Document:

purchaseagreement.htm

RECEIVABLES PURCHASE AGREEMENT

 

between

 

BMW FINANCIAL SERVICES NA, LLC,

 

as Seller,

 

and

 

BMW FS SECURITIES LLC,

 

as Depositor

 

Dated as of August 1, 2011

 

  

  

  

TABLE OF CONTENTS

 

PAGE

 

	
ARTICLE I

	
CERTAIN DEFINITIONS

	
1

	
ARTICLE II

	
CONVEYANCE OF RECEIVABLES

	
3

	
SECTION 2.01

	
Conveyance of Receivables

	
3

	
SECTION 2.02

	
The Closing

	
4

	
ARTICLE III

	
REPRESENTATIONS AND WARRANTIES

	
4

	
SECTION 3.01

	
Representations and Warranties of the Depositor

	
4

	
SECTION 3.02

	
Representations and Warranties of the Seller

	
6

	
SECTION 3.03

	
Perfection Representations, Warranties and Covenants

	
17

	
ARTICLE IV

	
CONDITIONS

	
18

	
SECTION 4.01

	
Conditions to Obligation of the Depositor

	
18

	
SECTION 4.02

	
Conditions to Obligation of the Seller

	
19

	
ARTICLE V

	
COVENANTS OF THE SELLER AND THE DEPOSITOR

	
20

	
SECTION 5.01

	
Protection of Right, Title and Interest

	
20

	
SECTION 5.02

	
Other Liens or Interests

	
21

	
SECTION 5.03

	
Costs and Expenses

	
21

	
SECTION 5.04

	
Hold Harmless

	
21

	
ARTICLE VI

	
MISCELLANEOUS PROVISIONS

	
21

	
SECTION 6.01

	
Obligations of Seller

	
21

	
SECTION 6.02

	
Repurchase Events

	
21

	
SECTION 6.03

	
Depositor Assignment of Repurchased Receivables

	
22

	
SECTION 6.04

	
Transfer to the Issuer

	
22

	
SECTION 6.05

	
Amendment

	
22

	
SECTION 6.06

	
Waivers

	
23

	
SECTION 6.07

	
Notices

	
23

	
SECTION 6.08

	
Costs and Expenses

	
23

	
SECTION 6.09

	
Representations of the Seller and the Depositor

	
23

	
SECTION 6.10

	
Confidential Information

	
23

	
SECTION 6.11

	
Headings and Cross-References

	
23

	
SECTION 6.12

	
Governing Law

	
23

	
SECTION 6.13

	
Counterparts

	
24

	
SECTION 6.14

	
Third Party Beneficiary

	
24

  

i

  

	
SECTION 6.15

	
No Proceedings

	
24

EXHIBITS AND SCHEDULES

 

	
EXHIBIT A

	
Matters Addressed in Opinion of Seller’s Counsel

	
SCHEDULE I

	
Schedule of Receivables

	
SCHEDULE II

	
Location of Receivable Files

	
SCHEDULE III

	
Perfection Representations, Warranties and Covenants

  

ii

  

THIS RECEIVABLES PURCHASE AGREEMENT dated as of August 1, 2011, is between BMW FINANCIAL SERVICES NA, LLC, a Delaware limited liability company (the “Seller”), and BMW FS SECURITIES LLC, a Delaware limited liability company, as depositor (the “Depositor”).

 

RECITALS

 

WHEREAS, in the regular course of its business, BMW FS has purchased certain motor vehicle retail installment sale contracts secured by new and used automobiles, light trucks and motorcycles from certain motor vehicle dealers directly or indirectly through BMW Bank of North America;

 

WHEREAS, the Seller and the Depositor wish to set forth the terms pursuant to which such contracts are to be sold by the Seller to the Depositor; and

 

WHEREAS, the Depositor intends, concurrently with its purchase hereunder, to convey all of its right, title and interest in and to all of such contracts to BMW Vehicle Owner Trust 2011-A (the “Issuer”) pursuant to a Sale and Servicing Agreement dated as of August 1, 2011 (the “Sale and Servicing Agreement”), by and among the Issuer, the Depositor, the Seller, the Sponsor, the Servicer, the Administrator and the Custodian, and Citibank, N.A., as indenture trustee (the “Indenture Trustee”), and the Issuer intends to pledge all of its right, title and interest in and to such contracts to the Indenture Trustee pursuant to the Indenture dated as of August 1, 2011 (the
“Indenture”), by and between the Issuer and the Indenture Trustee.

 

NOW, THEREFORE, in consideration of the foregoing, other good and valuable consideration and the mutual terms and covenants contained herein, the parties hereto agree as follows:

 

ARTICLE I

 

CERTAIN DEFINITIONS

 

Terms not defined in this Agreement shall have the meanings assigned thereto in the Sale and Servicing Agreement, the Underwriting Agreement or the Indenture, as the case may be.  As used in this Agreement, the following terms shall, unless the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms of the terms defined):

 

“Act” shall have the meaning specified in Section 3.01(h).

 

“Agreement” shall mean this Receivables Purchase Agreement, as the same may be amended and supplemented from time to time.

 

“BMW Bank” shall mean BMW Bank of North America.

 

“BMW FS” shall mean BMW Financial Services NA, LLC.

 

“Conveyed Assets” shall have the meaning set forth in Section 2.01.

 

  

  

  

“Depositor” shall mean BMW FS Securities LLC, a Delaware limited liability company, and its successors and assigns.

 

“Final Prospectus” shall have the meaning set forth in the Underwriting Agreement.

 

“Indenture” shall have the meaning set forth in the recitals.

 

“Issuer” shall have the meaning set forth in the recitals.

 

“Lien Certificate” means, with respect to a Financed Vehicle, an original certificate of title, certificate of lien or other notification issued by the Registrar of Titles of the applicable State to a secured party which indicates that the lien of the secured party on such Financed Vehicle is recorded on the original certificate of title.  In any jurisdiction in which the original certificate of title is required to be given to the Obligor, the term “Lien Certificate” shall mean only a certificate or notification issued to a secured party.

 

“Preliminary Prospectus” shall have the meaning set forth in the Underwriting Agreement.

 

“Purchase Price” shall have the meaning set forth in Section 2.01.

 

“Receivable” shall mean any Contract listed on Schedule I hereto (which Schedule may be in the form of microfiche).

 

“Registrar of Titles” means with respect to any State, the governmental agency or body responsible for the registration of, and the issuance of certificates of title relating to, motor vehicles and liens thereon.

 

“Registration Statement” means Registration Statement No. 333-159922 filed by the Depositor with the Securities and Exchange Commission in the form in which it became effective on August 13, 2009.

 

“Rules and Regulations” shall have the meaning specified in Section 3.01(i).

 

“Sale and Servicing Agreement” shall have the meaning set forth in the recitals.

 

“Schedule of Receivables” shall mean the list of Receivables annexed hereto as Schedule I (which Schedule may be in the form of microfiche).

 

“Seller” shall mean BMW FS, and its successors and assigns.

 

“Transfer Date” shall mean the Closing Date.

 

“Transfer Taxes” shall have the meaning specified in Section 3.02(b)(xlii).

 

“Underwriters” means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets, LLC, Barclays Capital Inc., Credit Agricole Securities (USA) Inc. and Credit Suisse Securities (USA) LLC.

 

  

2

  

“Underwriting Agreement” means the Underwriting Agreement dated September 14, 2011, relating to BMW Vehicle Owner Trust 2011-A among BMW FS, the Depositor and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the Underwriters.

 

ARTICLE II

 

CONVEYANCE OF RECEIVABLES

 

SECTION 2.01  Conveyance of Receivables.

 

(a)           In consideration of the Depositor’s delivery to or upon the order of the Seller on the Closing Date of $[__] (the “Purchase Price”), the Seller does hereby sell, transfer, assign, set over and otherwise convey to the Depositor, without recourse (subject to the obligations of the Seller herein) all right, title, and interest of the Seller in and to the following assets and property whether now owned or existing or hereafter acquired or arising:

 

(i)                 the Receivables and all moneys received thereon after the close of business on July 31, 2011;

 

(ii)                the security interests in the Financed Vehicles and any accessions thereto granted by Obligors pursuant to the Receivables and any other interest of the Seller in such Financed Vehicles;

 

(iii)               any Liquidation Proceeds and Recoveries and any other proceeds with respect to the Receivables from claims on any theft, physical damage, credit life or disability insurance policies covering Financed Vehicles or Obligors, including any vendor’s single interest or other collateral protection insurance policy;

 

(iv)               any property that shall have secured a Receivable and that shall have been acquired by or on behalf of the Seller;

 

(v)                all documents and other items contained in the Receivable Files;

 

(vi)               all proceeds from any Receivable repurchased by a Dealer pursuant to a Dealer Agreement and all rights against BMW Bank pursuant to one or more bills of sale pursuant to which the Seller acquired the Receivables; and

 

(vii)              the proceeds of any and all of the foregoing (collectively, with the assets listed in clauses (i) through (vi) above, the “Conveyed Assets”).

 

(b)           For all non-tax purposes, the Seller and the Depositor intend that the transfer of assets by the Seller to the Depositor pursuant to this Agreement be a sale of the ownership interest in such assets to the Depositor, rather than the mere granting of a security

 

  

3

  

interest to secure a borrowing.  In the event, however, that such transfer is deemed not to be a sale but to be a grant of a mere security interest to secure a borrowing, the Seller shall be deemed to have hereby granted, and does hereby grant, to the Depositor a first priority security interest in all right, title and interest of the Seller in and to the Conveyed Assets, whether now owned or existing or hereafter acquired or arising, and all accounts, money, chattel paper, securities, instruments, documents, deposit accounts, certificates of deposit, letters of credit, advices of credit, banker’s acceptances, uncertificated securities, general intangibles, contract rights, goods and other property
consisting of, arising from or relating to such Conveyed Assets, which security interest shall be perfected, and this Agreement shall constitute a security agreement under applicable law.  Pursuant to the Sale and Servicing Agreement and Section 6.04 hereof, the Depositor may sell, transfer and assign to the Issuer (i) all or any portion of the assets assigned to the Depositor hereunder, (ii) all or any portion of the Depositor’s rights against the Seller under this Agreement and (iii) all proceeds thereof.  Such assignment may be made by the Depositor with or without an assignment by the Depositor of its rights under this Agreement, and without further notice to or acknowledgement from the Seller.  The Seller waives, to the extent permitted under applicable law, all claims, causes of action and remedies, whether legal or equitable (including any
right of setoff), against the Depositor or any assignee of the Depositor relating to such action by the Depositor in connection with the transactions contemplated by the Sale and Servicing Agreement.

 

SECTION 2.02  The Closing.  The sale and purchase of the Receivables shall take place at a closing at the offices of Bingham McCutchen LLP, 399 Park Avenue, New York, New York 10022 on the Closing Date, simultaneously with the closing under (a) the Sale and Servicing Agreement, (b) the Indenture and (c) the Trust Agreement.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.01  Representations and Warranties of the Depositor.  The Depositor hereby represents and warrants as follows to the Seller and the Indenture Trustee as of the date hereof and the Transfer Date:

 

(a)           Organization and Good Standing.  The Depositor is duly organized and validly existing as a limited liability company in good standing under the laws of the State of Delaware, with the power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted.

 

(b)           Due Qualification.  The Depositor is duly qualified to do business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals in all jurisdictions, including a license pursuant to the Pennsylvania Motor Vehicle Sales Finance Act and the Maryland Code Financial Institutions, Title 11, Subtitle 4, where the failure to do so would materially and adversely affect the Depositor’s ability to acquire the Receivables or the validity or enforceability of the Receivables.

 

(c)           Power and Authority.  The Depositor has the limited liability company power and authority to execute and deliver this Agreement and the other Basic Documents to

 

  

4

  

which it is a party and to carry out their respective terms; the Depositor has full power and  authority to sell and assign the property to be sold and assigned to and deposited with the Issuer, and the Depositor shall have duly authorized such sale and assignment to the Issuer by all necessary limited liability company action; and the execution, delivery and performance of this Agreement and the other Basic Documents to which the Depositor is a party have been duly authorized by the Depositor by all necessary limited liability company action.

 

(d)           Binding Obligation.  This Agreement and the other Basic Documents to which the Depositor is a party, when duly executed and delivered by the other parties hereto and thereto shall constitute legal, valid and binding obligations of the Depositor, enforceable against the Depositor in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and to general principles of equity (whether applied in a
proceeding at law or in equity).

 

(e)           No Violation.  The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the limited liability company agreement or certificate of formation of the Depositor, or any indenture, agreement or other instrument to which the Depositor is a party or by which it is bound, or violate any law, rules or regulation applicable to the Depositor of any court or federal or state
regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Depositor.

 

(f)           No Proceedings.  There are no proceedings or investigations pending or, to the Depositor’s knowledge, threatened against the Depositor before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Depositor or its properties (i) asserting the invalidity of this Agreement or any other Basic Document to which the Depositor is a party, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Basic Document to which the Depositor is a party or (iii)
seeking any determination or ruling that might materially and adversely affect the performance by the Depositor of its obligations under, or the validity or enforceability of, this Agreement or any other Basic Document to which the Depositor is a party.

 

(g)           No Consents.  The Depositor is not required to obtain the consent of any other party or any consent, license, approval, registration, authorization, or declaration of or with any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity, or enforceability of this Agreement or any other Basic Document to which it is a party that has not already been obtained.

 

(h)           The Depositor, and the Securities being offered in connection with the transactions described in this Agreement and the Basic Documents, meet the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the “Act”), and the Depositor has filed with the Commission the Registration Statement on such Form, including a related base prospectus and a preliminary prospectus supplement, for the registration under the Act of the offering and sale of the Securities.

 

 

  

5

  

(i)   On the date of this Agreement, the Registration Statement will comply in all material respects with the applicable requirements of the Act, and the respective rules and regulations of the Commission thereunder (the “Rules and Regulations”).

 

(j)           On the date of this Agreement, the Depositor is not aware of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threat of any proceeding for that purpose.

 

SECTION 3.02  Representations and Warranties of the Seller.

 

(a)           The Seller hereby represents and warrants as follows to the Depositor and the Indenture Trustee as of the date hereof and as of the Transfer Date:

 

(i)                 Organization and Good Standing.  The Seller has been duly  organized and is validly existing as a limited liability company under the laws of the State of Delaware, with the power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted.

 

(ii)                Due Qualification.  The Seller is duly authorized to transact business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals, in all  jurisdictions in which the ownership or lease of property or the conduct of its business shall require such qualifications and in which the failure to be so authorized would have a material adverse effect on the business, properties, assets, or condition (financial or other) of the Seller and its subsidiaries, considered as one
enterprise.

 

(iii)               Power and Authority; Binding Obligation.  The Seller has the  power and authority to make, execute, deliver and perform this Agreement and all of the transactions contemplated under this Agreement and the other Basic Documents to which the Seller is a  party, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other Basic Documents to which the Seller is a party.  When executed and delivered, this Agreement and the other Basic Documents to which the Seller
is a  party will constitute legal, valid and binding obligations of the Seller enforceable in accordance with their respective terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies.

 

(iv)               No Violation.  The execution, delivery and performance by the  Seller of this Agreement and the other Basic Documents to which the Seller is a party will not violate any provision of any existing  state, federal or, to the best knowledge of the Seller, local law or regulation or any order or decree of any court applicable to the Seller or any provision of the limited liability company agreement of the Seller, or constitute a breach of any

 

  

6

  

mortgage, indenture, contract or other agreement to which the Seller is a party or by which the Seller may be bound or result in the creation or imposition of any lien upon any of the Seller’s properties pursuant to any such mortgage, indenture, contract or other agreement (other than this Agreement).

 

(v)                No Proceedings.  There are no proceedings or investigations pending or, to the Seller’s knowledge, threatened against the Seller before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties (i) asserting the invalidity of this Agreement or any other Basic Document, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any other Basic Document or (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, this  Agreement or any other Basic Document.

 

(vi)               Chief Executive Office and Principal Place of Business.  The chief executive office and the principal place of business of the Seller for the previous five years is 300 Chestnut Ridge Road, Woodcliff Lake, New Jersey 07677.

 

(vii)              No Consents.  The Seller is not required to obtain the consent of any other party or any consent, license, approval, registration, authorization, or declaration of or with any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity, or enforceability of this Agreement or any other Basic Document to which it is a party that has not already been obtained.

 

(viii)             No Notice.  The Seller represents and warrants that it acquired title to the Receivables in good faith, without notice of any adverse claim.

 

(ix)                Bulk Transfer.  The Seller represents and warrants that the transfer, assignment and conveyance of the Receivables by the Seller pursuant to this Agreement is not subject to the bulk transfer laws or any similar statutory provisions in effect in any applicable jurisdiction.

 

(x)                 Seller Information.  No certificate of an officer, statement or document furnished in writing or report delivered pursuant to the terms hereof by the Seller contains any untrue statement of a material fact or omits to state any material fact necessary to make the certificate, statement, document or report not misleading.

 

(xi)                Ordinary Course.  The transactions contemplated by this Agreement and the other Basic Documents to which the Seller is a party are in the ordinary course of the Seller’s business.

 

  

7

  

(xii)               Solvency.  The Seller is not insolvent, nor will the Seller be made insolvent by the transfer of the Receivables, nor does the Seller anticipate any pending insolvency.

 

(xiii)              Legal Compliance.  The Seller is not in violation of, and the execution and delivery of this Agreement and the other Basic Documents to which the Seller is a party by it and its performance and compliance with the terms of this Agreement and the other Basic Documents to which the Seller is a party will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction, which violation would materially and adversely affect the Seller’s
condition (financial or otherwise) or operations or any of the Seller’s properties or materially and adversely affect the performance of any of its duties under the Basic Documents.

 

(xiv)              Creditors.  The Seller is not selling the Receivables to the Depositor with any intent to hinder, delay or defraud any of its creditors.

 

(b)           The Seller makes the following representations and warranties with respect to the Receivables, on which the Depositor relies in accepting the Receivables and in transferring the Receivables to the Issuer under the Sale and Servicing Agreement, and on which the Issuer relies in pledging the same to the Indenture Trustee.  Such representations and warranties speak as of the execution and delivery of this Agreement and as of the Transfer Date, but shall survive the sale, transfer and assignment of the Receivables to the Depositor, the subsequent sale, transfer and assignment
of the Receivables by the Depositor to the Issuer pursuant to the Sale and Servicing Agreement and the pledge of the Receivables by the Issuer to the Indenture Trustee pursuant to the Indenture and with respect to the representations and warranties set forth in paragraphs (lii) through (lviii) below, shall be non-waivable.

 

(i)                 Characteristics of Receivables.  Each Receivable (A) was originated in the United States of America by a Dealer located in the United States of America for the retail sale of a Financed Vehicle in the ordinary course of such Dealer’s business in accordance with the Seller’s credit policies as of the date of origination or acquisition of the related Receivable, is payable in United States dollars, has been fully and properly executed or electronically authenticated by the parties thereto, has been purchased by the Seller or
BMW Bank from such Dealer under an existing Dealer Agreement and has been validly assigned by such Dealer to the Seller or by such Dealer to BMW Bank, which has validly assigned the same to the Seller, except that certain Receivables originated through the “Lease to Loan” program were not originated by Dealers, but directly by the Seller or BMW Bank and to the best of the Seller’s knowledge was so originated or sold without fraud or misrepresentation on the part of such Dealer in either case, (B) has created a valid, subsisting and enforceable first priority perfected security interest in favor of the Seller in the Financed Vehicle, which security interest is assignable by the Seller to the Depositor, and by the Depositor to the Issuer, (C) contains customary and enforceable provisions such that the rights and

 

  

8

  

remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security, (D) provides for fixed level monthly payments (provided that the payment in the last month of the term of the Receivable may be different from the level scheduled payments) that fully amortize the Amount Financed by maturity and yield interest at the APR and (E) amortizes using the Simple Interest Method.

 

(ii)                 Compliance with Law.  Each Receivable and the sale of the related Financed Vehicle complied at the time it was originated or made, and at the time of execution of this Agreement complies, in all material respects with all requirements of applicable federal, state and, to the best knowledge of the Seller, local laws, rulings and regulations thereunder, including usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations “B” and “Z,” the Servicemembers Civil Relief Act, as amended (the “Relief Act”), the Military Reservist Relief Act of 1991, as amended, and state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code, and other consumer credit laws and equal credit opportunity and disclosure laws applicable to such Receivable.

 

(iii)                Binding Obligation.  Each Receivable represents the genuine, legal, valid and binding payment obligation of the Obligor thereon, enforceable by the holder thereof in accordance with its terms, except (A) as enforceability thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law and (B) as such
Receivable may be modified by the application after the Transfer Date of the Relief Act or the Military Reservist Relief Act of 1991, as amended.

 

(iv)                No Government Obligor.  No Receivable is due from the United States of America or any State or any agency, department, subdivision or instrumentality thereof.

 

(v)                 Obligor Bankruptcy.  To the best of the Seller’s knowledge, as of the Cutoff Date with respect to the Receivables, no Obligor is or has been, since the origination of the related Receivable, the subject of a bankruptcy proceeding.

 

(vi)                Schedule of Receivables.  The information set forth in Schedule I to this Agreement is true and correct in all material respects as of the close of business on the Cutoff Date.

 

  

9

  

(vii)               Marking Records.  By the Transfer Date, the Seller will have caused its computer and accounting records relating to each Receivable to be marked to show that such Receivables have been sold to the Depositor by the Seller and transferred and assigned by the Depositor to the Issuer in accordance with the terms of the Sale and Servicing Agreement and pledged by the Issuer to the Indenture Trustee in accordance with the terms of the Indenture.

 

(viii)              Computer Tape.  The computer tape regarding the Receivables made available by the Seller to the Depositor is complete and accurate in all material respects as of the Cutoff Date.

 

(ix)                 No Adverse Selection.  No selection procedures (other than those specified herein) believed by the Seller to be adverse to the Noteholders or the Certificateholders were utilized in selecting the Receivables.

 

(x)                  [Reserved.]

 

(xi)                 One Original.  With respect to any Receivable constituting “electronic chattel paper”, there is only one “authoritative copy” of the Receivable and with respect to any Receivable constituting “tangible chattel paper”, there is no more than one original executed copy of such Receivable and none of the “instruments”, “tangible chattel paper” or “electronic chattel paper” that constitute or evidence the Receivables has any marks or notations indicating that it has
been pledged, assigned or otherwise conveyed to any Person other than to the Depositor, the Trust or the Indenture Trustee.  All quoted terms are used as such term is used in the UCC.

 

(xii)                Receivables in Force.  No Receivable has been satisfied, subordinated or rescinded, nor has any Financed Vehicle been released from the Lien of the related Receivable in whole or in part.  None of the terms of any Receivable has been waived, altered or modified in any respect since its origination, except by instruments or documents identified in the related Receivable File.  No Receivable has been modified as a result of the application of the Relief Act or the Military Reservist Relief Act of 1991, as
amended.

 

(xiii)               Lawful Assignment.  No Receivable has been originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer and assignment of such Receivable under this Agreement or the Sale and Servicing Agreement, as applicable, or the pledge of such Receivable under the Indenture.

 

(xiv)               Title.  It is the intention of the Seller that the transfers and assignments herein contemplated constitute sales of the Receivables from the Seller to the Depositor and that the beneficial interest in and title to the Receivables not be part of the debtor’s estate in the event of the appointment

 

  

10

  

of a receiver or conservator for the Seller under any receivership, bankruptcy law, insolvency or banking law.  Immediately prior to the Closing Date, no Receivable has been sold, transferred, assigned or pledged by the Seller to any Person other than to the Depositor or pursuant to this Agreement (or by the Depositor to any other Person other than to the Issuer pursuant to the Sale and Servicing Agreement).  Immediately prior to the transfers and assignments herein contemplated, the Seller has good and marketable title to each Receivable free and clear of all Liens, and, immediately upon the transfer thereof, the Depositor shall have good and marketable title to each Receivable, free and clear
of all Liens and, immediately upon the transfer thereof from the Depositor to the Issuer pursuant to the Sale and Servicing Agreement, the Issuer shall have good and marketable title to each Receivable, free and clear of all Liens and, immediately upon the pledge thereof from the Issuer to the Indenture Trustee pursuant to the Indenture, the Indenture Trustee shall have a first priority perfected security interest in each Receivable.

 

(xv)                Security Interest in Financed Vehicle.  Immediately prior to its sale, assignment and transfer to the Depositor pursuant to this Agreement, each Receivable is secured by a first priority perfected security interest in the related Financed Vehicle in favor of BMW FS as secured party, or all necessary and appropriate actions have been commenced that will result in the valid perfection of a first priority security interest in such Financed Vehicle in favor of BMW FS as secured party.  The Lien Certificate for each Financed Vehicle
shows, or if a new or replacement Lien Certificate is being applied for with respect to such Financed Vehicle such Lien Certificate shall be received within 120 days of the Closing Date and shall show, BMW FS or BMW Bank named as the original secured party under each Receivable as the holder of a first priority security interest in such Financed Vehicle.  With respect to each Receivable for which the Lien Certificate has not yet been returned from the Registrar of Titles, BMW FS has received written evidence that such Lien Certificate showing BMW FS or BMW Bank as first lienholder has been applied for.  Each Dealer’s security interest in any Receivable originated by such Dealer has been validly assigned by the Dealer to BMW FS or to BMW Bank, which has validly assigned it to BMW FS.  BMW FS’ security interest has been validly assigned to the
Depositor pursuant to this Agreement.  BMW FS has the legal right to repossess or recover by legal process the Financed Vehicle in its name.

 

(xvi)               All Filings Made.  All filings (including UCC filings) required to be made in any jurisdiction to give the Issuer a first perfected ownership interest in the Conveyed Assets and the Indenture Trustee a first priority perfected security interest in the Conveyed Assets have been made or will be made on the Closing Date.

 

(xvii)              No Defenses.  No Receivable is subject to any right of rescission, setoff, counterclaim, dispute or defense, including the defense of

 

  

11

  

usury, whether arising out of transactions concerning the Receivable or otherwise, and the operation of any terms of the Receivable or the exercise by the Seller or the Obligor of any right under the Receivable will not render the Receivable unenforceable in whole or in part, and no such right of rescission, setoff, counterclaim, dispute or defense, including the defense of usury, has been asserted with respect thereto.

 

(xviii)             No Default.  There has been no default, breach, violation or event permitting acceleration under the terms of any Receivable (other than payment delinquencies of not more than 30 days) as of the Cutoff Date, and no condition exists or event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of any Receivable, and there has been no waiver of any of the foregoing.  On or prior to the Transfer Date, no Financed Vehicle has been
repossessed.

 

(xix)                Insurance.  The Seller, in accordance with its customary procedures, has determined that the Obligor has obtained physical damage insurance covering each Financed Vehicle and, under the terms of the related Receivable, the Obligor is required to maintain such insurance.

 

(xx)                 Final Scheduled Maturity Date.  No Receivable has a final scheduled payment date later than six months prior to the Class A-4 Final Scheduled Payment Date.

 

(xxi)                Certain Characteristics of the Receivables.  As of the Cutoff Date, (A) each Receivable had an original maturity of not less than 15 or more than 72 months and (B) no Receivable was more than 29 days past due.

 

(xxii)               No Foreign Obligor.  All of the Receivables are due from Obligors with billing addresses within the United States of America, its territories and possessions.

 

(xxiii)              No Deferments.  The number or timing of scheduled payments has not been changed on any Receivable on or before the Closing Date, except as reflected on the computer tape delivered in connection with the sale of the Receivables.

 

(xxiv)              Scheduled Payments.  Each Receivable had a first scheduled payment due on or prior to 45 calendar days after the origination date thereof.  Each Obligor has been instructed to make all scheduled payments to BMW FS.  To the best knowledge of the Seller, each Obligor has paid the entire down payment called for by the Contract.

 

(xxv)               Receivable Files Complete.  There exists a Receivable File pertaining to each Receivable and such Receivable File contains, without limitation, (A) a fully executed or electronically authenticated original of the

 

  

12

  

Receivable, (B) the original Lien Certificate or application therefor together with such other documents that the Seller shall keep on file in accordance with its customary procedures evidencing the security interest of the Seller in the related Financed Vehicle, and (C) any and all other documents that the Servicer shall have kept on file in accordance with its customary procedures relating to a Receivable, an Obligor or a Financed Vehicle.  Each of such documents that is required to be signed by the Obligor has been signed by the Obligor in the appropriate spaces.  All blanks on any form described in clauses (A), (B) and (C) of this paragraph have been properly filled in and each form has
otherwise been correctly prepared in all material respects.  Notwithstanding the above, the complete Receivable File for each Receivable, (x) shall fulfill the documentation requirements of the Seller’s credit policies as in effect on the date of origination of such Receivable and (y) is in possession of the Servicer and/or Custodian, as applicable, at the location set forth on Schedule II hereto (except that, in the case of any Receivable constituting “electronic chattel paper”, the “authoritative copy” (as such term is used in Section 9-105 of the UCC) of such Receivable shall be maintained by the Servicer in a computer system such that the Servicer maintains “control” (as such term is used in Section 9-105 of the UCC) over such authoritative copy on the Transfer Date.  The blanket power of attorney granted to the Indenture
Trustee and the original Lien Certificate are the only documents necessary to permit the Indenture Trustee to submit the Lien Certificate for each Financed Vehicle for retitling in the name of the Indenture Trustee as secured party in the event such retitling were required or otherwise permitted under the Basic Documents.

 

(xxvi)              Receivables Not Assumable.  No Receivable is assumable by another person in a manner which would release the Obligor thereof from such Obligor’s obligations to the Seller with respect to such Receivable.

 

(xxvii)             Tax Liens.  To the best of the Seller’s knowledge, there is no Lien against any Financed Vehicle for delinquent taxes.

 

(xxviii)            No Impairment.  The Seller has not done anything to convey any right to any person that would result in such person having a right to payments due under a Receivable or otherwise to impair the rights of the Depositor in any Receivable or the proceeds thereof.

 

(xxix)               Servicing.  Each Receivable has been serviced in conformity with all applicable laws, rules and regulation and in conformity with the Seller’s policies and procedures which are consistent with customary, prudent industry standards.

 

(xxx)                No Liens.  No Liens or claims have been filed for work, labor, or materials relating to a Financed Vehicle that are prior to, or equal or coordinate with, the security interest in the Financed Vehicle granted by the related Receivable.

 

  

13

  

(xxxi)               APR.  No Receivable has an APR of less than 0.01% and the weighted average coupon on the pool of Receivables is at least 3.22%.

 

(xxxii)              Remaining Term.  Each Receivable has a remaining term of at least 6 months and no more than 72 months.

 

(xxxiii)             Seasoning.  The weighted average number of months since the initial installment due date for the Receivables is at least 11 months.

 

(xxxiv)             Remaining Balance.  Each Receivable has a remaining balance of at least $1,761.

 

(xxxv)              New Vehicles.  At least 49.73% of the aggregate principal balance of the Receivables is secured by Financed Vehicles which were new at the date of origination.

 

(xxxvi)             No Repossessions.  No Financed Vehicle has been repossessed prior to the Transfer Date.

 

(xxxvii)            Initial Payment.  The Obligor with respect to each Receivable has made at least one scheduled payment.

 

(xxxviii)           No Proceedings.  As of the Cutoff Date, there are no proceedings pending, or to the best of the Seller’s knowledge, threatened, wherein the Obligor or any governmental agency has alleged that any Receivable is illegal or unenforceable.

 

(xxxix)              Dealer Agreement.  Each Dealer from whom the Seller (or BMW Bank) purchases Receivables directly has entered into a Dealer Agreement with the Seller (or BMW Bank) providing for the sale of Receivables from time to time by such Dealer to the Seller (or BMW Bank).  Each Dealer Agreement is substantially in the form attached to the Sale and Servicing Agreement as Exhibit D, except for immaterial modifications or deviations from the Dealer Agreement.  Such modifications and deviations from the Dealer Agreement will not have a material
adverse effect on the Noteholders.

 

(xl)                   Obligations Fulfilled.  To the best of its knowledge, BMW FS has duly fulfilled all obligations to be fulfilled on its part under or in connection with the origination, acquisition and assignment of the Receivables.

 

(xli)                  No Consent.  To the best of the Seller’s knowledge, no notice to or consent from any Obligor is necessary to effect the acquisition of the Receivables by the Depositor or the Trust or the pledge of the Receivables by the Trust to the Indenture Trustee.

 

  

14

  

(xlii)                 No Transfer Taxes.  The sale, transfer, assignment and conveyance of the Receivables by the Seller pursuant to this Agreement is not subject to and will not result in any tax, fee or governmental charge payable by the Depositor, the Seller, the Issuer or the Indenture Trustee to any federal, state or local government (“Transfer Taxes”) other than Transfer Taxes which have or will be paid by the Seller as due.  In the event the Depositor, the Issuer or the Indenture Trustee receives actual notice of any Transfer
Taxes arising out of the transfer, assignment and conveyance of the Receivables, on written demand by the Depositor, the Issuer or the Indenture Trustee, or upon the Seller’s otherwise being given notice thereof by the Depositor, the Issuer or the Indenture Trustee, the Seller shall pay, and otherwise indemnify and hold the Depositor, the Issuer and the Indenture Trustee harmless, on an after-tax basis, from and against any and all such Transfer Taxes (it being understood that the Depositor, the Noteholders, the Indenture Trustee and the Issuer shall have no obligation to pay such Transfer Taxes).

 

(xliii)                Aggregate Balance.  The aggregate principal balance of the Receivables as of the Cutoff Date is equal to $1,334,182,794.79.

 

(xliv)                Geographic Distribution.  No more than 5.00% of the aggregate principal balance of the Receivables as of the Cutoff Date is attributable to Receivables with Obligors having a billing address in any single State other than California, Texas, New Jersey, Florida and New York which represent no more than 22.06%, 10.20%, 7.80%, 7.40% and 5.17%, respectively.

 

(xlv)                 No Advances.  No advances have been made to Obligors in order to meet any representation and warranties herein set forth; provided, however, that Receivables may have had up to four deferments prior to the Cutoff Date, subject to the following: (A) each such deferment was made in conformity with the Seller’s “Collection and Servicing Guidelines” and (B) each deferred Receivable satisfies in all material respects all applicable requirements under BMW FS’ credit and collection policies as of the date of its
origination.

 

(xlvi)                Amount Financed.  At the time each Receivable was acquired from the Dealer, the Amount Financed was fully disbursed.  There is no requirement for future advances of principal thereunder, and all fees and expenses in connection with the origination of such Receivable have been paid.

 

(xlvii)               Tape.  The computer tape from which the selection of the Receivables being acquired on the Closing Date was made available to the accountants that are providing comfort letters to the Depositor and the Underwriters in connection with the numerical information regarding the Receivables and the Notes contained in the Preliminary Prospectus and the Final Prospectus and such information in the Preliminary Prospectus and the

 

  

15

  

Final Prospectus with respect to the Receivables and the Notes was complete and accurate as of its date and includes a description of the same Receivables that are described in Schedule I to this Agreement.

 

(xlviii)              Insurance.  In connection with the purchase of each Receivable, the Seller (or BMW Bank) required the related Dealer to supply information that a physical damage insurance policy covers the related Financed Vehicle: (i) in an amount at least equal to the lesser of (a) the actual cash value of the related Financed Vehicle or (b) the unpaid principal balance owing on such Receivable, (ii) naming the Seller (or BMW Bank) as a loss payee and (iii) insuring against loss and damage due to fire, theft, transportation, collision and other risks generally
covered by comprehensive and collision coverage.

 

(xlix)                 Dealer Agreement Binding.  Each Dealer that sold a Receivable to BMW FS (or BMW Bank) has entered into a Dealer Agreement and such Dealer Agreement, together with the assignment and related documentation signed by the Dealer, constitutes the entire agreement between BMW FS (or BMW Bank) and the related Dealer with respect to the sale of such Receivable to BMW FS (or BMW Bank).  Each such Dealer Agreement is in full force and effect and is the legal, valid and binding obligation of such Dealer; there have been no material
defaults by BMW FS (or BMW Bank) under such Dealer Agreement; BMW FS (or BMW Bank) has fully performed all of its obligations under such Dealer Agreement; BMW FS (or BMW Bank) has not made any statements or representations to such Dealer (whether written or oral) inconsistent with any term of such Dealer Agreement; the purchase price (as specified in the applicable Dealer Agreement) for such Receivable has been paid in full, other than any dealer reserve, by BMW FS (or BMW Bank); and any payment owed to such Dealer by BMW FS (or BMW Bank) is a corporate obligation of BMW FS (or BMW Bank).

 

(l)                     Good Working Order.  Each Receivable requires the Obligor to maintain the related Financed Vehicle in good and workable order and to obtain and maintain physical damage insurance on the related Financed Vehicle subject thereto and to name the Seller as a loss payee.

 

(li)                    No Consumer Lease.  No Receivable constitutes a “consumer lease” under either (a) the UCC as in effect in the jurisdiction whose law governs the Receivable or (b) the Consumer Leasing Act, 15 USC 1667.

 

(lii)                   Valid Security Interest.  This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Conveyed Assets in favor of the Depositor, which security interest is prior to all other Liens, and is enforceable as such as against creditors of and purchasers from the Seller.

 

  

16

  

(liii)                  Perfection.  The Seller has taken all steps necessary to perfect its security interest against the Obligors in the property securing the Receivables.

 

(liv)                 Chattel Paper.  Each Receivable constitutes “tangible chattel paper” or “electronic chattel paper” within the meaning of the applicable UCC.

 

(lv)                   Good and Marketable Title.  The Seller owns and has good and marketable title to the Receivables free and clear of any Lien, claim or encumbrance of any Person.

 

(lvi)                  Filing of Financing Statements.  The Seller has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Receivables granted to the Depositor hereunder.

 

(lvii)                 Other Financing Statements.  Other than the security interest granted to the Depositor pursuant to this Agreement, the Seller has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Conveyed Assets.  The Seller has not authorized the filing of and is not aware of any financing statements against the Seller that include a description of collateral covering the Conveyed Assets other than any financing statement relating to the security interest granted to the Depositor hereunder or
that has been terminated.  The Seller is not aware of any judgment or tax lien filings against the Seller.

 

(lviii)                Original Contracts.  The Seller has in its possession all original copies of the Contracts that constitute or evidence the Receivables (or, in the case of each Receivable constituting “electronic chattel paper” the custodian has “control” (as such term is used in Section 9-105 of the UCC) of each such Receivable).  The Contracts that constitute or evidence the Receivables do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the
Depositor.  All financing statements filed or to be filed against the Seller in favor of the Depositor in connection herewith describing the Receivables contain a statement to the following effect: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Depositor.”

 

SECTION 3.03  Perfection Representations, Warranties and Covenants. The Seller hereby makes the perfection representations, warranties and covenants set forth on Schedule III hereto to the Depositor and the Depositor shall be deemed to have relied on such representations, warranties and covenants in acquiring the Receivables.

 

  

17

  

ARTICLE IV

 

CONDITIONS

 

SECTION 4.01  Conditions to Obligation of the Depositor.  The obligation of the Depositor to purchase the Receivables is subject to the satisfaction of the following conditions:

 

(a)           Representations and Warranties True.  The representations and warranties of the Seller hereunder shall be true and correct on the Transfer Date with the same effect as if then made, and the Seller shall have performed all obligations to be performed by it hereunder on or prior to the Transfer Date.

 

(b)           Computer Files Marked.  The Seller shall, at its own expense, on or prior to the Transfer Date, indicate in its computer files that the Receivables have been sold to the Depositor by the Seller pursuant to this Agreement and transferred and assigned by the Depositor to the Issuer in accordance with the terms of the Sale and Servicing Agreement and pledged by the Issuer to the Indenture Trustee in accordance with the Indenture and deliver to the Depositor the Schedule of Receivables, certified by the Seller’s President, Vice President or Treasurer to be true, correct
and complete.

 

(c)           Documents To Be Delivered by the Seller on the Transfer Date:

 

(i)      Evidence of UCC Filing.  On or prior to the Closing Date, the Seller shall record and file, at its own expense, a UCC-1 financing statement in the State of Delaware and the State of Ohio and in each other jurisdiction required by applicable law, executed by the Seller, as seller or debtor, and naming the Depositor, as secured party, describing the Receivables and the other assets assigned to the Depositor pursuant to Section 2.01 hereof meeting the requirements of the laws of each such jurisdiction and in such manner as is necessary to perfect the sale, transfer, assignment and conveyance of the
Receivables and such other assets to the Depositor.  The Seller shall deliver to the Depositor a file-stamped copy or other evidence satisfactory to the Depositor of such filing on or prior to the Transfer Date.

 

(ii)      Opinions of Seller’s Counsel.  On or prior to the Closing Date, the Depositor shall have received the opinions of counsel to the Seller, in form and substance satisfactory to the Depositor, as to the matters set forth in Exhibit A hereto and such other matters as the Depositor has heretofore requested or may reasonably request.

 

(iii)     Other Documents.  Such other documents as the Depositor may reasonably request.

 

(d)           Other Transactions.  The transactions contemplated by the Sale and Servicing Agreement, the Indenture and the Trust Agreement to be consummated on the Transfer Date shall be consummated on such date.

 

  

18

  

SECTION 4.02  Conditions to Obligation of the Seller.  The obligation of the Seller to sell the Receivables to the Depositor is subject to the satisfaction of the following conditions:

 

(a)           Representations and Warranties True.  The representations and warranties of the Depositor hereunder shall be true and correct on the Transfer Date with the same effect as if then made, and the Depositor shall have performed all obligations to be performed by it hereunder on or prior to the Transfer Date.

 

(b)           Receivables Purchase Price.  On the Transfer Date, the Depositor shall have delivered to the Seller the Purchase Price.

 

(c)           Opinion of Counsel.  The Depositor shall have furnished to the Seller an opinion of counsel, dated the Closing Date, to the effect that:

 

(i)      the Depositor has been duly formed and is validly existing as a limited liability company in good standing under the laws of the State of Delaware, with full power and authority to own its properties and conduct its business as described in the Prospectus;

 

(ii)     each of this Agreement, the Sale and Servicing Agreement and the Trust Agreement has been duly authorized, executed and delivered by the Depositor and constitutes a legal, valid and binding obligation of the Depositor, enforceable against the Depositor in accordance with its terms except as limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, receivership, conservatorship or similar laws relating to or affecting creditors’ rights generally or the rights of creditors, and except that such counsel need express no opinion as to the availability of equitable remedies or the
enforceability of rights of indemnification for violations of federal securities laws;

 

(iii)    no consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required for the consummation by the Depositor of the transactions contemplated herein or in the Sale and Servicing Agreement, the Trust Agreement or the Indenture, except such as may be required under the blue sky or securities laws of any jurisdiction in connection with the purchase and sale of the Notes by the Underwriters, the filing of the UCC-1 financing statements relating to the conveyance of the Receivables and the Conveyed Assets (as defined herein) by the Seller to the Depositor and of the Receivables
and the Conveyed Assets (as defined in the Sale and Servicing Agreement)by the Depositor to the Trust and of the Collateral by the Trust to the Indenture Trustee for the benefit of the Noteholders and the filing of the UCC-1 financing statement relating to the security interests in the Eligible Investments included in the Reserve Account, and such other approvals (which shall be specified in such opinion) as have been obtained and such filings as have been made or are in the process of being made; and

 

  

19

  

(iv)    none of the issue and sale of the Notes and Certificates, the execution and delivery of this Agreement, the Sale and Servicing Agreement or the Trust Agreement, the consummation of any other of the transactions herein or therein contemplated or the fulfillment of the terms hereof or thereof will conflict with, result in a breach or violation of, or constitute a default under, the limited liability company agreement or certificate of formation of the Depositor or the terms of any indenture or other agreement or instrument known to such counsel and to which the Depositor is a party or by which it is bound, or any judgment,
order or decree known to such counsel to be applicable to the Depositor of any court, regulatory body, administrative agency, governmental body, or arbitrator having jurisdiction over the Depositor.

 

(d)           Other Transactions.  The transactions contemplated by the Sale and Servicing Agreement, the Indenture and the Trust Agreement to be consummated on the Transfer Date shall be consummated on such date.

 

ARTICLE V

 

COVENANTS OF THE SELLER AND THE DEPOSITOR

 

The Seller and the Depositor agree with each other, respectively, and the Indenture Trustee as follows:

 

SECTION 5.01  Protection of Right, Title and Interest.

 

(a)           Filings.  The Seller shall cause at its own expense all financing statements and continuation statements and any other necessary documents covering the right, title and interest of the Seller, the Depositor, the Trust and the Indenture Trustee, respectively, in and to the Receivables and the other property included in the Trust Estate to be promptly filed and at all times to be kept recorded, registered and filed, all in such manner and in such places as may be required by law fully to preserve and protect the right, title and interest of the Depositor hereunder, the Trust
under the Sale and Servicing Agreement and the Indenture Trustee under the Indenture in and to the Receivables and the other property included in the Trust Estate.  The Seller shall deliver to the Depositor and the Indenture Trustee file-stamped copies of, or filing receipts for, any document recorded, registered or filed as provided above, as soon as available following such recordation, registration or filing.  The Depositor shall cooperate fully with the Seller in connection with the obligations set forth above and will execute any and all documents reasonably required to fulfill the intent of this paragraph.

 

(b)           Name Change.  If the Seller makes any change in its jurisdiction of organization (within the meaning of the applicable UCC), name or corporate structure that would make any financing statement or continuation statement filed in accordance with paragraph (a) above seriously misleading within the applicable provisions of the UCC or any title statute, the Seller shall give the Depositor, the Indenture Trustee and the Owner Trustee written notice thereof at least 45 days prior to such change and shall promptly file such financing statements or

 

  

20

  

amendments as may be necessary to continue the perfection of the Depositor’s interest in the Conveyed Assets.

 

SECTION 5.02  Other Liens or Interests.  Except for the conveyances hereunder and pursuant to the Basic Documents, the Seller shall not sell, pledge, assign or transfer to any Person, or grant, create, incur, assume, or suffer to exist any Lien on, or any interest in, to or under the Conveyed Assets, and the Seller shall defend the right, title and interest of the Depositor, the Trust and the Indenture Trustee in, to and under the Conveyed Assets against all claims of third parties claiming through or under the Seller.

 

SECTION 5.03  Costs and Expenses.  BMW FS agrees to pay all reasonable costs and disbursements in connection with the perfection, as against all third parties, of the Depositor’s, the Issuer’s and the Indenture Trustee’s right, title and interest in and to the Receivables and the other property included in the Trust Estate.

 

SECTION 5.04  Hold Harmless.  BMW FS shall protect, defend, indemnify and hold the Depositor, the Issuer, the Noteholders, the Underwriters and their respective assigns and their employees, officers and directors harmless from and against all losses, liabilities, claims and damages of every kind and character, including any legal or other expenses reasonably incurred, as incurred, resulting from or relating to or arising out of (i) the inaccuracy, nonfulfillment or breach of any representation, warranty, covenant or agreement made by the Seller in this Agreement, (ii) any legal action, including, without limitation, any
counterclaim, that has either been settled by the litigants or has proceeded to judgment by a court of competent jurisdiction, in either case to the extent it is based upon alleged facts that, if true, would constitute a breach of any representation, warranty, covenant or agreement made by the Seller in this Agreement, or (iii) any failure of a Receivable to be originated in compliance with all applicable requirements of law.  These indemnity obligations shall be in addition to any obligation that the Seller may otherwise have.

 

ARTICLE VI

 

MISCELLANEOUS PROVISIONS

 

SECTION 6.01  Obligations of Seller.  The obligations of the Seller under this Agreement shall not be affected by reason of any invalidity, illegality or irregularity of any Receivable.

 

SECTION 6.02  Repurchase Events.  The Seller hereby covenants and agrees with the Depositor for the benefit of the Depositor, the Indenture Trustee, the Issuer, the Owner Trustee, the Certificateholders and the Noteholders that the occurrence of a breach of any of the Seller’s representations and warranties contained in Section 3.02 and Section 3.03 that materially and adversely affects the interests of the Issuer, the Indenture Trustee, the Owner Trustee, the Certificateholders or the Noteholders in any Receivable, without regard to any limitation set forth in such representation or warranty concerning the knowledge of the
Seller as to the facts stated therein shall constitute an event obligating the Seller to repurchase the Receivables to which such failure or breach is applicable, at the Purchase Amount from the Issuer on or before the last day of the second Collection Period following the Collection Period in which it discovers

 

  

21

  

or receives notice of such failure or breach (or, at the Seller’s election the last day of the first Collection Period following the Collection Period in which it discovers or receives notice of such breach), unless any such failure or breach shall have been cured in all material respects by such date.

 

SECTION 6.03  Depositor Assignment of Repurchased Receivables.  With respect to all Receivables repurchased by the Seller pursuant to this Agreement, the Depositor shall assign, without recourse, representation or warranty, to the repurchasing Seller all of the Depositor’s right, title and interest in and to such Receivables and all security and documents relating thereto.

 

SECTION 6.04  Transfer to the Issuer.  The Seller acknowledges and agrees that (1) the Depositor will, pursuant to the Sale and Servicing Agreement, transfer and assign the Conveyed Assets and assign its rights under this Agreement with respect thereto to the Issuer and, pursuant to the Indenture, the Issuer will pledge the Conveyed Assets to the Indenture Trustee, and (2) the representations and warranties contained in this Agreement and the rights of the Depositor under this Agreement, including under Section 6.02, are intended to benefit the Issuer and the Noteholders.  The Seller hereby consents to such transfers and
assignments and agrees that enforcement of a right or remedy hereunder by the Indenture Trustee, the Owner Trustee or the Issuer shall have the same force and effect as if the right or remedy had been enforced or executed by the Depositor.

 

SECTION 6.05  Amendment.  This Agreement may be amended from time to time, with prior written notice to the Rating Agencies, but without the consent of the Noteholders or the Certificateholders, by a written amendment duly executed and delivered by the Seller and the Depositor, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of Noteholders or Certificateholders; provided that such amendment shall not, as evidenced by an Opinion of Counsel, materially and adversely affect the interest of any Noteholder or
Certificateholder; provided further, that such action shall be deemed not to adversely affect in any material respect the interests of any Noteholder or Certificateholder and no Opinion of Counsel to that effect shall be required if the Rating Agency Condition is satisfied.  This Agreement may also be amended by the Seller and the Depositor, with prior written notice to the Rating Agencies and the prior written consent of Holders of Notes evidencing at least a majority of the Outstanding Amount of the Notes and the Holders (as defined in the Trust Agreement) of outstanding Certificates evidencing not less than a majority of the outstanding aggregate Certificate Percentage Interest (as defined in the Trust Agreement), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the
rights of the Noteholders or the Certificateholders; provided, however, that no such amendment may (i) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Receivables or distributions that are required to be made for the benefit of Noteholders or Certificateholders or (ii) reduce the aforesaid percentage of the Notes or the Certificates that is required to consent to any such amendment, without the consent of the Holders of all the Outstanding Notes and all of the Certificates.

 

  

22

  

SECTION 6.06  Waivers.  No failure or delay on the part of the Depositor, the Issuer or the Indenture Trustee in exercising any power, right or remedy under this Agreement or any bill of sale shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy.

 

SECTION 6.07  Notices.  All demands, notices and communications under this Agreement shall be in writing, personally delivered, faxed and followed by first class mail, or mailed by certified mail, return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Depositor, to 300 Chestnut Ridge Road, Woodcliff Lake, New Jersey 07677, Attention: Vice President-Finance & CFO; (b) in the case of the Servicer, Administrator and Custodian, to 300 Chestnut Ridge Road, Woodcliff Lake, New Jersey 07677, Attention: Vice President of-Finance & CFO; (c) in the case of the Seller, 300 Chestnut
Ridge Road, Woodcliff Lake, New Jersey 07677, Attention: Vice President of Finance & CFO; (d) in the case of the Issuer or the Owner Trustee, at the Corporate Trust Office (as defined in the Trust Agreement); (e) in the case of Moody’s, to 7 World Trade Center, 250 Greenwich Street, 25th Floor, New York, New York 10007, Attention: ABS/RMBS Monitoring Department, Email: ServicerReports@moodys.com; and (f) in the case of Fitch, to One State Street Plaza, New York, New York 10004, Email: notifications.abs@fitchratings.com, Fax: 212-514-9879; or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.

 

SECTION 6.08  Costs and Expenses.  The Seller shall pay all expenses incident to the performance of its obligations under this Agreement and the Seller agrees to pay all reasonable out-of-pocket costs and expenses of the Depositor, in connection with the perfection as against third parties of the Depositor’s, the Issuer’s and the Indenture Trustee’s right, title and interest in and to the Receivables and the enforcement of any obligation of the Seller hereunder.

 

SECTION 6.09  Representations of the Seller and the Depositor.  The respective agreements, representations, warranties and other statements by the Seller and the Depositor set forth in or made pursuant to this Agreement shall remain in full force and effect and will survive the closing under Section 2.02 and the transfers and assignments referred to in Section 6.04.

 

SECTION 6.10  Confidential Information.  The Depositor agrees that it will neither use nor disclose to any Person the names and addresses of the Obligors, except in connection with the enforcement of the Depositor’s rights hereunder, under the Receivables, under the Sale and Servicing Agreement or any other Basic Document, or as required by any of the foregoing or by law.

 

SECTION 6.11  Headings and Cross-References.  The various headings in this Agreement are included for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement.  References in this Agreement to section names or numbers are to such Sections of this Agreement.

 

SECTION 6.12  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW

 

  

23

  

PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

SECTION 6.13  Counterparts.  This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

 

SECTION 6.14  Third Party Beneficiary.  The Indenture Trustee is an express third party beneficiary of this Agreement and shall be entitled to enforce the provisions of this Agreement as if it were a party hereto.

 

SECTION 6.15  No Proceedings.  The Seller hereby covenants and agrees that it will not, at any time, petition or otherwise invoke or cause the Trust or the Depositor to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Trust or the Depositor under any federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Trust or the Depositor or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Trust or the
Depositor.

 

  

24

  

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

 

BMW FINANCIAL SERVICES NA, LLC

 

By:____________________________                                                                  

Name:

Title:

 

By:____________________________                                                                  

Name:

Title:

 

BMW FS SECURITIES LLC

 

By:____________________________                                                                 

Name:

Title:

 

By:____________________________                                                                  

Name:

Title:

 

  

  

  

EXHIBIT A

 

MATTERS ADDRESSED IN OPINION OF SELLER’S COUNSEL

 

  

A-1

  

SCHEDULE I

 

Schedule of Receivables

 

[To be delivered to the Indenture Trustee at Closing]

 

  

  

  

SCHEDULE II

 

Location of Receivable Files

 

BMW Financial Services NA, LLC

5550 Britton Parkway

Hillard, Ohio 43016

  

  

  

SCHEDULE III

 

PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS

 

          In addition to the representations, warranties and covenants contained in this Agreement, the Seller hereby represents, warrants and covenants to the Depositor as follows on the Closing Date:

 

General

 

          1. This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables and the other Conveyed Assets in favor of the Depositor, which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Seller.

 

          2. The Receivables constitute “chattel paper” (including “electronic chattel paper” and “tangible chattel paper”) within the meaning of the applicable UCC.

 

          3. Each Receivable is secured by a first priority validly perfected security interest in the related Financed Vehicle in favor of BMW FS, as secured party, or all necessary actions with respect to such Receivable have been taken or will be taken to perfect a first priority security interest in the related Financed Vehicle in favor of BMW FS, as secured party.

 

Creation

 

          4. Immediately prior to the sale, transfer, assignment and conveyance of a Receivable by the Seller to the Depositor, the Seller owned and had good and marketable title to such Receivable free and clear of any Lien and immediately after the sale, transfer, assignment and conveyance of such Receivable to the Depositor, the Depositor will have good and marketable title to such Receivable free and clear of any Lien.

 

Perfection

 

          5. The Seller has caused or will have caused, within ten days after the effective date of this Agreement, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Conveyed Assets granted to the Depositor hereunder; and the Servicer, in its capacity as custodian, has in its possession the original copies of such “instruments” or “tangible chattel paper” and the “authoritative copy” of such “electronic chattel paper” that constitute or evidence the Receivables, and all financing statements
referred to in this paragraph contain a statement that: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Secured Party/Depositor.”

 

          6. With respect to Receivables that constitute “instruments” or “tangible chattel paper”, such instruments or tangible chattel paper are in the possession of the Servicer and the Indenture Trustee has received a written acknowledgment from the Servicer that the Servicer (in its capacity as custodian) is holding such instruments or tangible chattel paper solely on behalf and for the benefit of the Indenture Trustee.

 

  

  

  

 

Priority

 

          7. The Seller has not authorized the filing of, and is not aware of, any financing statements against the Seller that include a description of collateral covering the Receivables other than any financing statement (i) relating to the conveyance of the Receivables by the Seller to the Depositor under the Receivables Purchase Agreement, (ii) relating to the conveyance of the Receivables by the Depositor to the Issuer under the Sale and Servicing Agreement, (iii) relating to the security interest granted to the Indenture Trustee under the Indenture or (iv) that has been terminated.

 

          8. The Seller is not aware of any material judgment, ERISA or tax lien filings against the Seller.

 

          9. Neither the Seller nor a custodian or vaulting agent thereof holding any Receivable that is “electronic chattel paper” has communicated an “authoritative copy” (as such term is used in Section 9-105 of the UCC) of any loan agreement that constitutes or evidences such Receivable to any Person other than the Servicer.

 

          10. None of the tangible chattel paper or electronic chattel paper that constitute or evidence the Receivables has any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Depositor, the Issuer or the Indenture Trustee.

 

Survival of Perfection Representations

 

          11. Notwithstanding any other provision of this Agreement or any other Basic Document, the perfection representations, warranties and covenants contained in this Schedule III shall be continuing, and remain in full force and effect until such time as all obligations under the Basic Documents and the Notes have been finally and fully paid and performed.

 

No Waiver

 

          12. The parties to this Agreement shall provide the Rating Agencies with prompt written notice of any material breach of the perfection representations, warranties and covenants contained in this Schedule III, and shall not, without satisfying the Rating Agency Condition, waive a breach of any of such perfection representations, warranties or covenants.exv10w6

Exhibit 10.6

FORM OF

OMNIBUS AGREEMENT

BY AND AMONG

MEMORIAL PRODUCTION PARTNERS LP,

MEMORIAL PRODUCTION PARTNERS GP LLC,

AND

MEMORIAL RESOURCE DEVELOPMENT LLC

 

 

FORM OF OMNIBUS AGREEMENT

     This Omnibus Agreement is entered into on, and effective as of, ____________, 2011 (the
“Closing Date”), and is by and among Memorial Production Partners LP, a Delaware limited
partnership (the “MLP”), Memorial Production Partners GP LLC, a Delaware limited liability company
and the general partner of the MLP (the “General Partner”), and Memorial Resource Development LLC,
a Delaware limited liability company (“MRD”). The above-named entities are sometimes referred to in
this Agreement each as a “Party” and collectively as the “Parties.”

RECITALS:

     WHEREAS, on the Closing Date, certain subsidiaries of MRD will contribute and/or sell certain
assets and interests to the MLP (the “Contribution”) in exchange for limited partnership interests
in the MLP, cash and other consideration agreed to by the Parties; and

     WHEREAS, in connection with the Contribution, the Parties desire by their execution of this
Agreement to evidence their understanding, as more fully set forth in this Agreement, with respect
to (1) specified indemnification obligations of MRD and (2) certain reimbursement obligations of
the Parties.

     NOW, THEREFORE, 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 hereby agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Definitions.

     “Affiliate” is defined in the MLP Agreement.

     “Agreement” means this Omnibus Agreement, as it may be amended, modified or supplemented from
time to time in accordance with the terms hereof.

     “Audit Right” is defined in Article IX.

     “BlueStone Contribution Agreement” means the Contribution, Conveyance and Assumption Agreement
dated as of the Closing Date among MRD, BlueStone Natural Resources Holdings, LLC, the General
Partner, the MLP and the OLLC.

     “Board” means the Board of Directors of the General Partner.

     “Business Day” means any day that is not a Saturday, Sunday or day on which banks are
authorized by law to close in the State of Texas.

     “Classic Assets” means the “Assets”, as such term is defined in the Classic Purchase
Agreement.

 

 

     “Classic Purchase Agreement” means the Purchase and Sale Agreement dated as of the Closing
Date among MRD, Classic Hydrocarbons Holdings, L.P., the General Partner, the MLP and the OLLC.

     “Closing Date” is defined in the Preamble.

     “Columbus Assets” means the “Assets”, as such term is defined in the BlueStone Contribution
Agreement.

     “Common Unit” is defined in the MLP Agreement.

     “Confidential Information” means all information, including information relating to the MLP
Group, (i) furnished to MRD or its representatives by or on behalf of the General Partner or (ii)
prepared by or at the direction of the General Partner (in each case irrespective of the form of
communication and whether such information is furnished before, on or after the date hereof), and
all analyses, compilations, data, studies, notes, interpretations, memoranda or other documents
prepared by MRD or its representatives containing or based in whole or in part on any such
furnished information.

     “Conflicts Committee” is defined in the MLP Agreement.

     “Contribution” is defined in the Recitals.

     “Control” means the possession, directly or indirectly, 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.

     “Covered Environmental Losses” means Losses by reason of or arising out of:

     (a) with respect to the MLP Assets, any violation or correction of violation of
Environmental Law, including the performance of any Environmental Activity; or

     (b) any event, omission, or condition associated with ownership or operation of the MLP
Assets (including the exposure to or presence of Hazardous Substances on, under, about or
Releasing to or from the MLP Assets or the exposure to or Release of Hazardous Substances
arising out of operation of the MLP Assets at non-MLP Asset locations) including (i) the
cost and expense of any Environmental Activities and (ii) the cost and expense for any
environmental or toxic tort pre-trial, trial or appellate legal or litigation support work;

but only to the extent that such violation described in clause (a), or such events, omissions or
conditions described in clause (b), occurred or existed before the Closing Date.

     “Environmental Activity” shall mean any investigation, study, assessment, evaluation,
sampling, testing, monitoring, containment, removal, disposal, closure, corrective action,
remediation (regardless of whether active or passive), natural attenuation, restoration,
bioremediation, response, repair, corrective measure, cleanup or abatement that is required or
necessary under any applicable Environmental Law, including institutional or engineering

2

 

controls or participation in a governmental voluntary cleanup program to conduct voluntary
investigatory and remedial actions for the clean-up, removal or remediation of Hazardous Substances
that exceed actionable levels established pursuant to Environmental Laws, or participation in a
supplemental environmental project in partial or whole mitigation of a fine or penalty.

     “Environmental Laws” means all federal, regional, state, and local laws, statutes, rules,
regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental Permits and
other legally enforceable requirements and rules of common law relating to (i) pollution or
protection of human health or the environment or natural resources, (ii) any Release or threatened
Release of, or any exposure of any Person or property to, any Hazardous Substances or (iii) the
generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport,
arrangement for disposal or transport, or handling of any Hazardous Substances. Without limiting
the foregoing, Environmental Laws include the federal Comprehensive Environmental Response,
Compensation and Liability Act, the Superfund Amendments and Reauthorization Act, the Resource
Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Oil Pollution Act of 1990, the Federal Hazardous Materials
Transportation Law, the Occupational Safety and Health Act, the Marine Mammal Protection Act, the
Endangered Species Act, the National Environmental Policy Act and other environmental conservation
and protection laws, each as amended through the Closing Date.

     “Environmental Permit” means any permit, approval, identification number, license,
registration, certification, consent, exemption, variance or other authorization required under or
issued pursuant to any applicable Environmental Law.

     “GAAP” means accounting principles generally accepted in the United States.

     “General Partner” is defined in the Preamble.

     “Governmental Authority” means the United States, any foreign country, state, county, city or
other incorporated or unincorporated political subdivision, agency or instrumentality thereof.

     “Governmental Requirement” means any law, statute, code, ordinance, order, determination,
rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license,
authorization or other directive or requirement, whether now or hereinafter in effect, including
environmental laws, energy regulations and occupational, safety and health standards or controls,
of any Governmental Authority.

     “Hazardous Substance” means (a) any substance that is designated, defined or classified under
any Environmental Law as a hazardous waste, solid waste, hazardous material, pollutant, contaminant
or toxic or hazardous substance, or terms of similar meaning, or that is otherwise regulated under
any Environmental Law, including any hazardous substance as defined under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, (b) oil as defined in the Oil
Pollution Act of 1990, as amended, including oil, gasoline, natural gas, fuel oil, motor oil, waste
oil, diesel fuel, jet fuel and other refined petroleum hydrocarbons and

3

 

petroleum products, and (c) radioactive materials, asbestos containing materials or
polychlorinated biphenyls.

     “Indemnified Party” is defined in Section 2.3(a).

     “Initial Term” means the period from the Closing Date until 12:01 a.m. on the fifth
anniversary of the Closing Date (or the next Business Day thereafter).

     “Liabilities” is defined in Section 6.1.

     “Losses” means any and all losses, damages, obligations, liabilities, claims, demands, causes
of action, judgments, settlements, fines, penalties, costs and expenses (including court costs and
reasonable attorneys’ and experts’ fees) of any and every kind or character.

     “Material Losses” is defined in Section 2.2(b).

     “MLP” is defined in the Preamble.

     “MLP Agreement” means the First Amended and Restated Agreement of Limited Partnership of the
MLP, dated as of the Closing Date, as it may be amended, modified or supplemented from time to
time; provided, however, that if any such amendment, modification or supplement in the reasonable
discretion of the General Partner (i) would have a material adverse effect on the holders of Common
Units; or (ii) materially limit or impair the rights or reduce the obligations of the Parties under
this Agreement, then such amendment, modification or supplement shall not be given effect for
purposes of this Agreement unless it has been approved by the Conflicts Committee.

     “MLP Assets” means the Classic Assets, the Columbus Assets and the WHT Assets, in each case
with the MLP Group owning, as of the Closing Date, (i) a working interest no greater than (unless
there is a corresponding increase in net revenue interest), and (ii) a net revenue interest no less
than, the respective interest set out in the Reserve Reports with respect to each such property.

     “MLP
Change of Control” means MRD ceases to Control the General Partner or the General Partner
is removed as general partner of the MLP.

     “MLP Contribution Agreements” means collectively, the Classic Purchase Agreement, the
BlueStone Contribution Agreement and the WHT Contribution Agreement.

     “MLP Group” means the MLP, the General Partner and the subsidiaries of the MLP, including the
OLLC.

     “MLP Indemnified Party” is defined in Section 6.1.

     “MRD” is defined in the Preamble.

     “MRD Indemnified Party” is defined in Section 6.2.

4

 

     “OLLC” means Memorial Production Operating LLC, a Delaware limited liability company.

     “Party” and “Parties” are defined in the Preamble.

     “Person” means an individual or entity (including a corporation, partnership, joint venture,
trust, limited liability company, unincorporated organization or any other entity or governmental
agency or authority).

     “PDP Reserves” means the Proved Reserves that are expected to be produced from existing wells
with existing equipment and operating methods.

     “Proceedings” means all proceedings, actions, claims, suits and notices of investigations by
or before any arbitrator or Governmental Authority.

     “Properties” means the oil and natural gas properties now owned or hereafter acquired by the
MLP Group, including oil and gas leases, mineral interests, royalty interests, overriding royalty
interests, pipelines, flow lines, gathering lines, gathering systems, compressors, dehydration
units, separators, meters, injection facilities, salt water disposal wells and facilities, plants,
wells, downhole and surface equipment, fixtures, improvements, easements, rights-of-way, surface
leases, licenses, permits and other surface rights, and other real or personal property appurtenant
thereto or used in conjunction therewith, including the MLP Assets.

     “Proved Reserves” has the meaning given to the term “proved oil and gas reserves” in Rule 4-10
of Regulation S-X promulgated under the Securities Act of 1933, as amended.

     “Registration Statement” means the Registration Statement on Form S-1, as amended (No.
333-175090), filed with the Securities and Exchange Commission with respect to the initial public
offering of Common Units.

     “Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting,
discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping or
disposing into the environment.

     “Reserve Reports” means the MLP’s estimate of its Proved Reserves as of December 31, 2010 or
January 1, 2011, as applicable, as set forth in aggregate in the reserve engineer evaluation and
audit letters included as Exhibits C, D and E to the prospectus included in the Registration
Statement.

     “Services” means the services to be provided by or on behalf of MRD to the General Partner for
the benefit of the MLP Group pursuant to this Agreement as set forth in Exhibit A.

     “Tax Authority” means any Governmental Authority having jurisdiction over the assessment,
determination, collection or imposition of any Tax.

     “Tax Return” means any report, return, election, document, estimated tax filing, declaration
or other filing provided to any Tax Authority, including any amendments thereto.

5

 

     “Tax” or “Taxes” means (i) all taxes, assessments, charges, duties, levies, imposts or other
similar charges imposed by a Tax Authority, including all income, franchise, profits, capital
gains, capital stock, transfer, gross receipts, sales, use, transfer, service, occupation, excise,
severance, windfall profits, premium, stamp, license, payroll, employment, social security,
unemployment, disability, environmental (including taxes under Code section 59A), alternative
minimum, add-on, value-added, withholding and other taxes, assessments, charges, duties, levies,
imposts or other similar charges of any kind whatsoever (whether payable directly or by withholding
and whether or not requiring the filing of a Tax Return), and all estimated taxes, deficiency
assessments, additions to tax, additional amounts imposed by any Tax Authority, penalties and
interest, but excluding any and all taxes based on net income, net worth, capital or profit; (ii)
any liability for the payment of any amount of the type described in the immediately preceding
clause (i) as a result of being a member of a consolidated, affiliated, unitary, combined, or
similar group with any other corporation or entity at any time on or prior to the Closing Date; and
(iii) any liability for the payment of any amount of the type described in the preceding clauses
(i) or (ii) whether as a result of contractual obligations to any other Person or by operation of
law.

     “Term” means the period commencing with the Closing Date and ending on the date of termination
of this Agreement pursuant to Section 8.1.

     “WHT Assets” means the “Assets”, as such term is defined in the WHT Contribution Agreement.

     “WHT Contribution Agreement” means the Contribution, Conveyance and Assumption Agreement dated
as of the Closing Date among MRD, WHT Energy Partners LLC, the General Partner, the MLP and the
OLLC.

     1.2 Other Definitions. Words not otherwise defined herein that have well-known and generally accepted technical or
trade meanings in the oil and gas industry are used herein in accordance with such recognized
meanings.

     1.3 Construction. Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) the terms “include,” “includes,” “including” and words
of like import shall be deemed to be followed by the words “without limitation;” and (d) the terms
“hereof,” “herein” and “hereunder” refer to this Agreement as a whole and not to any particular
provision of this Agreement. The table of contents and headings contained in this Agreement are for
reference purposes only, and shall not affect in any way the meaning or interpretation of this
Agreement.

ARTICLE II

PAYMENT; INDEMNIFICATION

     2.1 Title, Tax and Environmental Indemnifications. Subject to the provisions of Sections 2.2, 2.3 and 2.4, MRD shall indemnify, defend
and hold harmless the MLP Group from and against:

6

 

     (a) any Losses suffered or incurred by the MLP Group by reason or arising out of the
failure of the MLP Group to be the owner of valid and indefeasible title, easement rights,
leasehold and/or fee ownership interests in and to the lands on which any MLP Assets are
located or which constitute any MLP Assets, and such failure deprives the MLP Group from the
economic benefits of the MLP Assets or renders the MLP Group liable or unable to use or
operate the MLP Assets in substantially the same manner that the MLP Assets (A) were used
and operated by MRD and/or its applicable subsidiary immediately prior to the Closing Date
as described in the Registration Statement or (B) are intended to be used by the MLP Group
from and after the Closing Date as described in the Registration Statement (including as
setforth on the Reserve Reports);

     (b) any Losses suffered or incurred by the MLP Group by reason of or arising out of any
federal, state and local income tax liabilities attributable to the ownership or operation
of the MLP Assets prior to the Closing Date, including (A) any such income tax liabilities
that may result from the consummation of the formation transactions for the MLP Group
occurring on or prior to the Closing Date and (B) any income tax liabilities arising under
Treasury Regulation Section 1.1502-6 and any similar provision from state, local or foreign
applicable law, by contract, as successor, transferred or otherwise and which income tax is
attributable to having been a member of any consolidated, combined or unitary group prior to
the Closing Date;

     (c) any Covered Environmental Losses suffered or incurred by the MLP Group;

     (d) all liabilities, other than Covered Environmental Losses, relating to the operation
of the MLP Assets prior to the Closing Date that were not disclosed in the most recent pro
forma balance sheet of the MLP included in the Registration Statement, or incurred in the
ordinary course of business thereafter; and

     (e) any losses suffered or incurred by the MLP Group as a result of,
relating to or arising out of the failure of MRD or its applicable
subsidiary (including any member of the MLP Group) to have on the
Closing Date any consent, waiver or governmental permit that renders
the MLP Group liable or unable to own, use or operate the MLP Assets
in substantially the same manner that the MLP Assets (i) were
owned, used or operated by MRD or its applicable subsidiary
immediately prior to the Closing Date as described in the
Registration Statement or (ii) are intended to be used by the
MLP Group from and after the Closing Date as described in the
Registration Statement.

     2.2 Limitations Regarding Indemnification.

     (a)
The indemnification obligations set forth in Sections 2.1(a)
and (e) shall survive
until the third anniversary of the Closing Date, the indemnification obligations set forth
in Sections 2.1(c) and (d) shall survive until the first anniversary of the Closing
Date and the indemnification obligations set forth in Section 2.1(b) shall survive
until 60 days after the expiration of any applicable statute of limitations; provided,
however, that any such indemnification obligation shall remain in full force and effect
thereafter only with respect to any bona fide claim made thereunder prior to any such
expiration and then only for such period as may be necessary for the resolution thereof.

     (b) No claim may be made against MRD for indemnification pursuant to Section 2.1
(a), (d) or (e) unless the aggregate dollar amount of the Material Losses suffered or
incurred by the MLP Group under Sections 2.1(a), (d) and (e)
exceeds $500,000; after such time MRD shall be liable to the
extent and only to the extent that such Material Losses exceed
$500,000 and in no event
shall the aggregate liability of MRD under Section 2.1(d) exceed
$5,000,000. No claim may be made against MRD for indemnification
pursuant to Section 2.1(c) unless the aggregate dollar amount
of the Material Losses suffered or incurred by the MLP Group under
Section 2.1(c) exceeds $500,000; after such time MRD
shall be liable to the extent and only to the extent that such
Material Losses exceed $500,000 and in no event shall the aggregate
liability of MRD under Section 2.1(c) exceed $5,000,000.
The term “Material Losses” means only those Losses
that exceed $50,000.

7

 

     2.3 Indemnification Procedures.

     (a) Each Party seeking indemnification (each, an “Indemnified Party”) pursuant to this
Article II agrees that within a reasonable period of time after it shall become
aware of facts giving rise to a claim for indemnification pursuant to this Article
II, it will provide notice thereof in writing to the Parties from whom indemnification
is sought pursuant to this Article II (each, an “Indemnifying Party”) specifying the
nature of and specific basis for such claim; provided, however, that no Indemnified Party
shall submit claims more frequently than once a calendar quarter (or twice in the case of
the last calendar quarter prior to the expiration of the applicable indemnity coverage under
this Agreement); provided further, that failure to timely provide such notice shall not
affect the right of the Indemnified Party’s indemnification hereunder, except to the extent
the Indemnifying Party is materially prejudiced by such delay or omission.

     (b) The Indemnifying Party shall have the right to control 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 set forth in this Article II, including,
without limitation, the selection of counsel (provided that such counsel shall be reasonably
acceptable to the Indemnified Parties), 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 (which consent
shall not be unreasonably withheld, conditioned or delayed) of the Indemnified Parties
unless it includes a full release of the Indemnified Parties and their respective
Subsidiaries from such matter or issues, as the case may be.

     (c) The Indemnified Parties agree to cooperate fully with the Indemnifying Parties with
respect to all aspects of the defense of any claims covered by the indemnification set forth
in Article II, including, without limitation, the prompt furnishing to the
Indemnifying Parties of any correspondence or other notice relating thereto that the
Indemnified Parties may receive, permitting the names of the Indemnified Parties to be
utilized in connection with such defense, the making available to the Indemnifying Parties
of any files, records or other information of the Indemnified Parties that Indemnifying
Parties consider relevant to such defense and the making available to Indemnifying Parties
of any employees of the Indemnified Parties; provided, however, that in connection therewith
Indemnifying Parties agree to use reasonable efforts to minimize the impact thereof on the
operations of the Indemnified Parties and further agrees to reasonably maintain the
confidentiality of all files, records and other information furnished by the Indemnified
Parties pursuant to this Section 2.3. In no event shall the obligation of the
Indemnified Parties to cooperate with Indemnifying Parties as set forth in the immediately
preceding sentence be construed as imposing upon the Indemnified Parties 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 II; provided, however, that the
Indemnified Parties may, at their option, cost and expense, hire and pay for counsel in
connection with any such defense. The Indemnifying Parties agree to keep any such counsel
hired by the Indemnified Parties reasonably informed as to the status of any such defense,
but Indemnifying Parties shall have the right to retain sole control over such defense.

8

 

     (d) In determining the amount of any Losses for which the Indemnified Parties are
entitled to indemnification under this Agreement, the gross amount of the indemnification
will be reduced by (i) any insurance proceeds realized by the Indemnified Parties, and such
correlative insurance benefit shall be net of any incremental insurance premium that becomes
due and payable by the Indemnified Parties as a result of such claim and (ii) all amounts
recovered by the Indemnified Parties under contractual indemnities from third parties. The
Indemnified Parties hereby agree to use commercially reasonable efforts to realize any
applicable insurance proceeds or amounts recoverable under such contractual indemnities;
provided, however, that the costs and expenses (including, without limitation, court costs
and reasonable attorneys’ fees) of the Indemnified Parties in connection with such efforts
shall be promptly reimbursed by the Indemnifying Parties. To the extent that Indemnifying
Parties have made any indemnification payment hereunder in respect of a claim for which the
Indemnified Parties have asserted a related claim for insurance proceeds or under a
contractual indemnity, Indemnifying Parties shall be subrogated to the rights of the
Indemnified Parties to receive the proceeds of such insurance or contractual indemnity.

     2.4 Access Rights. Upon reasonable advance notice, the MLP Group shall afford to the directors, officers,
employees, accountants, counsel, agents, consultants, auditors and other authorized representatives
of MRD reasonable access, during normal business hours, to the MLP Assets in order to conduct any
Environmental Activity that MRD has agreed to perform or is responsible for performing or to
otherwise observe, review or evaluate any matters for which the MLP Group may seek indemnification
from MRD pursuant to this Article II; provided that any such access shall be conducted in a
manner so as not to interfere unreasonably with the operation of the business of the MLP Group and
MRD shall indemnify, defend and hold harmless the MLP Group from and against any losses of the MLP
Group arising from personal injury or property damage as a result of the access granted hereby to
the directors, officers, employees, accountants, counsel, agents, consultants, auditors and other
authorized representatives of MRD.

     2.5 Past Acquisitions. MRD agrees to (and to cause its applicable subsidiaries to) assign to the MLP all legal
rights to pursue claims for indemnification included in any acquisition agreements pursuant to
which MRD or such subsidiaries (excluding the MLP Group) acquired any of the MLP Assets. If such
legal rights are not assignable pursuant to the terms of such acquisition agreements or for any
other reason, MRD agrees to (and to cause its applicable subsidiaries to) pursue its remedies for
any indemnifiable claims on behalf of the MLP. Any amounts recovered by MRD on behalf of the MLP
shall be contributed to the MLP and will not be counted towards any deductible included in Section
2.2(b).

ARTICLE III

PROVISION OF SERVICES

     3.1 Services. During the Term, MRD shall provide (or cause to be provided) the Services to the General
Partner for the benefit of the MLP Group. MRD is authorized to enter into and act on the General
Partner’s behalf, as agent, in connection with any agreement with third parties, including any
agreements with purchasers of hydrocarbon products produced from the Properties or providers of
transportation services for such production, reasonably related to the provision of the Services.
The General Partner may temporarily or permanently exclude any

9

 

particular service from the scope of Services upon 90 days’ written notice to each of the
Partnership and OLLC.

     3.2 MRD Information. It is contemplated by the Parties that, during the Term, the General Partner will be
required to provide certain notices, information and data necessary for MRD to perform the Services
and its obligations under this Agreement. MRD shall be permitted to rely on any information or
data provided by the General Partner to MRD in connection with the performance of its duties and
provision of Services under this Agreement, except to the extent that MRD has actual knowledge that
such information or data is inaccurate or incomplete.

ARTICLE IV

STANDARD OF CARE

     4.1 Standard of Performance. Subject to the liability standard set forth in Article VI, MRD shall (and shall
cause its applicable subsidiaries, excluding the MLP Group, to) provide Services (a) using at least
the same level of care, quality, timeliness and skill in providing the Services as it employs for
itself and its Affiliates and no less than the same degree of care, quality, timeliness, and skill
as the applicable Person’s past practice in performing like services for itself and its Affiliates
in connection with the ownership or operation of the MLP Assets during the one-year period prior to
the Closing Date, and (b) in any event, using no less than a reasonable level of care in accordance
with industry standards, in compliance with all applicable laws.

     4.2 Procurement of Goods and Services. To the extent that MRD is permitted to arrange for contracts with third parties for goods
and services in connection with the provision of the Services, MRD shall use commercially
reasonable efforts (a) to obtain such goods and services at rates competitive with those otherwise
generally available in the area in which services or materials are to be furnished, and (b) to
obtain from such third parties such customary warranties and guarantees as may be reasonably
required with respect to the goods and services so furnished.

     4.3 Protection from Liens. MRD shall not permit any liens, encumbrances or charges upon or against any of the
Properties arising from the provision of Services or materials under this Agreement except as
approved, or consented to, by the General Partner.

     4.4 Commingling of Assets. To the extent MRD shall have charge or possession of any of the General Partner’s or the
MLP Group’s assets in connection with the provision of the Services, MRD shall separately maintain,
and not commingle, the assets of the General Partner or the MLP Group with those of MRD or any
other Person.

     4.5 Insurance. MRD shall obtain and maintain during the Term from insurers who are reliable and acceptable
to the General Partner and authorized to do business in the state or states or jurisdictions in
which Services are to be performed by MRD, insurance coverages in the types and minimum limits as
the Parties determine to be appropriate and as is consistent with standard industry practice and
MRD’s past practices. MRD agrees upon the General Partner’s request from time to time or at any
time to provide the General Partner with certificates of insurance evidencing such insurance
coverage and, upon request of the General Partner, shall furnish copies of such policies. Except
with respect to workers’ compensation coverage, the policies

10

 

shall name the General Partner as an additional insured and shall contain waivers by the
insurers of any and all rights of subrogation to pursue any claims or causes of action against the
General Partner. The policies shall provide that they will not be cancelled or reduced without
giving the General Partner at least 30 days’ prior written notice of such cancellation or
reduction. The insurance policies and coverages shall be reviewed with the Board at least
annually, beginning with the first Board meeting following the Closing Date.

     4.6 Third-Party Intellectual Property. If MRD uses or licenses intellectual property owned by third parties in the performance of
the Services, MRD shall obtain and maintain any such licenses and authorizations necessary to
authorize its use of such intellectual property in connection with the Services.

ARTICLE V

MRD REIMBURSEMENT; CONTINUING OBLIGATIONS

     5.1 MRD Reimbursement. During the Initial Term:

     (a) On or before the 45th day following the end of each calendar quarter,
the MLP shall pay MRD, with respect to any Services provided by MRD during such calendar
quarter, an amount equal to the sum of:

     (i) the costs and expenses incurred by MRD that are directly attributable to
the General Partner for the benefit of the MLP Group, including costs for engaging
third parties such as consultants, reservoir engineers, attorneys and accountants;
and

     (ii) a proportionate amount of all general, administrative, overhead and other
indirect costs and expenses (including, if applicable and if not covered by (i)
above, the allocable portion of salary, bonus, incentive compensation and other
amounts paid to Persons who provide Services, certain of whom may provide Services
solely for the benefit of the MLP Group) incurred by MRD or its Affiliates in
providing or causing to be provided Services for the benefit of the MLP Group
reasonably allocable to the provision of such Services.

     (b) The General Partner shall determine in good faith the proper allocation of costs
and expenses pursuant to Section 5.1(a).

     (c) On or before the 15th day following the end of each calendar quarter, MRD shall
provide the General Partner with an invoice for the costs and expenses described in
Section 5.1(a) relating to such calendar quarter. If requested by the General
Partner, MRD’s invoice therefor shall provide reasonably detailed documentation supporting
such costs and expenses.

     5.2 COPAS Fees. MRD shall be entitled to retain any COPAS overhead charges associated with drilling and
operating wells billed in accordance with operating agreements to the extent that it (or any of its
subsidiaries excluding the MLP Group) is the operator of such wells. The MLP Group will pay their
proportionate share of all expenses that are directly chargeable to wells in which they own an
interest pursuant to the terms of the applicable

11

 

operating agreements. The MLP shall be entitled to retain any
COPAS overhead charges
associates with drilling and operating wells billed in accordance with operating agreements to the
extent that the MLP is the operator of such wells. For the avoidance of doubt, a well in which the
MLP is the designated operator but that is operated by MRD personnel pursuant to this agreement is
a well for which the MLP is entitled to retain applicable COPAS overhead charges.

     5.3 Taxes. The MLP shall be responsible for all applicable Taxes levied on items, goods or services
that are sold, purchased or obtained for the provision of Services under this Agreement, including
any Taxes in respect of the Services.

     5.4 Disputed Charges.

     (a) The General Partner may, within 120 days after receipt of an invoice from MRD, take
written exception to any charge on the ground that the same was not a reasonable cost or
expense incurred by MRD in connection with the provision of Services. The General Partner
shall nevertheless pay MRD in full when due the invoiced amount. Such payment shall not be
deemed a waiver of the right of the General Partner to recoup any contested portion of any
amount so paid. However, if the amount as to which such written exception is taken, or any
part thereof, is ultimately determined not to be a reasonable cost or expense incurred by
MRD in connection with the provision of Services, such amount or portion thereof (as the
case may be) shall be refunded by MRD to the General Partner together with interst theeon at
the lesser of (i) the prime rate per annum established by the administrative agent under the
revolving credit agreement of the MLP or the OLLC, as applicable, as in effect on the date
of payment by the General Partner in respect of such contested invoice or (ii) the maximum
lawful rate during the period from the date of payment by the General Partner to the date of
refund by MRD.

     (b) If, within 20 days after receipt of any written exception pursuant to Section
5.4(a), the General Partner and MRD have been unable to resolve any dispute, and if (i)
such dispute relates to whether amounts were properly charged or Services actually performed
and (ii) the aggregate amount in dispute exceeds $100,000, either of the General Partner or
MRD may submit the dispute to an independent third party auditing firm that is mutually
agreeable to the MLP Group, on the one hand, and MRD, on the other hand. The Parties shall
cooperate with such auditing firm and shall provide such auditing firm access to such books
and records as may be reasonably necessary to permit a determination by such auditing firm.
The resolution by such auditing firm shall be final and binding on the Parties.

     5.5 Seismic Data. If the MLP Group requires access to seismic data, interpretations, geological and/or
geographic information to which MRD or any of its subsidiaries has access, (a) if MRD or any of its
subsidiaries has the unrestricted right to provide such data or information to the MLP Group, MRD
shall (or shall cause such subsidiary to) promptly provide such data or information to the MLP
Group, and (if neither MRD nor any of its subsidiaries has the unrestricted right to provide such
data or information, MRD shall (and shall cause any applicable subsidiary to) use all commercially
reasonable efforts to obtain (at the MLP Group’s sole cost and expense) access to such data or
information for the MLP Group.

12

 

ARTICLE VI

INDEMNIFICATION; LIMITATIONS

     6.1 Indemnification by MRD. MRD hereby agrees to defend, indemnify and hold harmless each member of the MLP Group and
their respective members, partners and Affiliates (other than MRD) and each of their respective
officers, managers, directors, employees and agents (each, an “MLP Indemnified Party”) from
any and all threatened or actual Losses incurred by, imposed upon or rendered against one or more
of the MLP Indemnified Parties, whether based on contract, or tort, or pursuant to any statute,
rule or regulation, and regardless of whether the Losses are foreseeable or unforeseeable, all to
the extent that such Losses arise out of the bad faith, fraud, gross negligence or willful
misconduct (or, in the case of a criminal matter, acts or omissions taken with the knowledge that
the conduct was criminal) of MRD in providing Services, but except to the extent arising out of the
gross negligence or willful misconduct of any MLP Indemnified Party.

     6.2 Indemnification by the MLP. The MLP hereby agrees to defend, indemnify and hold harmless MRD and its members, partners
and Affiliates (other than the MLP Group) and each of their respective officers, managers,
directors, employees and agents (each, a “MRD Indemnified Party” and, collectively with the MLP
Indemnified Parties, each an “Indemnified Party”) from any and all threatened or actual Losses
incurred by, imposed upon or rendered against one or more of the MRD Indemnified Parties, whether
based on contract, or tort, or pursuant to any statute, rule or regulation, and regardless of
whether the Liabilities are foreseeable or unforeseeable, all to the extent that such Losses arise
out of any acts or omissions of the MRD Indemnified Parties in connection with the provision of (or
failure to provide) Services, except to the extent that MRD is responsible for such Losses pursuant
to Section 6.1.

     6.3 Negligence; Strict Liability. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 6.1 AND SECTION 6.2, THE DEFENSE
AND INDEMNITY OBLIGATION IN SECTION 6.1 AND SECTION 6.2 SHALL APPLY REGARDLESS OF
CAUSE OR OF ANY NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE, CONCURRENT NEGLIGENCE OR
STRICT LIABILITY), BREACH OF DUTY (STATUTORY OR OTHERWISE), VIOLATION OF LAW OR OTHER FAULT OF ANY
INDEMNIFIED PARTY, OR ANY PRE-EXISTING DEFECT; PROVIDED, HOWEVER, THAT THIS PROVISION SHALL IN NOT
APPLY TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PARTY OR IN ANY WAY LIMIT OR
ALTER ANY QUALIFICATIONS SET FORTH IN SUCH DEFENSE AND INDEMNITY OBLIGATIONS EXPRESSLY RELATING TO
GROSS NEGLIGENCE, INTENTIONAL MISCONDUCT OR BREACH OF THIS AGREEMENT. BOTH PARTIES AGREE THAT THIS
STATEMENT COMPLIES WITH THE REQUIREMENT KNOWN AS THE ‘EXPRESS NEGLIGENCE RULE’ TO EXPRESSLY STATE
IN A CONSPICUOUS MANNER AND TO AFFORD FAIR AND ADEQUATE NOTICE THAT THIS ARTICLE VI HAS
PROVISIONS REQUIRING ONE PARTY TO BE RESPONSIBLE FOR THE NEGLIGENCE, STRICT LIABILITY OR OTHER
FAULT OF ANOTHER PARTY.

13

 

     6.4 Exclusion of Damages; Disclaimers.

          (a) NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY HERETO FOR EXEMPLARY, PUNITIVE, CONSEQUENTIAL,
SPECIAL, INDIRECT OR INCIDENTAL DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
REGARDLESS OF THE FORM IN WHICH ANY ACTION IS BROUGHT; PROVIDED, HOWEVER, THAT THIS
SECTION 6.4(a) SHALL NOT LIMIT A PARTY’S RIGHT TO RECOVERY UNDER SECTION 6.1 OR
SECTION 6.2 FOR ANY SUCH DAMAGES TO THE EXTENT SUCH PARTY IS REQUIRED TO PAY SUCH DAMAGES
TO A THIRD PARTY IN CONNECTION WITH A MATTER FOR WHICH SUCH PARTY IS OTHERWISE ENTITLED TO
INDEMNIFICATION UNDER SECTION 6.1 OR SECTION 6.2.

          (b) OTHER THAN AS SET FORTH IN SECTION 4.1, MRD DISCLAIMS ANY AND ALL WARRANTIES,
CONDITIONS OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN) WITH RESPECT TO SERVICES
RENDERED OR PRODUCTS PROCURED FOR THE GENERAL PARTNER FOR THE BENEFIT OF THE MLP GROUP, OR ANY PART
THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS
OR SUITABILITY FOR ANY PURPOSE (WHETHER MRD KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS
OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE) WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM
OR USAGE IN THE TRADE OR BY COURSE OF DEALING. HOWEVER, IN THE CASE OF OUTSOURCED SERVICES PROVIDED
SOLELY FOR THE GENERAL PARTNER, IF THE THIRD-PARTY PROVIDER OF SUCH SERVICES MAKES AN EXPRESS
WARRANTY TO THE GENERAL PARTNER, THE GENERAL PARTNER IS ENTITLED TO CAUSE MRD TO RELY ON AND TO
ENFORCE SUCH WARRANTY.

     6.5 Survival. The provisions of this Article VI shall survive the termination of this Agreement.

ARTICLE VII

CONFIDENTIALITY

     7.1 Confidential Information.

     (a) Non-disclosure. MRD shall maintain the confidentiality of all Confidential
Information; provided, however, that MRD may disclose such Confidential Information:

     (i) to its Affiliates to the extent deemed by MRD to be reasonably necessary or
desirable to enable it to perform the Services;

     (ii) to the extent necessary for MRD or any of its subsidiaries, in its
capacity as operator of properties that include MLP Assets, to fulfill duties to
third parties with interests in such properties;

     (iii) in any judicial or alternative dispute resolution Proceeding to resolve
disputes between MRD and the MLP Group arising hereunder;

14

 

     (iv) to the extent disclosure is legally required under applicable laws
(including applicable securities and tax laws) or any agreement existing on the date
hereof to which MRD is a party or by which it is bound; provided, however, that
prior to making any legally required disclosures in any judicial, regulatory or
dispute resolution Proceeding, MRD shall, if requested by the General Partner, seek
a protective order or other relief to prevent or reduce the scope of such
disclosure;

     (v) to MRD’s existing or potential lenders, investors, joint interest owners,
purchasers or other parties with whom MRD may enter into contractual relationships,
to the extent deemed by MRD to be reasonably necessary or desirable to enable it to
perform the Services; provided, however, that MRD shall require such third parties
to agree to maintain the confidentiality of the Confidential Information so
disclosed;

     (vi) if authorized by the General Partner; and

     (vii) to the extent such Confidential Information becomes publicly available
other than through a breach by MRD of its obligation arising under this Section
7.1(a).

MRD acknowledges and agrees that the Confidential Information is being furnished to MRD for
the sole and exclusive purpose of enabling it to perform the Services and the Confidential
Information may not be used by it for any other purpose.

     (b) Business Conduct. Subject to the last sentence of Section 7.1(a).
nothing in this Article VII shall prohibit the MLP, MRD or any of their respective
affiliates from conducting business in any location, including in and near the areas where
the MLP Assets are located.

     (c) Remedies and Enforcement. MRD acknowledges and agrees that a breach by it
of its obligations under this Article VII would cause irreparable harm to the
General Partner and that monetary damages would not be adequate to compensate the General
Partner. Accordingly, MRD agrees that the General Partner shall be entitled to immediate
equitable relief, including a temporary or permanent injunction, to prevent any threatened,
likely or ongoing violation by MRD, without the necessity of posting bond or other security.
The General Partner’s right to equitable relief shall be in addition to other rights and
remedies available to the General Partner, for monetary damages or otherwise.

     7.2 Survival. The provisions of this Article VII shall survive the termination of this Agreement.

15

 

ARTICLE VIII

TERM AND TERMINATION

     8.1 Term. This Agreement shall remain in force and effect through the end of the Initial Term, and
shall thereafter continue on a year-to-year basis, in each case unless terminated pursuant to
Section 8.2.

     8.2 Termination.

     (a) After the end of the Initial Term, this Agreement may be terminated by either Party
prior to the expiration of any applicable annual term thereafter, upon 180 days’ written
notice to the other Party;

     (b) This Agreement may be terminated at any time by MRD upon the General Partner’s or
the MLP’s material breach of this Agreement, if (i) such breach is not remedied within 60
days (or 30 days in the event of material breach arising out of a failure to make payment
hereunder) after the General Partner’s receipt of written notice thereof, or such longer
period as is reasonably required to cure such breach, provided that the General Partner
commences to cure such breach within the applicable period and proceeds with due diligence
to cure such breach, and (ii) such breach is continuing at the time notice of termination is
delivered to the General Partner;

     (c) This Agreement may be terminated at any time by the General Partner upon MRD’s
material breach of this Agreement, if (i) such breach is not remedied within 60 days after
MRD’s receipt of the General Partner’s written notice thereof, or such longer period as is
reasonably required to cure such breach, provided that MRD commences to cure such breach
within such 60-day period and proceeds with due diligence to cure such breach, and (ii) such
breach is continuing at the time notice of termination is delivered to MRD; or

     (d) This Agreement may be terminated immediately by any Party upon an MLP Change of
Control.

     8.3 Survival. The provisions of Article II, Article V (with respect to unpaid amounts due
hereunder), Section 5.4, Article VI, Article VII, Article IX,
Article X and Article XI shall survive any termination of this Agreement.

ARTICLE IX

AUDIT RIGHTS

     At any time during the Term and for one year thereafter, the General Partner shall have the
right to review and, at the General Partner’s expense, to copy, the books and records maintained by
MRD relating to the provision of the Services. In addition, to the extent necessary to verify the
performance by MRD of its obligations under this Agreement, the General Partner shall have the
right, at the General Partner’s expense, to audit, examine and make copies of or extracts from the
books and records of MRD (the “Audit Right”). The General Partner may exercise the Audit
Right through such auditors as the General Partner may determine in its sole discretion. The
General Partner shall (a) exercise the Audit Right only upon reasonable written

16

 

notice to MRD and during normal business hours and (b) use its reasonable efforts to conduct
the Audit Right in such a manner as to minimize the inconvenience and disruption to MRD.

ARTICLE X

BUSINESS OPPORTUNITIES

     10.1 No Business Opportunities. None of the Parties nor any of their Affiliates shall have any obligation to offer, or
provide any opportunity to pursue, purchase or invest in, any business opportunity to any other
Party or their Affiliates.

     10.2 No Non-Compete. Subject to the last sentence of Section 7.1(a), he Parties and their Affiliates
shall be free to engage in any business activity whatsoever without the participation of the other,
including any activity that may be in direct competition with the MLP Group or MRD, as the case may
be.

ARTICLE XI

MISCELLANEOUS

     11.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and governed by the laws of the State of Delaware. Each
Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and
to venue in Houston, Texas.

     11.2 Notice. All notices, requests or consents provided for 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 or at such other
address as such Party may stipulate to the other Parties in the manner provided in this Section
11.2.

     To MRD:

1401 McKinney Street, Suite 1025

Houston, TX 77010

Attention:           Chief Executive Officer

Telephone:         [           ]

Facsimile:           [           ]

     To the MLP Group:

1401 McKinney Street, Suite 1025

Houston, TX 77010

Attention:           Chief Executive Officer

Telephone:           [         ]

17

 

Facsimile:              [       ]

     11.3 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.

     11.4 Jointly Drafted. This Agreement, and all the provisions of this Agreement, shall be deemed drafted by all of
the Parties, and shall not be construed against any Party on the basis of that Party’s role in
drafting this Agreement.

     11.5 Effect of Waiver or Consent. No waiver or consent, express or implied, by any Party of or to any breach or default by
any Person in the performance by such Person of its obligations hereunder shall be deemed or
construed to be a consent or waiver of or to any other breach or default in the performance by such
Person of the same or any other obligations of such Person hereunder. Failure on the part of a
Party to complain of any act of any Person or to declare any Person in default, irrespective of how
long such failure continues, shall not constitute a waiver by such Party of its rights hereunder
until the applicable statute of limitations period has run.

     11.6 Amendment or Modification. This Agreement may be amended or modified only from time to time by the written agreement
of the Parties; provided, however, that the MLP 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 (a) would have a material adverse effect on the
holders of Common Units or (b) materially limit or impair the rights or reduce the obligations of
the Parties under this Agreement. Each such instrument shall be reduced to writing and shall be
designated on its face an “Amendment” to this Agreement.

     11.7 Assignment; No Third-Party Beneficiaries. None of the Parties shall have the right to assign its rights or obligations under this
Agreement without the prior written consent of all other Parties. Notwithstanding the foregoing, a
merger of a Party shall not be deemed to be an assignment or transfer of its rights or a delegation
of its obligations under this Agreement. Furthermore, the transfer of all or substantially all of
the assets of a Party shall not be deemed an assignment or transfer of its rights or a delegation
of its obligations under this Agreement if the assignee assumes all of the obligations under this
Agreement. The provisions of this Agreement are enforceable solely by the Parties (including any
permitted assignee), and no limited partner or member of the MLP or other Person shall have the
right, separate and apart from the Parties hereto, to enforce any provision of this Agreement or to
compel any Party to comply with the terms of this Agreement.

     11.8 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.

     11.9 Relationship of the Parties. Nothing in this Agreement shall be construed to create a partnership or joint venture or
give rise to any fiduciary or similar relationship of any kind.

18

 

     11.10 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance
shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.

     11.11 Further Assurances. In connection with this Agreement and all transactions contemplated by this Agreement, each
Party 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.

     11.12 Withholding or Granting of Consent. Except as expressly provided to the contrary in this Agreement, each Party may, with
respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant
or withhold such consent or approval in its sole and uncontrolled discretion, with or without
cause, and subject to such conditions as it shall deem appropriate.

     11.13 Laws and Regulations. Notwithstanding any provision of this Agreement to the contrary, no Party shall be required
to take any act, or fail to take any act, under this Agreement if the effect thereof would be to
cause such Party to be in violation of any applicable law, statute, rule or regulation.

     11.14 No Recourse Against Officers, Directors, Managers or Employees. For the avoidance of doubt, the provisions of this Agreement shall not give rise to any
right of recourse against any officer, director, manager or employee of MRD, the General Partner or
any of their respective Affiliates.

[Signatures on the following page]

19

 

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

	 	 	 	 	 

	 	 	MEMORIAL PRODUCTION PARTNERS LP
	 
	 	 	 	 
	 	 	By: Memorial Production Partners GP LLC, its general partner
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	MEMORIAL PRODUCTION PARTNERS GP LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	MEMORIAL RESOURCE DEVELOPMENT LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

EXHIBIT A

DESCRIPTION OF SERVICES

SERVICES

The following services to be provided by MRD or its designee:

	1.	 	Accounting;

	2.	 	Administrative;

	3.	 	Audit;

	4.	 	Benefits, Compensation and Human Resources Administration;

	5.	 	Billing and Invoices;

	6.	 	Bonds (performance, appeal, environmental and surety);

	7.	 	Books and Record Keeping;

	8.	 	Budget;

	9.	 	Cash Management;

	10.	 	Consulting;

	11.	 	Corporate Finance;

	12.	 	Corporate Governance Support;

	13.	 	Credit and Debt Administration;

	14.	 	Drilling;

	15.	 	Employee Health and Safety;

	16.	 	Engineering;

	17.	 	Environmental;

	18.	 	Financial, Planning and Analysis;

	19.	 	Geological and Geophysical;

	20.	 	Government and Public Relations;

	21.	 	Hedging and Derivatives;

	22.	 	Information Technology;

	23.	 	Insurance;

	24.	 	Investor Relations;

	25.	 	Legal;

	26.	 	Land Administration;

	27.	 	Management;

	28.	 	Marketing;

	29.	 	Office Leasing;

	30.	 	Operations;

	31.	 	Payroll;

	32.	 	Property Management;

	33.	 	Purchasing and Materials Management;

	34.	 	Regulatory Management;

	35.	 	Reservoir Engineering;

	36.	 	Risk Management;

	37.	 	Security;

	38.	 	Service Contracts,

	39.	 	Support for SEC reporting and compliance;

	40.	 	Tax;

	41.	 	Technical;

	42.	 	Travel;

	43.	 	Treasury; and

	44.	 	Acquisition Services.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00194-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00194-of-00352.parquet"}]]