desk on the last business day of the calendar quarterly reporting period to which such royalty payments relate

 

ARTICLE 6

REPORTS AND RECORDS

LICENSEE shall keep complete and accurate books of account containing all particulars which may be necessary for the purpose of showing the amount payable to NOTRE DAME by way of Royalty, sublicensing fees, and Annual License Maintenance Fee as set forth in this Agreement.  LICENSEE’s books of account shall be kept at its principal place of business or the principal place of business of a business division of LICENSEE responsible for marketing the LICENSED PRODUCT.  These books, along with any other relevant supporting data, shall be open at all reasonable times for five years following the end of the calendar year to which they pertain for inspection by NOTRE DAME’s internal auditing personnel or an independent certified public accountant retained by NOTRE DAME for the purpose of verifying LICENSEE’s royalty statement or compliance in other respects with this license.

  

4

  

ARTICLE 7

TERM AND TERMINATION

	
7.1  

	
The term of this Agreement (the “Term”), unless extended or terminated as provided herein, shall be Twenty (20) years from its Effective Date.  Notwithstanding the foregoing, the Term shall not extend beyond the time in which either BACKGROUND INTELLECTUAL PROPERTY or PROJECT INTELLECTUAL PROPERTY remains active and in force.

	
7.2  

	
If LICENSEE defaults in the performance of this Agreement, or breaches any of its obligations under this Agreement, and if the default or breach has not been remedied within ninety (90) days of written notice by NOTRE DAME, NOTRE DAME may by written notice terminate this Agreement immediately..

	
7.3  

	
In the event that LICENSEE becomes insolvent, makes an assignment for the benefit of creditors, or has a petition for bankruptcy filed for or against it, NOTRE DAME may, to the fullest extent allowed by law, terminate this entire Agreement immediately upon written notice to LICENSEE.

	
7.4  

	
LICENSEE may terminate this Agreement by giving NOTRE DAME 90 days advance written notice and paying a termination fee of:

 

	
a.  

	
if within two years of the Effective Date, five thousand U.S. dollars ($5,000)

 

	
b.  

	
if after two years but within 4 years of the Effective Date, ten thousand US dollars ($10,000)

 

	
c.  

	
if after 4 years of the Effective Date, twenty thousand US dollars ($20,000)

Upon termination, a final report and accounting of NET SALES, all earned but unpaid royalties, and all activities associated with LICENSED PRODUCT, along with payment of all royalties, fees, and unreimbursed patent expenses due to NOTRE DAME as of the date of termination, shall be forwarded to NOTRE DAME.

	
7.5  

	
The Term of this Agreement may be extended on an annual basis after the initial term upon mutual agreement of NOTRE DAME and LICENSEE, provided any patent in either BACKGROUND INTELLECTUAL PROPERTY or PROJECT INTELLECTUAL PROPERTY remains active.

	
7.6  

	
Termination or expiration of this Agreement for any reason shall not affect the rights and obligations of the parties that may have accrued prior to termination.

	
7.7  

	
Articles 2, 5, 7, 10, 12, 13, 14, 15, and 18 of this Agreement will survive termination for any cause.

	
7.8  

	
Upon termination of this Agreement for any reason, excepting the natural expiration of this Agreement at the end of the Term, LICENSEE and any sublicensee thereof shall immediately cease all manufacturing and sales of LICENSED PRODUCTS.  Notwithstanding the foregoing, after the effective date of the termination of this Agreement LICENSEE and any sublicensee thereof may, with the written consent of ND, sell all LICENSED PRODUCTS in its possession, and complete LICENSED PRODUCTS in the process of manufacture at the time of such termination and sell the same, provided that LICENSEE shall make the payments to NOTRE DAME as required by Article 5 of this Agreement and shall submit the reports required by Article 7 hereof.

	
7.9  

	
Upon termination of this Agreement for any reason, any sublicensee not then in default shall have the right to seek a license from ND.

 

ARTICLE 8

UNLICENSED ACTIVITY AND INFRINGEMENT

	
8.1  

	
LICENSEE and NOTRE DAME hereby agree to promptly inform the other in writing upon learning of any information concerning any actual or alleged infringement or unauthorized use of the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY by a third party.

  

5

  

	
8.2

	
NOTRE DAME shall have, at its sole option and discretion, the first opportunity to address potential unauthorized or unlawful uses of the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY.  NOTRE DAME shall have 120 days after receiving written notification of an alleged unlawful use of the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY to decide whether it shall pursue the alleged infringer or unlawful party.  If NOTRE DAME decides to pursue the alleged infringer or unlawful party, NOTRE DAME shall control any and all discussions, negotiations, litigation, settlement and/or other dispute resolution.  In doing so, NOTRE DAME will give reasonable consideration to the legitimate commercial interests of LICENSEE.  NOTRE DAME shall bear all fees and costs incurred and shall retain all awards, including any monetary award, received. In the event NOTRE DAME elects to bring suit in accordance with this paragraph, LICENSEE may thereafter join such suit at its own expense.  To the extent LICENSEE shares in the expense of the litigation, NOTRE DAME and LICENSEE shall cooperate with one another in regard to any negotiations or dispute resolution and shall share any recoveries in direct proportion to the total costs incurred.

	
8.3

	
If within 120 days after receiving notification of an alleged infringement or unlawful use NOTRE DAME decides not to pursue the alleged infringer or unlawful user of the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY, NOTRE DAME shall provide written notice to LICENSEE of its decision.  In such event, LICENSEE shall have the right, but shall not be obligated, to prosecute at its own expense any infringement of the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY in the FIELD OF USE, and LICENSEE may, for such purposes, include NOTRE DAME as a party plaintiff in any such suit, without expense to NOTRE DAME.  No settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the consent of NOTRE DAME, which consent shall not unreasonably be withheld. LICENSEE shall indemnify NOTRE DAME against any order for costs, damages, and attorneys’ fees that may be made against NOTRE DAME in such proceedings.

	
8.4  

	
In the event that LICENSEE shall undertake the enforcement and/or defense of the PATENT RIGHTS by litigation, LICENSEE may defer up to fifty percent (50%) of the payments otherwise thereafter due NOTRE DAME under Article 5 of this Agreement and apply the same toward reimbursement of up to half of LICENSEE’s expenses, including reasonable attorneys’ fees, in connection therewith. Any recovery of damages by LICENSEE for each such suit shall be applied first in satisfaction of any unreimbursed expenses and legal fees of LICENSEE relating to such suit, and next applied and paid to NOTRE DAME to the full extent of such recovery, if necessary, to satisfy any outstanding payments under Article 5 past due or deferred pursuant to this Article 8.  The balance remaining from any such recovery shall be divided equally between LICENSEE and NOTRE DAME.  LICENSEE agrees to make all payments to NOTRE DAME under this Article 7.4 within thirty (30) days of recovery of any.

	
8.5

	
In any negotiations, discussion, settlement or suit involving potential infringement or unlawful use of the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY, the parties hereto agree to reasonably cooperate in all respects to have its employees testify when requested, and make available relevant records, papers, information, samples, specimens or other evidence.

 

ARTICLE 9

ASSIGNMENT

This Agreement may not be assigned by LICENSEE without prior written approval of NOTRE DAME, which shall not be unreasonably withheld, and shall not be withheld without a commercially reasonable objection which will be provided to LICENSEE upon request.

ARTICLE 10

NON-USE OF NAMES

LICENSEE shall not use the names or trademarks of NOTRE DAME in any advertising, marketing, or promotion without the prior express written consent of NOTRE DAME in each case.

ARTICLE 11

PATENT FILING, PROSECUTION, AND MAINTENANCE

	
11.1

	
In addition to the payment referenced in Article 4, LICENSEE hereby agrees to pay NOTRE DAME one half of the unreimbursed patent expenses but not more than $15,000, within 30 days of execution of this Agreement, which is a portion of the attorneys’ fees and costs incurred in obtaining the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY, and which amount shall be pro-rated to account for any patent cost reimbursements from additional licensees.

	
11.2

	
NOTRE DAME, at its sole discretion and at its control, may seek further protection for the BACKGROUND INTELLECTUAL PROPERTY and PROJECT INTELLECTUAL PROPERTY, including but not limited to filing and obtaining U.S. and/or foreign patents.  After the Effective Date, LICENSEE shall reimburse NOTRE DAME within thirty (30) days of invoicing for all fees and costs incurred with the preparation, filing, prosecution and maintenance of patent applications, domestic and foreign, associated with the PROJECT INTELLECUAL PROPERTY.  Further, LICENSEE shall reimburse NOTRE DAME within thirty (30) days of invoicing for its pro rata share of all fees and costs incurred with the preparation, filing, prosecution and maintenance of patent applications, domestic and foreign, associated with the PARENT PATENT and IMPROVEMENT PATENTS.    In the event LICENSEE fails to reimburse NOTRE DAME for such fees, costs, and expenses associated with the PARENT PATENT, the IMPROVEMENT PATENTS, or the PROJECT INTELLECTUAL PROPERTY, LICENSEE shall have no rights or license to such patents.

  

6

  

ARTICLE 12

INDEMNIFICATION

	
12.1  

	
LICENSEE assumes liability for all losses, claims, damages (including loss of use), expenses, demands, and judgments in connection with or arising out of any injury or alleged damage to property sustained or alleged to have been sustained in connection with, or having arisen out of LICENSEE’s exercise of any rights, under this agreement, including losses, expenses, or damages sustained by NOTRE DAME.  LICENSEE hereby agrees to indemnify, defend, and hold harmless NOTRE DAME, USDA, UFL, and WYOMING (collectively, the “INDEMNITEES” and each an “INDEMNITEE”) and each of the INDEMNITEES’ Board of Trustees, individually or collectively, and the officers, agents, servants, and employees of INDEMNITEES and their respective Boards of Trustees, from any and all such losses, expenses, damages (including loss of use), judgments, demands, and claims and shall defend any suit or action brought against them, or any of them, based on any alleged injury (including death) or damage (including loss of use) arising in any way out of LICENSEE’s exercise of any rights under this Agreement or the possession, use, or operations of LICENSED PRODUCT by LICENSEE or any of its customers, and LICENSEE shall pay all damages, judgments, costs and expenses, including attorney’s fees, in connection with those damages and claims resulting therefrom.  The foregoing assumption, indemnification, hold harmless and undertaking of defense shall not apply to any loss, damage, expense, demand, claim, or cause of action arising out of, or caused by, the sole gross negligence of an INDEMNITEE, its Board of Trustees, individually or collectively, or the officers, agents, or employees of an INDEMNITEE and its Board of Trustees.

	
12.2  

	
LICENSEE, at its sole expense, shall insure its activities in connection with the work under this Agreement and obtain and keep in force Comprehensive or Commercial Form General Liability Insurance (contractual liability and products liability included) with limits as follows:

 

 

	 
(a)  

	Each Occurrence    	$1,000,000	 
	 	 	 	 
	 
(b)  

	Products/Completed Operations Aggregate   	$1,000,000	 
	 	 	 	 
	 
(c)  

	Personal and Advertising Injury   	$3,000,000	 
	 	 	 	 
	 
(d)  

	General Aggregate (commercial form only)  	$5,000,000	 

 

	
12.3  

	
The coverages and limits referred to in this Article 11 do not in any way limit the liability of LICENSEE.  LICENSEE shall furnish NOTRE DAME with certificates of insurance, including renewals, evidencing compliance with all requirements at least 30 days prior to the first commercial sale, use, practice or distribution of a LICENSED PRODUCT.

	
12.4  

	
NOTRE DAME will not accept a “claims-made” policy.

	
12.5  

	
LICENSEE shall maintain the general liability insurance specified during:

 

	
a.  

	
the period that the Licensed Product is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE or agent of LICENSEE, and

 

	
b.  

	
a reasonable period thereafter, but in no event less than five years.

	
12.6  

	
The insurance coverage of paragraph 12.2 must:

 

	
a.  

	
provide for 30 day advance written notice to NOTRE DAME of cancellation or of any modification.

 

	
b.  

	
indicate that NOTRE DAME, USDA, UFL, and WYOMING and their respective officers, employees, students, agents, are endorsed as additional insureds.

 

	
c.  

	
include a provision that the coverages are primary and do not participate with, nor are excess over, any valid and collectible insurance or program of self-insurance carried or maintained by NOTRE DAME, USDA, UFL, or WYOMING.

  

7

  

ARTICLE 13

NEGATION OF WARRANTIES

	
13.1  

	
NOTRE DAME makes no warranties or representations that anything made, used, sold, or disposed of under the license granted by this Agreement is or in the future will be free from infringement of patents, copyrights, or trademarks of third parties.

	
13.2  

	
Except as expressly set out in this Agreement, NOTRE DAME MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED.  THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.

 

ARTICLE 14

CHOICE OF LAW AND VENUE

	
14.1  

	
This Agreement is to be construed and interpreted according to the laws of the State of Indiana.

	
14.2  

	
Any litigation that arises out of this Agreement will be filed in a court of competent jurisdiction in the State of Indiana.

 

ARTICLE 15

NOTICE

Written notices required to be given under this Agreement shall be addressed as follows:

 

	TO NOTRE DAME: 	Office of Technology Transfer
	 	 
University of Notre Dame

	 	Notre Dame, IN  46556
	 	 
Attention:  Director

	 	 
	TO LICENSEE: 	Kraig Biocraft Laboratories, Inc.
	 	 
120 North Washington Square, Suite 805,

	 	 
Lansing, MI 48933

	 	 
	 	 
With a copy to:

	 	 
	 	 
Pavel I. Seroklinov

	 	GUZOV OFSINK, LLC
	 	 
900 Third Avenue, 5th Floor

	 	 
New York, NY 10022

	 	 
	 	 
And an electronic copy to:  Legal@kraiglabs.com

 

ARTICLE 16

SEVERABILITY, WHOLE AGREEMENT

	
16.1  

	
Should a court of competent jurisdiction later find any provision of this Agreement to be invalid, illegal, or unenforceable, that provision shall be considered to be severed from this Agreement.  All other provisions, rights, and obligations shall continue to remain in force without regard to the severed provision, provided that the remaining provisions still reflect the intentions of the parties.

	
16.2  

	
This Agreement constitutes the entire understanding between the parties, and neither party shall be obligated by any condition or representation other than those expressly contained herein or as may be subsequently agreed to in writing by the parties.

ARTICLE 17

WAIVER AND AMENDMENT

Upon written request of LICENSEE, NOTRE DAME agrees to consider an express waiver or amendment of applicable provisions of this Agreement.  Waiver or amendment of any provision of this Agreement will be granted by NOTRE DAME in its sole discretion and in writing only.

ARTICLE 18

EXPORT CONTROL

LICENSEE acknowledges that it is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities (including the Arms Export Control Act, as amended, and the United States Department of Commerce Export Administration Regulations). The transfer of such items may require a license from the cognizant agency of the United States Government and/or written assurances by LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without prior approval of such agency. NOTRE DAME neither represents that a license shall not be required nor that, if required, it shall be issued.

 

(Signatures next page)

 

  

8

  

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement.

For the UNIVERSITY OF NOTRE DAME du LAC:

By: /s/ Richard Cox                               

Name: Richard Cox

Title: Director, Office of Technology Transfer

Date: 11/1/2011

 

For Kraig Biocraft Laboratories, Inc

 

By: /s/ Kim Thompson                                                                

Name: Kim Thompson

Title: Chief Executive Officer

Date: 10/28/2011

 

9

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