Document:

Exhibit 10.8

 

EXECUTION COPY

 

 

CONTRIBUTION, CONVEYANCE

AND ASSUMPTION AGREEMENT

 

Among

 

HILAND PARTNERS, LP,

HILAND OPERATING, LLC,

HILAND GP, LLC,

HILAND LP, LLC,

CONTINENTAL GAS, INC.

HILAND PARTNERS GP, LLC,

HILAND PARTNERS, LLC,

CONTINENTAL GAS HOLDINGS, INC.,

HILAND ENERGY PARTNERS, LLC,

HAROLD HAMM,

HAROLD HAMM HJ TRUST

HAROLD HAMM DST

EQUITY FINANCIAL SERVICES, INC

RANDY MOEDER,

And

KEN MAPLES

 

 

EFFECTIVE AS OF

FEBRUARY 15, 2005

 

 

 

CONTRIBUTION, CONVEYANCE

AND ASSUMPTION AGREEMENT

 

THIS CONTRIBUTION,
CONVEYANCE AND ASSUMPTION AGREEMENT, dated as of February 15, 2005, is
entered into by and among HILAND PARTNERS, LP, a Delaware limited partnership (“MLP”),
HILAND
OPERATING, LLC,
a Delaware limited liability company (“OLLC”), HILAND GP, LLC, a Delaware limited
liability company (“Hiland GP LLC”),
HILAND LP, LLC, a Delaware limited
liability company (“Hiland LP LLC”), CONTINENTAL GAS, INC., an Oklahoma
corporation (“Continental Inc.”), HILAND PARTNERS GP, LLC, a
Delaware limited liability company (“GP”), HILAND PARTNERS, LLC, an Oklahoma
limited liability company (“Hiland LLC”), CONTINENTAL GAS HOLDINGS, INC.,
a Delaware corporation (“New Continental”), HILAND
ENERGY PARTNERS, LLC, a
Delaware limited liability company (“New
Hiland LLC”), HAROLD HAMM, an
individual residing in Enid, Oklahoma (“Mr. Hamm”), the HAROLD HAMM HJ TRUST (“HJ
Trust”), the HAROLD HAMM DST
TRUST (“DST Trust”),
EQUITY FINANCIAL SERVICES, INC.,
an Oklahoma corporation (“Equity Financial”),
RANDY MOEDER, an individual
residing in Enid, Oklahoma (“Mr. Moeder”)
and KEN MAPLES, an individual
residing in Enid, Oklahoma (“Mr. Maples”).  The parties to this agreement are
collectively referred to herein as the “Parties.”  Capitalized terms used herein shall have the
meanings assigned to such terms in Section 1.1.

 

RECITALS

 

A.                                   Continental
Inc. and GP have formed MLP pursuant to the Delaware Revised Uniform Limited
Partnership Act (the “Delaware Act”), for the purpose of engaging in any
business activity that is approved by GP and that lawfully may be conducted by
a limited partnership organized pursuant to the Delaware Act.

 

B.                                     In
order to accomplish the objectives and purposes in the preceding recital, the
following actions have been taken prior to the date hereof:

 

 1.                                    Continental
Inc., HJ Trust, DST Trust and Equity Financial have formed GP, to which
Continental Inc. contributed $648.50 in exchange for 6,141 GP Class B
Units, representing a 64.85% economic non-voting member interest in GP, DST
Trust contributed $206.50 in exchange for 1,956 GP Class B Units,
representing a 20.65% economic non-voting member interest in GP, HJ Trust
contributed $137.60 in exchange for 1,303 GP Class B Units, representing a
13.76% economic non-voting member interest in GP and Equity Financial
contributed $7.40 in exchange for 70 GP Class B Units, representing a
0.74% economic non-voting member interest in GP.

 

 2.                                    Continental
Inc. and GP have formed MLP, to which Continental Inc. contributed $980 in
exchange for a 98% limited partner interest in MLP (the “Continental MLP Interest”), and GP
contributed $20 in exchange for a 2% general partner interest in MLP.

 

 3.                                    MLP
has formed OLLC, to which MLP contributed $1,000 in exchange for all of the
member interests in OLLC.

 

2

 

 4.                                    Mr. Hamm,
DST Trust and HJ Trust formed New Continental, to which Mr. Hamm
contributed $907 in exchange for 9,070 shares of common stock, par value
$1.00 per share, of New Continental (“New
Continental Common Stock”), DST Trust contributed $55.80 in
exchange for 558 shares of New Continental Common Stock and HJ Trust
contributed $37.20 in exchange for 372 shares of New Continental Common
Stock.  The shares of New Continental
Common Stock that were so issued to Mr. Hamm, DST Trust and HJ Trust represent
all of the outstanding shares of New Continental Common Stock and are referred
to herein as the “New Continental Shares.”

 

 5.                                    New
Continental has formed Hiland GP LLC, to which it contributed $1,000 in
exchange for all of the member interests in Hiland GP LLC.

 

 6.                                    New
Continental has formed Hiland LP LLC, to which it contributed $1,000 in
exchange for all of the member interests in Hiland LP LLC.

 

 7.                                    Hiland
has formed New Hiland LLC, to which it contributed $1,000 in exchange for all
of the member interests in New Hiland LLC.

 

 8.                                    Mr. Hamm
has formed HH GP Holding, LLC, a Delaware limited liability company (“Holding LLC”), to which he has
contributed $1,000 in exchange for all of the membership interest in Holding
LLC.

 

 9.                                    Hiland
LLC has conveyed all of its assets, other than its assets related to the Bakken
Gathering System to New Hiland LLC as a capital contribution pursuant to, and
in accordance with, that certain Assignment, Conveyance and Bill of Sale
between Hiland LLC and New Hiland LLC (“Hiland
Conveyance and Bill of Sale”) dated as of November 23, 2004
and that certain Bill of Sale between Hiland LLC and New Hiland LLC dated as of
November 23, 2004 (collectively, the “Specific
Conveyances”).

 

C.                                     Concurrently
with the consummation of the transactions contemplated hereby, each of the
following matters shall occur:

 

 1.                                    New
Hiland LLC will distribute $0.6 million in cash and all of its accounts
receivables to Hiland LLC.

 

 2.                                    Hiland
LLC will distribute all of its member interests in New Hiland LLC to DST Trust,
HJ Trust and Equity Financial as follows: 
(i) DST Trust will receive a 58.8% member interest in New Hiland
LLC, (ii) HJ Trust will receive a 39.2% member interest in New Hiland LLC
and (iii) Equity Financial will receive a 2.0% member interest in New
Hiland LLC.

 

 3.                                    Mr. Hamm,
DST Trust and HJ Trust will convey all of their shares of common stock, no par
value, of Continental Inc. (“Continental
Common Stock”), representing all of the outstanding shares of
Continental Common Stock (the “Continental
Shares”) to New Continental as a capital contribution.

 

3

 

 4.                                    New
Continental will contribute 0.001 of a share of Continental Common Stock to
Hiland GP LLC and will contribute 99.999 shares of Continental Common Stock to
Hiland LP LLC, in each case as a capital contribution.

 

 5.                                    Continental
Inc. will convert from a corporation to an Oklahoma limited partnership, under Section 1090.5
of the Oklahoma General Corporation Act (the “OGCA”), named “Continental Gas Operating, LP” (“Continental LP”) and will designate
Hiland GP LLC as its general partner and Hiland LP LLC as its limited partner.

 

 6.                                    Continental
LP will distribute (i) approximately $0.5 million of its cash and all of
its accounts receivable to New Continental (.001% and 99.999% on behalf of
Hiland GP LLC and Hiland LP LLC, respectively) and (ii) 6,141 Class B
Units in GP to New Continental (on behalf of Hiland GP LLC (0.0614 Class B
Units) and Hiland LP LLC (6,140.9386 Class B Units)).

 

 7.                                    Equity
Financial, DST Trust and HJ Trust will convey 0.014%, 0.413% and 0.276% member
interests in New Hiland LLC, respectively, to GP as a capital contribution and
New Continental will convey a 1.297% member interest in Hiland LP LLC to GP as
a capital contribution.  Such member
interests in New Hiland LLC and Hiland LP LLC have an aggregate value equal to
2% of the equity value of the MLP after the closing of the transactions
contemplated by this Agreement and shall be referred to herein as the “Interests.”

 

 8.                                    GP
will issue 330 GP Class B Units representing a 3.3% economic non-voting
member interest in GP to Mr. Moeder, and 200 GP Class B Units
representing a 2.0% economic non-voting member interest in GP to Mr. Maples.

 

 9.                                    Holding
LLC will contribute $0.94 to GP in exchange for 940 GP Class A Units, Mr. Moeder
will contribute $0.04 to GP in exchange for 40 GP Class A Units, and Mr. Maples
will contribute $0.02 in exchange for 20 GP Class A Units.

 

 10.                              GP
will contribute the Interests to MLP in exchange for (a) a continuation of
its 2% general partner interest in MLP and (b) the issuance of the IDRs.

 

 11.                              The
DST Trust will contribute all of its remaining member interests in New Hiland
LLC to MLP in exchange for (a) 148,721 Common Units, representing a 2.14%
interest in MLP, (b) 842,752 Sub Units representing a 12.15% interest in
MLP and (c) the right to receive reimbursement of certain capitalized
expenditures as contemplated herein.

 

 12.                              The
HJ Trust will contribute all of its remaining member interests in New Hiland
LLC to MLP in exchange for (a) 99,147 Common Units, representing a 1.43%
interest in MLP, (b) 561,834 Sub Units, representing a 8.10% interest in
MLP and (c) the right to receive reimbursement of certain capitalized
expenditures as contemplated herein.

 

 13.                              Equity
Financial will contribute all of its remaining member interests in New Hiland
LLC to MLP in exchange for (a) 5,059 Common Units, representing a 0.07%
interest in MLP, (b) 28,665 Sub Units, representing a 0.41% interest in
MLP and (c) the right to receive reimbursement of certain capitalized
expenditures as contemplated herein.

 

4

 

 14.                              New
Continental will contribute all of its remaining member interests in Hiland LP
LLC and all of its member interests in Hiland GP LLC to MLP in exchange for (a) 467,073
Common Units, representing a 6.73% interest in MLP, (b) 2,646,749 Sub
Units, representing a 38.14% interest in MLP and (c) the right to receive
reimbursement of certain capitalized expenditures as contemplated herein.

 

 15.                              The
MLP will redeem and cancel the Continental MLP Interest in exchange for $980
payable to Continental LP and the MLP shall distribute $20 to the GP.

 

 16.                              The
public, through the Underwriters, will contribute approximately
$51.75 million in cash, less the Underwriters’ spread of
$3.6225 million in exchange for 2,300,000 Common Units.

 

 17.                              MLP
will (a) pay transaction expenses associated with the transactions
contemplated by this Agreement in the amount of approximately $1.8 million
(exclusive of the Underwriter’s spread), (b) contribute approximately
$14.0 million to Continental LP (on behalf of Hiland GP LLC (.001%) and Hiland
LP LLC (99.999%)) for the retirement of indebtedness under its term loan (the “Continental Debt”), (c) contribute
approximately $8.9 million to New Hiland LLC for the retirement of indebtedness
under its term loan (the “Hiland Debt”)
and (d) contribute cash to Continental LP and New Hiland LLC to replenish
working capital

 

 18.                              Continental
LP and New Hiland LLC will retire the Continental Debt and the Hiland Debt.

 

 19.                              MLP
will convey all of its member interests in New Hiland LLC, Hiland GP LLC and
Hiland LP LLC to the OLLC as a capital contribution.

 

 20.                              The
MLP shall redeem from HJ Trust, DST Trust and New Continental 300,000 Common
Units on a pro rata basis based on their relative respective ownership of Units
immediately following the transactions contemplated by paragraph 16 above
(“Pro Rata Basis”) to
reimburse them for capital expenditures.

 

 21.                              The
Agreement of Limited Partnership of MLP, the Limited Liability Company
Agreement of OLLC and the Limited Liability Company Agreement of GP will be
amended and restated to reflect the applicable matters set forth above and as
contained in this Agreement.

 

 22.                              To
the extent required by this Agreement, MLP will (a) distribute cash to DST
Trust, HJ Trust and Equity Financial in reimbursement of certain capitalized
expenditures and (b) distribute cash to New Continental in reimbursement
of certain capitalized expenditures.

 

5

 

NOW, THEREFORE, in
consideration of their mutual undertakings and agreements hereunder, the
Parties undertake and agree as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.1                                      The
following capitalized terms shall have the meanings given below.

 

(a)                                  “Acquisition”
means consummation of the transactions contemplated by the terms of this
Agreement.

 

(b)                                 “Agreement”
means this Contribution, Conveyance and Assumption Agreement.

 

(c)                                  “Bakken Gathering System” means all
right, title and interest of Hiland LLC in and to the properties, assets and
rights relating to the natural gas and gathering system in eastern Montana
described in Schedule I to the Omnibus Agreement.

 

(d)                                 “Common Unit”
has the meaning assigned to such term in the Partnership Agreement.

 

(e)                                  “Effective Time”
shall mean 8:00 a.m. New York, New York time on February 15, 2005.

 

(f)                                    “GP”
has the meaning assigned to such term in the opening paragraph of this
Agreement.

 

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

 

(h)                                 “MLP”
has the meaning assigned to such term in the opening paragraph of this
Agreement.

 

(i)                                     “Offering” means the initial public
offering by the MLP of Common Units.

 

(j)                                     “Omnibus Agreement” means that
certain Omnibus Agreement of even date herewith, among Continental Resources, Inc.,
Hiland LLC, Mr. Hamm, GP, New Continental and MLP.

 

(k)                                  “Partnership
Agreement” means the First Amended and Restated Agreement of Limited
Partnership of Hiland Partners, LP dated as of February 15, 2005.

 

(l)                                     “Partnership Group” has the meaning
assigned to such term in the Omnibus Agreement.

 

6

 

(m)                               “Registration Statement” means the
registration statement on Form S-1 (Registration No. 333-119908)
filed by the MLP relating to the Offering.

 

(n)                                 “Sub Unit”
means “Subordinated Unit” as such term is defined in the Partnership Agreement.

 

(o)                                 “Underwriters”
means A.G. Edwards & Sons, Inc., Raymond James &
Associates, Inc., and RBC Capital Markets Corporation.

 

ARTICLE 2

CONTRIBUTIONS, ACKNOWLEDGMENTS AND DISTRIBUTIONS

 

Section 2.1                                      Distribution of Cash by New Hiland LLC to Hiland
LLC.  New Hiland LLC
hereby distributes, grants, bargains, conveys, assigns, transfers, sets over
and delivers to Hiland LLC, its successors and assigns, for its and their use
forever, $0.6 million of cash and all of its accounts receivables (“Hiland Distributed Working Capital”).

 

Section 2.2                                      Distribution of New Hiland LLC.  Hiland LLC hereby distributes, grants,
bargains, conveys, assigns, transfers, sets over and delivers to DST Trust, HJ
Trust and Equity Financial, their successors and assigns, for their use
forever, all right, title and interest in and to all of Hiland LLC’s 100%
member interest in New Hiland LLC as follows: 
(a) DST Trust is hereby distributed a 58.8% member interest in New
Hiland LLC, (b) HJ Trust is hereby distributed a 39.2% member interest in
New Hiland LLC and (c) Equity Financial is hereby distributed a 2.0%
member interest in New Hiland LLC.  Each
of DST Trust, HJ Trust and Equity Financial hereby accepts such member
interests in New Hiland LLC.

 

Section 2.3                                      Contribution of Continental Common Stock to New
Continental.  Each of Mr. Hamm,
DST Trust and HJ Trust hereby grants, contributes, bargains, conveys, assigns,
transfers, sets over and delivers to New Continental, its successors and
assigns, for its and their own use forever, all right, title and interest in
and to 907, 56 and 37 shares, respectively, of Continental Common Stock, as a
capital contribution, representing in the aggregate all of the outstanding
shares of Continental Common Stock in exchange for (a) the continuation of
Mr. Hamm’s, DST Trust’s and HJ Trust’s ownership of 9,070, 558 and 372
shares of New Continental Common Stock, respectively, and (b) other good
and valuable considerations, the sufficiency of which is hereby acknowledged,
and New Continental hereby accepts such Continental Shares as a contribution to
the capital of New Continental.

 

Section 2.4                                      Contribution of Continental Common Stock to Hiland
GP LLC.  New Continental
hereby grants, contributes, bargains, conveys, assigns, transfers, sets over
and delivers to Hiland GP LLC, its successors and assigns, for its and their
own use forever, all right, title and interest in and to 0.001 of a share of
Continental Common Stock, as a capital contribution, and Hiland GP LLC hereby
accepts such Continental Shares as a contribution to the capital of Hiland GP
LLC.

 

7

 

Section 2.5                                      Contribution of Continental Common Stock to Hiland
LP LLC.  New Continental
hereby grants, contributes, bargains, conveys, assigns, transfers, sets over
and delivers to Hiland LP LLC, its successors and assigns, for its and their
own use forever, all right, title and interest in and to 99.999 shares of
Continental Common Stock, as a capital contribution, and Hiland LP LLC hereby
accepts such Continental Shares as a contribution to the capital of Hiland LP LLC.

 

Section 2.6                                      Conversion of Continental Inc. to Continental LP.  The Parties acknowledge that Continental Inc.
has adopted a certificate of conversion in the form attached hereto as Exhibit A
and pursuant thereto, has converted to Continental LP, an Oklahoma limited
partnership, having (a) Hiland GP LLC as the general partner owning a
..001% general partner interest and (b) Hiland LP LLC as the limited
partner owning a 99.999% limited partner interest.

 

Section 2.7                                      Distribution of Working Capital Assets by
Continental LP. 
Continental LP hereby distributes, grants, bargains, conveys, assigns,
transfers, sets over and delivers to New Continental, its successors and
assigns, for its use forever, (a) $0.5 million of cash (0.001% and 99.999%
on behalf of Hiland GP LLC ($5.00) and Hiland LP LLC ($499,995.00),
respectively), and (b) all of its accounts receivable as of immediately
prior to the Effective Time (on behalf of Hiland GP LLC (0.01%) and Hiland LP
LLC (99.99%)) (collectively, the “Continental Distributed
Working Capital”); provided that if the Continental Distributed
Working Capital exceeds $9,971,214 the amount of accounts receivable
distributed pursuant to this Section 2.7 shall be reduced such that the
Continental Distributed Working Capital distributed pursuant to this Section 2.7
shall equal $9,971,214. New Continental hereby accepts such working capital
assets as a distribution.

 

Section 2.8                                      Distribution of GP by Continental LP.  Continental LP hereby distributes, grants,
bargains, conveys, assigns, transfers, sets over and delivers to New
Continental, its successors and assigns, for its use forever, all right, title
and interest in and to all of its 6,141 Class B Units in GP (on behalf of
Hiland GP LLC (.0614 Class B Units)) and Hiland LP LLC (6,140.9386 Class B
Units)). New Continental hereby accepts such member interests in GP as a
distribution.

 

Section 2.9                                      Contribution of Interests to GP.  Each of Equity Financial, DST Trust and HJ
Trust hereby grants, contributes, bargains, conveys, assigns, transfers, sets
over and delivers to GP, its successors and assigns, for its and their own use
forever, all right, title and interest in and to a 0.014%, 0.413% and 0.276%,
respectively, member interests in New Hiland LLC, as a capital contribution,
and New Continental hereby grants, contributes, bargains, conveys, assigns,
transfers, sets over and delivers to GP, its successors and assigns, for its
and their own use forever, all right, title and interest in and to a 1.297%
member interest in Hiland LP LLC, as a capital contribution, in each case in
exchange for (a) the continuation of Equity Financial’s, DST Trust’s, HJ
Trust’s and New Continental’s ownership of 70, 1,956, 1,303 and 6,141 GP Class B
Units and (b) other good and valuable consideration, the sufficiency of
which is hereby acknowledged, and GP hereby accepts such member interests in
New Hiland LLC and such member interest

 

8

 

in Hiland LP LLC as contributions to the
capital of GP.  The Parties acknowledge
that the Interests have an aggregate value equal to 2% of the equity value of
the MLP after the closing of the transactions contemplated by this Agreement.

 

Section 2.10                                Issuance of GP Class B Units.  GP hereby issues to Mr. Moeder and Mr. Maples,
their successors and assigns, for their use forever, all right, title and
interest in and to 330 GP Class B Units and 200 GP Class B Units,
respectively, representing a 3.3% and 2.0%, respectively, member interest in
GP.

 

Section 2.11                                Purchase of GP Class A Units.  Holding LLC hereby contributes $0.94 to GP in
exchange for 940 GP Class A Units, representing a 94% voting interest in
GP.  Mr. Moeder hereby contributes
$0.04 to GP in exchange for 40 GP Class A Units, representing a 4% voting
interest in GP, and Mr. Maples hereby contributes $0.02 to GP in exchange
for 20 GP Class A Units, representing a 2% voting interest in GP.

 

Section 2.12                                Contribution of
the Interests by GP to MLP. 
GP hereby grants, contributes, bargains, conveys, assigns, transfers,
sets over and delivers to MLP, its successors and assigns, for its and their
own use forever, all right, title and interest in and to the Interests, as a
capital contribution, in exchange for (a) a continuation of its 2% general
partner interest in MLP, (b) the issuance of the IDRs, and (c) other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, and MLP hereby accepts the Interests as a contribution to the
capital of MLP.

 

Section 2.13                                Contribution of
an Interest in New Hiland LLC by DST Trust to MLP.  DST Trust hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to MLP, its
successors and assigns, for its and their own use forever, all right, title and
interest in and to all of its 58.387% member interest in New Hiland LLC, as a
capital contribution, in exchange for (a) 148,721 Common Units,
representing a 2.14% interest in MLP, (b) 842,752 Sub Units representing a
12.15% interest in MLP, (c) the right to receive, if any, an amount in
cash equal to the product of 0.588 and the Hiland Excess Distribution Amount
(as defined below) in reimbursement of certain capitalized expenditures and (d) other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, and MLP hereby accepts such membership interest in New Hiland LLC
as a contribution to the capital of MLP. 
“Hiland Excess Distribution Amount”
shall mean the amount by which $5,399,858 exceeds the amount of Hiland
Distributed Working Capital.

 

Section 2.14                                Contribution of
an Interest in New Hiland LLC by the HJ Trust to MLP.  HJ Trust hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to MLP, its
successors and assigns, for its and their own use forever, all right, title and
interest in and to all of its 38.924% member interest in New Hiland LLC as a
capital contribution, in exchange for (a) 99,147 Common Units,
representing a 1.43% interest in the MLP, (b) 561,834 Sub Units
representing a 8.10% interest in the, (c) the right to receive, if any, an
amount in cash equal to the product of 0.392 and the Hiland Excess Distribution
Amount in reimbursement of certain capitalized expenditures and (d) other
good and valuable consideration, the sufficiency of which is

 

9

 

hereby acknowledged, and MLP hereby accepts
such membership interest in New Hiland LLC as a contribution to the capital of
MLP.

 

Section 2.15                                Contribution of
an Interest in New Hiland LLC by Equity Financial to MLP.  Equity Financial hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to MLP, its
successors and assigns, for its and their own use forever, all right, title and
interest in and to all of its 1.986% member interest in New Hiland LLC, as a capital
contribution, in exchange for (a) 5,059 Common Units, representing a 0.07%
interest in MLP and (b) 28,665 Sub Units representing a 0.41% interest in
MLP, (c) the right to receive, if any, an amount in cash equal to the
product of 0.02 and the Hiland Excess Distribution Amount in reimbursement of
certain capitalized expenditures and (d) other good and valuable
consideration, the sufficiency of which is hereby acknowledged, and MLP hereby
accepts such member interest in New Hiland LLC as a contribution to the capital
of MLP.

 

Section 2.16                                Contribution of
Interests in Hiland GP LLC and Hiland LP LLC by New Continental to MLP.  New Continental hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to MLP, its
successors and assigns, for its and their own use forever, all right, title and
interest in and to all of its 100% member interest in Hiland GP LLC and all of
its 98.703% member interest in Hiland LP LLC in exchange for (a) 467,073
Common Units, representing a 6.73% interest in MLP, (b) 2,646,749 Sub
Units, representing a 38.14% interest in MLP, (c) the right to receive, if
any, the Continental Excess Distribution Amount in reimbursement of certain
capitalized expenditures and (d) other good and valuable consideration,
the sufficiency of which is hereby acknowledged, and MLP hereby accepts such
membership interests in Hiland GP LLC and Hiland LP LLC as a contribution to
the capital of MLP. The “Continental Excess
Distribution Amount” shall mean the amount by which $9,971,214
exceeds the Continental Distributed Working Capital distributed by Continental
LP pursuant to Section 2.7.

 

Section 2.17                                Redemption of Initial MLP Interests; Distribution
to GP.  The MLP hereby
redeems from Continental LP and retires the Continental MLP Interest in
exchange for a payment in cash to Continental LP equal to $980.00.  The MLP hereby distributes $20.00 in cash to
the GP.

 

Section 2.18                                Public Cash
Contribution.  The Parties
acknowledge a capital contribution by the public through the Underwriters to
MLP of approximately $51.75 million in cash ($48.1275 million net to MLP after
the underwriters’ spread of $3.6225 million) in exchange for 2,300,000
Common Units.

 

Section 2.19                                Payment of
Transaction Costs; Retirement of Hiland Debt and Continental Debt.  The Parties acknowledge (a) payment by
MLP, in connection with the Acquisition, of transaction expenses in the amount
of approximately $1.8 million (exclusive of the Underwriter’s spread), (b) retirement
by MLP of approximately $14.0 million of debt of Continental, (c) retirement
by MLP of approximately $8.9 million of debt of Hiland and (d) contribution
by MLP of cash to Continental LP and New Hiland LLC to replenish working
capital.

 

10

 

Section 2.20                                Contribution of
New Hiland LLC, Hiland GP LLC and Hiland LP LLC by MLP to OLLC.  MLP hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers to OLLC, its successors and
assigns, for its and their own use forever, all right, title and interest in
and to all of its 100% member interests in New Hiland LLC, Hiland GP LLC and
Hiland LP LLC, as a capital contribution, in exchange for (a) a
continuation of its 100% membership interest in OLLC, and (b) other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
and OLLC hereby accepts such membership interests in New Hiland LLC, Hiland GP
LLC and Hiland LP LLC as a contribution to the capital of OLLC.

 

Section 2.21                                Redemption of Common Units.  MLP hereby redeems 41,604 Common Units from
HJ Trust, 62,405 Common Units from DST Trust and 195,991 Common Units from New
Continental (collectively, the “Redeemed Units”)
in exchange for payments of $870,563.70, $1,305,824.63 and $4,101,111.67,
respectively, which are being made in reimbursement of certain capitalized
expenditures.  Pursuant to such
redemption, each of HJ Trust, DST Trust and New Continental hereby grants,
bargains, conveys, assigns, transfers sets over and delivers to MLP their
respective Redeemed Units.

 

ARTICLE 3

ADDITIONAL TRANSACTIONS

 

Section 3.1                                      Distribution in Reimbursement of Capitalized Expenditures.  Within 30 days
after the date of this Agreement, MLP shall (a) distribute, grant,
bargain, convey, assign, transfer, set over and deliver to New Continental, for
its use forever an amount in cash equal to the Continental Excess Distribution
Amount, if any, and (b) distribute, grant, bargain, convey, assign,
transfer, set over and deliver to (i) DST Trust an amount in cash equal to
the product of 0.588 and the Hiland Excess Distribution Amount, if any, to
satisfy the right to reimbursement of capitalized expenditures, (ii) HJ Trust an amount in
cash equal to the product of 0.392 and the Hiland Excess Distribution Amount,
if any, to satisfy the right to reimbursement of capitalized expenditures and (iii) Equity Financial an amount in
cash equal to the product of 0.02 and the Hiland Excess Distribution Amount, if
any, to satisfy the right to reimbursement of capitalized expenditures.

 

ARTICLE 4

TITLE MATTERS

 

Section 4.1                                      Encumbrances.

 

(a)                                  Except
to the extent provided in Article 2 or any other document executed in
connection with this Agreement or the Offering including, without limitation,
the Omnibus Agreement, the contribution and conveyance (by operation of law or
otherwise) of the various physical assets owned by Hiland LLC or Continental
Gas as reflected in this Agreement (collectively, the “Assets”) are made expressly subject to
all matters of record (other than consensual liens) to the extent that such
matters are valid and in force and effect with respect to

 

11

 

the Assets or that a current
survey on the ground would show and all matters contained in the Specific
Conveyances.

 

(b)                                 To
the extent that certain jurisdictions in which the Assets are located may
require that documents be recorded in order to evidence the transfers of title
reflected in this Agreement, then the provisions set forth in Section 4.1(a) immediately
above shall also be applicable to the conveyances under such documents.

 

Section 4.2                                      Disclaimer of Warranties; Subrogation; Waiver of
Bulk Sales Laws.

 

(a)                                  EXCEPT
TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION WITH THIS AGREEMENT OR THE OFFERING INCLUDING, WITHOUT LIMITATION
THE OMNIBUS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT NONE OF THE
PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND
DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR
GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR
STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (A) THE VALUE,
NATURE, QUALITY OR CONDITION OF THE ASSETS INCLUDING, WITHOUT LIMITATION, THE
WATER, SOIL, GEOLOGY OR ENVIRONMENTAL CONDITION OF THE ASSETS GENERALLY,
INCLUDING THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON THE
ASSETS, (B) THE INCOME TO BE DERIVED FROM THE ASSETS, (C) THE
SUITABILITY OF THE ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE
CONDUCTED THEREON, (D) THE COMPLIANCE OF OR BY THE ASSETS OR THEIR
OPERATION WITH ANY LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL
PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR
REQUIREMENTS), OR (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE ASSETS.  EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE
OFFERING INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, THE PARTIES
ACKNOWLEDGE AND AGREE THAT EACH HAS HAD THE OPPORTUNITY TO INSPECT THE
RESPECTIVE ASSETS, AND EACH IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE
RESPECTIVE ASSETS AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY ANY
OF THE PARTIES.  EXCEPT TO THE EXTENT
PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS
AGREEMENT OR THE OFFERING INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT,
NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE ASSETS FURNISHED
BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. 
EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR
DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING INCLUDING, WITHOUT
LIMITATION, THE OMNIBUS AGREEMENT, EACH OF THE PARTIES ACKNOWLEDGES THAT TO THE

 

12

 

MAXIMUM EXTENT PERMITTED BY LAW, THE
CONTRIBUTION OF THE ASSETS AS PROVIDED FOR HEREIN IS MADE IN AN “AS IS”, “WHERE
IS” CONDITION WITH ALL FAULTS, AND THE ASSETS ARE CONTRIBUTED AND CONVEYED
SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION.  THIS SECTION SHALL SURVIVE SUCH
CONTRIBUTION AND CONVEYANCE OR THE TERMINATION OF THIS AGREEMENT.  THE PROVISIONS OF THIS SECTION HAVE BEEN
NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A
COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER
EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE ASSETS THAT MAY ARISE
PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET
FORTH IN THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION WITH THIS AGREEMENT OR THE OFFERING, INCLUDING, WITHOUT LIMITATION,
THE OMNIBUS AGREEMENT.

 

(b)                                 The
contributions of the Assets made under this Agreement are made with full rights
of substitution and subrogation of the respective parties receiving such
contributions, and all persons claiming by, through and under such parties, to
the extent assignable, in and to all covenants and warranties by the
predecessors-in-title of the parties contributing the Assets, and with full
subrogation of all rights accruing under applicable statutes of limitation and
all rights of action of warranty against all former owners of the Assets.

 

(c)                                  Each
of the Parties agrees that the disclaimers contained in this Section Section 4.2
are “conspicuous” disclaimers.  Any
covenants implied by statute or law by the use of the words “grant,” “convey,” “bargain,”
“sell,” “assign,” “transfer,” “deliver,” or “set over” or any of them or any
other words used in this Agreement or any exhibits hereto are hereby expressly
disclaimed, waived or negated.

 

Each of the Parties hereby waives compliance with any applicable bulk
sales law or any similar law in any applicable jurisdiction in respect of the
transactions contemplated by this Agreement.

 

ARTICLE 5

FURTHER ASSURANCES

 

Section 5.1                                      Further Assurances.  From time to time after the Effective Time,
and without any further consideration, the Parties agree to execute,
acknowledge and deliver all such additional deeds, assignments, bills of sale,
conveyances, instruments, notices, releases, acquittances and other documents,
and will do all such other acts and things, all in accordance with applicable
law, as may be necessary or appropriate (a) more fully to assure that the
applicable Parties own all of the properties, rights, titles, interests,
estates, remedies, powers and privileges granted by this Agreement, or which
are intended to be so granted, or (b) more fully and effectively to vest
in the applicable Parties and their respective successors and assigns
beneficial and record title to the interests contributed and assigned by this
Agreement or intended so to be and to more fully and effectively carry out the
purposes and intent of this Agreement.

 

13

 

Section 5.2                                      Other Assurances.  From time to time after the Effective Time,
and without any further consideration, each of the Parties shall execute,
acknowledge and deliver all such additional instruments, notices and other
documents, and will do all such other acts and things, all in accordance with
applicable law, as may be necessary or appropriate to more fully and effectively
carry out the purposes and intent of this Agreement.  Without limiting the generality of the
foregoing, the Parties acknowledge that the parties have used their good faith
efforts to attempt to identify all of the assets being contributed to the MLP
or its subsidiaries as required in connection with the Offering.  However, due to the age of some of those
assets and the difficulties in locating appropriate data with respect to some
of the assets it is possible that assets intended to be contributed to the MLP
or its subsidiaries were not identified and therefore are not included in the
assets contributed to the MLP or its subsidiaries.  It is the express intent of the Parties that
the MLP or its subsidiaries own all assets necessary to operate the assets that
are identified in this Agreement and in the Registration Statement.  To the extent any assets were not identified
but are necessary to the operation of assets that were identified, then the
intent of the Parties is that all such unidentified assets are intended to be
conveyed to the appropriate members of the Partnership Group.  To the extent such assets are identified at a
later date, the Parties shall take the appropriate actions required in order to
convey all such assets to the appropriate members of the Partnership
Group.  Likewise, to the extent that
assets are identified at a later date that were not intended by the parties to
be conveyed as reflected in the Registration Statement, the Parties shall take
the appropriate actions required in order to convey all such assets to the
appropriate party.

 

ARTICLE 6

EFFECTIVE TIME

 

Notwithstanding anything
contained in this Agreement to the contrary, none of the provisions of Article 2
or Article 3 of this Agreement shall be operative or have any effect until
the Effective Time, at which time all the provisions of Article 2 and Article 3
of this Agreement shall be effective and operative in accordance with Article 7,
without further action by any party hereto.

 

ARTICLE 7

MISCELLANEOUS

 

Section 7.1                                      Order of
Completion of Transactions. 
The transactions provided for in Article 2 and Article 3 of
this Agreement shall be completed immediately following the Effective Time in
the following order: first, the transactions provided for in Article 2
shall be completed in the order set forth therein; and second, following the
completion of the transactions as provided in Article 2, the transactions,
if they occur, provided for in Article 3 shall be completed.

 

Section 7.2                                      Costs.  Except for the transaction costs set forth in
Section 2.21, the OLLC shall pay all expenses, fees and costs, including
but not limited to, all sales, use and similar taxes arising out of the
contributions, conveyances and deliveries to be made hereunder and shall pay
all documentary, filing, recording, transfer, deed, and conveyance taxes and
fees required in connection therewith. 
In addition, the OLLC shall be responsible for all costs, liabilities
and expenses (including court costs and reasonable attorneys’ fees) incurred in

 

14

 

connection with the implementation of any
conveyance or delivery pursuant to Section 5.1 or Section 5.2.

 

Section 7.3                                      Headings;
References; Interpretation. 
All Article and Section headings in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any of the provisions hereof. 
The words “hereof,” “herein” and “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole,
including, without limitation, all Schedules and Exhibits attached hereto, and
not to any particular provision of this Agreement.  All references herein to Articles, Sections,
Schedules and Exhibits shall, unless the context requires a different
construction, be deemed to be references to the Articles and Sections of this
Agreement and the Schedules and Exhibits attached hereto, and all such
Schedules and Exhibits attached hereto are hereby incorporated herein and made
a part hereof for all purposes.  All
personal pronouns used in this Agreement, whether used in the masculine,
feminine or neuter gender, shall include all other genders, and the singular
shall include the plural and vice versa. 
The use herein of the word “including” following any general statement,
term or matter shall not be construed to limit such statement, term or matter
to the specific items or matters set forth immediately following such word or
to similar items or matters, whether or not non-limiting language (such as “without
limitation”, “but not limited to”, or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of such
general statement, term or matter.

 

Section 7.4                                      Successors and
Assigns.  The Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and assigns.

 

Section 7.5                                      No Third Party
Rights.  The provisions of
this Agreement are intended to bind the Parties as to each other and are not
intended to and do not create rights in any other person or confer upon any
other person any benefits, rights or remedies and no person is or is intended
to be a third party beneficiary of any of the provisions of this Agreement.

 

Section 7.6                                      Counterparts.  This Agreement may be executed in any number
of counterparts, all of which together shall constitute one agreement binding
on the parties hereto.

 

Section 7.7                                      Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Oklahoma applicable to
contracts made and to be performed wholly within such state without giving
effect to conflict of law principles thereof.

 

Section 7.8                                      Severability.  If any of the provisions of this Agreement
are held by any court of competent jurisdiction to contravene, or to be invalid
under, the laws of any political body having jurisdiction over the subject
matter hereof, such contravention or invalidity shall not invalidate the entire
Agreement. Instead, this Agreement shall be construed as if it did not contain
the particular provision or provisions held to be invalid and an equitable
adjustment shall be made and necessary provision added so as to give effect to
the intention of the Parties as expressed in this Agreement at the time of
execution of this Agreement.

 

Section 7.9                                      Amendment or
Modification.  This
Agreement may be amended or modified from time to time only by the written
agreement of all the Parties. Each such

 

15

 

instrument shall be reduced to writing and
shall be designated on its face as an Amendment to this Agreement.

 

Section 7.10                                Integration.  This Agreement and the instruments referenced
herein supersede all previous understandings or agreements among the Parties,
whether oral or written, with respect to their subject matter. This document
and such instruments contain the entire understanding of the Parties with
respect to the subject matter hereof and thereof. No understanding,
representation, promise or agreement, whether oral or written, is intended to
be or shall be included in or form part of this Agreement unless it is
contained in a written amendment hereto executed by the parties hereto after
the date of this Agreement.

 

Section 7.11                                Deed; Bill of Sale; Assignment. To
the extent required and permitted by applicable law, this Agreement shall also
constitute a “deed,” “bill of sale” or “assignment” of the assets and interests
referenced herein.

 

[THE REMAINDER
OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

16

 

IN WITNESS WHEREOF, this Agreement has been
duly executed by the parties hereto as of the date first above written.

 

	
   

  	
  HILAND PARTNERS, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Hiland Partners GP, LLC, its general

  partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  Name: Randy Moeder

  
	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HILAND PARTNERS GP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  Name: Randy Moeder

  
	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HILAND OPERATING, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  Name: Randy Moeder

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL GAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ HAROLD HAMM

  	
   

  
	
   

  	
  Name: Harold Hamm

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HILAND GP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  Name: Randy Moeder

  
	
   

  	
  Title: President and Chief Executive
  Officer

  
				

 

 

[Signature Page to
the Contribution Agreement]

 

 

	
   

  	
  HILAND LP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  Name: Randy Moeder

  
	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL GAS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  Name: Randy Moeder

  
	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HILAND ENERGY PARTNERS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  Name: Randy Moeder

  
	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EQUITY FINANCIAL SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  Name: Randy Moeder

  
	
   

  	
  Title: President and Chief Executive
  Officer

  

 

 

[Signature Page to
the Contribution Agreement]

 

 

	
   

  	
  HAROLD HAMM DST TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ BERT MACKIE

  	
   

  
	
   

  	
  Name: Bert Mackie

  
	
   

  	
  Title: Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAROLD HAMM HJ TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ BERT MACKIE

  	
   

  
	
   

  	
  Name: Bert Mackie

  
	
   

  	
  Title: Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ HAROLD HAMM

  	
   

  
	
   

  	
  HAROLD HAMM

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ RANDY MOEDER

  	
   

  
	
   

  	
  RANDY MOEDER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ KEN MAPLES

  	
   

  
	
   

  	
  KEN MAPLES

  

 

 

[Signature Page to
the Contribution Agreement]Exhibit
10.10

 

EXECUTION
COPY

 

 

 

 

OMNIBUS AGREEMENT

 

among

 

CONTINENTAL RESOURCES, INC.

 

HILAND PARTNERS, LLC

 

HAROLD HAMM

 

HILAND PARTNERS GP, LLC

 

CONTINENTAL GAS HOLDINGS, INC.

 

and

 

HILAND PARTNERS, LP

 

 

 

 

OMNIBUS
AGREEMENT

 

THIS OMNIBUS AGREEMENT (“Agreement”) is entered into on, and
effective as of, the Closing Date (as defined herein), and is by and among
Continental Resources, Inc., an Oklahoma corporation (“Continental Resources”), Hiland Partners,
LLC, an Oklahoma limited liability company (“Hiland”),
Harold Hamm, an individual residing in Enid, Oklahoma (“Mr. Hamm”), Hiland Partners GP, LLC,
a Delaware limited liability company (the “General
Partner”), Continental Gas Holdings, Inc., a Delaware corporation (“Continental Holdings”) and Hiland Partners,
LP, a Delaware limited partnership (the “Partnership”).  The above-named entities are sometimes
referred to in this Agreement each as a “Party”
and collectively as the “Parties.”

 

R E C I T A L
S:

 

1.                                       The
Parties desire by their execution of this Agreement to evidence their
agreement, as more fully set forth in Article II, with respect to those
business opportunities that the Hamm Entities (as defined herein) will not
engage in during the term of this Agreement.

 

2.                                       The
Parties desire by their execution of this Agreement to evidence their
agreement, as more fully set forth in Article III, with respect to certain
indemnification obligations of the Parties to each other.

 

3.                                       The
Parties desire by their execution of this Agreement to evidence their agreement,
as more fully set forth in Article IV, with respect to the amount to be
paid by the Partnership for certain general and administrative services to be
performed by Continental Resources for and on behalf of the Partnership Group
(as defined herein).

 

4.                                       The Parties
desire by their execution of this Agreement to evidence their agreement, as
more fully set forth in Article V, with respect to the Partnership Group’s
option to purchase the Bakken Gathering System (as defined herein).

 

In consideration of the premises and the
covenants, conditions and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto hereby agree as follows:

 

ARTICLE I

Definitions

 

1.1                               Definitions.

 

As used in this Agreement, the following terms shall have the
respective meanings set forth below:

 

“Affiliate” is defined in the
Partnership Agreement.

 

“Assets” means all
assets conveyed, contributed, or otherwise transferred to the Partnership Group
pursuant to the Contribution Agreement prior to or on the Closing

 

 

Date and any assets acquired by the
Partnership Group pursuant to the exercise of the purchase option granted under
Article V.

 

“Bakken Gathering System” means
the natural gas gathering system owned by Hiland, located in Richmond County,
Montana and described further on Schedule I.

 

“Closing Date” means the date of the closing
of the Partnership’s initial public offering of Common Units.

 

“Common Units” is defined in the Partnership Agreement.

 

“Conflicts Committee” is defined in the
Partnership Agreement.

 

“Construction Cost” means
all costs associated with developing, designing, building and financing Subject
Assets, including, without limitation, any costs to acquire related real
property or necessary rights of way and any internal costs incurred to
compensate employees for time spent on developing, designing, building and
financing Subject Assets.

 

“Continental Gas” means Continental Gas,
Inc., an Oklahoma corporation.

 

“Contribution Agreement”
means that certain Contribution, Conveyance and Assumption Agreement, dated as
of the Closing Date, among Continental Gas, Hiland, the Hamm Parties, the
Harold Hamm HJ Trust, the Harold Hamm DST Trust, the General Partner, the
Partnership and certain other parties, together with the additional conveyance
documents and instruments contemplated or referenced thereunder.

 

 “control”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of Voting Securities, by contract, or otherwise.

 

“General Partner” is defined in the
introduction to this Agreement.

 

“Hamm Control Person means (i) any of the Harold Hamm HJ Trust,
the Harold Hamm DST Trust, Harold Hamm, any of his children, his spouse or any
of his children’s spouses (but excluding former spouses and spouses of any of
his deceased children) and (ii) any Person controlled, directly or indirectly,
by any Person specified in the preceding clause (i), other than a Partnership
Entity.

 

“Hamm Entities” means each Hamm Party and any
Person controlled, directly or indirectly, by any Hamm Party or combination of
Hamm Parties other than the Partnership Entities; and “Hamm Entity”
means any of the Hamm Entities.

 

“Hamm Parties” means
Harold Hamm and each of Continental Resources and Hiland for so long as such
entity is controlled, directly or indirectly, by a Hamm Control Person or any
combination of Hamm Control Persons.

 

2

 

“Indemnified Party”
means each Partnership Group Member in its capacity as a party entitled to
indemnification in accordance with Article III.

 

“Indemnifying Party”
means each of Continental Resources, Hiland and Continental Holdings, as the
case may be, in their capacity as the parties from whom indemnification may be
required in accordance with Article III.

 

 “Limited
Partner” is defined in the Partnership Agreement.

 

“Offer” is defined
in Section 2.3(b).

 

“Partnership Agreement” means the First
Amended and Restated Agreement of Limited Partnership of Hiland Partners, LP,
dated as of the Closing Date, as such agreement is in effect on the Closing
Date, to which reference is hereby made for all purposes of this Agreement.  No amendment or modification to the
Partnership Agreement subsequent to the Closing Date shall be given effect for
the purposes of this Agreement unless consented to by each of the Parties to
this Agreement.

 

“Partnership Entities” means the General Partner and each member of the Partnership Group.

 

“Partnership Entity” means any of the Partnership Entities.

 

“Partnership Group”  means the Partnership and its subsidiaries.

 

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

 

“Party”
and “Parties” are defined in the introduction to this Agreement.

 

“Person” means an individual or a corporation,
limited liability company, partnership, joint venture, trust, business trust,
employee benefit plan, unincorporated organization, association, government agency
or political subdivision thereof or other entity.

 

“Restricted Businesses” is
defined in Section 2.1.

 

“Subject Assets” is
defined in Section 2.2(f).

 

“Subsidiary” means,
with respect to any Person, (a) a corporation of which more than 50% of the
voting power of shares entitled (without regard to the occurrence of any
contingency) to vote in the election of directors or other governing body of
such corporation is owned, directly or indirectly, at the date of
determination, by such Person, by one or more Subsidiaries of such Person or a
combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of
the partnership interests of such partnership (considering all of the
partnership interests of the partnership as a single class) is owned, directly
or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person,

 

3

 

or a combination thereof, or (c) any other
Person (other than a corporation or a partnership) in which such Person, one or
more Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors
or other governing body of such Person.

 

 “Transfer”
including the correlative terms “Transferring”
or “Transferred” means any direct
or indirect transfer, assignment, sale, gift, pledge, hypothecation or other
encumbrance, or any other disposition (whether voluntary, involuntary or by
operation of law) of the Assets.

 

“Units” is defined
in the Partnership Agreement.

 

“Voting Securities” means securities of any
class of a Person entitling the holders thereof to vote on a regular basis in
the election of members of the board of directors or other governing body of
such Person.

 

ARTICLE II

Business Opportunities

 

2.1                               Restricted Businesses. 
Subject to Section 2.6, and except as permitted by Section 2.2,
each Hamm Party shall be prohibited from engaging in, and the Hamm Parties shall cause each Hamm Entity not to engage in,
whether by acquisition, construction,
investment in debt or equity interests of any Person or otherwise, any
of the following businesses (the “Restricted
Businesses”):  the gathering,
treating, processing and transportation of natural gas in North America, the
transportation and fractionation of natural gas liquids (“NGLs”) in North America, and constructing,
buying or selling any assets related to the foregoing businesses.

 

2.2                               Permitted Exceptions. 
Notwithstanding any provision of Section 2.1 to the contrary, the
Hamm Entities may engage in the following activities under the following
circumstances:

 

(a)                                  the
ownership and/or operation of the Bakken Gathering System (including
replacements of and modifications or additions to the Bakken Gathering System);

 

(b)                                 any
business that is primarily related to the exploration for and production of oil
or natural gas and the sale and marketing of oil and natural gas derived from
such exploration and production activities;

 

(c)                                  any
Restricted Business that was engaged in by a Hamm Entity on the date of this
Agreement; provided, however, that any future acquisitions or opportunities
related to such Restricted Business shall be subject to the procedures set
forth in Section 2.3;

 

(d)                                 the
purchase and ownership of not more than five percent of any class of securities
of any entity engaged in the Restricted Business (but without otherwise
participating in the activities of such entity);

 

4

 

(e)                                  any
Restricted Business conducted by a Hamm Entity with the approval of the
Conflicts Committee;

 

(f)                                    the
ownership and/or operation of any asset or group of related assets used in the
activities described in Section 2.1 that are acquired or constructed by a
Hamm Entity after the Closing Date (the “Subject
Assets”) if, in the case of an acquisition, the fair market value of
the Subject Assets (as determined in good faith by the board of directors or
other comparable governing body of such Hamm Entity), or, in the case of
construction, the estimated Construction Cost of the Subject Assets (as
determined in good faith by the board of directors or other comparable
governing body of such Hamm Entity), is less than $5 million at the time of
such acquisition or completion of construction, as the case may be;

 

(g)                                 the
ownership and/or operation of any Subject Assets acquired by a Hamm Entity
after the Closing Date with a fair market value (as determined in good faith by
the board of directors or other comparable governing body of such Hamm Entity)
equal to or greater than $5 million at the time of the acquisition; provided,
the Partnership has been offered the opportunity to purchase the Subject Assets
in accordance with Section 2.3 and the Partnership (with the concurrence
of the Conflicts Committee) has elected not to purchase the Subject Assets; and

 

(h)                                 the
ownership and/or operation of any Subject Assets constructed by a Hamm Entity
after the Closing Date with a Construction Cost (as determined in good faith by
the board of directors or other comparable governing body of such Hamm Entity)
equal to or greater than $5 million at the time of completion of construction
that the Partnership has been offered the opportunity to purchase in accordance
with Section 2.3 and the Partnership (with the concurrence of the Conflicts
Committee) has elected not to purchase.

 

2.3                               Procedures.

 

(a)                                  If
a Hamm Entity becomes aware of an opportunity to acquire Subject Assets with a
fair market value (as determined in good faith by the board of directors or
other comparable governing body of such Hamm Entity) equal to or greater than
$5 million that it is interested in pursuing, then, subject to Section 2.3(b),
as soon as practicable thereafter, such Hamm Entity shall notify the General
Partner, in writing, of such opportunity and deliver to the General Partner all
information prepared by or on behalf of such Hamm Entity relating to such
opportunity.  As soon as practicable, but
in any event within 30 days after receipt of such written notification and information,
the General Partner, on behalf of the Partnership, shall notify the Hamm
Entity, in writing,  that either (i) the
General Partner, on behalf of the Partnership, has elected (with the
concurrence of the Conflicts Committee) not to cause a Partnership Group Member
to pursue the opportunity to purchase the Subject Assets, or (ii) the General
Partner, on behalf of the Partnership, has elected (with the concurrence of the
Conflicts Committee) to cause a Partnership Group Member to pursue the
opportunity to purchase the Subject Assets. 
If, at any time, the General Partner abandons such opportunity with the
approval of the Conflicts Committee (as evidenced in writing by the General
Partner following the

 

5

 

request of the Hamm Entity), the Hamm Entity may pursue such
opportunity.  Any Subject Assets that are
permitted to be acquired by a Hamm Entity must be so acquired (i) within 12
months of the later to occur of (A) the date that the Hamm Entity becomes able
to pursue such acquisition in accordance with the provisions of this Section 2.3(a),
and (B) the date upon which all required governmental approvals to consummate
such acquisition have been obtained, and (ii) on terms not more favorable in
any material respect to the Hamm Entity than were offered to the
Partnership.  If either of these
conditions are not satisfied, the opportunity must be reoffered to the
Partnership in accordance with this Section 2.3(a).

 

(b)                                 Notwithstanding
Section 2.3(a), in the event that a Hamm Entity becomes aware of an
opportunity to make an acquisition that includes both Subject Assets and assets
that are not Subject Assets and the Subject Assets have a fair market value (as
determined in good faith by the board of directors or other comparable
governing body of such Hamm Entity) equal to or greater than $5 million but
comprise less than half of the fair market value (as determined in good faith
by the board of directors or other comparable governing body of such Hamm
Entity) of the total assets being considered for acquisition, then the Hamm
Entity may make such acquisition without first offering the opportunity to the
Partnership as long as it complies with the following procedures:

 

(i)                                     Within
90 days after the consummation of such an acquisition, the Hamm Entity shall
notify the General Partner in writing of such acquisition and offer the
Partnership Group the opportunity to purchase such Subject Assets in accordance
with this Section 2.3(b) (the “Offer”).  The Offer shall set forth the terms relating
to the purchase of the Subject Assets and, if any Hamm Entity desires to
utilize the Subject Assets, the Offer will also include the commercially
reasonable terms on which the Partnership Group will provide services to the
Hamm Entity to enable the Hamm Entity to utilize the Subject Assets.  As soon as practicable, but in any event
within 30 days after receipt of such written notification, the General Partner
shall notify the Hamm Entity in writing that either (x) the General Partner, on
behalf of the Partnership, has elected (with the concurrence of the Conflicts
Committee) not to cause a Partnership Group Member to purchase the Subject
Assets, in which event the Hamm Entity shall be forever free to continue to own
or operate such Subject Assets, or (y) the General Partner, on behalf of the
Partnership, has elected (with the concurrence of the Conflicts Committee) to
cause a Partnership Group Member to purchase the Subject Assets, in which event
the following procedures shall apply.

 

(ii)                                  If
the Hamm Entity and the General Partner (with the concurrence of the Conflicts
Committee) within 60 days after receipt by the General Partner of the Offer are
able to agree on the fair market value of the Subject Assets that are subject
to the Offer and the other terms of the Offer including, without limitation,
the terms, if any, on which the Partnership Group will provide services to the
Hamm Entity to enable it to utilize the Subject Assets, a Partnership Group
Member shall purchase the Subject Assets for the agreed

 

6

 

upon fair market value as soon as commercially practicable after such
agreement has been reached and, if applicable, enter into an agreement with the
Hamm Entity to provide services in a manner consistent with the Offer.

 

(iii)                               If
the Hamm Entity and the General Partner (with the concurrence of the Conflicts
Committee) are unable to agree within 60 days after receipt by the General
Partner of the Offer on the fair market value of the Subject Assets that are
subject to the Offer or the other terms of the Offer including, if applicable,
the terms on which the Partnership Group will provide services to the Hamm
Entity to enable it to utilize the Subject Assets, the Hamm Entity and the
General Partner will engage a mutually agreed upon investment banking firm to
determine the fair market value of the Subject Assets and/or the other terms on
which the General Partner and the Hamm Entity are unable to agree.  Such investment banking firm will determine
the fair market value of the Subject Assets and/or the other terms on which the
General Partner and the Hamm Entity are unable to agree within 30 days of its
engagement and furnish the Hamm Entity and the General Partner its
determination.  The fees of the
investment banking firm will be split equally between the Hamm Entity and the
Partnership Group.  Once the investment
banking firm has submitted its determination of the fair market value of the
Subject Assets and/or the other terms on which the Partnership Group and the
Hamm Entity are unable to agree, the General Partner will have the right, but
not the obligation, subject to the approval of the Conflicts Committee, to
cause a Partnership Group Member to purchase the Subject Assets pursuant to the
Offer as modified by the determination of the investment banking firm.  The Partnership Group Member will provide
written notice of its decision to the Hamm Entity within 30 days after the
investment banking firm has submitted its determination.  Failure to provide such notice within such
30-day period shall be deemed to constitute a decision not to purchase the
Subject Assets.  If the General Partner
elects to cause a Partnership Group Member to purchase the Subject Assets, then
the Partnership Group Member shall purchase the Subject Assets pursuant to the
Offer as modified by the determination of the investment banking firm as soon
as commercially practicable after such determination and, if applicable, enter
into an agreement with the Hamm Entity to provide services in a manner consistent
with the Offer, as modified by the determination of the investment banking
firm, if applicable.

 

(c)                                  In
the event that a Hamm Entity desires to construct Subject Assets with an
estimated Construction Cost (as determined in good faith by the board of directors
or other comparable governing body of such Hamm Entity) equal to or greater
than $5 million, then the Hamm Entity may construct such Subject Assets as long
as it complies with the following procedures:

 

(i)                                     Within
90 days after the completion of construction by a Hamm Entity of the Subject
Assets, the Hamm Entity shall notify the General Partner in writing of such
construction and offer the Partnership Group the opportunity to purchase such
Subject Assets in accordance with this Section 2.3(c) (the “Construction Offer”).  The Construction Offer shall set forth the

 

7

 

Hamm Entities’ good faith estimate of the actual Construction Cost for
the Subject Assets incurred by the Hamm Entities (the “Actual Construction Cost”), which shall
constitute the proposed purchase price for the Subject Assets, together with
the other proposed terms relating to the purchase of the Subject Assets, and,
if any Hamm Entity desires to utilize the Subject Assets, the Construction
Offer will also include the commercially reasonable terms on which the
Partnership Group will provide services to the Hamm Entity to enable the Hamm
Entity to utilize the Subject Assets.  As
soon as practicable, but in any event within 30 days after receipt of such
written notification, the General Partner shall notify the Hamm Entity in
writing that either (x) the General Partner, on behalf of the Partnership, has
elected (with the concurrence of the Conflicts Committee) not to cause a
Partnership Group Member to purchase the Subject Assets, in which event the
Hamm Entity shall be forever free to continue to own or operate such Subject
Assets, or (y) the General Partner, on behalf of the Partnership, has elected
(with the concurrence of the Conflicts Committee) to cause a Partnership Group
Member to purchase the Subject Assets, in which event the following procedures
shall apply.

 

(ii)                                  If
the Hamm Entity and the General Partner (with the concurrence of the Conflicts
Committee) within 60 days after receipt by the General Partner of the
Construction Offer are able to agree on the Actual Construction Cost of the
Subject Assets that are subject to the Construction Offer and the other terms (“Other Terms”) of the Construction Offer
including, without limitation, the terms, if any, on which the Partnership
Group will provide services to the Hamm Entity to enable it to utilize the
Subject Assets, a Partnership Group Member shall purchase the Subject Assets
for the agreed upon Actual Construction Cost as soon as commercially
practicable after such agreement has been reached and, if applicable, enter
into an agreement with the Hamm Entity to provide services in a manner
consistent with the Construction Offer.

 

(iii)                               If
the Hamm Entity and the General Partner (with the concurrence of the Conflicts
Committee) are unable to agree within 60 days after receipt by the General
Partner of the Construction Offer on the Actual Construction Cost of the
Subject Assets that are subject to the Construction Offer, the Hamm Entity and the
General Partner will engage a mutually agreed upon nationally recognized
accounting firm, other than any such accounting firm that has served as either
Person’s independent auditors within the past three years, to determine the
Actual Construction Cost of the Subject Assets. 
Such accounting firm will determine the Actual Construction Cost of the
Subject Assets within 30 days of its engagement and furnish the Hamm Entity and
the General Partner its determination, which determination shall be a final and
binding determination of the Actual Construction Cost.  The fees of the accounting firm will be split
equally between the Hamm Entity and the Partnership Group.

 

(iv)                              If
the Hamm Entity and the General Partner are unable to agree within 60 days
after receipt by the General Partner of the Construction Offer on all of the
Other Terms, the Hamm Entity and the General Partner will

 

8

 

obtain a good faith proposal from a mutually agreed upon third party
engaged in the business to which such Other Terms relate in order to determine
the Other Terms on which the General Partner and the Hamm Entity are unable to
agree.  Such third party will submit a
good faith proposal regarding the Other Terms on which the General Partner and
the Hamm Entity are unable to agree within 30 days of its engagement and
furnish the Hamm Entity and the General Partner its proposal, which
determination shall be a final and binding determination of the Other Terms.  The fees of the third party will be split
equally between the Hamm Entity and the Partnership Group.

 

(v)                                 Once
the Actual Construction Cost and the Other Terms have been finally determined
pursuant to clauses (ii), (iii) or (iv) above, the General Partner will have
the right, but not the obligation, subject to the approval of the Conflicts
Committee, to cause a Partnership Group Member to purchase the Subject Assets
pursuant to the Construction Offer as modified by the determination of the
accounting firm and/or the third party submitting a proposal, as
applicable.  The Partnership Group Member
will provide written notice of its decision to the Hamm Entity within 30 days
after the later of the date on which the accounting firm and/or the third party
submitting a proposal, as applicable, has submitted its determination.  Failure to provide such notice within such
30-day period shall be deemed to constitute a decision not to purchase the
Subject Assets.  If the General Partner
elects to cause a Partnership Group Member to purchase the Subject Assets, then
the Partnership Group Member shall purchase the Subject Assets pursuant to the
Construction Offer as modified by the determination of the accounting firm
and/or the third party submitting a proposal as soon as commercially
practicable after such determination and, if applicable, enter into an
agreement with the Hamm Entity to provide services in a manner consistent with
the Construction Offer, as modified by the determination of the third party
submitting a proposal, if applicable.

 

2.4                               Scope of Prohibition. 
Except as provided in this Article II and the Partnership
Agreement, each Hamm Entity shall be free to engage in any business activity,
including those that may be in direct competition with any Partnership Group
Member.

 

2.5                               Enforcement.  Each
Hamm Party agrees and acknowledges that the Partnership Group does not have an
adequate remedy at law for the breach by the Hamm Entities of the covenants and
agreements set forth in this Article II, and that any breach by any of the
Hamm Entities of the covenants and agreements set forth in this Article II
would result in irreparable injury to the Partnership Group.  Each Hamm Party further agrees and
acknowledges that any Partnership Group Member may, in addition to the other
remedies which may be available to the Partnership Group, file a suit in equity
to enjoin any of the Hamm Entities from such breach, and consents to the
issuance of injunctive relief under this Agreement.

 

2.6                               Termination.  This
Article II shall terminate on the first to occur of the following:  (i) the first day on which no Hamm Control
Person nor any combination of Hamm Control Persons controls the Partnership,
(ii) the death of Harold Hamm and (iii) the fifth anniversary of the date of
this Agreement.

 

9

 

ARTICLE III

Indemnification

 

3.1                               Continental Gas and Hiland Indemnification.  Continental Resources, Hiland and Continental
Holdings shall jointly and severally indemnify, defend and hold harmless the
Partnership Group from and against any losses, damages, liabilities, claims,
demands, causes of action, judgments, settlements, fines, penalties, costs and
expenses (including, without limitation, court costs and reasonable attorney’s
and expert fees) of any and every kind or character, known or unknown, fixed or
contingent, suffered or incurred by the Partnership Group by reason of or
arising out of all federal, state and local income tax liabilities attributable
to the operation of the Assets prior to the Closing Date, including any such
income tax liabilities that may result from the consummation of the formation
transactions contemplated by the Contribution Agreement.

 

3.2                               Continental Resources Indemnification.  Continental Resources shall indemnify, defend
and hold harmless the Partnership Group from and against any losses, damages,
liabilities, claims, demands, causes of action, judgments, settlements, fines,
penalties, costs and expenses (including, without limitation, court costs and
reasonable attorney’s and expert’s fees) of any and every kind or character,
known or unknown, fixed or contingent, suffered or incurred by the Partnership
Group by reason of or arising out of Continental Gas’ ownership, operation or
distribution of the properties and assets (and related rights and obligations)
distributed by Continental Gas to Continental Resources in 2004.

 

3.3                               Indemnification
Procedures.

 

(a)                                  The
Indemnified Party agrees that promptly after it becomes aware of facts giving
rise to a claim for indemnification under this Article III, it will
provide notice thereof in writing to the applicable Indemnifying Party,
specifying the nature of and specific basis for such claim.

 

(b)                                 The
Indemnifying Party or Indemnifying Parties shall have the right to control at
its sole cost and expense all aspects of the defense of (and any counterclaims
with respect to) any claims brought against the Indemnified Party that are
covered by the indemnification under this Article III, including, without
limitation, the selection of counsel, determination of whether to appeal any
decision of any court and the settling of any such matter or any issues
relating thereto; provided, however, that no such
settlement shall be entered into without the consent of the Indemnified Party
(with the concurrence of the Conflicts Committee) unless it includes a full
release of the Indemnified Party from such matter or issues, as the case may
be.

 

(c)                                  The
Indemnified Party agrees to cooperate fully with each Indemnifying Party, with respect to all aspects of the
defense of any claims covered by the indemnification under this Article III,
including, without limitation, the prompt furnishing to each Indemnifying Party of any correspondence or other notice
relating thereto that the Indemnified Party may receive, permitting the name of
the Indemnified Party to be utilized in connection with such defense, the
making available to each Indemnifying
Party of any files, records or other information of the Indemnified
Party

 

10

 

that any Indemnifying Party
reasonably considers relevant to such defense and the making available to each Indemnifying Party of any
employees of the Indemnified Party; provided, however,
that in connection therewith each
Indemnifying Party agrees to use reasonable efforts to minimize the
impact thereof on the operations of the Indemnified Party and further agrees to
maintain the confidentiality of all files, records, and other information
furnished by the Indemnified Party pursuant to this Section 3.3  In no event shall the obligation of the
Indemnified Party to cooperate with each
Indemnifying Party as set forth in the immediately preceding sentence be
construed as imposing upon the Indemnified Party an obligation to hire and pay
for counsel in connection with the defense of any claims covered by the
indemnification set forth in this Article III; provided,
however, that the Indemnified Party may, at its own option, cost and
expense, hire and pay for counsel in connection with any such defense.  The
Indemnifying Party agrees to keep any such counsel hired by the
Indemnified Party informed as to the status of any such defense, but the Indemnifying Party shall have the
right to retain sole control over such defense.

 

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

 

(e)                                  The
date on which notification of a claim for indemnification is received by the
Indemnifying Party shall determine whether such claim is timely made.

 

(f)                                    In
no event shall any Indemnified Party be permitted to make any claim under Section 3.2
unless the Indemnified Party provides notice of such claim to the Indemnifying
Party on or before the fifth anniversary of the date of this Agreement.

 

ARTICLE IV

General and Administrative Expenses

 

For a period of two years from the Closing Date, Continental Resources
shall continue to  provide the
Partnership Group the general and administrative services that Continental
Resources has provided to Continental Gas and Hiland since January 1,
2004, including but not limited to the general and administrative services
listed in Schedule II to this Agreement (the “Services”). 
Continental Resources shall exercise at least the same degree of care,
skill and prudence in providing the services as customarily exercised by it for
its own operations.  In consideration for
the providing of the Services, the Partnership will pay Continental Resources a
fee equal to the lesser of (i) Continental Resources’ actual cost of providing
the Services and (ii) $50,000, payable annually.

 

11

 

ARTICLE V

Purchase Option

 

5.1                               Option
to Purchase the Bakken Gathering System by the Partnership Group.

 

(a)                                  Hiland
hereby grants to the Partnership Group the unconditional right and exclusive
option for a period of two years from the Closing Date to purchase for fair
market value at the time of purchase (in accordance with Section 5.2) all
of Hiland’s right, title and interest in, to and under the Bakken Gathering
System.

 

(b)                                 The
Parties acknowledge that any potential transfer of the Bakken Gathering System
pursuant to this Article V is subject to obtaining any and all required
written consents of governmental authorities.

 

(c)                                  Hiland
hereby (i) represents and warrants that there are no rights of first refusal to
purchase the Bakken Gathering System; and (ii) covenants and agrees that,
subject to Section 5.2(c), Hiland will not transfer or grant any right or
option to purchase the Bakken Gathering System, other than to a Partnership
Group Member, during a period of two years from the Closing Date.

 

5.2                               Procedures.

 

(a)                                  If
a Partnership Group Member decides to exercise the option to purchase the
Bakken Gathering System, it will provide written notice to Hiland stating its
intention to exercise the option to purchase the Bakken Gathering System.  Within 30 days following receipt of such
notice by Hiland, Hiland shall propose to the Partnership Group Member, in
writing, a fair market value for the Bakken Gathering System, taking into
account the terms of sale contained herein. 
The decision to purchase the Bakken Gathering System, the fair market
value to be paid for the Bakken Gathering System and the other terms of the
purchase shall be approved by the Conflicts Committee.  If the Partnership Group Member and Hiland
are unable to agree on the fair market value of the Bakken Gathering System
within 30 days after the Partnership Group Member’s receipt of Hiland’s
proposal, the Partnership Group Member and Hiland will engage a
mutually-agreed-upon investment banking firm to determine the fair market value
of the Bakken Gathering System.  Such
investment banking firm will determine the fair market value of the Bakken
Gathering System within 30 days of its engagement and furnish Hiland and the
General Partner its determination.  The
fees of the investment banking firm will be split equally between Hiland and
the Partnership Group.  Once the
investment banking firm submits its determination of the fair market value of
the Bakken Gathering System, the Partnership Group Member will have the right,
but not the obligation, subject to the approval of the Conflicts Committee, to
purchase the Bakken Gathering System on the terms as modified by the
determination of the investment banking firm. 
The Partnership Group Member will provide written notice of its decision
to Hiland within 30 days after the investment banking firm has submitted its
determination.  Failure to provide such
notice within such 30-day period shall be deemed to constitute a decision not
to purchase the Bakken Gathering System.

 

12

 

(b)                                 If
a Partnership Group Member chooses to exercise its option to purchase the
Bakken Gathering System under Section 5.2(a), this Agreement shall become
a contract of sale and purchase for the Bakken Gathering System pursuant to
which Hiland shall be obligated to sell the Bakken Gathering System to the
Partnership Group Member and the Partnership Group Member shall be obligated to
purchase the Bakken Gathering System from Hiland.  The terms of the purchase and sale agreement,
unless otherwise agreed to by the Partnership Group Member (with the consent of
the Conflicts Committee) and Hiland, will consist of the following:

 

(i)                                     the
Partnership Group Member will deliver a cash purchase price (unless the
Partnership Group Member and Hiland agree that the consideration will be paid
by means of Units or an interest-bearing promissory note);

 

(ii)                                  Hiland
will represent that it has good and indefeasible title to the Bakken Gathering
System, subject to all recorded and unrecorded matters and all physical conditions
and other matters in existence on the closing date for the purchase of the
Bakken Gathering System, plus any other such matters as the Partnership Group
Member may approve, which approval will not be unreasonably withheld.  If the Partnership Group Member desires to
obtain any title insurance with respect to the Bakken Gathering System, the
full cost and expense of obtaining the same (including but not limited to the
cost of title examination, document duplication and policy premium) shall be
borne by the Partnership Group Member;

 

(iii)                               Hiland
will grant to the Partnership Group Member the right, exercisable at the
Partnership Group Member’s risk and expense, to make such surveys, tests and
inspections of the Bakken Gathering System as the Partnership Group Member may
deem desirable, so long as such surveys, tests or inspections do not damage the
Bakken Gathering System or interfere in any material respect with the
activities of Hiland thereon and so long as the Partnership Group Member has
furnished Hiland with evidence that adequate liability insurance is in full
force and effect;

 

(iv)                              the
Partnership Group Member will have the right to terminate its obligation to
purchase the Bakken Gathering System under this Section 5.2(b) if Hiland
is not able to make the representations contemplated by Section 5.2(b)(ii)
as of the closing date or if the results of any searches, surveys, tests or
inspections conducted pursuant to Section 5.2(b)(ii) or (iii) above are,
in the reasonable opinion of the Partnership Group Member, unsatisfactory;

 

(v)                                 the
closing date for the purchase of the Bakken Gathering System shall occur no
later than 90 days following receipt by Hiland of written notice by the
Partnership Group Member of its intention to exercise its option to purchase
the Bakken Gathering System pursuant to Section 5.2(a);

 

13

 

(vi)                              Hiland
shall execute, have acknowledged and deliver to the Partnership Group Member a
special warranty deed, assignment of easement, or comparable document, as
appropriate, in the applicable jurisdiction, on the closing date for the
purchase of the Bakken Gathering System constituting a real property interest
conveying the Bakken Gathering System unto the Partnership Group Member free and
clear of all encumbrances created by Hiland other than those set forth in Section 5.2(b)(ii)
above;

 

(vii)                           the
sale of the Bakken Gathering System shall be made on an “as is,” “where is” and
“with all faults” basis, and the instruments conveying the Bakken Gathering
System shall contain appropriate disclaimers;

 

(viii)                        neither
Hiland nor the applicable Partnership Group Member shall have any obligation to
sell or buy the Bakken Gathering System if any of the material consents
referred to in Section 5.1(b) have not been obtained; and

 

(ix)                                Hiland
and the Partnership Group shall cooperate in good faith and use commercially
reasonable efforts to obtain all necessary governmental and other third Person
approvals, waivers and consents required for the closing.  Any such closing shall be delayed, to the
extent required, until the third Business Day following the expiration of any
required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.

 

(c)                                  If
a Partnership Group Member chooses or is deemed to have chosen not to exercise
its option to purchase the Bakken Gathering System at the price determined by
the investment banking firm under Section 5.2(a), all future rights to
purchase the Bakken Gathering System by the Partnership Group will be
extinguished.

 

ARTICLE VI

 

Miscellaneous

 

6.1                               Choice of Law; Submission to Jurisdiction.  This Agreement shall be subject to and
governed by the laws of the State of Oklahoma, excluding any conflicts-of-law
rule or principle that might refer the construction or interpretation of this
Agreement to the laws of another state. 
Each Party hereby submits to the jurisdiction of the state and federal
courts in the State of Oklahoma and to venue in Enid, Oklahoma.

 

6.2                               Notice.  All
notices or requests or consents provided for by, or permitted to be given
pursuant to, this Agreement must be in writing and must be given by depositing
same in the United States mail, addressed to the Person to be notified,
postpaid, and registered or certified with return receipt requested or by
delivering such notice in person or by telecopier or telegram to such
Party.  Notice given by personal delivery
or mail shall be effective upon actual receipt. 
Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient’s normal business hours or at the
beginning of the recipient’s next business day after receipt if not received
during the recipient’s normal business hours. 
All notices to be sent to a Party pursuant to this Agreement shall be
sent to or made at the address set forth below

 

14

 

such Party’s signature to this Agreement or at such other address as
such Party may stipulate to the other Parties in the manner provided in this Section 6.2.

 

if to Harold Hamm or the Hamm Entities (other
than Continental Resources):

 

c/o
Continental Resources, Inc.

302 North
Independence, Suite 1400

Enid, Oklahoma 73702

Attention: Mr.
Harold Hamm

 

if to Continental Resources:

 

Continental Resources,
Inc.

302 North
Independence, Suite 1400

Enid, Oklahoma 73702

Attention: Mr.
Harold Hamm

 

if to the Partnership Entities:

Hiland
Partners, LP

205 West
Maple, Suite 110

Enid, Oklahoma
73701

Attention: Mr. Randy Moeder

 

6.3                               Entire Agreement. 
This Agreement constitutes the entire agreement of the Parties relating
to the matters contained herein, superseding all prior contracts or agreements,
whether oral or written, relating to the matters contained herein.

 

6.4                               Amendment
or Modification.  This Agreement
may be amended or modified from time to time only by the written agreement of
all the Parties hereto; provided, however, that the Partnership may not,
without the prior approval of the Conflicts Committee, agree to any amendment
or modification of this Agreement that, in the reasonable discretion of the
General Partner, will adversely affect the holders of Common Units.  Each such instrument shall be reduced to
writing and shall be designated on its face an “Amendment” or an “Addendum” to
this Agreement.

 

6.5                               Assignment.  No
Party shall have the right to assign any of its rights or obligations under
this Agreement without the consent of the other Parties hereto.

 

6.6                               Counterparts. 
This Agreement may be executed in any number of counterparts with the
same effect as if all signatory parties had signed the same document.  All counterparts shall be construed together
and shall constitute one and the same instrument.

 

6.7                               Severability.  If
any provision of this Agreement shall be held invalid or unenforceable by a
court or regulatory body of competent jurisdiction, the remainder of this
Agreement shall remain in full force and effect.

 

15

 

6.8                               Further Assurances. 
In connection with this Agreement and all transactions contemplated by
this Agreement, each signatory party hereto agrees to execute and deliver such
additional documents and instruments and to perform such additional acts as may
be necessary or appropriate to effectuate, carry out and perform all of the
terms, provisions and conditions of this Agreement and all such transactions.

 

6.9                               Rights of Limited Partners.  The provisions of this Agreement are
enforceable solely by the Parties to this Agreement, and no Limited Partner of
the Partnership shall have the right, separate and apart from the Partnership,
to enforce any provision of this Agreement or to compel any Party to this
Agreement to comply with the terms of this Agreement.

 

6.10                        Successors.  This
Agreement shall bind and inure to the benefit of the Parties and to their
respective successors and assigns.

 

16

 

IN WITNESS WHEREOF, the Parties have executed
this Agreement on, and effective as of, the Closing Date.

 

	
   

  	
  CONTINENTAL RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ HAROLD HAMM

  
	
   

  	
   

  	
  Harold Hamm

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HILAND PARTNERS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ RANDY MOEDER

  
	
   

  	
   

  	
  Randy Moeder

  
	
   

  	
   

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HILAND PARTNERS GP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ RANDY MOEDER

  
	
   

  	
   

  	
  Randy Moeder

  
	
   

  	
   

  	
  Chief Executive Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CONTINENTAL GAS HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ HAROLD HAMM

  
	
   

  	
   

  	
  Harold Hamm

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HILAND PARTNERS, LP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Hiland Partners GP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ RANDY MOEDER

  
	
   

  	
   

  	
  Randy Moeder

  
	
   

  	
   

  	
  Chief Executive Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   /s/ HAROLD HAMM

  
	
   

  	
  HAROLD HAMM

  

 

 

[Signature
Page to the Omnibus Agreement]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]