Document:

Exhibit 10.3

 

SPECIFIC
TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR
THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPERATELY FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT
THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

EXECUTION COPY

 

AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT

 

of

 

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

 

Dated as of February 27th, 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1 DEFINED TERMS

  	
  1

  
	
  Section 1.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 FORMATION AND TERM

  	
  14

  
	
  Section 2.1

  	
  Formation

  	
  14

  
	
  Section 2.2

  	
  Name

  	
  15

  
	
  Section 2.3

  	
  Term

  	
  15

  
	
  Section 2.4

  	
  Registered Agent and Office

  	
  15

  
	
  Section 2.5

  	
  Principal Place of Business

  	
  15

  
	
  Section 2.6

  	
  Qualification in Other Jurisdictions

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 PURPOSE AND POWERS OF THE COMPANY

  	
  16

  
	
  Section 3.1

  	
  Purpose

  	
  16

  
	
  Section 3.2

  	
  Powers of the Company

  	
  16

  
	
  Section 3.3

  	
  Projects, Restricted Projects, Exempted Projects and
  Out of Scope Projects

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 CAPITAL CONTRIBUTIONS, MEMBER INTERESTS,
  CAPITAL ACCOUNTS AND FUTURE CAPITAL REQUIREMENTS

  	
  18

  
	
  Section 4.1

  	
  Capital Contributions

  	
  18

  
	
  Section 4.2

  	
  Capital Contribution Defaults

  	
  21

  
	
  Section 4.3

  	
  Member’s Interest

  	
  21

  
	
  Section 4.4

  	
  Status of Capital Contributions

  	
  21

  
	
  Section 4.5

  	
  Capital Accounts

  	
  22

  
	
  Section 4.6

  	
  Capital Accounts Generally

  	
  22

  
	
  Section 4.7

  	
  Preferred Return

  	
  22

  
	
  Section 4.8

  	
  Investment Accounts

  	
  23

  
	
  Section 4.9

  	
  Equalization Target Date

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 MEMBERS, MEETINGS AND AMENDMENTS

  	
  24

  
	
  Section 5.1

  	
  Powers of Members

  	
  24

  
	
  Section 5.2

  	
  No Resignation or Expulsion

  	
  24

  
	
  Section 5.3

  	
  Additional Members

  	
  25

  
	
  Section 5.4

  	
  Confidentiality Obligations of Members

  	
  25

  
	
  Section 5.5

  	
  Initial Budget

  	
  26

  
	
  Section 5.6

  	
  Incentive Interests to MWE Liberty Upon Transfer of
  NGPMR’s Interest

  	
  26

  
	
  Section 5.7

  	
  Preemptive Rights

  	
  27

  
	
  Section 5.8

  	
  Registration Rights

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 MANAGEMENT

  	
  28

  
	
  Section 6.1

  	
  Management Under Direction of the Board

  	
  28

  
	
  Section 6.2

  	
  Number, Tenure and Qualifications

  	
  28

  
	
  Section 6.3

  	
  Votes Per Manager; Quorum; Required Vote for Board
  Action; Meetings of the Board

  	
  30

  
	
  Section 6.4

  	
  Power to Bind Company

  	
  31

  
	
  Section 6.5

  	
  Liability for Certain Acts

  	
  31

  
	
  Section 6.6

  	
  Manager Has No Exclusive Duty to Company

  	
  31

  
	
  Section 6.7

  	
  Resignation
  and Withdrawal

  	
  31

  

 

i

 

	
  Section 6.8

  	
  Removal

  	
  32

  
	
  Section 6.9

  	
  Vacancies

  	
  32

  
	
  Section 6.10

  	
  Delegation of Authority; Officers

  	
  32

  
	
  Section 6.11

  	
  Designation of Operator

  	
  32

  
	
  Section 6.12

  	
  Approval of Members

  	
  34

  
	
  Section 6.13

  	
  Reliance by Third Parties

  	
  36

  
	
  Section 6.14

  	
  Fees and Expenses of the Managers

  	
  37

  
	
  Section 6.15

  	
  Budgets

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 ASSIGNABILITY OF MEMBER INTERESTS

  	
  38

  
	
  Section 7.1

  	
  Prohibition on Assignment During Project Period

  	
  38

  
	
  Section 7.2

  	
  Transfers After the Project Period

  	
  39

  
	
  Section 7.3

  	
  Recognition of Assignment by Company or Other
  Members

  	
  41

  
	
  Section 7.4

  	
  Effective Date of Assignment

  	
  41

  
	
  Section 7.5

  	
  Limitations on Transfer

  	
  42

  
	
  Section 7.6

  	
  Transferee Not a Substitute Member

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 DISTRIBUTIONS TO MEMBERS

  	
  42

  
	
  Section 8.1

  	
  Available Cash

  	
  42

  
	
  Section 8.2

  	
  Incentive Interest Percentage Distributions

  	
  43

  
	
  Section 8.3

  	
  Withholding

  	
  43

  
	
  Section 8.4

  	
  Limitations on Distribution

  	
  43

  
	
  Section 8.5

  	
  Tax Distributions

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 ALLOCATIONS

  	
  44

  
	
  Section 9.1

  	
  Profits and Losses

  	
  44

  
	
  Section 9.2

  	
  Special Allocations

  	
  44

  
	
  Section 9.3

  	
  Curative Allocations

  	
  45

  
	
  Section 9.4

  	
  Income Tax Allocations

  	
  46

  
	
  Section 9.5

  	
  Allocation and Other Rules

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 BOOKS AND RECORDS

  	
  47

  
	
  Section 10.1

  	
  Inspection Rights Pursuant to Law

  	
  47

  
	
  Section 10.2

  	
  Books and Records

  	
  47

  
	
  Section 10.3

  	
  Financial Statements and Reports

  	
  47

  
	
  Section 10.4

  	
  Accounting Method

  	
  48

  
	
  Section 10.5

  	
  Bank Accounts; Investments

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 TAX MATTERS

  	
  49

  
	
  Section 11.1

  	
  Taxation of Company

  	
  49

  
	
  Section 11.2

  	
  Tax Returns

  	
  49

  
	
  Section 11.3

  	
  Member Tax Return Information

  	
  49

  
	
  Section 11.4

  	
  Tax Matters Representative

  	
  49

  
	
  Section 11.5

  	
  Right to Make Section 754 Election

  	
  50

  
	
  Section 11.6

  	
  Tax Elections

  	
  50

  
	
  Section 11.7

  	
  Tax Reimbursement

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 LIABILITY, EXCULPATION AND
  INDEMNIFICATION

  	
  50

  
	
  Section 12.1

  	
  Liability

  	
  50

  
	
  Section 12.2

  	
  Exculpation

  	
  51

  
	
  Section 12.3

  	
  Indemnification

  	
  51

  

 

ii

 

	
  Section 12.4

  	
  Expenses

  	
  51

  
	
  Section 12.5

  	
  Insurance

  	
  51

  
	
  Section 12.6

  	
  Certain Liabilities

  	
  52

  
	
  Section 12.7

  	
  Acts Performed Outside the Scope of the Company

  	
  52

  
	
  Section 12.8

  	
  Liability of Members to Company or Other Members

  	
  52

  
	
  Section 12.9

  	
  Attorneys’ Fees

  	
  52

  
	
  Section 12.10

  	
  Subordination of Other Rights to Indemnity

  	
  52

  
	
  Section 12.11

  	
  Survival of Indemnity Provisions

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION

  	
  52

  
	
  Section 13.1

  	
  No Dissolution

  	
  52

  
	
  Section 13.2

  	
  Events Causing Dissolution

  	
  53

  
	
  Section 13.3

  	
  Notice of Dissolution

  	
  53

  
	
  Section 13.4

  	
  Liquidation

  	
  53

  
	
  Section 13.5

  	
  Termination

  	
  54

  
	
  Section 13.6

  	
  Claims of the Members or Third Parties

  	
  54

  
	
  Section 13.7

  	
  Distributions In-Kind

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
  55

  
	
  Section 14.1

  	
  Representations, Warranties and Covenants

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15 MISCELLANEOUS

  	
  56

  
	
  Section 15.1

  	
  Notices

  	
  56

  
	
  Section 15.2

  	
  Failure to Pursue Remedies

  	
  56

  
	
  Section 15.3

  	
  Cumulative Remedies

  	
  56

  
	
  Section 15.4

  	
  Binding Effect

  	
  57

  
	
  Section 15.5

  	
  Interpretation

  	
  57

  
	
  Section 15.6

  	
  Severability

  	
  57

  
	
  Section 15.7

  	
  Counterparts

  	
  57

  
	
  Section 15.8

  	
  Integration

  	
  57

  
	
  Section 15.9

  	
  Amendment or Restatement

  	
  57

  
	
  Section 15.10

  	
  Governing Law

  	
  57

  
	
  Section 15.11

  	
  Dealings in Good Faith

  	
  58

  
	
  Section 15.12

  	
  Partition of the Property

  	
  58

  
	
  Section 15.13

  	
  Third Party Beneficiaries

  	
  58

  
	
  Section 15.14

  	
  Tax Disclosure Authorization

  	
  58

  
	
  Section 15.15

  	
  Waivers
  and Consents

  	
  58

  

 

iii

 

	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Area of Mutual Interest

  
	
  Exhibit B

  	
  Members and Capital Contributions

  
	
  Exhibit C

  	
  Base Project

  
	
  Exhibit D

  	
  Initial Budget

  
	
  Exhibit E

  	
  Illustrative Example Calculation of Incentive Interests

  
	
  Exhibit F

  	
  Services Agreement

  
	
  Exhibit G

  	
  Capital Expenditures for Agreements

  
	
  Exhibit H

  	
  Pre-Approved Affiliated Transactions

  
	
  Exhibit I

  	
  Bring Down Certificate

  
	
  Exhibit J

  	
  Escrow Agreement

  
	
  Exhibit K

  	
  Fractionation and NGL Purchase Agreement

  

 

iv

 

AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT

 

OF

 

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

 

THIS AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT (“Agreement”) of MarkWest Liberty Midstream &
Resources, L.L.C., a Delaware limited liability company (the “Company”), is
executed and agreed to as of February 27th, 2009, by and among MarkWest
Liberty Gas Gathering, L.L.C., a Delaware limited liability company (“MWE
Liberty”), M&R MWE Liberty, LLC, a Delaware limited liability company (“NGPMR”),
and such other Persons who may become Members of the Company from time to time
pursuant hereto.

 

WHEREAS, MWE Liberty, as the
then sole member of the Company, entered into that certain Limited Liability
Company Agreement (the “Original Agreement”) of the Company, dated as of January 20,
2009;

 

WHEREAS, in order to
initially capitalize the Company, at or before the Closing, the Members shall
make the Initial Capital Contributions and from time to time thereafter, certain
of the Members shall make additional Capital Contributions in accordance with Article 4;

 

WHEREAS, in order to effect
the contribution of the cash consideration comprising NGPMR’s Initial Capital
Contribution and the assets comprising MWE Liberty’s Initial Capital
Contribution, the Company, MWE Liberty and NGPMR entered into that certain
Contribution Agreement, dated January 22, 2009 (the “Contribution
Agreement”), pursuant to which MWE Liberty agreed to contribute, convey, assign
and transfer to the Company all of MWE Liberty’s right, title and interest in
and to the assets referenced thereunder;

 

WHEREAS, contemporaneously
with the execution of this Agreement and in order to provide for the provision
of certain services to the Company, the Company, MWE Liberty and MarkWest
Hydrocarbon, Inc., a Delaware corporation (“MWE Hydrocarbon”) shall enter
into that certain Services Agreement in the form attached hereto as Exhibit F
(the “Services Agreement”), pursuant to which MWE Hydrocarbon shall provide
certain services, or cause such services to be provided, to the Company;

 

WHEREAS, upon the Closing,
the parties to the Contribution Agreement shall consummate the transactions
contemplated by the Contribution Agreement and this Agreement shall become
effective; and

 

WHEREAS, the Company and the
Members desire to amend and restate the Original Agreement in its entirety to
reflect the agreement of the Company and the Members as set forth herein;

 

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

 

ARTICLE 1

DEFINED TERMS

 

Section 1.1             Definitions.

 

Unless the context otherwise
requires, the terms defined in this Article I shall, for the purposes of
this Agreement, have the meanings herein specified.

 

 

“AAA” shall have the meaning
set forth in Section 6.15(e).

 

“Accountants shall have the
meaning set forth in Section 4.1(a)(iii).

 

“Act” means the Delaware
Limited Liability Company Act, 6 Del. C. §§ 18-101 et  seq.,
as it may be amended from time to time, and any successor statute thereto.

 

“Additional Member” shall
have the meaning set forth in Section 5.3(a).

 

“Additional Projects” shall
have the meaning set forth in Section 3.3(a).

 

“Adjusted Capital Account”
means the Capital Account maintained for each Member (a) increased by any
amounts the Member is obligated to contribute or restore to the Company
pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), and (b) decreased by any amounts
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6) with
respect to such Member.

 

“Adjusted Capital Account
Deficit” means a deficit balance in the Adjusted Capital Account of a Member.

 

“Affiliate” means with
respect to a Person, any other Person that, directly or indirectly, Controls,
is Controlled by, or is under Common Control with, the specified Person.

 

“Affiliate Contract” means
any contract between the Company or any Subsidiary of the Company, on the one
hand, and a Member or an Affiliate of a Member, on the other hand.

 

“Affiliated Member Group”
means (a) the MWE Liberty Group, (b) the NGPMR Group and (c) any
other Member and transferee of Interests directly or indirectly (in the chain
of title) from such Member that is an Affiliate of such transferee Member; provided,
however, that once a Person is designated as a member of any Affiliated
Member Group, such Person shall, as long as it owns any Interests, at all times
be a member of such Affiliated Member Group and not a member of any other
Affiliated Member Group, and provided, further, that for purposes of this
clause (c) of this definition, an Affiliate shall not include a member of
the MWE Liberty Group or the NGPMR Group.

 

“Agreement” means this
Amended and Restated Limited Liability Company Agreement, as amended, modified,
supplemented or restated from time to time.

 

“Annual Financial Statements”
shall have the meaning set forth in Section 10.3(a).

 

“Approved Budget” shall have
the meaning set forth in Section 6.15(b).

 

“Arbitration Panel” shall
have the meaning set forth in Section 6.15(e).

 

“Area of Mutual Interest”
means the area ** identified **
as Exhibit A.

 

“Assumed Tax Liability”
shall have the meaning set forth in Section 8.5(a).

 

“Available Cash” means, with
respect to any period prior to the dissolution of the Company, all cash and
cash equivalents of the Company on hand at the end of such period less the
amount of any cash reserves established by the Operator to provide for the
proper conduct of the business of the Company, including reserves for: future
capital expenditures; current, future or contingent liabilities; anticipated
future credit needs of the Company; and debt service and repayments; provided
that such reserves shall 

 

2

 

not
equal less than ** as authorized in the Approved
Budget nor more than ** in the
Approved Budget, without the approval of the Board and Requisite Member
Approval.

 

“Base Project” shall have
the meaning set forth in Section 3.3(a).

 

“Board” shall have the
meaning set forth in Section 6.1.

 

“Bring Down Certificate”
means a certificate, in the form attached hereto as Exhibit I, to
be delivered by the Company to the Class A Members in respect of the
Capital Contributions set forth in Section 4.1(b)(i) stating that the
Company has spent or committed to spend all previous Capital Contributions by
the Class A Members in accordance with an Approved Budget, and will spend
the Capital Contribution to which the Bring Down Certificate relates in
accordance with an Approved Budget.

 

“Budget Rejection Notice”
shall have the meaning set forth in Section 6.15(b).

 

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

 

“Capital Account” means,
with respect to any Member, the capital account maintained for such Member in
accordance with the provisions of Section 4.5.

 

“Capital Call” means a call
or request for additional capital in writing (which may include electronic
mail) by or on behalf of the Company, specifying the amount of capital
requested to be contributed by each Member receiving such notice in accordance
with the terms of this Agreement.

 

“Capital Contribution”
means, with respect to any Member, the aggregate amount of cash and the initial
Gross Asset Value of any property other than cash contributed to the Company
pursuant to Article 4 hereof by such Member.  Any reference in this Agreement to a Capital
Contribution of a Member shall include a Capital Contribution contributed by
its predecessors in interest.

 

“Certificate” means the
Certificate of Formation of the Company filed on behalf of the Company with the
office of the Secretary of State of the State of Delaware pursuant to the Act
on January 20, 2009, and any and all amendments thereto and restatements
thereof.

 

“Claims” shall have the
meaning set forth in Section 6.5.

 

“Class A Interest”
means an Interest in the Company which is classified on Exhibit B
as a Class A Interest and which has the rights, powers and privileges
enjoyed by a Member holding a Class A Percentage Interest (under the Act,
the Certificate, this Agreement or otherwise) in its capacity as a Member, and
all obligations, duties and liabilities imposed on such a Member (under the
Act, the Certificate, this Agreement or otherwise) in its capacity as a Member.

 

“Class A Manager” shall
have the meaning set forth in Section 6.2.

 

“Class A Member” means
a Member who is designated on Exhibit B as a Class A Member,
in its capacity as a holder of a Class A Percentage Interest.

 

“Class A Percentage
Interest” means, with respect to a Class A Member, the quotient (expressed
as a percentage) obtained by dividing such Class A Member’s Investment
Balance by the aggregate Investment Balances of all Class A Members.

 

3

 

“Class B Interest”
means an Interest in the Company which is classified on Exhibit B
as a Class B Interest and which has the rights, powers and privileges
enjoyed by a Member holding a Class B Percentage Interest (under the Act,
the Certificate, this Agreement or otherwise) in its capacity as a Member, and
all obligations, duties and liabilities imposed on such a Member (under the
Act, the Certificate, this Agreement or otherwise) in its capacity as a Member.

 

“Class B Manager” shall
have the meaning set forth in Section 6.2.

 

“Class B Member” means
a Member who is designated on Exhibit B as a Class B Member,
in its capacity as a holder of a Class B Percentage Interest.

 

“Class B Percentage
Interest” means, with respect to a Class B Member, the quotient (expressed
as a percentage) obtained by dividing such Class B Member’s Investment
Balance by the aggregate Investment Balances of all Class B Members.

 

“Class B Seller” shall
have the meaning set forth in Section 7.2(b).

 

“Closing” has the meaning
ascribed to such term in the Contribution Agreement.

 

“Code” means the Internal
Revenue Code of 1986, as amended from time to time, or any corresponding
federal tax statute enacted after the date of this Agreement.

 

“Company” shall have the
meaning set forth in the preamble.

 

“Company Minimum Gain” shall
have the meaning assigned to the term “partnership minimum gain” in Treasury
Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

 

“Company Nonrecourse
Liability” shall have the meaning assigned to the term “nonrecourse liability”
in Treasury Regulations Section 1.704-2(b)(3)

 

** shall have the
meaning set forth in Section 4.9(b).

 

** shall have the
meaning set forth in Section 4.9(c).

 

“Confidential Information”
shall mean all information provided or made available by or on behalf of the
Company or its Representatives to a Member or its Representatives, including
all information, data, reports, interpretations, contract terms and conditions,
forecasts and records containing or otherwise reflecting information concerning
the Company or its Affiliates, potential counterparties or customers or their
Affiliates, potential projects, business plans or proposals, market or economic
data, identities of actual or potential counterparties or customers, designs,
concepts, trade secrets and other business, operational or technical
information (irrespective of the form of communication of such information) and
together with analyses, compilations, studies or other documents, whether
prepared by or on behalf of a Member or its Representatives, which contain or
otherwise reflect such information (irrespective of the form of communication
of such information).  “Confidential
Information” also includes information of third parties, including such
information as may be subject to any Third Party Confidentiality
Agreements.  Notwithstanding the
foregoing, Confidential Information shall not include the following:  (a) information which at the time of
disclosure by or on behalf of the Company is publicly available or which later
becomes publicly available through no act or omission of the disclosing Member
or its Representatives; (b) information which a Member can demonstrate was
in its possession on a non-confidential basis prior to disclosure by or on
behalf of the Company hereunder; (c) information received by a Member from
a third party who is not prohibited from transmitting the information by a
contractual, 

 

4

 

legal
or fiduciary obligation; or (d) information which a Member can demonstrate
was independently developed by it or for it and which was not derived or
obtained, in whole or in part, from Confidential Information or from the
Company or its Representatives hereunder.

 

“Contributing Member” shall
mean a Class A Member who makes a Quarterly Budgeted Funding Election in
accordance with Section 4.1(c).

 

“Contribution Agreement”
shall have the meaning set forth in the recitals.

 

“Control,” including the
correlative terms “Controlling,” “Controlled by” and “Under Common Control with”
means possession, directly or indirectly (through one or more intermediaries),
of the power to direct or cause the direction of the management or policies
(whether through ownership of securities or any partnership or other ownership
interest, by contract or otherwise) of a Person.  For the purposes of this definition,
ownership of more than 50% of the voting interests of any entity shall be
conclusive evidence that Control exists.

 

“Covered Person” means, in
each case, whether or not a Person continues to have the applicable status
referred to in the following list: a Member; a Manager; the Operator; any
Affiliate of a Member or a Manager or of the Operator; any officers of the
Company, whether or not such officers are employees of the Company; any
officers, directors, members, managers, stockholders, partners, employees,
representatives or agents of any Manager or Member or of the Operator, or of
any of their respective Affiliates; any employee or agent of the Company or its
Affiliates; and any Tax Matters Member of the Company.

 

“CP Index” means the United
States Department of Labor, Bureau of Labor Statistics Consumer Price Index —
All Urban Consumers, U.S. City Average, Not Seasonally Adjusted, or, if such
index is discontinued, any successor or substitute index, which, in the Board’s
reasonable opinion, is most nearly equivalent to such index.

 

“Debt” for any Person means,
without duplication: (a)     indebtedness of such
Person for borrowed money, including obligations under letters of credit and
agreements relating to the issuance of letters of credit or acceptance
financing; (b) obligations of such Person evidenced by bonds, debentures,
notes, or other similar instruments; (c) obligations of such Person to pay
the deferred purchase price of property or services (including, without
limitation, obligations that are non-recourse to the credit of such Person but
are secured by the assets of such Person, but excluding trade accounts
payable); (d) obligations of such Person under capital leases; and (e) obligations
of such Person under guarantees in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (d) above; provided
that “Debt” shall not include the incurrence of trade debt in the
ordinary course of business.

 

“Default Rate” means a per
annum rate of interest equal to the lower of **
and the maximum rate of interest then permitted by law.

 

“Defaulting Member” shall
have the meaning set forth in Section 4.2.

 

“Depreciation” means, for
each Fiscal Year or other period, an amount equal to the depreciation,
amortization or other cost recovery deduction allowable for federal income tax
purposes with respect to an asset for such Fiscal Year or other period and in a
manner consistent with the methodologies employed by MWE or otherwise
determined by the Board; provided, however, that if the Gross
Asset Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such Fiscal Year or other period, Depreciation for
such Fiscal Year or other period shall equal to the amount of book basis
recovered for such Fiscal Year or other period under the rules prescribed
by Treasury Regulation Section 

 

5

 

1.704-3(d)(2) and
provided  further, that if the federal income tax depreciation,
amortization or other cost recovery deduction for such Fiscal Year or other
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the Board.

 

“Designated MWE Employees”
has the meaning ascribed to such term in the Services Agreement.

 

“Economic Risk of Loss”
shall have the meaning assigned to that term in Treasury Regulation Section 1.752-2(a).

 

“Effective Time” means 12:01 a.m.
on January 1, 2009.

 

“Election Period” shall have
the meaning set forth in Section 5.7(b).

 

“Electing Member” shall have
the meaning set forth in Section 5.7(b).

 

“Eligible Member” shall have
the meaning set forth in Section 5.7(a).

 

“Enforcement Activities”
shall have the meaning set forth in Section 6.3(a).

 

“Equalization Date” shall
mean the first date after ** on which the
quotient (expressed as a percentage) obtained by dividing the aggregate
Investment Balances of all members of the MWE Liberty Group by the aggregate
Investment Balances of all members of the MWE Liberty Group plus all members of
the NGPMR Group is equal to or greater than 60%.

 

“Equalization Target Date”
shall have the meaning set forth in Section 4.9(a).

 

“Escrow Account” shall have
the meaning set forth in Section 10.5.

 

“Escrow Agent” means Wells
Fargo Bank, N.A.

 

“Escrow Agreement” means
that certain Escrow Agreement to be entered into among the Company, NGPMR and
the Escrow Agent in substantially the form attached hereto as Exhibit J.

 

“Escrow Letter” shall have
the meaning set forth in Section 10.5.

 

“Exchange Act” means the
Securities Exchange Act of 1934, and the rules and regulations promulgated
thereunder, as amended and any successor statutes thereto.

 

“Exempted Project” shall
have the meaning set forth in Section 3.3(b).

 

“Final Calculations” shall
have the meaning set forth in Section 4.1(a)(ii).

 

“Final Cost” shall have the
meaning set forth in Section 4.1(a)(iv).

 

“First Notice” shall have
the meaning set forth in Section 5.7(b).

 

“Fiscal Year” means (i) the
period commencing at the Effective Time and ending on December 31, 2010
and (ii) any subsequent 12 month period commencing on January 1 and
ending on December 31.

 

6

 

“Fractionation and NGL
Purchase Agreement” shall have the meaning set forth in Section 3.3(b)(ii).

 

“G&A Services” has the
meaning ascribed to such term in the Services Agreement.

 

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

 

** means that
certain ** by and between MarkWest Liberty Gas
Gathering, L.L.C. and **.

 

“Gross Asset Value” means,
with respect to any asset, such asset’s adjusted basis for federal income tax
purposes, except as follows:

 

(a)           the initial Gross Asset Value of any
asset contributed by a Member to the Company shall be the gross fair market
value of such asset, as agreed to by the contributing Member and the Board,
except that MWE Liberty’s Initial Capital Contribution shall have the gross
asset value determined in accordance with Section 4.1(a);

 

(b)           the Gross Asset Value of all Company
assets shall be adjusted to equal their respective gross fair market values, as
determined by the Board, in connection with: (i) the acquisition of an
additional interest in the Company by any new or existing Member in exchange
for more than a de minimis Capital Contribution or in exchange for
the performance of services to or for the benefit of the Company; (ii) the
distribution by the Company to a Member of more than a de minimis
amount of Company assets as consideration for an interest in the Company; and (iii) the
liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g) (other
than pursuant to Section 708(b)(1)(B) of the Code) or any other event
to the extent determined by the Board to be necessary to properly reflect the
Gross Asset Values in accordance with the standards set forth in Treasury
Regulations Section 1.704-1(b)(2)(iv)(q); provided, however,
that adjustments pursuant to clause (i) and clause (ii) of this
sentence shall be made only if the Board reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Members in the Company;

 

(c)           the Gross Asset Value of any Company
asset distributed to any Member shall be the gross fair market value of such
asset on the date of distribution, as determined by the Board and the
distributee Member; and

 

(d)           the Gross Asset Values of Company
assets shall be adjusted to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b),
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m).

 

If the Gross Asset Value of
an asset has been determined or adjusted pursuant to paragraph (a) or
paragraph (b) above, such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset for purposes
of computing Profits and Losses.

 

“Incentive Interest
Transaction” shall have the meaning set forth in Section 5.6.

 

“Indentures” has the meaning
ascribed to such term in the Contribution Agreement.

 

“Indemnitee” shall have the
meaning set forth in Section 12.7.

 

“Indemnitor” shall have the
meaning set forth in Section 12.7.

 

7

 

“Initial Budget” shall have
the meaning set forth in Section 5.5.

 

“Initial Capital
Contribution” shall have the meaning set forth in Section 4.1(a)(i).

 

“Interest” means the
interest of a Member in the Company, including both Class A Percentage
Interests and Class B Percentage Interests, including rights to
distributions (liquidating or otherwise), allocations, notices and information,
rights to approve of or consent to certain matters (if applicable) and all
other rights, benefits and privileges enjoyed by that Member (under the Act,
the Certificate, this Agreement, or otherwise) in its capacity as a Member; and
all obligations, duties and liabilities imposed on that Member (under the Act,
the Certificate, this Agreement, or otherwise) in its capacity as a Member.

 

“Investment Account” shall
have the meaning set forth in Section 4.8.

 

“Investment Balance” shall
have the meaning set forth in Section 4.8.

 

“Investment Balance Costs”
shall have the meaning set forth in Section 4.1(a)(ii).

 

“IPO Issuer” means (a) the
Company or (b) an Affiliate of the Company which will be a successor to
the Company and the issuer in a Qualified Public Offering.

 

“Lien” means, with respect
to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.

 

“Liquidating
Trustee” shall have the meaning set forth in Section 13.4(a).

 

“Manager” shall have the
meaning set forth in Section 6.1.

 

“Member” means any Person
(but not any Affiliate or entity in which such Person has an equity interest)
executing this Agreement and any Person admitted as an Additional Member or a
Substitute Member pursuant to the provisions of this Agreement, in such Person’s
capacity as a Member of the Company, and “Members” means two or more of such
Persons, in their capacities as Members of the Company.  Such terms do not include any Person or
Persons who have ceased to be Members in the Company.

 

“Member Nonrecourse Debt”
has the meaning assigned to the term “partner nonrecourse debt” in Treasury
Regulation Section 1.704-2(b)(4).

 

“Member Nonrecourse Debt
Minimum Gain” shall have the meaning assigned to the term “partner nonrecourse
debt minimum gain” in Treasury Regulation Section 1.704-2(i)(2).

 

“Member Nonrecourse
Deductions” shall have the meaning assigned to the term “partner nonrecourse
deductions” in Treasury Regulation Section 1.704-2(i)(1).

 

“Minimum Gain” shall have
the meaning assigned to that term in Treasury Regulation Section 1.704-2(d).

 

“Minimum Price” shall have
the meaning set forth in Section 7.2(b)(ii).

 

“Monthly Reports” shall have
the meaning set forth in Section 10.3(c).

 

“MWE” means MarkWest Energy
Partners, L.P., a Delaware limited partnership.

 

8

 

“MWE Hydrocarbon” shall have
the meaning set forth in the recitals.

 

“MWE Liberty” shall have the
meaning set forth in the preamble.

 

“MWE Liberty Group” means
MWE Liberty and each transferee of Interests directly or indirectly (in the
chain of title) from MWE Liberty that is an Affiliate of MWE Liberty; provided,
however, that once a Person is designated as a member of the MWE Liberty
Group such Person shall, as long as it owns any Interests, at all times be a
member of the MWE Liberty Group and not a member of any other Affiliated Member
Group; provided further, that for purposes of this definition, an Affiliate
shall not include a member of any other Affiliated Member Group.

 

“New Interests” shall have
the meaning set forth in Section 5.7(a).

 

“NGPMR” shall have the
meaning set forth in the preamble.

 

“NGPMR Covered Persons” has
the meaning ascribed to such term in the Contribution Agreement.

 

“NGPMR Exit Transaction”
means ** involving the Company in which ** in which the ** prior to the
** of the Company **
or a ** of the Company**.  For the avoidance of doubt, any **

 

“NGPMR Group” means NGPMR
and each transferee of Interests directly or indirectly (in chain of title)
from NGPMR that is an Affiliate of NGPMR; provided, however, that
once a Person is designated as a member of the NGPMR Group such Person shall,
as long as it owns any Interests, at all times be a member of the NGPMR Group
and not a member of any other Affiliated Member Group, and, provided further,
that for purposes of this definition, an Affiliate shall not include a member
of any other Affiliated Member Group.

 

“NGPMR Portfolio Companies”
shall have the meaning set forth in Section 3.3(c).

 

“NGPMR Representatives” shall
mean the members, managers and employees of NGPMR or any Affiliate thereof,
together with all other persons serving as representatives of NGPMR, including
those Persons who are serving as Managers at the request of NGPMR pursuant to
this Agreement.

 

“Non-Contributing Member”
shall mean a Class A Member who does not elect to make a Quarterly
Budgeted Funding Election in accordance with Section 4.1(c).

 

“Nonrecourse Deductions”
shall have the meaning assigned to that term in Treasury Regulation Section 1.704-2(b).

 

“Objection Notice” shall
have the meaning set forth in Section 4.1(a)(iii).

 

“Operator” means the Person
designated as the “Operator” of the Company in accordance with Section 6.11.

 

“Original Agreement” shall
have the meaning set forth in the recitals.

 

“Out of Scope Project” means
any project, activity, or business venture (a) outside the Area of Mutual
Interest or (b) not within the scope of the Primary Business of the
Company (whether inside or outside the Area of Mutual Interest).

 

“Over-Allotment Amount”
shall have the meaning set forth in Section 5.7(b).

 

9

 

“Overfunded Capital” means,
as of any determination date, the difference (expressed as a dollar amount)
between **.

 

“Partial NGPMR Exit
Transaction” means ** after which
the ** in the **
after which the **

 

“Percentage Interest” means:

 

(a)                                  at any time
prior to the earlier to occur of the Equalization Date and **:

 

(i)            with respect to a Class A Member, the product
(expressed as a percentage) of (1) 40% and (2) such Member’s Class A
Percentage Interest; and

 

(ii)           with respect to a Class B Member, the product
(expressed as a percentage) of (1) 60% and (2) such Member’s Class B
Percentage Interest.

 

(b)                                 at any time on
or after the earlier to occur of the Equalization Date and **,
with respect to any Member (including any Class A Member or Class B
Member), the quotient (expressed as a percentage) obtained by dividing the
Investment Balance of such Member by the Investment Balances of all Members.

 

“Permitted Liens” means (a) statutory
liens for current taxes or assessments not yet due and delinquent or the
validity of which is being contested in good faith by appropriate proceedings
and for which adequate reserves have been established; (b) mechanics’, carriers’,
workers’, repairers’ and other similar liens arising or incurred in the
ordinary course of business; and (c) all applicable zoning ordinances and
land use restrictions.

 

“Permitted Transfers” shall
have the meaning set forth in Section 7.1.

 

“Personnel Services” has the
meaning ascribed to such term in the Services Agreement.

 

“Person” means any natural
person, corporation, limited partnership, general partnership, limited
liability company, joint stock company, joint venture, association, company,
estate, trust, bank trust company, land trust, business trust, or other
organization, whether or not a legal entity, custodian, trustee-executor,
administrator, nominee or entity in a representative capacity and any
government or agency or political subdivision thereof.

 

“Post-Effective Date Capital
Expenditures” shall have the meaning ascribed to such term in the Contribution
Agreement.

 

“Preference
Amount” means an amount calculated on the last day of each calendar quarter
following the Effective Time and prior to the Equalization Date by determining
the difference between (a) the amount of Overfunded Capital as of the last
day of such quarter multiplied by the Preference Rate and (b) the amount
of all distributions made during such calendar quarter pursuant to Section 8.1(b)(i)(A).  The Preference Amount for the prior calendar
quarter shall be added to the Investment Balance as of the first day of the
following calendar quarter.

 

“Preference Rate” means a
quarterly rate expressed as a percentage equal to **
per annum, divided by four.

 

“Primary Business” shall
have the meaning set forth in Section 3.1(a).

 

10

 

“Profits” or “Losses” means,
for each Fiscal Year, an amount equal to the Company’s taxable income or loss
for such Fiscal Year, determined in accordance with Section 703(a) of
the Code (but including in taxable income or loss, for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code), with the following adjustments:

 

(a)           any income of the Company exempt from
federal income tax and not otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be added to such taxable income or loss;

 

(b)           any expenditures of the Company
described in Section 705(a)(2)(B) of the Code (or treated as
expenditures described in Section 705(a)(2)(B) of the Code pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(i)) and not otherwise
taken into account in computing Profits or Losses pursuant to this definition
shall be subtracted from such taxable income or loss;

 

(c)           in the event the Gross Asset Value of
any Company asset is adjusted in accordance with paragraph (b) or
paragraph (c) of the definition of “Gross Asset Value”, the amount of such
adjustment shall be taken into account as gain (if the adjustment increases the
Gross Asset Value of the Company asset) or loss (if the adjustment decreases
the Gross Asset Value of the Company asset) from the disposition of such asset
for purposes of computing Profits or Losses;

 

(d)           gain or loss resulting from any
disposition of any Company asset with respect to which gain or loss is
recognized for federal income tax purposes shall be computed by reference to the
Gross Asset Value of the asset disposed of, notwithstanding that the adjusted
tax basis of such asset differs from its Gross Asset Value;

 

(e)           in lieu of the depreciation,
amortization and other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account Depreciation for
such Fiscal Year or other period, computed in accordance with the definition of
“Depreciation”;

 

(f)            to the extent an adjustment to the
adjusted tax basis of any asset pursuant to Code Section 734(b) is
required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4),
to be taken into account in determining Capital Account balances as a result of
a distribution other than in liquidation of a Member’s interest in the Company,
the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or an item of loss (if the
adjustment decreases such basis) from the disposition of such asset and shall
be taken into account for purposes of computing Profits or Losses; and

 

(g)           notwithstanding any other provisions
of this definition, any items which are specially allocated pursuant to Section 9.2
or 9.3 shall not be taken into account in computing Profits or Losses.

 

“Project Period” shall have
the meaning set forth in Section 7.1.

 

“Projects” shall have the
meaning set forth in Section 3.3(a).

 

“Property” means all of the
assets and property now owned or hereafter acquired by the Company.

 

“Proposed Budget” shall have
the meaning set forth in Section 6.15(a).

 

“Proposed Purchaser” shall
have the meaning set forth in Section 5.7(a).

 

11

 

“Prudent Industry Practices”
means, at a particular time, any of the practices, methods and acts which, ** based upon the **, and the **, at such time, is ** operation
and maintenance of the Company assets and shall include, without limitation,
the practices, methods and acts engaged in or approved by **
at such time with respect to the assets of the same or similar types as the
Company assets. Prudent Industry Practices are not intended to be limited to ** to the exclusion of all others, but rather is ** practices, methods and acts which **
at a ** as well as with the **. Prudent Industry Practices are intended to entail the **, in the **, use from
time to time.

 

“Qualified Public Offering”
means any underwritten initial public offering by the IPO Issuer of equity
securities pursuant to an effective registration statement under the Securities
Act and for which aggregate cash proceeds to be received by the IPO Issuer from
such offering (without deducting underwriting discounts, expenses and
commissions) are at least $50,000,000.

 

“Qualifying Third Party
Offer” shall have the meaning set forth in Section 7.2(a)(ii).

 

“Quarterly Budgeted Funding
Election” shall have the meaning set forth in Section 4.1(c).

 

“Quarterly Financial
Statements” shall have the meaning set forth in Section 10.3(b).

 

“Regulatory Allocations”
shall have the meaning set forth in Section 9.3.

 

“Remaining Members” shall
have the meaning set forth in Section 7.2(a).

 

“Representatives” means (a) with
respect to the Company, any of: (i) the Company’s Affiliates; and (ii) directors,
officers, managers, employees, members, partners, agents and authorized
representatives (including attorneys, accountants, consultants, bankers,
lenders and financial advisors) of the Company and the Company’s Affiliates and
(b) with respect to a Member, any of: (i) such Member’s Affiliates; (ii) directors,
officers, managers, employees, members, stockholders, partners, agents and
authorized representatives (including attorneys, accountants, consultants,
bankers, lenders and financial advisors) of the Member and the Member’s
Affiliates; and (iii) Persons who are (or who are prospective) beneficial
owners of equity interests in such Member.

 

“Requisite Member Approval”
means the approval of each Affiliated Member Group holding Interests with (i) an
aggregate Percentage Interest equal to or exceeding **
or (ii) an **.

 

“Restricted Project” has the
meaning set forth in Section 3.3(b).

 

“ROFO Interest” shall have
the meaning set forth in Section 7.2(a).

 

“ROFO Offer” shall have the
meaning set forth in Section 7.2(a).

 

“Rules” shall have the
meaning set forth in Section 6.15(e).

 

“Sale Proposal” shall have
the meaning set forth in Section 7.2(b)(i).

 

“Securities Act” means the
Securities Act of 1933, and the rules and regulations promulgated
thereunder, as amended and any successor statutes thereto.

 

“Services Agreement” shall
have the meaning set forth in the recitals.

 

“Solicitation Notice” shall
have the meaning set forth in Section 7.2(b)(ii).

 

12

 

“Solicitation Period” shall
have the meaning set forth in Section 7.2(a)(ii).

 

“Solicitation Response”
shall have the meaning set forth in Section 7.2(b)(ii).

 

“Subsidiary” means, with
respect to any Person, (a) any corporation, of which a majority of the
total voting power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote generally in the election of directors thereof is
at the time owned or controlled, directly or indirectly, by that Person or one
or more of the other Subsidiaries of that Person or a combination thereof or (b) any
limited liability company, partnership, association or other business entity,
of which a majority of the partnership or other similar ownership interests
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination
thereof.  For purposes of this
definition, a Person or Persons will be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other business
entity if such Person or Persons will be allocated a majority of limited
liability company, partnership, association or other business entity gains or
losses, or is or controls the managing member or general partner of such
limited liability company, partnership, association or other business entity.

 

“Substitute Member” means a
Person who is admitted to the Company as a Member pursuant to Article 7,
and then designated as a “Member” on an amended Exhibit B to this
Agreement.

 

“Tag-Along Members” shall
have the meaning set forth in Section 7.2(b).

 

“Tag-Along Notice” shall
have the meaning set forth in Section 7.2(b)(i).

 

“Tag-Along Notice Period”
shall have the meaning set forth in Section 7.2(b)(i).

 

“Tag-Along Rights” shall
have the meaning set forth in Section 7.2(b).

 

“Tax Distribution Date”
shall have the meaning set forth in Section 8.5(a).

 

“Tax Matters Member” shall
have the meaning set forth in Section 11.4(a).

 

“Third Party Confidentiality
Agreements” means that certain ** among MWE
Liberty, **, the **,
that certain ** between **
and MWE Liberty, that certain ** between ** and MWE Liberty ** and that
certain ** between **
and MWE Liberty ** or any other third party
agreement entered into by or on behalf of the Company and delivered to a
Member.

 

“Third Party Offer” shall
have the meaning set forth in Section 7.2(a)(ii).

 

“**
Payout” shall mean the dollar threshold, if any, at which the NGPMR Group has
received a cumulative cash amount in respect of the NGPMR Group’s Interests
(whether as distributions from the Company or as cash payment in an Incentive
Interest Transaction) equal to the ** as of the
date of such cash payment ** where ** is equal to the ** determined
as of the date of such cash payment or distribution.

 

“**
Payout Threshold” shall mean the receipt by the NGPMR Group of a cumulative
cash amount in respect of the NGPMR Group’s Interests (whether as distributions
from the Company or as cash payment in an Incentive Interest Transaction) equal
to the ** where **
is equal to the ** determined as of the date of
such distribution or cash payment.

 

“**
Percentage” shall mean **.

 

13

 

**

 

“Transaction Documents” shall have the
meaning set forth in Section 5.1(b).

 

“Transfer” means any direct or indirect
transfer, assignment, sale, conveyance, license, lease, or partition of any
Interest, and includes any “involuntary transfer” such as a sale of any part of
the Interest therein in connection with any bankruptcy or similar insolvency
proceedings, or any other disposition of any Interest.  A Transfer shall not include any pledge,
hypothecation or encumbrance of any Interest.

 

“Transferring Member” shall have the meaning
set forth in Section 7.2(a).

 

“Treasury Regulations” means the income tax
regulations, including temporary regulations, promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

 

“True-Up Contribution” shall have the meaning
set forth in Section 4.9(a).

 

** means that certain ** by and between MWE Liberty and ** as amended by Amendment No. 1 to ** by and between MWE Liberty and **.

 

“Unrelated Information” shall have the
meaning set forth in Section 10.2.

 

“Weighted Average Capital Contribution Factor”
shall mean as of any date of calculation, a weighted average ** the amounts determined for each date on which NGPMR has
made Capital Contributions (including without limitation the Capital
Contributions funded on the date hereof) calculated as **
of the total ** years from the date of each
Capital Contribution until the date of such calculation (with a partial year
being expressed as a decimal determined by dividing the number of days which
have passed since the most recent anniversary by 365).  Solely for purposes of determining Capital
Contributions under this definition, (i) ** shall be
treated as a Capital Contribution made by the NGPMR Group as of the date **, and (ii) any other amounts **
shall be treated as Capital Contributions made by the NGPMR Group as of the
date **.

 

ARTICLE 2

FORMATION AND TERM

 

Section 2.1                                      Formation.

 

(a)                                  The Company was organized as a Delaware limited liability company
under and pursuant to the Act by the filing of the Certificate by an authorized
person and is being continued pursuant to the terms of this Agreement.

 

(b)                                 The name and mailing address of each Member and the total
amount which shall be contributed to the capital of the Company through the
Closing is listed on Exhibit B. 
The Board shall cause Exhibit B to be updated, from time to time,
as may be necessary to accurately reflect the information therein.  Any amendment or revision to Exhibit B
made in accordance with this Agreement shall not be deemed an amendment to this
Agreement.  Any reference in this
Agreement to Exhibit B shall be deemed to be a reference to Exhibit B,
as amended, revised and in effect from time to time.

 

14

 

Section 2.2                                      Name.

 

The business and affairs of the Company shall
be conducted under the name “MarkWest Liberty Midstream & Resources, L.L.C.”
and such name shall be used at all times in connection with the Company’s
business and affairs, except to the extent the Board agrees to the use by the
Company of assumed names or other trade names or fictitious names.  The Company’s Managers or officers or the
Operator shall execute such assumed or fictitious name certificates as may be
desirable or required by law to be filed in connection with the business and
affairs of the Company and shall cause such certificates to be filed in all
appropriate public records.

 

Section 2.3                                      Term.

 

The term of the Company commenced upon the
effectiveness of the Certificate and shall continue perpetually, unless the
Company is dissolved in accordance with the provisions of this Agreement.

 

Section 2.4                                      Registered Agent and Office.

 

The registered office of the Company required
by the Act to be maintained in Delaware shall be the office of the initial
registered agent named in the Certificate or such other office (which need not
be a place of business of the Company) as the Board may designate in the manner
provided by law.  The registered agent of
the Company in Delaware shall be the initial registered agent named in the
Certificate or such other Person or Persons as the Board may designate in the
manner provided by law.

 

Section 2.5                                      Principal Place of Business.

 

The principal place of business of the
Company shall be 1515 Arapahoe Street, Tower 2, Suite 700, Denver, CO
80202.  At any time, the Board may change
the location of the Company’s principal place of business.  The Company may have such other places of
business as the Board or the Operator may designate.

 

Section 2.6                                      Qualification in Other Jurisdictions.

 

The Managers, the officers of the Company or
the Operator shall cause the Company to be qualified, formed or registered
under assumed or fictitious name statutes or similar laws in any jurisdiction
in which the Company transacts business. 
The Managers, the officers of the Company or the Operator shall execute,
deliver and file any certificates (and any amendments and/or restatements
thereof) necessary or appropriate for the Company to qualify and continue to do
business in a jurisdiction in which the Company may wish to conduct business.
At the request of the Board or the Operator, each Member shall execute,
acknowledge, swear to and deliver all certificates and other instruments
conforming with this Agreement that are necessary or appropriate to qualify,
continue and terminate the Company as a foreign limited liability company in
all such jurisdictions in which the Company may conduct business, provided
that no Member shall be required to file any general consent to service
of process or to qualify as a foreign corporation, limited liability company,
partnership or other entity in any jurisdiction in which it is not already so
qualified.

 

15

 

ARTICLE 3

PURPOSE AND POWERS OF THE COMPANY

 

Section 3.1                                      Purpose.

 

(a)                                  The purpose of the Company is to engage in the natural gas
midstream business, including but not limited to natural gas gathering and
processing, and the natural gas liquids processing, fractionation,
transportation, storage and marketing businesses in the Area of Mutual Interest
and to fulfill the obligations of the Company pursuant to any contract entered
into by the Company or under which the Company has assumed obligations of any
Person (the “Primary Business”), and to engage in any other business or
activity that now or in the future may be necessary, incidental, proper,
advisable or convenient to accomplish the foregoing purpose and that is not
forbidden by the law of the jurisdiction in which the Company engages in such
business or activity.

 

(b)                                 In no event shall this Agreement be held or construed to
imply the existence of a partnership (including a limited partnership) or joint
venture among the Members and no Member shall be held or construed to be a
partner or joint venturer of any other Member, for any purposes other than
federal and state tax purposes.  No
Member shall have any power or authority under this Agreement to act as the
agent or representative of the Company or any other Member with regard to any
matter beyond the scope of this Company.

 

Section 3.2                                      Powers of the Company.

 

The Company shall have all powers and
privileges granted by the Act, any other law, or by this Agreement, including
incidental powers thereto, to the extent that such powers and privileges are
necessary, customary, convenient or incidental to the attainment of the Company’s
purpose.

 

Section 3.3                                      Projects, Restricted Projects, Exempted Projects and Out of
Scope Projects.

 

(a)                                  As part of the Primary Business, the Company shall use
commercially reasonable efforts to pursue the acquisition, development,
construction and operation of natural gas gathering and processing, and natural
gas liquids fractionation, transportation, storage and marketing assets
described on Exhibit C (such activities, the “Base Project”).  From time to time, the Company may also
pursue the acquisition, development, construction and operation of additional
midstream assets in the Area of Mutual Interest in accordance with this
Agreement (such activities, the “Additional Projects” and, collectively with
the Base Project, the “Projects”).

 

(b)                                 No Class B Member (either directly or indirectly through one
or more Affiliates) shall, own, operate, manage, control, engage in,
participate in, invest in, finance, render services for, assist others in, or
otherwise carry out any Primary Business (a “Restricted Project”) other than
through the Company, without Requisite Member Approval, except as follows (any
Restricted Project engaged in pursuant to one of the following exceptions is an
“Exempted Project”):

 

(i)                                     MWE Liberty or its Affiliates may engage in a Restricted
Project outside the Company without Requisite Member Approval if the pursuit of
such Restricted Project by the Company does not receive approval of the Board
pursuant to Section 6.1 and Requisite Member Approval pursuant to Section 6.12,
and the Company therefore is unable to pursue the Restricted Project;

 

(ii)                                  MWE Hydrocarbon may perform its obligations under that
certain Fractionation and NGL Purchase Agreement, dated as of the date hereof,
by and between MWE 

 

16

 

Hydrocarbon and the Company in the form attached
hereto as Exhibit K (the “Fractionation and NGL Purchase Agreement”);
and

 

(iii)                               A Class B Member or its Affiliates may **
as part of ** Restricted Projects, provided
that  ** such Class B Member ** the Company ** of ** as ** the Class B
Member.  In connection with ** the Company and the other Members **.  Members holding Interests with an aggregate
Percentage Interest ** Class B
Member ** shall have the **
this Section 3.3(b)(iii) (which, for clarity purposes, shall not **).  Such Members
may, by written notice to the Company ** the Class B
Member ** the Class B Member ** the Class B Member **.  For the avoidance of doubt, ** the Restricted Project shall have **
prior to **. 
In the event that ** the
Restricted Project, the ** the Class B
Member ** the Class B Member or ** the Class B Member. 
** Class B Member **
the Company.

 

Each Member recognizes and affirms that in
the event of breach by such Member of any of the provisions of this Section 3.3(b),
money damages may be inadequate and the non-breaching Members may have no
adequate remedy at law.  Accordingly,
each Member agrees that the non-breaching Members shall have the right, in
addition to any other rights and remedies existing in their favor, to enforce
their rights and each of the Members’ obligations under this Section 3.3(b) not
only by an action or actions for damages, but also by an action or actions for
specific performance, injunctive and/or other equitable relief in order to
enforce or prevent any violations (whether anticipatory, continuing or future)
of the provisions of this Section 3.3(b).

 

(c)                                  The Company and the Members recognize that: (i) NGPMR and its
Affiliates own and will own substantial equity interests in other companies
(existing and future) that participate in the energy industry (“NGPMR Portfolio
Companies”) and have in the past and will in the future enter into advisory
service agreements with such NGPMR Portfolio Companies; (ii) the NGPMR
Representatives who serve as Managers also serve as principals of other NGPMR
Portfolio Companies; and (iii) at any time, other NGPMR Portfolio Companies may
be in direct or indirect competition with the Company and/or its
Subsidiaries.  The Company and the
Members acknowledge and agree that NGPMR, its Affiliates and NGPMR
Representatives: (A) shall not be prohibited or otherwise restricted by their
relationship with the Company and its Subsidiaries from engaging in the
business of investing in NGPMR Portfolio Companies, entering into agreements to
provide services to such NGPMR Portfolio Companies or acting as directors or
advisors to, or other principals of, such NGPMR Portfolio Companies, regardless
of whether such activities are in direct or indirect competition with the
Company or the Primary Business, (B) shall not have any obligation to offer the
Company or its Subsidiaries any business opportunity resulting from NGPMR and
its Affiliates’ ownership in the NGPMR Portfolio Companies, and (C) the Company
and the Members hereby renounce any interest or expectancy in any such business
opportunity pursued by NGPMR, its Affiliates, the NGPMR Representatives or
another NGPMR Portfolio Company and waive any claim that any such business
opportunity constitutes a corporate, partnership or other business opportunity
of the Company or any of its Subsidiaries; provided, however,
that nothing contained in this Section 3.3(c) is intended to limit the
confidentiality obligations in Section 5.4 and NGPMR, its Affiliates, the NGPMR
Portfolio Companies and the NGPMR Representatives are expressly prohibited from
using any Confidential Information (i) to pursue any such business opportunity,
(ii) in providing services to the NGPMR Portfolio Companies or (iii) in acting
as directors or advisors to, or other principals of, such companies.

 

(d)                                 No Member or its Affiliates shall have any obligation to
communicate or offer any Out of Scope Projects to the Company or the other
Members.  The Members acknowledge and
agree that each Member, and their respective Affiliates, may presently or in
the future engage in and/or possess an interest in other business ventures of
every nature and description, independently or with others, outside of the Area
of Mutual Interest, whether or not such business ventures are within the scope
of the 

 

17

 

Primary
Business, or within the Area of Mutual Interest, so long as such ventures
constitute Out of Scope Projects or Exempted Projects, and neither the Company
nor any other Members shall have any right by virtue of this Agreement in and
to any Out of Scope Projects or Exempted Projects, or to the income or profits
derived therefrom.

 

ARTICLE 4

CAPITAL CONTRIBUTIONS, MEMBER INTERESTS,

CAPITAL ACCOUNTS AND FUTURE CAPITAL REQUIREMENTS

 

Section 4.1                                      Capital Contributions.

 

(a)                                  Initial Capital Contributions.

 

(i)                                     At Closing, MWE Liberty and NGPMR shall have made the
respective Capital Contributions (each, an “Initial Capital Contribution”) to
the Company in the amounts set forth on Exhibit B in exchange for the
initial Percentage Interest and the type of Interest set forth on Exhibit B.  In connection with such contributions, the Company,
MWE Liberty and NGPMR shall execute the Contribution Agreement in order to
effect the contribution to the Company of the cash consideration comprising
NGPMR’s Initial Capital Contribution and the assets comprising MWE Liberty’s
Initial Capital Contribution.  The
Members hereby acknowledge and agree that the gross fair market value of MWE
Liberty’s Initial Capital Contribution shall equal the actual out-of-pocket
costs incurred by MWE Liberty and its Affiliates that specifically relate to
developing the assets to be contributed and the established value of other
property to be contributed by MWE Liberty to the Company pursuant to the
Contribution Agreement, but that such actual cost will not be finally
determinable as of the date hereof and is subject to adjustment as set forth in
Section 4.1(a)(ii) below.

 

(ii)                                  As soon as reasonably practicable following the Closing, and
in any event within ninety (90) days thereafter, MWE Liberty shall prepare and
deliver to NGPMR a schedule, prepared by MWE Liberty in good faith that
describes in reasonable detail the actual out-of-pocket costs incurred by MWE
Liberty that specifically relate to the assets contributed by MWE Liberty
pursuant to the Contribution Agreement (the “Final Calculations”).  The Final Calculations shall separately
identify (A) actual out-of-pocket costs incurred by MWE Liberty and its
Affiliates through December 31, 2008 that specifically relate to developing
assets contributed, plus the established value of other property contributed,
by MWE Liberty to the Company pursuant to the Contribution Agreement, which
collectively correspond to MWE Liberty’s initial Investment Balance after
taking into account the adjustment provisions in Section 4.8 (the “Investment
Balance Costs”) and (ii) the **.

 

(iii)                               NGPMR shall have the right to review and verify the Final
Calculations.  MWE Liberty shall provide
NGPMR reasonable access to its records and employees and shall cooperate and
cause the Company to cooperate in all reasonable respects with NGPMR in connection
with its review of such work papers and other documents and information
relating to the Final Calculations.  If
within thirty (30) days after NGPMR’s receipt of the Final Calculations, NGPMR
shall not have given written notice to MWE Liberty of objection thereto, then
NGPMR shall be deemed to have accepted the Final Calculations, which shall then
be final, binding and conclusive for all purposes hereunder.  In the event that NGPMR gives written notice
of any objection to the Final Calculations (an “Objection Notice”) within such
thirty (30) day period, then NGPMR and MWE Liberty will use all commercially
reasonable efforts to resolve the disputed matter(s) within the thirty (30) day
period following the delivery of such Objection Notice.  If, at the end of the thirty (30) day
resolution period, the parties are unable to resolve any 

 

18

 

disagreement between them with respect to the
preparation of the Final Calculations, then each party shall deliver simultaneously
to a nationally recognized accounting firm mutually agreed on by the parties
(the “Accountants”) (i) the Objection Notice and such work papers, invoices and
other reports and information relating to the disputed matter(s) as the
Accountants may request and (ii) such party’s proposed resolution of the
disputed matter(s) and any materials it wishes to present to justify the
resolution it so presents.  MWE Liberty
and NGPMR shall each be afforded the opportunity to discuss the disputed matter(s)
with the Accountants.  The Accountants,
acting as experts and not as arbitrators, shall have thirty (30) days to carry
out a review and prepare a written statement of its determination regarding the
disputed matter(s) (including a statement regarding the Accountants’
determination of the prevailing party in any such disputed matter) which
determination shall be final and binding upon NGPMR and MWE Liberty.  Any fees and expenses of the Accountants
incurred in resolving the disputed matter(s) shall be borne equally by NGPMR,
on the one hand, and by MWE Liberty, on the other hand.

 

(iv)                              The aggregate amount of MWE Liberty’s Initial Capital
Contribution finally determined pursuant to this Section 4.1(a) shall be
referred to as the “Final Cost.”  Upon
determination of the Final Cost, MWE Liberty’s Initial Capital Contribution and
Investment Balance (pursuant to Section 4.8) shall be adjusted to reflect such
Final Cost; provided  that in no event shall **.

 

(v)                                 In the event that the Final Cost reflects that the Investment
Balance Costs are greater or less than the Investment Balance of MWE Liberty
initially specified on Exhibit B, a corresponding adjustment shall be
made to MWE Liberty’s Investment Balance to reflect such amount determined as
part of the Final Cost.

 

(vi)                              In the event that the Final Cost reflects that the **, MWE Liberty shall within two Business Days pay to the
Company in immediately available funds an amount equal to such difference; in
the event that the Final Cost reflects that the **,
the Company shall within two Business Days pay to MWE Liberty in immediately
available funds an amount equal to such difference.

 

(b)                                 Additional Capital Contributions Prior to the Equalization
Date.

 

(i)                                     The Class A Members hereby collectively agree to make
additional cash Capital Contributions of $** to the
Company on ** upon receipt by each Class A
Member, at least ten Business Days prior to each of such dates, of a Bring Down
Certificate from the Company and a Capital Call properly made by the Board to
such Class A Members for such amount.  In
the event that any of these Capital Contributions are made by the Class A
Members prior to the respective dates set forth in the preceding sentence, such
Capital Contributions shall be deemed to be made as of such dates.  No Class A Member shall have an obligation to
make a Capital Contribution pursuant to this Section 4.1(b)(i) unless the
Company has issued a Bring Down Certificate to such Class A Member and the
Board has issued a Capital Call to such Class A Member.  Upon contribution of the Class A Member’s
Initial Capital Contribution and each of the additional Capital Contributions
pursuant to this Section 4.1(b)(i), the Class A Members shall have no
obligation to contribute any additional capital to the Company other than pursuant
to Section 4.1(b)(iii).

 

(ii)                                  The Class B Members hereby agree to make additional Capital
Contributions to the Company, on an as needed basis, until the occurrence of
the Equalization Date.  Prior to the
occurrence of the Equalization Date, at each time when the Company requires
additional capital, the Board shall issue a Capital Call to the Class B
Members, and the Class B 

 

19

 

Members shall contribute to the Company the amount of
capital so requested, in accordance with their respective Class B Percentage
Interests, within ten days after receipt of such Capital Call.  Notwithstanding the foregoing, the Class B
Members shall not make any Capital Contributions pursuant to this Section 4.1(b)(ii)
and the Company shall not issue any Capital Calls for any such Capital
Contributions unless and until each of the Capital Contributions by the Class A
Members set forth in Section 4.1(b)(i) have been spent by the Company or
committed to be spent in accordance with an Approved Budget.

 

(iii)                               The Class B Members hereby agree that, any distributions of
Available Cash payable to a Class B Member pursuant to Section 8.1(a) prior to
the earlier to occur of (i) December 31, 2010 and (ii) the Equalization Date
shall be distributed and automatically reinvested by each Class B Member as
additional Capital Contributions, without the issuance of any Capital
Call.  In accordance with Section 8.1(a),
the Class A Members acknowledge and agree that they shall not receive any distributions
of Available Cash prior to the earlier to occur of (i) December 31, 2010 and (ii)
the Equalization Date; provided, however that the amount that each Class A
Member would have received if Available Cash were distributed prior to the
earlier of (i) December 31, 2010 and (ii) the Equalization Date, shall increase
the Investment Balance of such Class A Member on a dollar-for-dollar
basis.  Once the Equalization Date has
occurred, Available Cash shall be distributed in accordance with Section 8.1(b)(ii).

 

(c)                                  Capital Contributions After the Equalization Date.  Upon contribution of the Class A Member’s
Initial Capital Contribution and each of the additional Capital Contributions
pursuant to Section 4.1(b)(i), no Class A Member shall be obligated to contribute
additional capital to the Company except as agreed upon by such Class A Member
pursuant to this Section 4.1(c).  If the
Company requires additional capital to pursue any Project or in connection with
the operation of the Primary Business after the Equalization Date, then, with
respect to funding for Projects or operations within the then current Approved
Budget, the Class A Members shall elect (such election, a “Quarterly Budgeted
Funding Election”) on a quarterly basis whether to contribute additional
capital that may be required to fund such Projects or operations for the
upcoming calendar quarter based on their respective Percentage Interests.  Such Quarterly Budgeted Funding Election shall
be irrevocable, and shall be made in writing (which may include electronic
mail) to the Company no less than 30 days prior to the commencement of the
upcoming calendar quarter.  If one or
more Class A Members elect not to participate, or fail to make any election
(which shall be deemed to be an election not to contribute), then such
Non-Contributing Member(s) shall have no obligation to contribute additional
capital to fund Projects or operations within the then current Approved Budget
for such upcoming calendar quarter.  With
respect to each Contributing Member, at least ten days prior to the beginning
of such calendar quarter, the Board shall issue to such Contributing Member a
Capital Call that identifies the amount of capital that the Company needs in
connection with such Projects or operations for such quarter.  Each Contributing Member shall contribute
such requested capital to the Company within ten days after the issuance of
each such quarterly Capital Call.

 

After the Equalization Date, the Class B
Member(s) may contribute on a quarterly basis all additional capital (less any
capital to be contributed by the Contributing Members for such upcoming
calendar quarter) required to fund Projects or operations within the then
current Approved Budget for the upcoming calendar quarter, including any
capital required to reduce any capital shortfall that may result from
Non-Contributing Member elections during such calendar quarter; provided, that
the Class B Member(s) shall provide written notice to the other Members on a
quarterly basis regarding their decision to fund additional capital and the
amount of such Capital Contribution.

 

For the avoidance of doubt, the Percentage
Interests of the Members shall be subject to adjustment (upward and downward)
pursuant to this Section 4.1(c), based upon the Members’ respective 

 

20

 

Investment Balances giving
effect to such additional Capital Contributions. If elections to contribute
capital by the Contributing Members and the Class B Member(s) are less than the
total amount of capital required by the Company pursuant to this Section 4.1(c),
then the Company may seek to obtain the requested capital from third parties,
which may include issuing additional Interests in the Company pursuant to
Sections 5.3 and subject to Section 5.7, if applicable.

 

Section 4.2                                      Capital Contribution Defaults.

 

If a Member fails to contribute any capital
to the Company that is required to be so contributed pursuant to Section 4.1,
such Member shall be considered in default (a “Defaulting Member”), but shall
remain fully obligated to contribute such capital to the Company.  The Company shall be entitled to pursue all
remedies available at law or in equity against the Defaulting Member, including
any one or more of the following:

 

(a)                                  the Company may take all actions, including court
proceedings, as the other Members may deem appropriate, to obtain payment by
the Defaulting Member of the required amount of the Capital Contribution
remaining unpaid, together with interest thereon at the Default Rate from the date
that the required Capital Contribution was required to be contributed to the
Company until the date it is so contributed, at the cost and expense of the
Defaulting Member; and

 

(b)                                 the non-defaulting Members may advance the portion of the
Defaulting Member’s Capital Contribution that is in default, in accordance with
the non-defaulting Members’ respective Percentage Interests, and, at the option
of the non-defaulting Members, the non-defaulting Members making such advance
may be deemed to have made a loan to the Defaulting Member in the amount of the
Capital Contribution so advanced, which loan shall bear interest at the Default
Rate from the date that such advance is made until the loan is repaid in full,
and until such loan is repaid in full, the non-defaulting Members making such
loan to the Defaulting Member shall be entitled to receive all distributions of
Available Cash that would otherwise be payable to the Defaulting Member
hereunder, in accordance with the non-defaulting Members’ respective Percentage
Interests.

 

Section 4.3                                      Member’s Interest.

 

A Member’s Interest shall for all purposes be
personal property.  Title to the Company’s
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Company as an entity, and no Member,
Manager, Operator or officer of the Company shall have any ownership interest
in such Company assets.

 

Section 4.4                                      Status of Capital Contributions.

 

(a)                                  Except as otherwise provided in this Agreement, no Member, or
the successor or assign of a Member, may demand a return of its Capital
Contributions, in whole or in part.  An
unrepaid Capital Contribution is not a liability of the Company or of any
Member.

 

(b)                                 No Member or Affiliate of any Member shall receive any
interest, return, compensation or drawing with respect to its Capital
Contributions or its Capital Account, except as otherwise specifically provided
in this Agreement.

 

(c)                                  Except as otherwise provided in this Agreement, no Member
shall be required to lend any funds or make any additional Capital
Contributions to the Company.  No Member
shall have any personal liability for the repayment of any other Member’s
Capital Contribution or be required to 

 

21

 

contribute
or lend any cash or property to the Company to enable the Company to repay any
Member’s Capital Contributions.

 

Section 4.5                                      Capital Accounts.

 

(a)                                  A separate Capital Account shall be established and
maintained for each Member in accordance with the requirements of Treasury
Regulations Section 1.704-1(b)(2)(iv). 
The original Capital Account established for any Member who acquires an
Interest by virtue of an assignment in accordance with the terms of this
Agreement shall be in the same amount as and shall replace the Capital Account
of the assignor of such Interest.  To the
extent such Member acquires less than all of the Interest of the assignor of
the Interest so acquired by such Member, the original Capital Account of such Member
and its Capital Contributions shall be in proportion to the Interest it
acquires, and the Capital Account of the assignor who retains an Interest shall
be reduced in proportion to the Interest it retains.

 

(b)                                 The Capital Account of each Member shall be maintained in
accordance with the following provisions:

 

(i)                                     to such Member’s Capital Account there shall be credited such
Member’s Capital Contributions, such Member’s distributive share of Profits,
special allocations of income and gain, and the net amount of any Company
liabilities that are assumed by such Member or that are secured by any Company
assets distributed to such Member;

 

(ii)                                  to such Member’s Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Company assets distributed to
such Member pursuant to any provision of this Agreement, such Member’s
distributive share of Losses, special allocations of loss and deduction, and
the net amount of any liabilities of such Member that are assumed by the
Company or that are secured by any property contributed by such Member to the
Company;

 

(iii)                               in determining the amount of any liability for purposes of
this Section 4.5(b), there shall be taken into account Section 752(c) of the
Code and any other applicable provisions of the Code and the Treasury Regulations;
and

 

(iv)                              the Capital Accounts shall be increased or decreased upon a
revaluation of Company property pursuant to clause (b) of the definition of
Gross Asset Value in the manner prescribed in Treasury Regulation Section 1.704-1(b)(2)(iv)(f).

 

Section 4.6                                      Capital Accounts Generally.

 

(a)                                  Except as otherwise provided in this Agreement, whenever it
is necessary to determine the Capital Account of any Member for any purpose
hereunder, the Capital Account of such Member shall be determined after giving
effect to all adjustments provided for in Section 4.5 for the current Fiscal
Year in respect of transactions effected prior to the date such determination
is to be made.

 

(b)                                 No Member shall be entitled to withdraw any part of its
Capital Account, or to receive any distribution from the Company except as
specifically provided in this Agreement.

 

Section 4.7                                      Preferred Return.

 

For the avoidance of doubt, the Class A
Interests shall accrue the Preference Amount until the Equalization Date, after
which time the Preference Amount shall no longer accrue.

 

22

 

Section 4.8                                      Investment Accounts.

 

The Company shall maintain an investment
account (an “Investment Account”) for each Member, the balance of which (the “Investment
Balance”) shall represent the sum of a Member’s Initial Capital Contribution,
any additional Capital Contributions made by a Member pursuant to Sections
4.1(b), 4.1(c) and 4.9, and with respect to each Class A Member, (i) the
Preference Amount and (ii) the amount that is retained by the Company in
accordance with Section 4.1(b)(iii) and which such Class A Member would have
otherwise received if Available Cash were distributed prior to the earlier to
occur of (i) December 31, 2010 and (ii) the Equalization Date.  The Investment Balance for each Class A
Member shall be reduced by any actual distributions to such member of Available
Cash pursuant to Section 8.1(b)(i)(A) and Sections 13.4(a)(i)(A) and (B).  The Investment Balance of the Class B Members
shall be reduced by the amount of any **, subject to
adjustment pursuant to Section 4.1(a). 
For the avoidance of doubt, the Investment Balance of each Member
immediately following the Closing, after giving effect to Capital Contributions
and reimbursements, shall be as set forth on Exhibit B.  An assignee of all or any portion of an
Interest shall succeed to a portion of the assignor Member’s Investment Account
in proportion to the Interest acquired.

 

Section 4.9                                      Equalization Target Date.

 

(a)                                  In the event that the Equalization Date has not occurred on
or before **, then all distributions of Available
Cash received by the MWE Liberty Group after **
pursuant to any provision of this Agreement shall automatically be contributed
to the Company as additional Capital Contributions until the Equalization Date
occurs.  If the Equalization Date has not
occurred on or before December 31, 2011 (the “Equalization Target Date”), then
the Class A Members holding at least a majority of the Class A Percentage
Interests may elect by written notice to require MWE Liberty to make an
additional cash Capital Contribution (the “True-Up Contribution”) sufficient to
result in the Equalization Date occurring within **
after the Equalization Target Date.  MWE
Liberty shall cause such True-Up Contribution to be made and the Equalization
Date to occur within ** of the
requesting notice of the requisite Class A Members.  To the extent that the Company does not have
commitments to spend the True-Up Contribution in accordance with the Approved Budget
(and any amendments or modifications to such Approved Budget approved prior to
the date of the True-up Contribution) in effect at the time MWE Liberty is
required to make the True-Up Contribution, then, at the end of the first full
fiscal quarter following the date of the True-Up Contribution, the Company
shall distribute any amount of the True-Up Contribution not spent or committed
to be spent in accordance with such Approved Budget, and any approved
amendments thereto, to the Members in accordance with their Percentage
Interests.  For clarification purposes,
it is the intent of the Members that the True-Up Contribution be an amount such
that after payment of the True-Up Contribution is made by MWE Liberty, the Percentage
Interest of the MWE Liberty Group is 60% and the Percentage Interest of the
NGPMR Group is 40%.

 

(b)                                 If MWE Liberty fails to make the True-Up Contribution in
accordance with Section 4.9(a) above, then the Interests held by the MWE
Liberty Group shall not be ** of the
Company; provided, however, that the then controlling Members
shall not ** to the MWE Liberty Group in any
material respect ** of the MWE Liberty Group.  Additionally, NGPMR shall have the ** subject to the provisions of **
to any Person, other than an Affiliate or partner of any member of the NGPMR
Group or any NGPMR Portfolio Company, **, (B) all
Members ** any Person, other than an Affiliate
or partner of any member of the NGPMR Group or any NGPMR Portfolio Company, of
all of ** or (C) the Company to ** other than an Affiliate or partner of any member of the
NGPMR Group or any NGPMR Portfolio Company, **.

 

(c)                                  Within five days after receipt of any notice of **, the Board shall notify each Member, in writing, ** shall identify the **, including
the form of the ** and provide a copy of **.  Each 

 

23

 

Member
agrees that ** it will (i) take such action as
may reasonably be required, including **, (ii) cause
its designated Managers to take such action required, to **,
(iii) provide for the execution of such agreements and such instruments and
other actions reasonably necessary to provide, to the extent necessary, ** relating to such **, in each
case only to the extent that **; provided
that, no Affiliated Member Group shall be obligated in respect of any ** and referred to in the immediately preceding clause in
such ** for an **
to such Affiliated Member Group in **.  The Member proposing **
shall have the right in connection with ** (or in
connection with the **) to require
the Company to cooperate fully with ** by taking
all customary and other actions reasonably requested by the Member **, including making the **
reasonably available **,
establishing a ** in connection with such
processes and making ** activities,
in each case subject to **. The Company
and each Member shall provide assistance with respect to these actions as
reasonably requested by the Member **. In
addition, once ** under this Section 4.9, the
Board shall be entitled to take all steps reasonably necessary to carry out **, including **; provided,
however, that the rights granted the Board in this sentence shall not
permit the Board to **.

 

ARTICLE 5

MEMBERS, MEETINGS AND AMENDMENTS

 

Section 5.1                                      Powers of Members.

 

(a)                                  Except for the right to consent to or approve certain matters
as expressly provided in this Agreement, the Members in their capacity as
Members shall not have any other power or authority to manage the business or
affairs of the Company or to bind the Company or enter into agreements on
behalf of the Company.

 

(b)                                 To the fullest extent permitted by law and notwithstanding
any provision of this Agreement or any other document executed in connection
with this Agreement (a “Transaction Document”) to the contrary, no Member in
its capacity as a Member shall have any duty, fiduciary or otherwise, to the
Company or any other Member in connection with the business and affairs of the
Company or any consent or approval given or withheld pursuant to this Agreement
or any other Transaction Document.

 

(c)                                  Any matter requiring the consent or approval of the Members
pursuant to this Agreement may be taken without a meeting, without prior notice
and without a vote, by a consent in writing, setting forth such consent or
approval, and signed by Members holding Interests not less than the requisite
Interests necessary to consent to or approve such action; provided that at
least one Class A Member shall be required to sign such consent or approval in
order for such consent to be effective in the event that the Class A Members
did not receive prior written notice of the action to be so taken.  Prompt notice of such consent or approval
shall be given by the Company to those Members who have not joined in such
consent or approval.

 

Section 5.2                                      No Resignation or Expulsion.

 

A Member may not take any action to resign,
withdraw or retire as a Member voluntarily, and a Member may not be expelled or
otherwise removed involuntarily as a Member, prior to the dissolution and
winding up of the Company, other than as a result of a Permitted Transfer of
all of such Member’s Interests in accordance with Article 7 and each of the
transferees of such Interests being admitted as a Substitute Member.

 

24

 

Section 5.3             Additional Members.

 

(a)           After
the Board makes a Capital Call pursuant to Section 4.1(c) that was
not fully funded by the Members and subject to the preemptive rights set forth
in Section 5.7 to the extent applicable, the Company is authorized to
issue additional Interests and to admit any Person as an additional member of
the Company (each, an “Additional Member” and collectively, the “Additional
Members”).  Upon receipt of requisite
approval of the Board and the Members, the Company is authorized to issue
additional Interests and to admit any Person as an additional member of the
Company (each, an “Additional Member” and collectively, the “Additional Members”). 
Each such Person receiving additional Interests shall be admitted as an
Additional Member at the time such Person (i) executes a counterpart
signature page agreeing to be bound hereby and such other documents or
instruments as may be required in the Board’s reasonable judgment to effect the
admission, and (ii) is designated as a Member (with a corresponding
Percentage Interest) on an amended or supplemental Exhibit B.
 The Company may issue additional Interests or additional classes of
membership interests to existing Members or to new or Additional Members in
exchange for such Capital Contributions, including cash, property or services
or any combination thereof.

 

(b)           Additional
Members shall not be entitled to any retroactive allocation of the Company’s
income, gains, losses, deductions, credits or other items; provided  that,
subject to the restrictions of Section 706(d) of the Code, Additional
Members shall be entitled to their respective share of the Company’s income,
gains, losses, deductions, credits and other items arising under contracts
entered into before the effective date of the admission of any Additional
Members to the extent that such income, gains, losses, deductions, credits and
other items arise after such effective date. 
To the extent consistent with Section 706(d) of the Code and
Treasury Regulations promulgated thereunder, the Company’s books may be closed
at the time Additional Members are admitted (as though the Company’s tax year
had ended) or the Company may credit to the Additional Members pro rata
allocations of the Company’s income, gains, losses, deductions, credits and
items for that portion of the Company’s Fiscal Year after the effective date of
the admission of the Additional Members.

 

Section 5.4             Confidentiality Obligations of Members.

 

(a)           Each
Member agrees that all Confidential Information shall be kept confidential by
the Member, shall only be used for the purpose of reviewing and evaluating the
performance of the Company and the Member’s Interest therein, and shall not be
disclosed in any manner, except to such of the Member’s Representatives who
have a need to know and who agree to be, or are otherwise, bound by the Member’s
obligations hereunder and except as otherwise expressly permitted in this Section 5.4.  Each Member shall be responsible for any
breach of this Section 5.4 by itself or any of its Representatives, and
each Member covenants and agrees that it shall promptly notify the Company of
any actual, potential or threatened breach of this Section 5.4 and shall,
at its own expense, enforce, and assist the Company in its enforcement of, the
provisions of this Section 5.4, including, to the extent reasonably
necessary, seeking specific enforcement through court proceedings.  Subject to Section 5.4(b), if a Member
or any of its Representatives is requested or required by applicable law, rule or
regulation, regulatory authority, subpoena, civil investigation, court order,
demand or similar legal process to disclose any Confidential Information, the
Member shall, to the maximum extent permitted by applicable law, provide the
Company with prompt written notice thereof and will use reasonable efforts to
resist disclosure, until an appropriate protective order or motion to quash may
be sought or a waiver of compliance with this Section may be granted.  If, in the absence of a protective order or
the receipt of a waiver hereunder, such Member or any of its Representatives
is, in the opinion of its legal counsel, legally required to disclose
Confidential Information, then such Member or its Representatives may disclose
only that portion of the Confidential Information legally required to be
disclosed, without liability hereunder, provided that such Member or its
Representatives uses reasonable efforts to obtain reliable assurance that 

 

25

 

confidential treatment will be accorded the Confidential
Information.  Each Member acknowledges
and agrees that the Company and the other Members may be irreparably harmed by
disclosure of the Confidential Information, that money damages would not be a
sufficient remedy for any breach of this Section 5.4 by such Member or its
Representatives and that, in addition to any other remedies available at law or
in equity, specific performance and injunctive or other equitable remedies
shall be available to the Company and the Members as a remedy for any such
breach or threatened breach, without the requirement of posting bond or other
security.  The Company and the other
Members shall be entitled to recover their costs and expenses, including attorneys’
fees, incurred in connection with any successful action brought by them to
enforce the terms of this Agreement. 
With respect to Confidential Information that is subject to
confidentiality agreements under any Third Party Confidentiality Agreements,
each Member covenants and agrees to, and shall cause its Representatives to,
treat such Confidential Information confidentially in accordance with, and to
comply with the terms of, the confidentiality provisions contained in those
Third Party Confidentiality Agreements that have been disclosed to such Member,
including, any provisions thereof that impose more stringent or additional
obligations than those set forth herein (provided such has been disclosed to
such Member).  The obligations of a
Member pursuant to this Section 5.4 shall continue following the time such
Person ceases to be a Member, but thereafter such Person shall not have the
right to enforce the provisions hereof. 
Notwithstanding anything set forth herein, all covenants made herein by
a Member are for the sole benefit of the Company and the other Members and
there shall be no third party beneficiaries of any of such covenants.

 

(b)           Notwithstanding
anything to the contrary in this Agreement, each Member may disclose any
information about the Company, including any Confidential Information, without
any liability to the Company or to any other Member or to their respective
Affiliates and without any notice to any Member, to the extent that such
disclosing Member believes that such disclosure is necessary or appropriate to
satisfy its public disclosure obligations under the Securities Act, the
Exchange Act, the rules of any stock exchange, or any similar public
disclosure obligations.

 

Section 5.5             Initial Budget.

 

By execution of this
Agreement, the Members hereby approve and consent to the initial budget
attached hereto as Exhibit D (the “Initial Budget”) and acknowledge
and agree that such Initial Budget shall be deemed to be an Approved Budget for
all purposes of this Agreement.

 

Section 5.6             Incentive Interests to MWE Liberty Upon Transfer of NGPMR’s
Interest.

 

In the event NGPMR receives
cash from any NGPMR Exit Transaction or Partial NGPMR Exit Transaction (for the
purposes of this section, such transaction an “Incentive Interest Transaction”)
that would result in ** Payout**, simultaneously with the consummation of any such
transaction, NGPMR shall pay to MWE Liberty as a fee the following amount**, to the extent applicable:

 

** Following ** Payout
Threshold, if any, an amount equal to the ** of (i) the
cash proceeds of all Incentive Interest Transactions plus cumulative cash
distributions to NGPMR in respect of its Interest, **

 

**

 

Exhibit E contains
illustrative examples of the calculation and operation of amount** payable pursuant to Section 5.6**
based upon hypothetical Incentive Interest Transactions.  This Section 5.6 shall be interpreted
and applied in a manner consistent with the examples set forth in Exhibit E.
The obligations of NGPMR to make payment** to MWE
Liberty pursuant to this Section 5.6 shall survive the closing of any 

 

26

 

NGPMR Exit Transaction or Partial NGPMR Exit Transaction and
any liquidation, dissolution or winding up of the Company until such payment to
MWE Liberty has been made.

 

Section 5.7             Preemptive Rights.

 

(a)           After
the Equalization Date, prior to the Company issuing any Interests or options or
rights to acquire Interests (other than (i) any equity issuance associated
with an acquisition previously approved by NGPMR, (ii) Interests issued in
connection with any split, distribution or recapitalization of the Company, (iii) Interests
issued in any initial public offering registration statement filed under the
Securities Act, or (iv) in connection with any capital raising or
financing efforts by the Company the purpose of which is to fund any activities
of the Company which were the subject of a Capital Call made pursuant to Section 4.1(c) that
was not fully funded by the Members; provided, however, that any
Interests to be issued in such capital raising or financing efforts, and the
pricing of such Interests, are equivalent to the terms of such Capital Call),
whether through exchange, conversion or otherwise (the “New Interests”), to a
proposed third party purchaser (the “Proposed Purchaser”), each Member who is
not in default of this Agreement and which certifies to the Company’s
reasonable satisfaction that it is an “accredited investor” within the meaning
of Rule 501 under the Securities Act (an “Eligible Member”) shall have the
right to purchase a portion of the New Interests in accordance with this Section 5.7.

 

(b)           The
Company shall give each Eligible Member prior written notice (the “First Notice”)
of any proposed issuance of New Interests, which shall set forth in reasonable
detail the proposed terms and conditions thereof (as determined by the Board in
good faith) and shall offer to each Eligible Member the opportunity to purchase
its Percentage Interest (as of the date of such notice) of the New Interests,
on the same terms and conditions and at the same time as the New Interests are
proposed to be issued by the Company.  If
any Eligible Member desires to exercise its preemptive rights under this Section 5.7,
it must deliver an irrevocable written notice within 30 days after the Eligible
Member’s receipt of the First Notice (the “Election Period”) setting forth the
dollar amount of the New Interests the Eligible Member (the “Electing Member”)
is electing to purchase, up to its Percentage Interest plus any additional
amount of New Interests it desires to purchase in excess of its Percentage
Interest (the “Over-Allotment Amount”) if other Eligible Members do not
exercise their preemptive rights hereunder. 
The right of each Electing Member to purchase New Interests in excess of
its Percentage Interest shall be based on the relative Percentage Interests of
the Electing Members desiring to purchase Over-Allotment Amounts.

 

(c)           If
the Eligible Members do not subscribe for all of the New Interests, the Company
shall have the right, but not the obligation, to issue and sell the
unsubscribed portion of the New Interests to the Proposed Purchaser at any time
during the 90 days following the end of the Election Period, at the same price
and pursuant to the terms and conditions set forth in the First Notice.  The Board may, in its reasonable discretion,
impose such other reasonable and customary terms and procedures such as setting
a closing date and requiring customary closing deliveries in connection with
any preemptive rights offering.  In the
event any Electing Member refuses to purchase the New Interests for which it
subscribed pursuant to this Section 5.7, then in addition to any other
rights the Company may have at law or in equity, such Electing Member and any
transferee thereof shall not be considered an Eligible Member for any future
rights granted under this Section 5.7 unless the Board expressly
designates otherwise (which the Board may, in its sole discretion, do on an
offer-by-offer basis or not at all) and shall be deemed a Defaulting Member
under Section 4.2.

 

27

 

Section 5.8             Registration Rights.

 

If the Board with Requisite
Member Approval determines to effect a Qualified Public Offering, each of the
Members shall be granted customary registration rights, including piggyback
registration rights, with respect to such Qualified Public Offering.

 

ARTICLE 6

MANAGEMENT

 

Section 6.1             Management Under Direction of the Board.

 

Except as otherwise
expressly provided in this Agreement or required under the Act, the business
and affairs of the Company shall be managed by a board of managers (the “Board”
and each member of the Board, a “Manager”), and the Board shall have full and
complete authority, power, and discretion to manage and control the business,
affairs, and properties of the Company, to make all decisions regarding those
matters and to perform any and all other acts or activities customary or
incidental to the management of the Company’s business.  Without limiting the generality of the
foregoing the approval of the Board shall be required for all matters not
delegated by the Board to the Operator, the officers of the Company or to other
authorized persons in accordance with Section 6.10, including approval of
the following matters, which the Board shall not have the power to delegate to
any Person, in each case except as otherwise approved in any Approved Budget:

 

(a)           Proposed
Budgets for the Company, other than the Initial Budget;

 

(b)           distributions
of Available Cash (including Tax Distributions);

 

(c)           efforts
by the Company to raise additional capital, including the issuance of
additional Interests or any options to acquire Interests and the issuance of
additional equity interests or options to acquire equity interests in the
Company’s subsidiaries;

 

(d)           incurrence
or guarantee of Debt by the Company in excess of $**;

 

(e)           acquisitions
or dispositions of assets by the Company in excess of $**;

 

(f)            commencing
or resolving litigation;

 

(g)           election
or removal of officers of the Company;

 

(h)           material
contracts to which the Company (or a subsidiary of the Company) is a party or
by which it is bound; and

 

(i)            the
registration of any equity or debt securities of the Company or its
subsidiaries under applicable United States federal or foreign securities laws
or any public offering of equity or debt securities of the Company or its
subsidiaries (including any Qualified Public Offering).

 

Section 6.2             Number, Tenure and Qualifications.

 

(a)           Prior
to the Equalization Date, the Board shall be comprised of five Managers,
designated as follows:

 

(i)            two Managers (each, a “Class A Manager”) designated by Class A
Members with an aggregate Class A Percentage Interest of at least 50%; and

 

28

 

(ii)           three Managers (each, a “Class B Manager”) designated by
Class B Members with an aggregate Class B Percentage Interest of at
least 50%.

 

The initial Managers of the
Company shall be:  Jeffrey Rawls and
Patrick Wade, who are the Class A Managers, and John Mollenkopf, Randy
Nickerson and Frank Semple, who are the Class B Managers.

 

(b)           On
and after the Equalization Date, each Affiliated Member Group shall be entitled
to designate the number of Managers determined by their Percentage Interests as
follows:

 

(i)             Each Affiliated Member Group with a Percentage Interest less
than or equal to ** shall not be allowed to
designate any Managers;

 

(ii)           Each Affiliated Member Group with a Percentage Interest
greater than ** but less than or equal to **, shall be allowed to designate one Manager;

 

(iii)          Each Affiliated Member Group with a Percentage Interest
greater than ** but less than or equal to **, shall be allowed to designate two Managers;

 

(iv)          Each Affiliated Member Group with a Percentage Interest
greater than ** but less than or equal to **, shall be allowed to designate three Managers;

 

(v)           Each Affiliated Member Group with a Percentage Interest
greater than ** but less than or equal to **, shall be allowed to designate four Managers; and

 

(vi)          Each Affiliated Member Group with a Percentage Interest
greater than **, shall be allowed to designate
five Managers.

 

Any Manager designated in
accordance with this section shall be immediately removed from the Board at any
time that the Affiliated Member Group that designated such Manager ceases to own
aggregate Percentage Interests that would permit such Affiliated Member Group
to designate such Manager in accordance with the first sentence of this
section.  Notwithstanding the foregoing,
so long as the Class A Members have **, such Class A
Members shall be entitled to appoint no less than one Manager to the Board and
the size of the Board shall be, if necessary, increased by one to enable the Class A
Members to make such appointment.  The
Board shall be comprised of the total number of Managers that all Affiliated
Member Groups are entitled to so designate pursuant to the first sentence of
this Section 6.2(b), plus any additional Manager whom the Class A
Members are entitled to designate pursuant to the immediately preceding
sentence. At any time that any Affiliated Member Group acquires aggregate
Percentage Interests sufficient to permit such Affiliated Member Group to
designate one or more additional Managers in accordance with the first sentence
of this Section, then a new Manager position shall be created and such
Affiliated Member Group shall be entitled to fill such the vacancy in such
position in accordance with Section 6.9.

 

(c)           A
Manager need not be a resident of the State of Delaware.  A Manager shall hold office until the Manager’s
successor shall be duly elected and shall qualify or until the earlier of such
Manager’s withdrawal, death, removal or resignation.

 

29

 

Section 6.3             Votes Per Manager; Quorum; Required Vote for Board Action;
Meetings of the Board.

 

(a)           Each
Manager shall have one vote.  Except as
provided below, Managers comprising at least a majority of the total number of
Managers entitled to be designated in accordance with Section 6.2 shall
constitute a quorum for the transaction of business at a meeting of the
Board.  Except as otherwise expressly
provided in this Agreement, any action or event shall be deemed approved by the
Board of Managers comprising at least a majority of the total number of
Managers then entitled to be designated at the time of such approval in
accordance with Section 6.2 vote in favor of or approve such action or
event at a meeting at which a quorum is present.  Any actions by the Company in response to a
breach of or default (or alleged breach or default) under an Affiliate Contract
or other transaction with an Affiliate of a Member (such as a waiver of the
breach or default, notice of breach or event of default or notice of
termination for breach or default in accordance with the terms of the Affiliate
Contract) or enforcement or exercise of any of the Company’s rights or remedies
in respect to such breach or default (or alleged breach or default)
(collectively, “Enforcement Activities”) shall be conducted by or under the
direction of the Board, provided  that any Manager designated by a
Member that is a party to, or has an Affiliate (other than the Company) that is
a party to, such Affiliate Contract or transaction **
at any meeting of the Board and ** of the
Board; provided  further  that the foregoing proviso shall
not apply to **, which shall be **.

 

(b)           Except
as otherwise required by applicable law, the Board may hold meetings in such
place or places, within or outside of the State of Delaware, as the Board may
determine from time to time.  Business
shall be conducted at such meetings in such order as the Board shall determine
from time to time.

 

(c)           Regular
meetings of the Board shall be held at least quarterly and at such times and
places as shall be designated from time to time by the Board.  Notice of such regular meetings shall not be
required if held at the times and places as previously determined by the Board
and provided to each Manager.  Special
meetings of the Board may be called by any Manager upon at least 24 hours prior
notice, which may be given via electronic mail, and which notice must include
dial-in or other information so as to permit each Manager to participate in
such meeting by telephone conference or other electronic means.  Such notice must state the purpose of such
meeting.

 

(d)           Any
action required or permitted to be taken at any meeting of the Board may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by a majority of the Managers then entitled to be
designated in accordance with Section 6.2; provided  that at
least one Manager designated by the NGPMR Group (if there is such a Manager)
and at least one Manager designated by the MWE Liberty Group (if there is such
a Manager) shall be required to sign such consent or approval, solely for purposes
of providing an acknowledgement of receipt of notice of the action to be taken
rather than approval or rejection thereof, in order for such consent or
approval to be effective in the event that at least one Manager designated by
the NGPMR Group (if there is such a Manager) or at least one Manager designated
by the MWE Liberty Group (if there is such a Manager), as applicable, did not
receive prior written notice of the action to be so taken.

 

(e)           Members
of the Board may participate in any meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in such a meeting such
constitute presence in person at such meeting, except as provided in clause
(f).

 

(f)            Attendance
of a Manager at any meeting of the Board (including by telephone) shall
constitute a waiver of notice of such meeting, except where such Manager
attends the meeting for 

 

30

 

the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened and
notifies the other Managers at such meeting of such purpose.

 

Section 6.4             Power to Bind Company.

 

Unless authorized to do so
by this Agreement or by the Board, no Member of the Company shall have any
power or authority to bind the Company in any way, to pledge the Company’s
credit or to render it liable pecuniarily for any purpose.  However, a Person may act by a duly authorized
attorney-in-fact executed in writing by the Board.

 

Section 6.5             Liability for Certain Acts.

 

No Manager or officer of the
Company (solely in such individual’s capacity as a Manager or officer of the
Company), nor any of their Affiliates or their respective successors or
assigns, shall be liable to the Company or to any Member for any claims,
losses, expenses, costs, obligations, liabilities, actions, suits, proceedings,
judgments, or settlements (including attorneys’ fees) (whether civil, criminal,
administrative or investigative) (collectively, “Claims”) arising or resulting
from or relating to the performance of any of such Manager’s or officer’s
obligations or duties under this Agreement in its capacity as Manager or
officer, or otherwise attributable to any breach of duty owed by such Manager
or officer (by virtue of being a Manager or officer) to the Company or the
Members, except to the extent such Claims or breach of duty is based upon such
person’s fraud, bad faith or willful misconduct as established by a
non-appealable court order, judgment, decree or decision by a court of
competent jurisdiction.  Without limiting
the generality of the foregoing, the doing of any act or the failure to do any
act by any Manager or officer, which shall not constitute fraud, bad faith or
willful misconduct (as established by a non-appealable court order, judgment,
decree or decision by a court of competent jurisdiction), the effect of which
may cause or result in loss or damage to the Company, shall not subject any
Manager or officer to any liability. 
Each Manager and officer shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters such
Manager or officer reasonably believes are within such other Person’s
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to Members might properly be paid.  The Managers do not, in any way, guarantee
the return of the Members’ Capital Contributions or a profit for the Members
from the operations of the Company.  No
Manager shall be responsible to any Members because of a loss of their
investments or a loss in operations, unless the loss shall have been the result
of fraud, bad faith or willful misconduct established as set forth in this Section 6.5.

 

Section 6.6             Manager Has No Exclusive Duty to Company.

 

A Manager shall not be
required to manage the Company as the Manager’s sole and exclusive occupation,
and a Manager may have other business interests and may engage in other
investments, occupations and activities in addition to those relating to the
Company.  Neither the Company nor any
Member shall have any right, by virtue of this Agreement, to share or
participate in such other investments or activities of a Manager or to the
income or proceeds derived therefrom.

 

Section 6.7             Resignation and Withdrawal.

 

A Manager of the Company may
resign from the position of Manager at any time by giving written notice to the
Members of the Company.  The resignation
of a Manager shall take effect upon receipt of notice thereof or at such later
time as shall be specified in such notice; and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.  Upon the 

 

31

 

withdrawal
of a Manager, such Manager shall be treated as having resigned as of the date
of withdrawal and shall automatically cease to be a Manager as of the date of
such withdrawal.  Except in the case of
resignation by reason of withdrawal, the resignation of a Manager who is also a
Member pursuant to this Section 6.7 shall not affect such Manager’s rights
as a Member and shall not constitute a withdrawal of such Member.

 

Section 6.8             Removal.

 

Subject to Section 6.2(b),
a Manager may only be removed by the consent of the Member or Members then
entitled to designate such Manager in accordance with Section 6.2.  The removal of a Manager who is also a Member
shall not affect such Manager’s rights as a Member and shall not constitute a
withdrawal of such Member.

 

Section 6.9             Vacancies.

 

Any vacancy in the position
of a Manager that is created by the withdrawal, death, resignation or removal
of a Manager or by the creation of a new Manager position pursuant to Section 6.2(b) shall
be filled only by consent of the Member or Members then entitled to designate
such Manager in accordance with Section 6.2.  A Manager elected to fill a vacancy shall
hold office until a successor shall be elected and shall qualify, or until the
Manager’s earlier death, resignation, withdrawal or removal.

 

Section 6.10           Delegation of Authority; Officers.

 

The Board shall have the
power to elect, delegate authority to, and remove such officers, employees,
agents and representatives of the Company as the Board may from time to time
deem appropriate.  Any delegation of
authority to take any action must be approved in the same manner as would be
required for the Board to approve such action directly.  The salaries of all officers, employees and
agents of the Company shall be fixed by the Board in accordance with the
Approved Budget.

 

Section 6.11           Designation of Operator.

 

(a)           The
Company hereby designates MWE Liberty as the initial “Operator” of the
Company.  Subject to any required Board
or Member approvals rights set forth in this Agreement, MWE Liberty shall be
responsible for, shall make all decisions regarding and shall have full power
and authority to manage the day-to-day operations of the Company’s business,
including, the development, construction and operation of the Company’s
facilities and business development activities and the oversight of G&A
Services and Personnel Services provided to the Company by MWE Hydrocarbon
pursuant to the Services Agreement, which includes the day-to-day management
and supervision of all Designated MWE Employees.  The appointment of MWE Liberty as the
Operator shall be exclusive to MWE Liberty, except to the extent that MWE
Liberty elects to cause such duties to be provided by third parties (and, in
any case MWE Hydrocarbon and MWE Liberty remain fully responsible for
compliance with the Services Agreement). 
MWE Liberty shall have the power and authority to execute contracts, and
to take such other actions, on behalf of the Company as may be necessary or
appropriate to carry out the Company’s business in accordance with the Approved
Budget.

 

(b)           For
the avoidance of doubt, the power and authority granted to MWE Liberty as the
Operator pursuant to Section 6.11(a) shall specifically include the
ability to perform (or cause to be performed) the following services and
activities (subject to compliance with any Board or Member approval rights with
respect to such services and activities required pursuant to this Agreement):

 

32

 

(i)            investigation, analysis and selection of acquisition and
business development opportunities;

 

(ii)           with respect to prospective acquisitions or dispositions by
the Company, conducting negotiations with sellers and purchasers and their
respective agents, representatives and advisors (including, without limitation,
investment bankers);

 

(iii)          administering the day-to-day operations of the Company and
performing and supervising the performance of such other administrative
functions necessary in the management of the Company as may be agreed upon by
MWE Liberty as Operator and the Board, including the collection of revenues and
the payment of the Company’s debts and obligations and maintenance of
appropriate computer services to perform such administrative functions;

 

(iv)          monitoring the operating performance of the Company’s assets
and providing periodic reports with respect thereto to the Board, including
comparative information with respect to such operating and performance and
budgeted or projected operating results;

 

(v)           assisting the Company to retain qualified accountants and
legal counsel, as applicable, to assist in developing appropriate accounting
procedures and compliance procedures;

 

(vi)          causing the Company to qualify to do business in all
applicable jurisdictions and to obtain and maintain all appropriate licenses;

 

(vii)         negotiating, executing, amending and terminating the Company’s
agreements with unaffiliated third parties, managing and administering the
Company’s rights and obligations under all agreements with unaffiliated third
parties to which the Company is a party or by which the Company is bound and
monitoring compliance by the Company and by such unaffiliated third parties to
such agreements with the terms and conditions thereof;

 

(viii)        taking all necessary actions to enable the Company to make
required tax filings and reports;

 

(ix)           handling and resolving all claims, disputes or controversies
(including, without limitation, all litigation, arbitration, settlement or
other proceedings or negotiations) with unaffiliated third parties in which the
Company may be involved or to which the Company may be subject arising out of
the Company’s day-to-day operations, subject to such limitations or parameters
as may be imposed from time to time by the Board;

 

(x)            purchasing, selling, leasing, operating and maintaining the
Company’s assets;

 

(xi)           establishing and maintaining the Company’s bank accounts and
banking arrangements, and to the extent of funds available, reinvesting Company
funds as MWE Liberty as Operator may deem appropriate and consistent with MWE
Liberty’s practices;

 

(xii)          performing such other services as may be required from time
to time for management and other activities relating to the assets of the
Company as the Board shall reasonably request or MWE Liberty shall deem
appropriate under the particular circumstances; and

 

33

 

(xiii)         using commercially reasonable efforts to cause the Company to
comply with all applicable laws.

 

The Operator shall operate the Company and perform the
services and activities referred to in clauses (i) through (xiii) above in
accordance with Prudent Industry Practices.

 

(c)           As
of the date hereof, the Operator and the Company shall execute the Services
Agreement with MWE Hydrocarbon, which is hereby approved by the Members.  MWE Hydrocarbon shall receive the fees and
reimbursement for its services as set forth in the Services Agreement.  The Company and the Members hereby
acknowledge and agree that the liability of Operator and MWE Hydrocarbon to the
Company and the Members, and the Operator’s obligation to satisfy any claim for
indemnification in connection with any such liability, shall be limited in the
manner and to the extent set forth in the Services Agreement, and the Members
hereby consent to, approve, and agree to be bound by the terms thereof with
regard to such limitations of the liability of the Operator and MWE Hydrocarbon
to the Company and the Members, in the same manner and to the same extent as
though such provisions were set forth herein. 
The Operator shall serve as the Operator until the termination of the
Services Agreement.  Upon the termination
of the Services Agreement, the Board with the Requisite Member Approval may
cause the Company to designate a new operator and enter into a new services
agreement.

 

(d)           MWE
Liberty hereby agrees to notify NGPMR of any notice of default or other
material notices received by MWE Liberty in connection with the agreements
listed on Exhibit H.

 

Section 6.12           Approval of Members.

 

The following matters shall
require Requisite Member Approval (provided that an explicit approval of such
matter in the Approved Budget or related Member resolution shall constitute a
Requisite Member Approval if such approval is explicitly identified as a
Requisite Member Approval):

 

(a)           Prior
to the Equalization Date to the extent not in accordance with Section 8.1,
any distributions of Available Cash (including Tax Distributions);

 

(b)           The
approval of the Proposed Budgets for the Company, other than (i) the
Initial Budget, which shall be deemed approved upon the execution of this
Agreement and (ii) budget items associated with capital expenditures
relating to the agreements set forth on Exhibit G; provided  that
the Company may not without the Requisite Member Approval (i) enter into
any additional **, (ii) enter into any
agreements or transactions referred to in ** or **, or (iii) extend the term of any of the agreements
set forth on Exhibit G.  In
connection with any such approval, the Members having the authority to approve
the Proposed Budget shall give the notice required by Section 6.15(d) below;

 

(c)           Material
deviations from Approved Budgets, including (i) with respect to any
Approved Budget, any modification or amendment of any **
or other ** contained therein, the
satisfaction of which results in the ** pursuant
to such budget, (ii) with respect to the capital expenditure budget,
changes of more than ** to the **, but excluding any items prior to the Equalization Date
requiring aggregate capital expenditures of less than $**
associated with a Project **, and
excluding any items after the Equalization Date requiring aggregate capital
expenditures of less than $** associated
with a Project ** and (iii) with respect to
the operating expenditure budget, increases of more than $**
to the ** or increases of more than $** to the ** calculated
on a **; provided  that, in any
case, a Project, operation, venture, agreement or activity that has received
Requisite Member Approval shall automatically be incorporated within the
Approved Budget and any changes or deviations required to incorporate such
Project, operation, venture, agreement or activity into the then current
Approved Budget shall not require additional Requisite Member Approval; provided
further that any additional changes or 

 

34

 

deviations associated with such Project, operation, venture,
agreement or activity shall be subject to Requisite Member Approval to the
extent they involve material deviations to the Approved Budget, as modified to
include such new Project, operation, venture, agreement or activity, under this
clause (c); provided, further, that changes in budget items listed in Section 6.15(a)(iii) through
(vi) shall not be considered material deviations for purposes of this Section 6.12(c);

 

(d)           Any
material change in the Primary Business or in the Company’s purpose;

 

(e)           The
incurrence of Debt and the granting of Liens on the Company’s Property in an
aggregate amount in excess of (A) $** prior to the
Equalization Date and (B) $** after the
Equalization Date, in each case excluding the Permitted Liens;

 

(f)            Any
interest rate protection agreement, foreign currency exchange agreement,
commodity price protection agreement, or other interest, currency or commodity
hedging arrangement entered into by the Company, including any forward sales,
calls, puts, swaps and other derivative transactions, whether financially or
physically settled; provided  that transactions to be settled (i) within
** based on **
or (ii)  ** based on the **, shall not require Requisite Member Approval;

 

(g)           The
acquisition or sale of any assets of the Company or its subsidiaries for
consideration in excess of (i) $** prior to the
Equalization Date and (ii) $** after the
Equalization Date;

 

(h)           Entry
into, termination or renewal of, or material modification or amendment of, (i) any
commercial contractual commitment reasonably expected to (A) result in
expenditures or liabilities in excess of $**, which $** threshold shall be subject to increase by ** per year, (B) generate annual revenues in excess of
$**, which $**
threshold shall be subject to increase by ** per year, or
(C) result in the commitment of more than **
of the capacity of any Company facility **, (ii) any
joint venture, partnership or other similar arrangement involving the sharing
of profits of the Company or any of its subsidiaries with any third-party, (iii) any
contractual commitment that limits the freedom of the Company or any of its
subsidiaries to compete within the Area of Mutual Interest, (iv) any
contract for the lease of real property for **
and (v) settlement agreements or other agreements related to or proposing
to resolve actual or threatened litigation, which involves (A) payment of
greater than $** or (B) provides for
restrictions or limitations on the Company’s ability to operate in the form of
an equitable remedy;

 

(i)            The
formation of any subsidiary of the Company;

 

(j)            Transactions
or agreements (including amendments, terminations and renewals thereof) between
the Company on the one hand, and a Member or an Affiliate of a Member on the
other hand, unless such transaction or agreements (including amendments,
terminations and renewals thereof) (i) has been approved by the other
Members that are not a party to, or Affiliates of a Party to, such transaction
or agreement and whose consent is required pursuant to this Section or (ii) is
identified on Exhibit H, all of which are hereby approved by the
Members;

 

(k)           The sale, exchange
or other disposition of all, or substantially all, of the Company’s assets in
one transaction or a series of related transactions,

 

(l)            Any
merger into or with or consolidation with any other entity (i) in which
the interests in the Company will be exchanged for a security with different
rights, preferences or privileges or (ii) pursuant to which the Members
will own less than 50% of the voting securities of the surviving entity;

 

35

 

(m)          Any
repurchase by the Company of Interests in the Company or any equity interests
in any of its subsidiaries;

 

(n)           Prior
to the Equalization Date, other than in accordance with the obligations of the
Members pursuant to Section 4.1, any efforts by the Company to raise
additional capital, including the issuance of additional Interests or options
to acquire Interests or any equity interests or options to acquire equity interests
in any of the Company’s subsidiaries;

 

(o)           The
registration of any equity or debt securities of the Company or its
subsidiaries under applicable United States federal or foreign securities laws
or any public offering of equity or debt securities of the Company or its
subsidiaries (including any Qualified Public Offering).

 

(p)           Any
declaration of bankruptcy, or the filing of a petition, or seeking protection,
under any federal or state bankruptcy, insolvency or reorganization law;

 

(q)           The
dissolution of the Company or the voluntary liquidation of the Company’s
assets;

 

(r)            Designating
a new Operator of the Company;

 

(s)           Approval
of the maintenance of reserves less than the **
as authorized in the Approved Budget or more than the **
in the Approved Budget;

 

(t)            Permit
the Company to create any Debt in favor of any Person;

 

(u)           Distributions
in-kind of any assets of the Company pursuant to Section 13.7;

 

(v)           Hiring
any employees of the Company or accepting secondments of employees;

 

(w)          After
the ** in **
becomes operational, and thereafter to the extent there is available **, elections by the Company to **
to MWE Hydrocarbon under the Fractionation and NGL Purchase Agreement;

 

(x)            Any
action by the Company that would cause it to be **
under the **; and

 

(y)           The
entry into any agreement to effect any of the foregoing.

 

Section 6.13           Reliance
by Third Parties.  Any Person dealing with the Company, a
Manager or the Operator may rely upon a certificate signed by a Manager or an
appropriate officer as to:

 

(a)           the
identity of the Managers;

 

(b)           the
existence or non-existence of any fact or facts which constitute a condition
precedent to acts by the Board or in any other manner germane to the affairs of
the Company;

 

(c)           the
Persons who are authorized to execute and deliver any instrument or document of
or on behalf of the Company; and

 

(d)           any
act or failure to act by the Company or as to any other matter whatsoever
involving the Company or any Member.

 

36

 

Section 6.14           Fees and Expenses of the Managers.

 

A Class A Manager shall
receive an annual amount of $** for serving
as a Manager.  A Class B Manager
shall not be entitled to any fees for serving as a Manager.  A Manager shall be entitled to reimbursement
for all reasonable out-of-pocket costs and expenses incurred by such Manager in
the capacity as a Manager.

 

Section 6.15           Budgets.

 

By **
of each calendar year following the Effective Time, the Operator shall prepare
and submit the following budgets and forecasts for the upcoming year (to the
extent such budgets or forecasts are applicable to such upcoming year) to the
Board for approval and to the appropriate Members for Requisite Member Approval
in accordance with Section 6.12:

 

(a)           (i) an
operating expenditure oversight budget, which shall consist of the operating
expenditure budget broken down by general categories of expenses for categories
exceeding an aggregate **; (ii) a
capital expenditure budget which shall include, to the extent applicable,
maintenance capital expenditures and growth capital expenditures; (iii) a
cost of goods sold budget or forecast; (iv) a volume budget or forecast; (v) a
revenue budget or forecast; and (vi) a forecast of distributions or
capital contributions (collectively, the “Proposed Budget”).

 

(b)           The
Board and the Members with Requisite Member Approval Rights shall have 15 days
to review and to either approve or to reject the Proposed Budget, in whole or
in part.  Any rejection of the Proposed
Budget in whole or in part must be made in good faith, based on commercially
reasonable standards and submitted in writing to the Board, the other Members
with Requisite Member Approval rights and the Operator and must describe
proposed modifications in reasonable detail (a “Budget Rejection Notice”).  If a Budget Rejection Notice is not received
within the requisite 15 day period, then the Proposed Budget will be deemed to
be approved in all respects.  If a Budget
Rejection Notice is received within the requisite 15 day period, the Operator, the
Board and the Members with Requisite Member Approval rights to approve the
Proposed Budget will work together in good faith to promptly resolve the issues
identified in a mutually agreeable manner and, if such dispute is not resolved
prior to the commencement of the calendar year to which the Proposed Budget
relates, the Approved Budget for the prior calendar year, increased by the
percentage increase in the CP Index since the first day of the previous
calendar year, shall be in effect until such dispute is resolved.  If such dispute is not resolved by January 30th of the calendar year
to which the Proposed Budget relates, such dispute shall be submitted to
arbitration pursuant to Section 6.15(e) below.  The Proposed Budget as approved, or as deemed
approved, by the Board and Requisite Member Approval in accordance with Section 6.12,
and as modified in accordance with Section 6.15(c) below, is referred
to herein as an “Approved Budget.”

 

(c)           Subject
to the remaining provisions of this clause (c), the Operator shall update the
Approved Budget from time to time to reflect amendments or modifications that
the Operator deems necessary or appropriate, and shall promptly provide such
updates to the Board; provided  that any material deviations which
require the consent of the Board or Requisite Member Approval in accordance
with Section 6.12(c) shall not become part of the Approved Budget
unless approved by the Board and Requisite Member Approval.

 

(d)           Once
a Proposed Budget or material deviations from an Approved Budget pursuant to Section 6.12(c) have
been approved by the Board and have received Requisite Member Approval pursuant
to Section 6.12, each Member that has the right to approve such Proposed
Budget (or deviations from an Approved Budget) shall at the time of the
approval, give notice to the Board of their 

 

37

 

intent to fund any budget item to the extent that such item
would require the Board to make a Capital Call in order to fund such budget
item.

 

(e)           The
binding arbitration shall be administered by the American Arbitration
Association (“AAA”) in accordance with its Commercial Arbitration Rules (the
“Rules”).  The “Arbitration Panel” shall
consist of three members.  The Class A
Members and the Class B Members, acting by the vote of Members holding Class A
Interests or Class B Interests with an aggregate Class A Percentage
Interest or Class B Percentage Interest, respectively, equal to or
exceeding 50% shall appoint one member of the Arbitration Panel.  The third member of the Arbitration Panel
shall be chosen by the appointed members and shall act as chairman of the
Arbitration Panel.  Should any arbitrator
fail to be appointed in accordance with the foregoing, then such arbitrator
shall be appointed by the AAA in accordance with the Rules.  The arbitration shall be held in Houston,
Texas, and the proceeding shall be conducted and concluded as soon as
reasonably practicable, based upon the schedule established by the Arbitration
Panel, but in any event the decision of the Arbitration Panel shall be rendered
within 90 days following the selection of the chairman of the Arbitration
Panel.  The decision of the Arbitration
Panel shall be final and binding upon the Company and the Members.  Judgment upon the award rendered by the
Arbitration Panel may be entered in, and enforced by, any court of competent
jurisdiction.  Each class of Members
shall bear its own expenses related to the arbitration, including its attorneys’
fees and the fees and expenses of the arbitrator it appointed.  Each class of Members shall pay 50% of the
fees and expenses of the chairman of the Arbitration Panel.

 

ARTICLE 7

ASSIGNABILITY OF MEMBER INTERESTS

 

Section 7.1             Prohibition on Assignment During Project Period.

 

Prior to ** (the “Project Period”), no Member may, directly or
indirectly, Transfer its Interest or any portion thereof without the prior
written consent of the other Members except for Permitted Transfers.  For purposes of this Agreement, “Permitted
Transfers” shall include the following:  (a) a
Member may Transfer all or a portion of its Interest to any of its Affiliates, (b) Interests
held by any member of the MWE Liberty Group may be (i) Transferred, in
whole or in part, in connection with any sale of all or substantially all of
the assets of MWE, or (ii) indirectly Transferred by way of a sale of
Control of MWE, or any merger of MWE with or into, or any consolidation of MWE
into, any other entity and (c) Interests held by NGPMR may be transferred
to the limited partners of NGPMR, if and to the extent required by the
governance documents of NGPMR.  In the
event of a Transfer pursuant to the foregoing clause (c), the NGPMR Group shall
designate a single representative to exercise all of the NGPMR Group’s rights
hereunder.  If a Member Transfers an
Interest during the Project Period in accordance with this Section 7.1,
such Transfer shall entitle the assignee to become a Substitute Member and to
exercise or receive the rights, powers or benefits of a Member if the assigning
Member designates, in a written instrument delivered to the Board and the other
Members, its assignee to become a Substitute Member and such assignee executes
an instrument reasonably satisfactory to the Board, which shall include an
acceptance and agreement by the Substitute Member to abide by all of the terms
and conditions of this Agreement.  A
Member may not Transfer Interests in a Permitted Transfer if such Permitted
Transfer has as a purpose the avoidance of the restrictions on Transfers in
this Agreement (it being understood that the purpose of this sentence is to
prohibit the Transfer of Interests to a transferee in a Permitted Transfer
followed by a change in the relationship between the transferor and the
transferee (or a change of Control of such transferor or transferee) after the
Permitted Transfer with the result and effect that the transferor has
indirectly Transferred Interests to a transferee in a Transfer which would not
have been directly permitted as a Permitted Transfer under this Section 7.1
had such change in such relationship occurred prior to such Transfer).

 

38

 

Section 7.2             Transfers After the Project Period.

 

After the Project Period, a
Member may Transfer its Interest, or any portion thereof, without the consent
of any other Member or the Board, provided  that such Member
complies with the requirements of this Section 7.2 in all instances except
in connection with Permitted Transfers:

 

(a)           In
the event that a Member (the “Transferring Member”) desires to Transfer,
directly or indirectly, all or any portion of its Interest (the “ROFO Interest”)
and such Transfer is not a Permitted Transfer, then the Transferring Member
shall give written notice thereof to the other Members (the “Remaining Members”).  For a period of 30 days thereafter, all or a
portion of the Remaining Members shall have the right, but not the obligation,
to submit a written offer to purchase the ROFO Interest (with each offering
Remaining Member to purchase its pro rata portion of the ROFO Interest as is
determined in accordance with the respective Percentage Interests of the
Remaining Members, or such other portion as the Remaining Members may mutually
agree upon) (the “ROFO Offer”), on such terms and conditions as the offering Remaining
Members may determine and which terms and conditions shall be described in the
ROFO Offer.  Upon receipt of the ROFO
Offer, the Transferring Member may elect in its sole discretion to accept or
reject the ROFO Offer.

 

(i)            In the event that the Transferring Member elects to accept
the ROFO Offer, then the Transferring Member shall be bound to Transfer to the
offering Remaining Members, and the offering Remaining Members shall be bound
to purchase from the Transferring Member, the ROFO Interest on the terms and
conditions set forth in the ROFO Offer (with such modifications as may be
mutually agreed upon by the offering Remaining Members and the Transferring
Member), and the closing of such Transfer of the ROFO Interest shall occur
within 30 days of the Transferring Member’s acceptance of the ROFO Offer or on
such other date as may be set forth in the ROFO Offer (subject to extension to
the extent necessary to pursue any required regulatory approvals, including to
allow for the expiration or termination of all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976).

 

(ii)           In the event that the Transferring Member rejects the ROFO
Offer, then for a 60-day period after the date on which the Transferring Member
rejects the ROFO Offer (the “Solicitation Period”), the Transferring Member may
solicit an offer to purchase the ROFO Interest from one or more third parties
as the Transferring Member may determine in its discretion.  If the Transferring Member receives a third
party offer (a “Third Party Offer”) to purchase the ROFO Interest within the
Solicitation Period, and the consideration payable for the ROFO Interest
pursuant to such Third Party Offer exceeds the consideration payable for the
ROFO Interest pursuant the ROFO Offer (such Third Party Offer is referred to as
a “Qualifying Third Party Offer”), the Transferring Member may elect to
Transfer the ROFO Interest to such third party in accordance with the
Qualifying Third Party Offer within 30  days
after the end of the Solicitation Period, subject to the Transferring Member’s
compliance with the provisions of Section 7.2(b).  Any noncash consideration set forth in the
ROFO Offer or a Third Party Offer shall be valued at its fair market value, as
agreed by the Transferring Member and the offering Remaining Members, and
failing such agreement, as determined by an independent third party appraiser
selected by the Transferring Member and reasonably acceptable to the offering
Remaining Members (the costs for which third party appraiser shall be shared
equally by the Transferring Member, on the one hand, and the offering Remaining
Members, on the other hand).  The
Transferring Member may not Transfer the ROFO Interest to any third party
pursuant to a Third Party Offer that is not a Qualifying Third Party Offer
without the offering Remaining Members’ prior written consent, which may be
withheld in their sole discretion.  Such
transferee shall become a Substitute Member if the Transferring Member
designates, in a written instrument delivered to the Board and the other
Members, the transferee to become a Substitute Member and 

 

39

 

such transferee executes an instrument reasonably
satisfactory to the Board, which shall include an acceptance and agreement by
the Substitute Member to abide by all of the terms and conditions of this
Agreement.  If
such closing does not occur within the required  30-day
period, then the ROFO Interest in question shall once again become subject to
the restrictions of this Section 7.2, and the Transferring Member shall no
longer be permitted to Transfer such ROFO Interest without again fully
complying with the provisions of this Section 7.2

 

(b)           Except
for any Transfer to another Member and except for Permitted Transfers, each Class B
Member hereby agrees, whether in one transaction or in a series of related
transactions, not to Transfer for value, all or any portion of its Interest,
directly or indirectly, without first complying with Section 7.2(a) and
then permitting each of the Remaining Members (the “Tag-Along Members”) to participate as sellers in such
transaction (the “Tag-Along Rights”),
such that each Tag-Along Member shall be entitled to sell, on the same terms as
the Class B Member proposing to sell its Interest (the “Class B
Seller”), a portion of such Tag-Along Member’s Interest, determined by
multiplying the Interest that the purchaser is willing to acquire by the
Percentage Interest of each such Tag-Along Member desiring to participate.

 

(i)            Before accomplishing or entering into a binding contract for
any Transfer for value of any Interest that would be covered by the Tag-Along
Rights, the Class B Seller agrees to give each Tag-Along Member written
notice (the “Tag-Along Notice”) of any such proposed sale (the “Sale Proposal”).  The Tag-Along Notice shall state that such
Tag-Along Member shall be entitled to exercise its Tag-Along Rights.  Each Tag-Along Member shall notify the Class B
Seller in writing within 10 days after receipt of the Tag-Along Notice as to whether
or not such Tag-Along Member wishes to exercise Tag-Along Rights and
participate in the proposed Transfer (the “Tag-Along Notice Period”).  Failure by any Tag-Along Member to respond
within such period shall be deemed to be a declination of such Tag-Along Member’s
Tag-Along Rights with respect to such proposed transfer.  The Class B Seller shall use its
commercially reasonable efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Tag-Along Members in any
contemplated Sale Proposal and to the inclusion of the Tag-Along Members’
Interests in such transaction, and no Class B Seller shall transfer any
portion of the Interest to any prospective transferee if such prospective
transferee(s) declines to allow the participation of the Tag-Along Members
or the inclusion of their Interests as contemplated herein.  Each Tag-Along Member that elects to
participate pursuant to this paragraph shall pay its pro rata share (based on
the Interests to be Transferred) of the expenses incurred by the Class B
Seller in connection with such Sale Proposal and shall be obligated to join on
a pro rata basis (based on the Interests to be Transferred) in any
indemnification or other obligations that Class B Seller agrees to provide
in connection with such Sale Proposal (other than any such obligations that
relate specifically to a particular Member such as indemnification with respect
to representations and warranties given by a Member regarding such Member’s
title to and ownership of its Interest); provided  that no
Tag-Along Member shall be obligated in connection with such Sale Proposal to
agree to indemnify or hold harmless the transferee with respect to an amount in
excess of the net cash proceeds paid to such Tag-Along Member in connection with
such Sale Proposal.  If the Tag-Along
Members decline, or are deemed to decline, their Tag-Along Rights for any
proposed transfer, the Class B Seller may sell its offered Interest; provided,
however, that (i) such Sale Proposal is consummated within 90 days
after the end of the Tag-Along Notice Period and (ii) the terms of the
actual transaction involve exactly the same consideration and other terms and
conditions set forth in the Tag-Along Notice. 
Any transferee pursuant to the Sale Proposal shall become a
Substitute Member if the Class B Seller designates, in a written
instrument delivered to the Board and the other Members, the transferee to
become a Substitute Member and such transferee executes an instrument
reasonably satisfactory to the Board, which shall include an acceptance and
agreement by the Substitute Member to abide by all of the terms and conditions
of 

 

40

 

this Agreement.  Failure to close the Sale Proposal within the required 90-day
period shall again subject the offered Interest to the Tag-Along Rights set
forth in this Section 7.2(b), whereupon the Class B Seller shall be
required to give each Tag-Along Member a new written notice with respect to the
proposed transfer, and each Tag-Along Member shall again have the right to
exercise Tag-Along Rights in respect of such proposed transfer.

 

(ii)           If a Class B Seller wishes to solicit Sale Proposals
from third parties involving a Company Sale, it shall first notify the other
Members of its desire to solicit a Company Sale (“Solicitation Notice”).  The other Members shall notify the Class B
Seller in writing within 10 days after receipt of the Solicitation Notice as to
whether or not such Members wish to participate in a Company Sale and shall specify
a minimum price (“Minimum Price”) at which such Members are willing to sell
their Interest thereunder (“Solicitation Response”).  If the Class B Seller obtains
Solicitation Responses from all of the Members indicating each Member’s desire
to enter into a Company Sale and a Minimum Price with respect to each Member,
then the Class B Seller may solicit offers for a Company Sale.  If the Class B Seller obtains an offer
within 90 days of its receipt of the Solicitation Responses for a Company Sale
in excess of each of the Minimum Prices set forth in the Solicitation
Responses, it may cause a Company Sale **.  If the Class B Seller does not obtain an
offer for a Company Sale in excess of the minimum prices set forth in the
Solicitation Responses within 90 days of its receipt of the Solicitation
Responses, then the Class B Seller may not pursue a Company Sale.  For the avoidance of doubt, this Section 7.2(b)(ii) shall
only apply to a Company Sale to be solicited by a Class B Member.  Any sale of the Interest of a Class B
Seller that is not a Company Sale shall remain subject to the provisions of Section 7.2(b)(i) above.

 

(c)           The
consideration or value allocated to the Members under this Section 7.2
shall be allocated among the Transferring Member and other Members (whether
Tag-Along Members or otherwise) in accordance with their respective rights to
distributions from the Company as if the Company had been liquidated pursuant
to Section 13.4 and the Company had sold all of its Property for an
Appraised Value using the implied valuation of such Property that may be
derived from the sales process described in Section 7.2, provided, that,
for purposes of determining whether the ** Payout, ** has been met, only the actual cash proceeds from the sale
received by NGPMR shall be considered rather than the proceeds allocable to
NGPMR from an implied valuation based upon a sale of all of the Company’s
Property and, except for such consideration, no Member will receive any
payments of any nature whatsoever from the transferee in connection with or
arising from such sale transaction.

 

Section 7.3             Recognition of Assignment by Company or Other Members.

 

No Transfer of an Interest
that is in violation of this Article 7 shall be valid or effective, and
neither the Company nor the Board nor any Member shall recognize the same for
any purpose of this Agreement, including the purpose of making distributions of
Available Cash pursuant to this Agreement with respect to such Interest or part
thereof.  Neither the Company nor the
Board shall incur any liability as a result of refusing to make any such
distributions to the assignee of any such invalid assignment.

 

Section 7.4             Effective Date of Assignment.

 

Any valid Transfer of a
Member’s Interest, or part thereof, pursuant to the provisions of this Article 7
shall be effective as of the later of (i) the date of Transfer set forth
on the written instrument of Transfer, (ii) the date on which the Company
has received the written instrument of Transfer and such other documents as may
be required by the Company pursuant to this Agreement and such Transfer has
been recorded on the books of the Company, and (iii) the date on which the
requirements of this Article 7 have been satisfied.  The Company shall, from the effective date of
such Transfer, thereafter pay all 

 

41

 

further
distributions on account of the Interest (or part thereof) so assigned to the
assignee of such Interest, or part thereof. 
As between any Member and its assignee, Profits and Losses for the
Fiscal Year of the Company in which such assignment occurs shall be apportioned
for federal income tax purposes in accordance with any convention permitted
under Section 706(d) of the Code and selected by the Board.

 

Section 7.5             Limitations on Transfer.

 

No Transfer of an Interest
may be effectuated unless in the opinion of counsel satisfactory to the Board,
the Transfer (a) would comply with the Securities Act and applicable
securities laws of any other jurisdiction; (b) would not cause the Company
to be terminated for purposes of Code Section 708; or (c) would not
violate any other applicable laws, provided  that the provisions
of this Section 7.5 may be waived by the Board.

 

Section 7.6             Transferee Not a Substitute Member.

 

In the event that a
transferee is not designated, or does not become, a Substitute Member pursuant
to this Article 7, then such transferee shall not be entitled to exercise
or receive any of the rights, powers or benefits of a Member other than the
right to receive distributions to which the assigning Member would be entitled.

 

ARTICLE
8

DISTRIBUTIONS
TO MEMBERS

 

Section 8.1             Available Cash.

 

Available Cash shall be
determined by the Board on a quarterly basis within 30 days after the end of
each calendar quarter.  Subject to the
remaining provisions of this Article 8 and any preferential or
disproportionate distributions to the extent expressly provided for in this
Agreement, and other than upon a liquidation of the Company pursuant to Section 13.4,
the Company shall distribute such Available Cash within 45 days following the
end of each calendar quarter to the Members of record, as follows.

 

(a)           Following
the end of each calendar quarter prior to the earlier to occur of (i) December 31,
2010 and (ii) the Equalization Date, Available Cash shall be retained by
the Company for reinvestment, and with respect to the Class B Members such
Available Cash shall be distributed and automatically reinvested (pursuant to Section 4.1(b)(iii))
in accordance with their Class B Percentage Interests.

 

(b)           Following
the end of each calendar quarter ending on or after the earlier to occur of (i) December 31,
2010 and (ii) the Equalization Date, Available Cash shall be distributed
to the Members as follows:

 

(i)            If the Equalization Date has not yet occurred, then:

 

(A)          First, 100% to the Class A Members in accordance with
their Class A Percentage Interests, until the Preference Amount accruing
for such calendar quarter is reduced to zero; and

 

(B)           Thereafter, to the Members in accordance with their
respective Percentage Interests.

 

42

 

(ii)           If the Equalization Date has occurred, then to the Members in
accordance with their respective Percentage Interests.

 

Section 8.2            Incentive Interest Percentage Distributions.

 

Notwithstanding the
preceding provisions in Sections 8.1(a) and (b), any Available Cash
remaining after a ** Payout** has occurred shall be distributed as follows:

 

**           Following
the ** Payout, if any, (x) first
calculated in accordance with their respective Percentage Interests, then (y) adjusted
by reducing NGPMR’s pro rata amount of Available Cash as determined in (x) by
the ** and (z) increasing MWE Liberty’s
pro rata amount of Available Cash as determined in (x) by the amount
determined in (y) **

 

**

 

Exhibit E contains
illustrative examples of the determination of the amounts to be distributed to
NGPMR and MWE Liberty pursuant to Section** 8.2** based on hypothetical distributions of Available
Cash.  This Section 8.2 shall be
interpreted and applied in a manner consistent with the examples set forth in Exhibit E.

 

Section 8.3            Withholding.

 

All amounts withheld
pursuant to the Code or any provision of any foreign, state or local tax law or
treaty with respect to any payment, distribution or allocation to the Company
or the Members shall be treated as amounts distributed to the Members pursuant
to this Article 8 for all purposes of this Agreement.  The Board is authorized to withhold from
distributions, or with respect to allocations, to the Members and to pay over
to any federal, foreign, state or local government any amounts required to be
so withheld pursuant to the Code or any provision of any other federal,
foreign, state or local law or treaty and shall allocate such amounts to those
Members with respect to which such amounts were withheld.

 

Section 8.4            Limitations on Distribution.

 

Except as provided in this
Agreement, no Member shall be entitled to any distribution of cash or other
property from the Company. 
Notwithstanding any provision to the contrary contained in this
Agreement, the Company shall not make a distribution to any Member on account
of its Interest in the Company if such distribution would violate the Act or
other applicable law.

 

Section 8.5            Tax Distributions.

 

(a)           Each
Member shall be entitled to receive, on the date which is two Business Days
prior to each date on which estimated income tax payments are required to be
made by an individual calendar year taxpayer and each due date for the income
tax return of an individual calendar year taxpayer (each a “Tax Distribution
Date”), cumulative cash distributions in an amount equal to such Member’s
Assumed Tax Liability, if any.  The “Assumed
Tax Liability” of each Member means an amount equal to (i) the cumulative
amount of federal income taxes (including any applicable estimated taxes),
determined taking into account the character of income and loss allocated to
such Member as it affects the applicable tax rate, that the Board estimates
would be due from such Member as of such Tax Distribution Date, assuming such
Member were an individual that earned solely the items of income, gain,
deduction, loss and/or credit allocated to such Member pursuant to Section 9.4
(after reflecting any adjustments thereto by reason of Code Sections 732(d),
734, or 743), reduced by (ii) all previous distributions made to such 

 

43

 

Member pursuant to this Article 8 (other than
distributions distributed and reinvested pursuant to Section 8.1(a)).

 

(b)           Distributions
under this Section shall be treated as an advance distribution under and
shall offset future distributions that such Member would otherwise be entitled
to receive pursuant to Section 8.1 or, if not previously offset, Section 13.4.

 

(c)           If
on a Tax Distribution Date there are not sufficient funds on hand to distribute
to each Member the full amount of such Member’s Assumed Tax Liability,
distributions pursuant to this Section 8.5 shall be made to the Members to
the extent of the available funds in proportion to each Member’s Assumed Tax
Liability.

 

ARTICLE
9

ALLOCATIONS

 

Section 9.1            Profits and Losses.

 

(a)           After
giving effect to the special allocations set forth in Section 9.2  and 9.3 and subject to the allocations
contained in Section 13.4(b), all Profits and Losses from operations for
each Fiscal Year (or part thereof) shall be allocated to the Class A
Members and the Class B Members in accordance with their Percentage
Interests; provided, no Losses shall be allocated to any Member to the
extent that such Losses would result in a Member having an Adjusted Capital
Account Deficit.

 

Section 9.2            Special Allocations.

 

Notwithstanding anything in
this Agreement to the contrary, the following special allocations shall be
made:

 

(a)           Nonrecourse
Deductions.  Nonrecourse Deductions for any taxable year
shall be allocated to the Members in accordance with their Percentage
Interests.

 

(b)           Member
Nonrecourse Deductions.  Member Nonrecourse Deductions for any taxable
year shall be allocated 100% to the Member that bears the Economic Risk of Loss
with respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i).  If more than one Member bears the Economic
Risk of Loss with respect to a Member Nonrecourse Debt, Member Nonrecourse
Deductions attributable thereto shall be allocated between or among such
Members in accordance with the ratios in which they share such Economic Risk of
Loss.  This Section 9.2(b) is
intended to comply with the provisions of Treasury Regulation Section 1.704-2(i) and
shall be interpreted consistently therewith.

 

(c)           Company
Minimum Gain Chargeback.  Notwithstanding any other provision of this
Agreement, if there is a net decrease in Minimum Gain during any taxable year,
each Member shall be allocated items of Company income and gain for such year
(and, if necessary, subsequent taxable years) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6), (g)(2) and
(j)(2)(i).  For purposes of this Section 9.2,
each Member’s Capital Account shall be determined, and the allocation of income
or gain required hereunder shall be effected, prior to the application of any
other allocations pursuant to this Article 9 with respect to such taxable
year.  This Section 9.2(c) is
intended to comply with the partner minimum gain chargeback requirement in
Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.

 

44

 

(d)           Member
Nonrecourse Debt Minimum Gain Chargeback.  Notwithstanding the other provisions of this
Agreement (other than Section 9.2(c) above), if there is a net
decrease in Member Nonrecourse Debt Minimum Gain during any taxable year, any
Member with a share of Member Nonrecourse Debt Minimum Gain at the beginning of
such taxable year shall be allocated items of Company income and gain for such
year (and, if necessary, subsequent taxable years) in the manner and amounts
provided in Treasury Regulation Section 1.704-2(i)(4) and
(j)(2)(ii).  For purposes of this Section 9.2,
each Member’s Adjusted Capital Account balance shall be determined, and the
allocation of income and gain required hereunder shall be effected, prior to
the application of any other allocations pursuant to this Article 9, other
than Section 9.2(c) above, with respect to such taxable year.  This Section 9.2(d) is intended to
comply with the partner nonrecourse debt minimum gain chargeback requirement in
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.

 

(e)           Qualified
Income Offset.  Except as provided in Sections 9.2(c) and
9.2(d) above, in the event any Member unexpectedly receives an adjustment,
allocation or distribution described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain
shall be allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by such Treasury Regulation, the deficit
balance, if any, in its Adjusted Capital Account created by such adjustment,
allocation or distribution as quickly as possible unless such deficit balance
is otherwise eliminated pursuant to Sections 9.2(c), 9.2(d) or
9.2(f).  This Section 9.2(e) is
intended to constitute a qualified income offset described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

 

(f)            Priority
Allocation.

 

(i)            Items of Company gross income and gain shall be allocated to
the Class A Members in accordance with their Class A Percentage
Interests, until the aggregate amounts of such items allocated to the Class A
Members for such Fiscal Year equals the amount distributed to the Class A
Members pursuant to Section 8.1(b)(i)(A) for all Fiscal Years that
have not been previously reflected by an allocation pursuant to this Section 9.2(f).

 

(ii)           After giving effect to all preceding allocations in Section 9.2(f)(i),
all or a portion of the remaining items of Company income or gain for the
Fiscal Year, if any, shall be allocated to MWE Liberty in an amount equal to
the cumulative cash distributed to MWE Liberty pursuant to Sections 8.2(a), 8.2(b) or
8.2(c) (to the extent of such distributions in excess of MWE Liberty’s
Percentage Interest), less the cumulative amount of income and gain previously
allocated to MWE Liberty pursuant to this Section 9.2(f)(ii).

 

(g)           Gross
Income Allocation.  In the event any Member has a deficit balance
in its Adjusted Capital Account at the end of any taxable year, such Member
shall be allocated items of Company gross income and gain in the amount of such
excess as quickly as possible; provided, however,
that an allocation pursuant to this Section 9.2(g) shall be made only
if and to the extent that such Member would have a deficit balance in its
Adjusted Capital Account after all other allocations provided in this Section 9.2
(other than Section 9.2(e)) have been tentatively made as if Section 9.2(e) and
this Section 9.2(g) were not in this Agreement.

 

Section 9.3            Curative Allocations.

 

The allocations set forth in
Section 9.2 (other than Section 9.2(f)) (the “Regulatory Allocations”)
are intended to comply with certain requirements of the Treasury
Regulations.  It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Company income, gain, loss or 

 

45

 

deduction
pursuant to this Section 9.3. 
Therefore, notwithstanding any other provision of this Article 9
(other than the Regulatory Allocations), but subject to the Code and the
Treasury Regulations, the Board shall make such offsetting special allocations
of Company income, gain, loss or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Member’s
Capital Account balance is, to the extent possible, equal to the Capital
Account balance such Member would have had if the Regulatory Allocations were
not part of this Agreement.  In
exercising its discretion under this Section 9.3, the Board shall take
into account future Regulatory Allocations that, although not yet made, are
likely to offset other Regulatory Allocations previously made.

 

Section 9.4            Income Tax Allocations.

 

(a)           Except
as provided in this Section 9.4, each item of income, gain, loss and
deduction of the Company for federal income tax purposes shall be allocated
among the Members in the same manner as such items are allocated for book
purposes under Sections 9.1, 9.2, 9.3 and 13.4(b).

 

(b)           In
accordance with Code Section 704(c) and the applicable Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the Company shall, solely for tax purposes, be
allocated among the Members so as to take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its Gross Asset Value at the time of its contribution to the Company.  If the Gross Asset Value of any Company
property is adjusted in accordance with clause (c) or (d) of the
definition of Gross Asset Value, then subsequent allocations of income, gain,
loss and deduction shall take into account any variation between the adjusted
basis of such property for federal income tax purposes and its Gross Asset
Value as provided in Code Section 704(c) and the related Treasury
Regulations.  For purposes of such
allocations, the Company shall elect the remedial allocation method described
in Treasury Regulation Section 1.704-3(d).

 

(c)           All
items of income, gain, loss, deduction and credit allocated to the Members in
accordance with the provisions hereof and basis allocations recognized by the
Company for federal income tax purposes shall be determined without regard to
any election under Section 754 of the Code which may be made by the
Company.

 

(d)           If
any deductions for depreciation or cost recovery are recaptured as ordinary
income upon the Transfer of Company properties, the ordinary income character
of the gain from such Transfer shall be allocated among the Members in the same
ratio as the deductions giving rise to such ordinary character were allocated.

 

Section 9.5             Allocation and Other Rules.

 

(a)           In
the event Members are admitted to the Company pursuant to this Agreement on
different dates, the Profits (or Losses) allocated to the Members for each
Fiscal Year during which Members are so admitted shall be allocated among the
Members in proportion to their Percentage Interests during such Fiscal Year in
accordance with Section 706 of the Code, using any convention permitted by
law and selected by the Board that takes into account the varying interests of
the Members during such Fiscal Year.

 

(b)           For
purposes of determining the Profits, Losses or any other items allocable to any
period, Profits, Losses and any such other items shall be determined on a
daily, monthly or other basis, as determined by the Board using any method that
is permissible under Section 706 of the Code and the Treasury Regulations
thereunder.

 

46

 

(c)           The
Members are aware of the income tax consequences of the allocations made by
this Article 9 and hereby agree to be bound by the provisions of this Article 9
in reporting their shares of Company income and loss for income tax purposes.

 

(d)           Allocations
made by the Board under Section 9.2 in reliance upon the advice of the
Company’s accountants shall be deemed to be made pursuant to any fiduciary
obligation to the Company and the Members.

 

(e)           If
any Member makes a loan to the Company, or the Company makes a loan to any Member,
and interest in excess of the amount actually payable is imputed under Code
Sections 7872, 483, or 1271 through 1288 or corresponding provisions of
subsequent federal income tax law, then any item of income or expense
attributable to any such imputed interest shall be allocated solely to the
Member who made or received the loan and shall be credited or charged to its
Capital Account, as appropriate.

 

ARTICLE
10

BOOKS
AND RECORDS

 

Section 10.1          Inspection Rights Pursuant to Law.

 

The Company shall have
obligations to the Members as set forth in this Article 10 respecting
books, records and financial statements of the Company.

 

Section 10.2          Books and Records.

 

At all times during the
continuance of the Company, the Company shall maintain at its principal place
of business all records and materials the Company is required to maintain at
such location under the Act.  The Company
shall keep proper and complete books of account adequate for its purposes.  The books of account relating to the Company
shall be open to inspection and copying by any of the Members or by their
authorized representatives upon reasonable notice and at any reasonable time
during business hours, at the Member’s expense; provided, however,
that the Members acknowledge and agree that, to the extent that the books of
account include information relating to one or more Affiliates of the Operator
(other than the Company) or any Out of Scope Projects or Exempted Projects (the
“Unrelated Information”), then the Company and Operator shall be entitled
either to redact, or limit access to, the books of account such that the
Members shall not have access to Unrelated Information or to require such
Member to designate an independent third party auditor to conduct such review,
which auditor will be required to execute a confidentiality agreement with the
Operator under which such auditor may examine the Unrelated Information but may
not disclose the Unrelated Information to such Member.

 

Section 10.3          Financial Statements and Reports.

 

The Operator shall prepare,
on behalf of the Company and at the Company’s expense, and shall submit to the
Members the following statements, reports and notices:

 

(a)           Annual
financial statements of the Company, consisting of a profit and loss statement,
balance sheet and statement of cash flows, as of the end of and for the prior
Fiscal Year, which shall be prepared in accordance with generally accepted
accounting principles consistently applied (“GAAP”) and audited by the Operator’s
independent certified public accountants, which shall be a nationally
recognized accounting firm (the “Annual Financial Statements”).  The Annual Financial Statements shall be
delivered to each Member within 75 days after the end of each Fiscal Year;

 

47

 

(b)           Unaudited
quarterly financial statements of the Company, consisting of a profit and loss
statement, balance sheet and statement of cash flows, as of the end of and for
the prior calendar quarter, which shall be prepared in accordance with GAAP
except for normal year end adjustments and the absence of footnotes (the “Quarterly
Financial Statements”).  The Quarterly
Financial Statements shall be delivered within 45 days after the end of each
calendar quarter;

 

(c)           Monthly
financial and business reports, which shall consist of a profit and loss
statement, balance sheet and statement of cash flows, as of the end of and for
the prior calendar month, which shall be prepared in accordance with GAAP
except for normal year end adjustments and the absence of footnotes (the “Monthly
Reports”).  The Monthly Reports shall be
delivered within 30 days after the end of each calendar month;

 

(d)           Copies
of the Approved Budget in effect from time to time, within 30 days after the
approval thereof in accordance with Section 6.15;

 

(e)           Such
other information as a Member may reasonably request to satisfy such Member’s
or its Affiliates’ public disclosure obligations under the Exchange Act, the rules of
any stock exchange, or any similar public disclosure obligations; provided
that public disclosure of any such information shall be subject to the
provisions of Section 5.4.

 

Section 10.4          Accounting Method.

 

For both financial and tax
reporting purposes and for purposes of determining Profits and Losses, the
books and records of the Company shall be kept on such method of accounting as
determined by the Board and shall reflect all Company transactions and be
appropriate and adequate for the Company’s business.

 

Section 10.5          Bank Accounts; Investments.

 

The Board shall establish
one or more bank accounts in the name of the Company into which all Company
funds shall be deposited.  No other funds
shall be deposited into these accounts. 
All Capital Contributions made by the Class A Members pursuant to Section 4.1(b)(i) shall
be held in a separate joint banking account (the “Escrow Account”) and invested
in treasury bills, treasury notes or any other direct obligations issued by or
guaranteed in full as to principal and interest by the United States of America
pursuant to the terms of the Escrow Agreement. 
The Escrow Agent shall release funds from the Escrow Account to the
Company on at least a monthly basis upon receipt of a joint instruction letter
(an “Escrow Letter”) from the Members and the Company; provided  that
the execution of the Escrow Letter by NGPMR is conditioned upon its receipt of
a certificate from the Company that the Company has spent or committed to spend
such funds in accordance with an Approved Budget, and will spend such funds to
which such certificate relates in accordance with an Approved Budget, and upon
receipt of such certificate, NGPMR shall promptly execute the Escrow
Letter.  The Members hereby ** all of the Company’s remedies, powers, privileges,
rights, titles and interests of every kind and character now owned or hereafter
acquired, created or arising in and to the funds held in such joint
account.  **
such funds held in the Escrow Account in the event that (i) there is an
event causing dissolution of the Company pursuant to Section 13.2 or (ii) there
is a declaration of bankruptcy of the Company, MWE or MWE Liberty, or the
filing of a petition, or seeking protection, under any federal or state
bankruptcy, insolvency or reorganization law.

 

48

 

ARTICLE
11

TAX
MATTERS

 

Section 11.1          Taxation of Company.

 

It is the intent of the
Members that the Company shall be treated as a partnership for U.S. federal
income tax purposes.  Neither the Company
nor any Member shall make an election for the Company to be excluded from the
application of the provisions of subchapter K of chapter 1 of subtitle A of the
Code or any similar provisions of applicable state law or to be classified as
other than a partnership pursuant to Treasury Regulation Section 301.7701-3.

 

Section 11.2          Tax Returns.

 

The Company shall cause the
Operator to prepare, at the expense of the Company, for each Fiscal Year (or
part thereof), federal tax returns in compliance with the provisions of the
Code and any required state and local tax returns.  Each Member shall furnish to the Company all
pertinent information in its possession relating to the Company’s operations
that is necessary to enable the Company’s tax returns to be timely prepared and
filed.  Not less than 60 days prior to
the due date (as extended) of the Company’s federal income tax return or any
state income tax return, the return proposed by the Board to be filed by the
Company shall be furnished to the Members for review.  In addition, not more than 10 days after the
date on which the Company files its federal income tax return or any state
income tax return, a copy of the return so filed shall be furnished to the
Members.

 

Section 11.3          Member Tax Return Information.

 

The Company, at its expense,
shall cause to be delivered to each Member within 60 calendar days after the
end of the Company’s taxable year an IRS Form K-1 or a good faith estimate
of the amounts to be included on such IRS Form K-1 for such Member and
such other information as shall be necessary (including a statement for that
year of each Member’s share of net income, net losses and other items allocated
to such Member) for the preparation and timely filing by the Members of their
federal, state and local income and other tax returns.

 

Section 11.4          Tax Matters Representative.

 

(a)           The
“tax matters partner” of the Company for purposes of Section 6231(a)(7) of
the Code shall be MWE Liberty, so long as MWE Liberty or one of its Affiliates
is a Member, and shall have the power to manage and control, on behalf of the
Company, any administrative proceeding at the Company level with the Internal
Revenue Service relating to the determination of any item of Company income,
gain, loss, deduction or credit for federal income tax purposes.  Any Member who is designated as the tax
matters partner shall be referred to herein as the “Tax Matters Member.”

 

(b)           The
Tax Matters Member shall keep the Members informed as to the status of any
audit of the Company’s tax affairs, and shall take such action as may be
necessary to cause any Member so requesting to become a “notice partner” within
the meaning of Section 6231(a)(8) of the Code.  Without first obtaining the approval of the
Board and Requisite Member Approval, the Tax Matters Member shall not, with
respect to Company tax matters: (i) enter into a settlement agreement with
respect to any tax matter which purports to bind Members, (ii) intervene
in any action pursuant to Code Section 6226(b)(5), (iii) enter into
an agreement extending the period of limitations for making assessments on
behalf of Members, or (iv) file a petition pursuant to Code Section 6226(a) or
6228.  If an audit of any of the Company’s
tax returns shall occur, the Tax Matters Member shall not settle or otherwise
compromise assertions of the auditing agent which may be adverse to any Member
as 

 

49

 

compared to the position taken on the Company’s tax returns
without the prior written consent of each such affected Member.

 

(c)           No
Member shall file a request pursuant to Code Section 6227 for an
administrative adjustment of Company items for any taxable year, or a petition
under Code Sections 6226 or 6228 or other Code sections with respect to any
item involving the Company, without first notifying other Members.

 

Section 11.5          Right to Make Section 754 Election.

 

The Board, in its sole
discretion, may make or revoke, on behalf of the Company, an election in
accordance with Section 754 of the Code, so as to adjust the basis of
Company property in the case of a distribution of property within the meaning
of Section 734 of the Code, and in the case of a transfer of Interests
within the meaning of Section 743 of the Code.

 

Section 11.6          Tax Elections.

 

The Company shall have the
right to make any U.S. federal income tax elections it deems appropriate and in
the best interests of the Members.

 

Section 11.7          Tax Reimbursement.

 

If
Texas law requires the Company and any Member both to participate in the
filing of a Texas margin tax combined group report, and if such Member pays
the margin tax liability due in connection with such combined report, the
parties agree that the Company shall promptly reimburse such Member for the
margin tax paid on behalf of the Company as a combined group member.  The margin tax paid on behalf of the Company
shall be equal to the margin tax that the Company would have paid if it had
computed its margin tax liability for the report period on a separate entity
basis rather than as a member of the combined group.  In such event, the parties agree that such
Member shall be considered as paying such amount on behalf of the
Company and the Company shall deduct for federal income tax purposes 100% of
the Texas margin tax attributable to the Company; provided  that
in the event that such deduction may not be properly taken by the Company, the
Company shall reimburse such Member for the after-tax cost of such payment of
Texas margin tax paid on the Company’s behalf.

 

ARTICLE
12

LIABILITY,
EXCULPATION AND INDEMNIFICATION

 

Section 12.1          Liability.

 

(a)           Except
as otherwise provided by the Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Covered Person shall
be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Covered Person.

 

(b)           Except
as otherwise expressly required by law, a Member, in its capacity as Member,
shall have no liability in excess of (i) the amount of its Capital
Contributions; (ii) its share of any assets and undistributed profits of
the Company; (iii) its obligation to make other payments expressly
provided for in this Agreement; and (iv) the amount of any distributions
wrongfully distributed to it.

 

50

 

Section 12.2          Exculpation.

 

(a)           No
Covered Person shall be liable to the Company or any other Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Covered Person on behalf of the Company and in a manner
reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement, except that a Covered Person shall be liable
for any such loss, damage or claim incurred by reason of such Covered Person’s
fraud, bad faith or willful misconduct as established by a non-appealable court
order, judgment, decree or decision.

 

(b)           A
Covered Person shall be fully protected in relying in good faith upon the
records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person’s professional or
expert competence and who has been selected with reasonable care by or on
behalf of the Company, including information, opinions, reports or statements
as to the value and amount of the assets, liabilities, Profits, Losses or
Available Cash or any other facts pertinent to the existence and amount of
assets from which distributions to Members might properly be paid.

 

Section 12.3          Indemnification.

 

To the fullest extent
permitted by applicable law, the Company shall indemnify and hold harmless each
Covered Person from and against all Claims arising from or related to any act
or omission performed or omitted by such Covered Person on behalf of the
Company and in a manner reasonably believed to be within the scope of authority
conferred on such Covered Person by this Agreement, except that no Covered
Person shall be entitled to be indemnified in respect of any Claim by reason of
such Covered Person’s fraud, bad faith, or willful misconduct as established by
a non-appealable court order, judgment, decree or decision.  Any indemnity under this Section 12.3
shall be provided out of and to the extent of Company assets only (including
the proceeds of any insurance policy obtained pursuant to Section 12.5),
and no Covered Person shall have any personal liability on account
thereof.  Any amendment, modification or
repeal of this Section 12.3 or any provision in this Section 12.3
shall be prospective only and shall not in any way affect the rights of any
Covered Person under this Section 12.3 as in effect immediately prior to
such amendment, modification or repeal with respect to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless
of when claims relating to such matters may arise or be asserted.

 

Section 12.4          Expenses.

 

To the fullest extent
permitted by applicable law, expenses (including legal fees) incurred by a
Covered Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Company of an undertaking by or on behalf of the Covered Person to repay
such amount if it shall be determined that the Covered Person is not entitled
to be indemnified as authorized in Section 12.3.

 

Section 12.5          Insurance.

 

The Company may purchase and
maintain insurance, to the extent and in such amounts as the Board shall, in
its sole discretion, deem reasonable, on behalf of Covered Persons and such
other Persons as the Board shall determine, against any liability that may be
asserted against or expenses that may be incurred by any such Person in
connection with the activities of the Company or such indemnities, regardless
of whether the Company would have the power to indemnify such Person against
such liability under the provisions of this Agreement.  The Board and the Company may enter into
indemnity contracts 

 

51

 

with
Covered Persons and such other Persons as the Board shall determine and adopt
written procedures pursuant to which arrangements are made for the advancement
of expenses and the funding of obligations under Section 12.4 and
containing such other procedures regarding indemnification as are appropriate.

 

Section 12.6          Certain Liabilities.

 

Each Member agrees to be
liable for the Capital Contributions required to be made by such Member, and
subject to the other provisions of this Agreement, in the event a Member
becomes liable for any liabilities of the Company, the Members shall bear such
liability in proportion to their then existing Percentage Interests.

 

Section 12.7          Acts Performed Outside the Scope of the Company.

 

Each Member (each Member in
such capacity, an “Indemnitor”) shall indemnify, defend, save and hold harmless
each other Member (an “Indemnitee”) from any and all Claims that shall or may
arise by virtue of any act or thing done or omitted to be done by the
Indemnitor (directly or through agents or employees) outside the scope of, or
in breach of, the terms of this Agreement; provided, however,
that the Indemnitor shall be properly notified of the existence of the Claim,
and shall be given reasonable opportunity to cure any act or omission causing
liability, and participate in the defense thereof.  The Indemnitee’s
failure to give such notice shall not affect the Indemnitor’s obligations
hereunder, except to the extent of any actual prejudice arising therefrom.

 

Section 12.8          Liability of Members to Company or Other Members.

 

Unless otherwise provided in
this Agreement, no Member shall be liable to any other Member or to the Company
by reason of such Member’s actions in connection with the Company, except in
the event of a violation of any provision of this Agreement, fraud, bad faith
or willful misconduct.

 

Section 12.9          Attorneys’ Fees.

 

All of the indemnities
provided in this Agreement shall include reasonable attorneys’ fees, including
appellate attorneys’ fees and court costs.

 

Section 12.10        Subordination of Other Rights to Indemnity.

 

The interests of the Members
in any proceeds of the Company by way of repayment of loans, return of any
Capital Contributions, or any distributions from the Company, shall be
subordinated to the right of Members to the indemnities provided by this Article 12.

 

Section 12.11        Survival of Indemnity Provisions.

 

Except as otherwise
specifically provided herein, all of the indemnity provisions contained in this
Agreement shall survive a Member’s ceasing to be a Member hereunder.

 

ARTICLE
13

DISSOLUTION,
LIQUIDATION AND TERMINATION

 

Section 13.1          No Dissolution.

 

The Company shall not be
dissolved by the admission of Additional Members or Substitute Members in
accordance with the terms of this Agreement, or the withdrawal of a Member.

 

52

 

Section 13.2          Events Causing Dissolution.

 

The Company shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following events:

 

(a)           the
determination of the Members pursuant to Section 6.12(p);

 

(b)           at
such time as there are no Members;

 

(c)           the
entry of a decree of judicial dissolution under the Act; or

 

(d)           the
sale, exchange or disposition of all, or substantially all, of the Company’s
assets in one transaction or a series of related transactions.

 

Section 13.3          Notice of Dissolution.

 

Upon the dissolution of the
Company, the Board shall promptly notify the Members of such dissolution.

 

Section 13.4          Liquidation.

 

(a)           Upon
dissolution of the Company, the Board (in such capacity, the “Liquidating
Trustee”) shall carry out the winding up of the Company and shall immediately
commence to wind up the Company’s affairs; provided, however,
that a reasonable time shall be allowed for the orderly liquidation of the
assets of the Company and the satisfaction of liabilities to creditors so as to
enable the Members to minimize the normal losses attendant upon a
liquidation.  The proceeds of liquidation
shall be applied first to payment of all expenses and debts of the Company and
setting up of such reserves as the Board reasonably deems necessary to wind up
the Company’s affairs and to provide for any contingent liabilities or
obligations of the Company; provided  that the unpaid principal of
and interest on any loans made to the Company by Members (and their Affiliates)
shall be distributed pro rata to the Members (and their Affiliates) who made
such loans, in proportion to the total amount of principal and interest payable
on such loans, such distributions being treated first as a payment of accrued
interest on such loans and next as in payment of principal on such loans.  Any remaining proceeds shall be distributed
as follows:

 

(i)            If the Equalization Date has not yet occurred, then:

 

(A)          First, 100% to the Class A Members in accordance with their Class
A Percentage Interests until the ** is reduced
to zero;

 

(B)           Next, 100% to the Class A Members in accordance with their Class
A Percentage Interests until the ** is reduced
to zero; and

 

(C)           Thereafter, ** to the
holders to the Class A Membership Interests and **
to the holders of the Class B Memberships Interests.

 

(ii)           If the Equalization Date has occurred, then to the Members in
accordance with their respective Percentage Interests.

 

(b)           Incentive
Interest Percentage Distributions.  Notwithstanding the preceding provisions in Section
13.4(a), in the event a ** Payout** has occurred, Available Cash shall be distributed as
follows:

 

53

 

**           Following the ** Payout, if
any, (x) first calculated in accordance with their respective Percentage Interests,
then (y) adjusted by reducing NGPMR’s pro rata amount of Available Cash as
determined in (x) by the ** and (z) increasing
MWE Liberty’s pro rata amount of Available Cash as determined in (x) by the
amount determined in (y) **

 

**

 

(c)           The
Profits and Losses arising from liquidation of the Company shall be allocated
to the Members so that, to the maximum extent possible, each Member’s Capital
Account balance equals the amount of cash distributed to each such Member
pursuant to Sections 13.4(a)(i) and (ii) and Section 13.4(b), to the extent
applicable.

 

Section 13.5          Termination.

 

The Company shall terminate
when all of the assets of the Company, after payment of or due provision for
all debts, liabilities and obligations of the Company, shall have been
distributed to the Members in the manner provided for in this Article 13 and
the Certificate shall have been canceled, or such other documents required
under the Act to be executed and filed with the Secretary of State of the State
of Delaware have been so executed and filed, in the manner required by the Act.

 

Section 13.6          Claims of the Members or Third Parties.

 

The Members and former
Members shall look solely to the Company’s assets for the return of their
Capital Contributions, and if the assets of the Company remaining after payment
of or due provision for all debts, liabilities and obligations of the Company
are insufficient to return such Capital Contributions, the Members and former
Members shall have no recourse against the Company or any other Member; provided,
however, that nothing contained herein shall be deemed to limit the
rights of a Member under applicable law. 
In the event any Member has a deficit balance in its Capital Account at
the time of the Company’s dissolution, it shall not be required to restore such
account to a positive balance or otherwise make any payments to the Company or
its creditors or other third parties in respect of such deficiency.

 

Section 13.7          Distributions In-Kind.

 

If any assets of the Company
shall be distributed in kind, such assets shall be distributed to the Member(s)
entitled thereto as tenants-in-common in the same proportions as such Member(s)
would have been entitled to cash distributions if (i) such assets had been sold
for cash by the Company at the fair market value of such property (taking the
Gross Asset Value definition herein and Code Section 7701(g) into account) on
the date of distribution; (ii) any unrealized income, gain, loss and deduction
inherent in such property (that has not been reflected in the Capital Accounts
previously) that would be realized by the Company from such sale were allocated
among the Member(s) as Profits or Losses in accordance with this Agreement; and
(iii) the cash proceeds were distributed to the Member(s) in accordance with
this Article 13.  The Capital Accounts of
the Member(s) shall be increased by the amount of any unrealized income or gain
inherent in such property or decreased by the amount of any loss or deduction
inherent in such property that would be allocable to them, and shall be reduced
by the fair market value of the assets distributed to them under the preceding
sentence.  Notwithstanding the foregoing,
the Members shall have the right to assign their interest to such in-kind
distribution to any Person.

 

54

 

ARTICLE 14

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 14.1          Representations, Warranties and Covenants.

 

Each Member hereby
represents, warrants and covenants to the Company as follows:

 

(a)           The
Member understands that the purpose of the Company is to engage in the Primary
Business.  The Member has read and is
familiar with, and has been given full and complete access to, information,
financial or otherwise, regarding the Company and has utilized such access to
the Member’s satisfaction and has obtained any other relevant information the
Member has sought.  The Member has been
given the opportunity to ask questions of, and receive answers from, the
Company concerning the terms and conditions of, and other matters pertaining
to, this investment.

 

(b)           The
Member has read this Agreement and understands that the Interests being
acquired by the Member will be governed hereby. 
The Member agrees to be bound, in all respects, by the terms of this
Agreement.

 

(c)           The
Member has sufficient knowledge and experience in financial and business
matters in general, and investments in particular, to be capable of evaluating
the merits and risks of the investment in the Interests.  The Member is able to bear the economic risk
of this investment, including a total loss of the investment.  The Member has adequate means of providing
for its currents needs and personal contingencies, has no need for liquidity in
the investment in the Company and has no reason to anticipate any circumstances,
financial or otherwise, which might cause or require any sale or distribution
of the Interests.  The Member’s overall
commitment to investments that are not readily marketable is not
disproportionate to the Member’s net worth and the investment in the Company
will not cause the Member’s overall commitment in such investments to become
excessive.  The Member can lose its
entire investment in the Interests without producing a material adverse change
in the Member’s net worth.

 

(d)           It
is the Member’s intention to acquire the Interest for its own account, for
investment purposes, and not with a view to, or for, resale in connection with
any distribution thereof.  The Member
understands that no federal or state agency has passed upon the Interests or
made any findings or determination as to the fairness of this investment.  The Member understands and acknowledges that
the Interests have not been registered under the Securities Act or under state
securities laws and that the sale of the Interests is being made pursuant to
exemptions from registration that may depend upon the Member’s investment
intention.  The Member also understands
and acknowledges that the Interests may not be transferred unless they are
registered under the Securities Act or an exemption from such registration is
available thereunder and under applicable state securities laws and established
to the Company’s satisfaction.  In
addition, the Member acknowledges that the Interests are subject to additional
restrictions on transferability in this Agreement that will make it difficult
to Transfer or liquidate this investment. 
The Member acknowledges that the Company will rely on these
representations and that the Company is not required to recognize any Transfer
of an Interest if, in the opinion of counsel, such Transfer would result in a
violation of any federal or state law, rule or regulation, regarding the
offering or sale of securities.  The
Member further understands that any certificates representing the Interests may
contain legends restricting the Transfer of the Interests.

 

(e)           The
Member is fully authorized and qualified to become a Member of the Company and
is authorized to make the initial Capital Contribution to the Company, and the
person executing this Agreement on the Member’s behalf has been duly authorized
to do so.

 

55

 

(f)            The
Member understands and acknowledges that (i) the Company may need to raise
additional capital from time to time in order to engage in the Primary Business
and achieve any other objectives and goals that may be established for the
Company by the Board, (ii) the Company may raise additional capital by selling
Interests to one or more Members or other Persons, (iii) the Member has no
right to participate in any future offering, or to buy any additional Interests
that may be issued, by the Company except to the extent set forth herein, and (iv)
the Member’s Percentage Interest in the Company may be diluted as a result of
any such sale of additional Interests in the Company.

 

(g)           The
Member will indemnify and hold harmless the Company and its Managers, officers,
Members and Affiliates, and any other Person who controls or is controlled by
any of them, against any and all loss, liability, claim, damage and expense
whatsoever, including reasonable attorney’s fees, arising out of or based upon
any false representation or warranty or any breach by the Member of any term or
condition contained in this Article 14.

 

(h)           All
of the information provided to the Company by the Member and all of the Member’s
representations and warranties are true and correct as of the date of this
Agreement.  The Member’s representations,
warranties and covenants shall survive the delivery of the Member’s Capital
Contribution.

 

ARTICLE 15

MISCELLANEOUS

 

Section 15.1          Notices.

 

All notices provided for in
this Agreement shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied, mailed by registered or certified
mail, sent by recognized overnight delivery or courier service (e.g., Federal
Express) or, to the extent permitted by this Agreement, sent via electronic
mail, and shall be deemed to have been given upon delivery, if delivered
personally or by facsimile or electronic mail, three days after mailing, if
mailed, or one Business Day after delivery to the courier, if delivered by
overnight courier service, as follows:

 

(i)            if given to the Company, in care of the Board at the
principal place of business of the Company set forth in Section 2.5 or at such
other address as the Company may hereafter designate by 10 days’ written notice
to the Members.

 

(ii)           if given to any Member, at such address designated on the
signature page hereto or at such other address as such Member may hereafter
designate by 10 days’ written notice to the Company.

 

Section 15.2          Failure to Pursue Remedies.

 

The failure of any party to
seek redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would
have originally constituted a violation, from having the effect of an original
violation.

 

Section 15.3          Cumulative Remedies.

 

The rights and remedies
provided by this Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive its right to use any or all
other remedies.  Said rights and remedies
are given in addition to any other rights the parties may have by law, statute,
ordinance or otherwise.

 

56

 

Section 15.4          Binding Effect.

 

This Agreement shall be
binding upon and inure to the benefit of all of the parties and, to the extent
permitted by this Agreement, their successors, legal representatives and
assigns.

 

Section 15.5          Interpretation.

 

Throughout this Agreement,
nouns, pronouns and verbs shall be construed as masculine, feminine, neuter,
singular or plural, whichever shall be applicable.  All references herein to “Articles,” “Sections”
and “Paragraphs” shall refer to corresponding provisions of this Agreement.

 

Section 15.6          Severability.

 

The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision were omitted.

 

Section 15.7          Counterparts.

 

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

 

Section 15.8          Integration.

 

This Agreement constitutes
the entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings pertaining
thereto.

 

Section 15.9          Amendment or Restatement.

 

This Agreement (including
any Exhibit or Schedule hereto) and the Certificate may be amended, modified or
supplemented, and any provisions of this Agreement or the Certificate be
waived, with a written instrument adopted, executed and agreed to by the
Company and the Class B Members with an aggregate Class B Percentage Interest
equal to or exceeding 50%; provided, however, that (a) this
Agreement shall be deemed automatically amended from time to time without
further consent of any party to reflect issuances and transfers of Interests
made in compliance with this Agreement and (b) any amendment, modification,
supplement or waiver to this Agreement or the Certificate that would adversely
affect the rights, or increase the obligations, of any Member in any material
respect shall not be effective without the consent of such affected
Member.  Except as required by law, no
amendment, modification, supplement, discharge or waiver of or under this
Agreement shall require the consent of any Person not a party to this
Agreement.

 

Section 15.10        Governing Law.

 

This Agreement and the
rights of the parties hereunder shall be interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.  The parties further agree that any legal
action or proceeding with respect to this Agreement or any document relating
hereto may be brought only in a federal or state court of competent
jurisdiction in Houston, Texas.  Each
party hereby irrevocably waives any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non-

 

57

 

convenience,
which it may now or hereafter have to the bringing of such action or proceeding
in any such respective jurisdiction.

 

Section 15.11        Dealings in Good Faith.

 

Except as otherwise
expressly set forth herein, each party hereto agrees to act in good faith with
respect to the other party in exercising its rights and discharging its
obligations under this Agreement.  Each
party further agrees to use its reasonable efforts to ensure that the purposes
of this Agreement are realized and to take all steps as are reasonable in order
to implement the operational provisions of this Agreement.

 

Section 15.12        Partition of the Property.

 

Each Member agrees that it
shall have no right to partition the Property, or any portion thereof, and each
Member agrees that it shall not make application to any court or authority
having jurisdiction in the matter to commence or prosecute any action or
proceeding for partition of the Property, or any portion thereof.  Upon the breach of this Section by any
Member, the other Members, in addition to all other rights and remedies in law
and equity, shall be entitled to a decree or order dismissing application,
action or proceeding.

 

Section 15.13        Third Party Beneficiaries.

 

Except as expressly set
forth in this Agreement, nothing in this Agreement is intended or shall be
construed, to confer upon or give any Person other than the parties hereto, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, or result in their being deemed a third party beneficiary of this
Agreement.

 

Section 15.14        Tax Disclosure Authorization.

 

Notwithstanding anything
herein to the contrary, the Members (and each Affiliate and Person acting on
behalf of any Member) agree that each Member (and each employee,
representative, and other agent of such Member) may disclose to any and all
Persons, without limitation of any kind, the transaction’s tax treatment and
tax structure (as such terms are used in Sections 6011 and 6112 of the Code and
the Treasury Regulations thereunder) contemplated by this Agreement and all
materials of any kind (including opinions or other tax analyses) provided to
such Member or such Person relating to such tax treatment and tax structure,
except to the extent necessary to comply with any applicable federal or state
securities laws.

 

Section 15.15        Waivers and Consents.

 

A waiver or consent, express
or implied, to or of any breach or default by any Person in the performance of
its obligations hereunder is not a consent or waiver to or of any other breach
or default in the performance by that Person of the same or any other
obligation of such Person hereunder. 
Failure of a Person to assert the default or breach of any other Person
hereunder shall not constitute a waiver thereof until the applicable statute of
limitations period has run.

 

[Signature Page Follows]

 

58

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above written.

 

	
   

  	
  MWE LIBERTY:

  
	
   

  	
   

  
	
   

  	
  MARKWEST LIBERTY GAS GATHERING, L.L.C.,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frank M. Semple

  
	
   

  	
  Name:

  	
  Frank M. Semple

  
	
   

  	
  Title:

  	
  President and CEO

  
	
   

  	
   

  
	
   

  	
  Address for notice:

  
	
   

  	
  1515 Arapahoe Street

  
	
   

  	
  Tower 2, Suite 700

  
	
   

  	
  Denver, CO 80202-2126

  
	
   

  	
  Attention: Senior Vice President and Chief Operations Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NGPMR:

  
	
   

  	
   

  
	
   

  	
  M&R MWE LIBERTY, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John T. Raymond

  
	
   

  	
  Name:

  	
  John T. Raymond

  
	
   

  	
  Title:

  	
  Chief Executive Officer & Managing Partner

  
	
   

  	
   

  
	
   

  	
  Address for notice:

  
	
   

  	
  1401 McKinney, Suite 1025

  
	
   

  	
  Houston, TX 77010

  
	
   

  	
  Attention: Jeffrey C. Rawls

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Locke Lord Bissell & Liddell, LLP

  
	
   

  	
  600 Travis Street, Suite 3400

  
	
   

  	
  Houston, Texas 77002

  
	
   

  	
  Fax (713) 229-2518

  
	
   

  	
  Attention:
  H. William Swanstrom

  

 

Signature
Page

 

 

EXHIBIT A

 

AREA OF MUTUAL INTEREST

 

The areas described on the
attached Area of Mutual Interest Map.

 

**

 

A-1

 

EXHIBIT B

 

MEMBERS AND CAPITAL CONTRIBUTIONS

 

	
  Member Name and Address

  	
   

  	
  Capital Contribution

  	
   

  	
  Type of 

  Membership 

  Interest

  	
   

  	
  Initial 

  Percentage 

  Interest

  	
   

  	
  Initial Investment 

  Balance

  
	
  M&R MWE Liberty, LLC

  1401 McKinney, Suite 1025

  Houston, TX 77010

  Attention:  Jeffrey C.
  Rawls

  Facsimile:  (713)
  579-5017

  Email:  jrawls@ngpmr.com

   

  with a copy to:

   

  Locke Lord Bissell & Liddell, LLP

  600 Travis Street, Suite 3400

  Houston, Texas 77002

  Fax (713) 229-2518

  Attention: H. William Swanstrom

  	
   

  	
  **

  	
   

  	
  Class A

  	
   

  	
  40%

  	
   

  	
  **

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MarkWest Liberty Gas Gathering, L.L.C.

  1515 Arapahoe Street, Tower 2, Suite 700

  Denver, CO 80202

  Attention: Senior Vice President and Chief Operations
  Officer

  Facsimile: (303) 925-9305

  Email: jmollenkopf@markwest.com

   

  with a copy to:

   

  MarkWest Liberty Gas Gathering, L.L.C.

  1515 Arapahoe Street, Tower 2, Suite 700

  Denver, CO 80202

  Attention: Senior Vice President, General Counsel and
  Secretary

  Facsimile: (303) 925-9308

  Email: cbromley@markwest.com

  	
   

  	
  **(1)

  	
   

  	
  Class B

  	
   

  	
  60%

  	
   

  	
  **(2)

  

 

(1) Subject
to adjustment in accordance with Section 4.1(a).

(2) Represents
actual out-of-pocket costs incurred by MWE Liberty and its Affiliates through December 31,
2008 specifically related to developing the assets to be contributed, plus the
established value of other property to be contributed, by MWE Liberty to the
Company pursuant to the Contribution Agreement, subject to adjustment in
accordance with Section 4.1(a).

 

B-1

 

EXHIBIT C

 

BASE PROJECT

 

1.             Natural Gas Processing Plant Construction
and Operation

 

**

 

2.             Natural Gas Pipeline Construction and
Operation

 

**

 

3.             Miscellaneous Natural Gas Processing
Infrastructure Construction and Operation

 

**

 

C-1

 

EXHIBIT D

 

INITIAL BUDGET

 

(See attached)

 

**

 

[2 pages have been omitted and filed separately with the Securities and
Exchange Commission pursuant to the request for confidential treatment.]

 

D-1

 

EXHIBIT E

 

ILLUSTRATIVE EXAMPLE
CALCULATION OF INCENTIVE INTERESTS

 

**

 

[6
pages have been omitted and filed separately with the Securities and
Exchange Commission pursuant to the request for confidential treatment.]

 

E-1

 

EXHIBIT F

 

SERVICE AGREEMENT

 

(see attached)

 

F-1

 

SERVICES AGREEMENT

 

BY AND BETWEEN

 

MARKWEST HYDROCARBON, INC.

 

MARKWEST LIBERTY GAS GATHERING, L.L.C.

 

AND

 

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

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I. DEFINITIONS

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II. CAPEX FEE

  	
  4

  
	
  2.1

  	
  CapEx Fee

  	
  4

  
	
  2.2

  	
  CapEx Fee Payment Procedures

  	
  4

  
	
   

  	
   

  
	
  ARTICLE III. GENERAL AND ADMINISTRATIVE SERVICES

  	
  4

  
	
  3.1

  	
  General and Administrative Services

  	
  4

  
	
  3.2

  	
  General and Administrative Fee

  	
  5

  
	
  3.3

  	
  G&A Fee Payment Procedures

  	
  5

  
	
   

  	
   

  
	
  ARTICLE IV. PERSONNEL SERVICES

  	
  6

  
	
  4.1

  	
  Personnel Services

  	
  6

  
	
  4.2

  	
  Personnel Procedures

  	
  6

  
	
  4.3

  	
  Personnel Expenses

  	
  6

  
	
  4.4

  	
  Personnel Expenses Reimbursement Procedures

  	
  7

  
	
  4.5

  	
  Acknowledgment and Insurance

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE V. TERM

  	
  8

  
	
   

  	
   

  
	
  ARTICLE VI. LIMITS OF RESPONSIBILITY; INDEMNIFICATION

  	
  8

  
	
  6.1

  	
  Limits of Responsibility

  	
  8

  
	
  6.2

  	
  Indemnification by the Company

  	
  9

  
	
  6.3

  	
  Indemnification by MWE Hydrocarbon

  	
  9

  
	
  6.4

  	
  Remedies for Breach

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII. GENERAL PROVISIONS

  	
  10

  
	
  7.1

  	
  Accuracy of Recitals

  	
  10

  
	
  7.2

  	
  Choice of Law; Submission to Jurisdiction

  	
  10

  
	
  7.3

  	
  Notices

  	
  10

  
	
  7.4

  	
  Further Assurances

  	
  11

  
	
  7.5

  	
  Entire Agreement

  	
  11

  
	
  7.6

  	
  Effect of Waiver or Consent

  	
  11

  
	
  7.7

  	
  Amendment or Modification

  	
  12

  
	
  7.8

  	
  Assignment; Third-Party Beneficiaries

  	
  12

  
	
  7.9

  	
  Counterparts

  	
  12

  
	
  7.10

  	
  Severability

  	
  12

  
	
  7.11

  	
  Interpretation

  	
  12

  
	
  7.12

  	
  Relationship of the Parties

  	
  12

  
	
  7.13

  	
  Binding Effect

  	
  12

  
	
  7.14

  	
  Time of the Essence

  	
  13

  
	
  7.15

  	
  Withholding or Granting of Consent

  	
  13

  
	
  7.16

  	
  Laws and Regulations

  	
  13

  

 

i

 

	
  7.17

  	
  No Recourse Against Officers or Directors

  	
  13

  
	
  7.18

  	
  Signatories Duly Authorized

  	
  13

  
	
  7.19

  	
  Incorporation of Exhibits by References

  	
  13

  
	
  7.20

  	
  Dispute Resolution and Arbitration

  	
  13

  
	
  7.21

  	
  Legal Compliance

  	
  14

  
	
  7.22

  	
  Books & Records

  	
  14

  
	
  7.23

  	
  Audit
  Rights

  	
  15

  

 

ii

 

SERVICES
AGREEMENT

 

This
Services Agreement (this “Agreement”),
is executed and agreed to as of February 27, 2009, to become effective at
the Closing (the date and time of such Closing, if any, the “Effective Time”) by and between
MarkWest Hydrocarbon, Inc., a Delaware corporation (“MWE
Hydrocarbon”), MarkWest Liberty Gas Gathering, LLC, a Delaware
limited liability company (“MWE Liberty”)
and MarkWest Liberty Midstream & Resources, L.L.C., a Delaware limited
liability company (the “Company”).  MWE Hydrocarbon, MWE Liberty and the Company
are hereinafter each referred to as a “Party” and
are collectively referred to as the “Parties.”

 

RECITALS

 

WHEREAS,
MWE Liberty has been designated as the Operator pursuant to the Company
Operating Agreement and believes it to be advisable and in the best interests
of the Company to enter into this Agreement in order to provide for the
provision by MWE Hydrocarbon of certain services to the Company; and

 

WHEREAS,
MWE Hydrocarbon will provide to the Company and its subsidiaries (collectively,
the “Company Entities”) all of the
services necessary to operate, manage, maintain and report the operating
results of the Company Entities’ assets, including natural gas processing
plants, natural gas gathering pipelines, natural gas liquids pipelines,
fractionation facilities, compressors, treating facilities, transportation
facilities, storage facilities and related equipment and assets (collectively,
the “Company Assets”);

 

NOW
THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, and 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.  As used in this Agreement, the following
terms shall have the respective meanings set forth below:

 

“Additional Projects”
has the meaning ascribed to such term in the Company Operating Agreement.

 

“Agreement”
is defined in the preamble.

 

“Approved Budget”
has the meaning ascribed to such term in the Company Operating Agreement.

 

“Area of Mutual Interest”
has the meaning ascribed to such term in the Company Operating Agreement.

 

“Available Cash”
has the meaning ascribed to such term in the Company Operating Agreement.

 

“CapEx Fee”
is defined in Section 2.1.

 

1

 

“Capital Expenditures”
means the amount of all capital expenditures and capital costs related to the
Projects that are paid by the Company or a subsidiary of the Company and which
are (i) expended for the acquisition of real property interests, making
application for, prosecuting or obtaining permits, paying for equipment or
other personal property or otherwise expended in the development, construction
and expansion of the Projects (but, excluding maintenance capital expenditures)
and (ii) ** of the **,
including ** in accordance with the Company
Operating Agreement.  For clarity
purposes, the definition of “Capital Expenditures” shall **,
but shall ** in accordance with clauses (i) and
(ii) of the immediately preceding sentence.

 

“Claimant”
is defined in Section 7.20(b).

 

“Class A Percentage
Interest” has the meaning ascribed to such term in the Company
Operating Agreement.

 

“Closing”
has the meaning ascribed to such term in the Contribution Agreement.

 

“Company” is
defined in the preamble.

 

“Company Assets”
is defined in the recitals.

 

“Company Board”
means the Board of Managers of the Company.

 

“Company Entities”
is defined in the recitals.

 

“Company Entity”
means any of the Company Entities.

 

“Company Operating
Agreement” means that certain Amended and Restated Limited
Liability Company Agreement of the Company, executed and agreed to as of the
date hereof.

 

“Company Released Parties”
is defined in Section 6.1(a).

 

“Contribution Agreement”
means that certain Contribution Agreement, dated as of the date hereof, by and
among the Company, MWE Liberty and M&R MWE Liberty, LLC, a Delaware limited
liability company.

 

“Control,”
including the correlative terms “Controlling,”
“Controlled by” and “Under Common Control with” means
possession, directly or indirectly (through one or more intermediaries), of the
power to direct or cause the direction of management or policies (whether
through ownership of securities or any partnership or other ownership interest,
by contract or otherwise) of a Person. 
For the purposes of this definition, ownership of more than 50% of the
voting interests of any entity shall be conclusive evidence that Control
exists.

 

“CP Index”
means the United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index — All Urban Consumers, U.S. City Average, Not Seasonally
Adjusted, or, if such index is discontinued, any successor or substitute index,
which, in MWE Hydrocarbon’s reasonable opinion, is most nearly equivalent to
such index.

 

“Designated MWE Employees”
is defined in Section 4.2.

 

2

 

“Effective Time”
shall have the meaning set forth in the preamble.

 

“G&A Fee”
is defined in Section 3.2(a).

 

“G&A Services”
is defined in Section 3.1.

 

“Investment Balance”
has the meaning ascribed to such term in the Company Operating Agreement.

 

“Loss” and “Losses” are defined in Section 6.2.

 

“Member” has
the meaning ascribed to such term in the Company Operating Agreement.

 

“MWE Entities”
means MWE Hydrocarbon and any other Person Controlled by MWE Hydrocarbon or
MarkWest Energy Partners, L.P., including MWE Liberty.

 

“MWE Entity”
means any of the MWE Entities.

 

“MWE Hydrocarbon”
is defined in the preamble.

 

“MWE Indemnified Party”
is defined in Section 6.2.

 

“MWE Liberty”
is defined in the preamble.

 

“MWE Released Parties”
is defined in Section 6.1(a).

 

“Operator”
has the meaning ascribed to such term in the Company Operating Agreement.

 

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

 

“Person”
means any natural person, corporation, limited partnership, general
partnership, limited liability company, joint stock company, joint venture,
association, company, estate, trust, bank trust company, land trust, business
trust, or other organization, whether or not a legal entity, custodian,
trustee-executor, administrator, nominee or entity in a representative capacity
and any government or agency or political subdivision thereof.

 

“Personnel Expenses”
is defined in Section 4.3.

 

“Personnel Services”
is defined in Section 4.1.

 

“Projects”
has the meaning ascribed to such term in the Company Operating Agreement.

 

“Prudent Industry Practices”
means, at a particular time, any of the practices, methods and acts which, ** based upon the **, and the **, at such time, is ** operation
and maintenance of the Company Assets and shall include, without limitation,
the practices, methods and acts engaged in or approved by **
at such time with respect to the assets of the same or similar types as the
Company Assets. Prudent Industry Practices are not intended to be limited to ** to the exclusion of all others, but rather is ** practices, methods and acts which **
at a ** as well as 

 

3

 

with
the **. Prudent Industry Practices are
intended to entail the **, in the **, use from time to time.

 

** is defined in Section 2.1.

 

“Respondent”
is defined in Section 7.20(b).

 

“Services”
means all of the services necessary to operate, manage, maintain and report the
operating results of the Company Assets, which services shall include the
G&A Services and the Personnel Services.

 

ARTICLE II.

CAPEX FEE

 

2.1           CapEx
Fee.  In partial consideration for
the Services provided by MWE Hydrocarbon pursuant to this Agreement, the
Company shall pay to MWE Hydrocarbon, or an MWE Entity designated by MWE
Hydrocarbon, a quarterly fee (the “CapEx Fee”)
equal to ** starting from and including the
fiscal quarter in which the Closing occurs **; provided that the CapEx Fee for the fiscal quarter in which
the Closing occurs shall be an amount equal to (a) **
(as defined in the Company Operating Agreement) of MWE Liberty ** (b) the CapEx Fee determined based on the ** such fiscal quarter in which the Closing occurs.

 

2.2           CapEx
Fee Payment Procedures.  Within 10
days after the end of each fiscal quarter after the Closing occurs, the Company
shall pay in immediately available funds the CapEx Fee with respect to such
fiscal quarter.

 

ARTICLE III.

GENERAL AND ADMINISTRATIVE SERVICES

 

3.1           General
and Administrative Services.  MWE
Hydrocarbon agrees to provide the Company Entities with certain general and
administrative services employing internal resources and employees of the MWE
Entities, including legal, accounting, treasury, risk management, health,
safety and environmental, information technology, human resources, credit,
payroll, internal audit and tax services necessary to operate, manage, maintain
and report the operating results of the Company Assets (collectively, the “G&A Services”).  The G&A Services shall be substantially
equivalent in nature and quality to the services of such type provided by MWE
Hydrocarbon in connection with its management and operation of assets similar
to the Company Assets, including other MWE Entities.  MWE Hydrocarbon acknowledges, agrees and
represents that the G&A Services will be provided by its employees,
representatives, agents or contractors and will be provided in accordance with
Prudent Industry Practices.  MWE
Hydrocarbon also acknowledges, agrees and represents that it will be solely and
completely responsible for (a) directing and managing the day-to-day
activities of the employees providing the G&A Services, (b) payment of
all compensation and benefits to, and employment and related taxes on behalf
of, the employees providing such G&A Services and (c) complying with
all statutes, laws, regulations, and ordinances related to its employment of
such employees and any damages arising from its failure to do so.  The G&A Services shall not include any third
party costs or expenses directly incurred by the Company Entities (or incurred
by MWE Hydrocarbon on behalf of the Company Entities), including, without
limitation, insurance coverage (or, if any 

 

4

 

such insurance is provided through policies held by
any of the MWE Entities, a pro rata allocation of the cost thereof determined
by MWE Hydrocarbon and the Company in good faith and consistent with the
historical practices of the MWE Entities) which third party costs and expenses
shall be borne 100% by the Company Entities and shall not be subject to the
G&A Fee; provided, however, that (x) the
Company will not outsource services that are of the nature and quality of the
services provided by MWE Hydrocarbon in connection with its management and
operation of assets similar to the Company Assets, including assets of other
MWE Entities, (1) unless similar services are generally outsourced for other
MWE Entities and (2) ** and (y) all
third party costs incurred by MWE Hydrocarbon on behalf of the Company must be
reflected in an Approved Budget (as such term is defined in the Company
Operating Agreement).

 

3.2           General
and Administrative Fee.

 

(a)                                  Except to the extent modified by this Section 3.2(a),
beginning in the month in which the Closing occurs, in exchange for the G&A
Services, the Company shall pay to MWE Hydrocarbon, or an MWE Entity designated
by MWE Hydrocarbon, a monthly fee (the “G&A Fee”)
based on the following schedule: $** per month
during 2009; $** per month during 2010; $** per month during 2011; $**
per month during 2012; and $** per month
during 2013; provided that for the month in
which the Closing occurs, the G&A Fee shall be prorated based on a
fraction, of which the numerator is the number of days from and including the
date of the Closing to and including the final day of the month in which the
Closing occurs, and of which the denominator is the total number of days in the
month in which the Closing occurs.  As of
January 1 of each year beginning on or after January 1, 2014, the
G&A Fee shall be increased by the percentage increase in the CP Index.  In making such adjustments, the G&A Fee
shall be increased by the percentage increase in the CP Index for the prior
year period based on the most recent information available from the United
States Department of Labor.

 

(b)                                 If after the Closing the Company completes any acquisitions
or dispositions of assets or businesses, or any new laws, regulations or
accounting rules are enacted or implemented, or any other material change
in the business of the Company Entities occurs that is not anticipated as of
the Closing, then the G&A Fee shall be appropriately increased or
decreased, as appropriate, in order to account for adjustments in the nature and
extent of the G&A Services to be provided by the MWE Entities to the
Company Entities, with any such increase or decrease in the G&A Fee to be
determined in good faith negotiations between MWE Hydrocarbon and the Company
at such time.  Such new G&A Fee shall
be subject to certain approval rights set forth in the Company Operating
Agreement, including the Member approval rights set forth in Section 6.12
thereof.

 

3.3           G&A
Fee Payment Procedures.  Following
the end of each month, MWE Hydrocarbon shall send an invoice to the Company for
the G&A Fee for the preceding month. 
The Company shall pay such invoice within 30 days of receipt.

 

5

 

ARTICLE IV.

PERSONNEL SERVICES

 

4.1           Personnel
Services.  In addition to the G&A
Services, MWE Hydrocarbon shall provide its employees to operate, manage and
maintain the Company Assets (the “Personnel Services”).  The Personnel Services shall be no less than
substantially equivalent in nature and quality to the services of such type provided
by MWE Hydrocarbon in connection with its management of assets similar to the
Company Assets.  MWE Hydrocarbon
acknowledges and agrees that the Personnel Services will be provided by its
employees, representatives, agents or contractors and that it will be solely
and completely responsible for (i) directing and managing the day-to-day
activities of the employees providing the Personnel Services, (ii) payment
of all compensation and benefits to, and employment and related taxes on behalf
of, the employees providing such Personnel Services and (iii) complying
with all statutes, laws, regulations, and ordinances related to the its
employment of such employees and any damages arising from the its failure to do
so.

 

4.2           Personnel
Procedures.  The personnel providing
the Personnel Services at the direction of MWE Hydrocarbon, (a) whose
primary place of employment is within the Area of Mutual Interest and who have
been assigned to perform duties with respect to Company Assets or (b) whose
primary place of employment is outside the Area of Mutual Interest and who have
been assigned specific or project-based duties with respect to Company Assets
which duties are expected to be completed within a specified period of time
will be referred to as the “Designated MWE Employees.”  For the avoidance of doubt, the Designated
MWE Employees are not employees of the Company Entities, but instead, the
Designated MWE Employees are employees of MWE Hydrocarbon and are simply
performing Personnel Services for the Company Entities.  Furthermore, the Parties acknowledge that the
Designated MWE Employees providing the Personnel Services shall not include any
Person providing the G&A Services.

 

4.3           Personnel
Expenses.  Beginning in the month in
which the Closing occurs, in exchange for the Personnel Services, the Company
shall reimburse MWE Hydrocarbon for the Company Entities’ pro rata share (up to
100% for Designated MWE Employees whose only duties for the MWE Entities were
with respect to Company Entities’ business in the  bi-weekly pay periods ending in the preceding
month) of all costs and expenses incurred by MWE Hydrocarbon after the
Effective Time in connection with the provision of the Personnel Services
during the preceding month or the bi-weekly pay periods ending in the preceding
month, as applicable, related to, among other items, the following costs and
expenses incurred by the MWE Entities for the Designated MWE Employees:

 

(a)                                  compensation (including equity and equity-based compensation
expenses), salary and wages (including payroll and withholding taxes associated
therewith);

 

(b)                                 401(k) costs and any matching 401(k) contributions;

 

(c)                                  vacation and sick leave benefits;

 

(d)                                 medical and health insurance benefits;

 

6

 

(e)                                  disability insurance (including benefits paid);

 

(f)                                    workers’ compensation (including benefits paid);

 

(g)                                 life insurance;

 

(h)                                 any other employee benefit for which the MWE Entities incur
costs.

 

The
costs and expenses described in the immediately preceding sentence, including
clauses (a) through (h) of such sentence, are referred to as “Personnel Expenses.”  The Company Entities’ pro rata share of
Personnel Expenses with respect to each Designated MWE Employee shall be based
on a fraction, the numerator of which is the number of hours in the bi-weekly
pay periods ending during the preceding month such Designated Employee devoted
to matters relating to the Company Entities’ business and the denominator of
which is the aggregate number of hours such Designated Employee devoted to the
businesses of the MWE Entities and the Company Entities combined in the
bi-weekly pay periods ending in the preceding month; provided
that ** Personnel Expenses for any
Designated MWE Employee ** that ** the bi-weekly pay periods ending during the preceding
month **. 
Where it is not reasonably practicable to determine the pro rata share
of Personnel Expenses with respect to a Designated Employee, MWE Hydrocarbon
shall make a good faith reasonable estimate of such cost, expense or pro rata
share.  The Company shall accept any
estimate described in this paragraph, provided that
such estimate is reasonable and made in good faith.  MWE Hydrocarbon agrees that ** the Personnel Expenses, such **
a Proposed Budget (as defined in the Company Operating Agreement).  For clarity purposes, the Personnel Expenses
shall not include any costs or expenses related to any Person providing G&A
Services.  MWE Hydrocarbon hereby
represents that, as of the date hereof, it has no material liabilities with respect
to workers’ compensation or disability claims.

 

4.4           Personnel
Expenses Reimbursement Procedures. 
Following the end of each month, MWE Hydrocarbon shall send a reasonably
detailed invoice to the Company for amount of the Personnel Expenses incurred
during the preceding month or the bi-weekly pay periods ending in the preceding
month, as applicable, which is to be itemized by each Designated MWE Employee
with the calculation of how the Personnel Expenses were derived for each such
Designated MWE Employee.  The Company
shall pay such invoice within 30 days of receipt.

 

4.5           Acknowledgment
and Insurance.

 

(a)                                  MWE Hydrocarbon acknowledges and agrees that the Designated
MWE Employees are not employees of the Company Entities and are not entitled to
employment rights or benefits of the Company Entities.  MWE Hydrocarbon waives and releases the
Company Entities for all claims and causes of action the Designated MWE
Employees (or any subcontractors used by MWE Hydrocarbon to perform the
Services) may have for any compensation, benefits or violations of any statute
or regulation governing employee rights and benefits.

 

(b)                                 MWE Hydrocarbon shall maintain or require MWE Entities to
maintain insurance consistent with the historical practices of the MWE
Entities, including workers compensation (which specifically names Company
Entities as insureds), automobile liability, and commercial general liability
for injury of, or damages caused by all Designated MWE Employees (or 

 

7

 

any
subcontractors used by MWE Hydrocarbon to perform the Services) providing
Personnel Services to the Company Entities.

 

ARTICLE V.

TERM

 

The
term of this Agreement will commence on the Effective Time and will continue
and remain in full force and effect until terminated in accordance with this Article V.  MWE Hydrocarbon may terminate this Agreement,
upon ** prior written notice to Company, at
any time when the MWE Entities ** of the
Company.  The Company may terminate this
Agreement, upon ** prior written notice to MWE
Hydrocarbon, at any time when the MWE Entities **
of the Company.  This Agreement may not
be terminated at any other time or for any other reason other than upon
dissolution of the Company or due to the fraud, bad faith, gross negligence or
willful misconduct of MWE Hydrocarbon or MWE Liberty, as established by a
non-appealable court order, judgment, decree or decision.  Upon any such termination, only those
provisions that, by their terms, expressly survive the termination of this Agreement
shall survive such termination.

 

ARTICLE VI.

LIMITS OF RESPONSIBILITY; INDEMNIFICATION

 

6.1           Limits
of Responsibility.

 

(a)                                  Except as otherwise set forth herein, MWE Hydrocarbon assumes
no responsibility under this Agreement other than to provide the Services
called for under this Agreement in accordance with the terms of this Agreement
and shall not be responsible for any action of the Company or the Company Board
in following or declining to follow any advice or recommendations of MWE
Hydrocarbon.  The MWE Entities and their
respective stockholders, members, partners, directors, managers, officers and
employees (collectively, the “MWE Released Parties”)
will not be liable to the Company Entities or their respective stockholders,
members, partners, directors, managers, officers or employees (collectively,
the “Company Released Parties”) for any
acts or omissions by MWE Hydrocarbon performed or omitted in a manner
reasonably believed to be within the scope of authority conferred on MWE
Hydrocarbon pursuant to or in accordance with this Agreement, except for Losses
for which MWE Hydrocarbon is obligated to indemnify the Company Released
Parties pursuant to Section 6.3.

 

(b)                                 Except as otherwise set forth herein, there are no
representations or warranties made by MWE Hydrocarbon or MWE Liberty, express
or implied, at law or in equity, with respect to the subject matter hereof.

 

(c)                                  In no event shall either Party be liable to the other Party
for special, indirect, incidental, consequential or punitive damages arising
out of or related to this Agreement; provided, however,
that this waiver shall not apply to the extent such special, indirect,
incidental, consequential or 

 

8

 

punitive
damages are awarded in a proceeding brought or asserted by a third party
against either Party.

 

6.2           Indemnification
by the Company.  The Company shall,
to the full extent lawful, reimburse, indemnify, defend and hold each of the
MWE Released Parties (in such capacity, each, an “MWE Indemnified
Party”), harmless of and from any and all expenses, losses,
damages, liabilities, demands, charges and claims of any nature whatsover
(including reasonable attorneys’ fees) (each a “Loss”
and collectively, “Losses”) in respect of or
arising from **.

 

6.3           Indemnification
by MWE Hydrocarbon.  MWE Hydrocarbon
shall, to the full extent lawful, reimburse, indemnify, defend and hold each of
the Company Released Parties harmless of and from any and all Losses in respect
of or arising from **.

 

6.4           Remedies
for Breach.  MWE Hydrocarbon shall
satisfy any claim for any Losses for which the Company Released Parties are
entitled to indemnification under Section 6.3 by either (a) ** for any
such Losses and/or (b) ** such Losses. 
In the event MWE Hydrocarbon fails to satisfy in full any claim for any
Losses for which the Company is entitled to indemnification in accordance with
the immediately preceding sentence ** of such Losses being finally determined,
then MWE Liberty shall satisfy any such claim for indemnification by either (a)
** for any Losses related thereto that are ** or (b) having ** the amount of
any such Loss that has not been satisfied in full in accordance with the
immediately preceding sentence; provided that the ** set forth in this sentence
by providing ** within 30 days of such Losses being finally determined.  In the event that any claim for Losses is to
be satisfied pursuant to the immediately preceding sentence, MWE Liberty agrees
to ** the Company Operating Agreement ** an amount equal to such unremedied
Loss.

 

9

 

ARTICLE VII.

GENERAL PROVISIONS

 

7.1           Accuracy
of Recitals.  The paragraphs
contained in the recitals to this Agreement are incorporated in this Agreement
by this reference, and the Parties to this Agreement acknowledge the accuracy
thereof.

 

7.2           Choice
of Law; Submission to Jurisdiction. 
This Agreement and the rights of the parties hereunder shall be
interpreted in accordance with the laws of the State of Delaware and all rights
and remedies shall be governed by such laws without regard to principles of
conflict of laws.  Subject to Section 7.20,
the parties further agree that any legal action or proceeding with respect to
this Agreement or any document relating hereto may be brought only in a federal
or state court of competent jurisdiction in Houston, Texas.  Each party hereby irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non-convenience, which it may now or hereafter
have to the bringing of such action or proceeding in any such respective
jurisdiction.

 

7.3           Notices.  Any notice, demand or communication required
or permitted under this Agreement shall be in writing and delivered personally
or by reputable courier, and shall be deemed to have been duly given as of the
date and time reflected on the delivery receipt, addressed as follows:

 

If
to MWE Hydrocarbon:

 

MarkWest Hydrocarbon, Inc.

1515 Arapahoe Street

Tower 2, Suite 700

Denver, Colorado 80202-2126

Attention: 
Senior Vice President and Chief Operations Officer

 

and

 

MarkWest Liberty Gas Gathering, L.L.C.

1515 Arapahoe Street

Tower 2, Suite 700

Denver, Colorado 80202-2126

Attention: General Counsel

 

If
to MWE Liberty:

 

MarkWest Liberty Gas Gathering, L.L.C.

1515 Arapahoe Street

Tower 2, Suite 700

Denver, Colorado 80202-2126

Attention: 
Senior Vice President and Chief Operations Officer

 

and

 

MarkWest Liberty Gas Gathering, L.L.C.

1515 Arapahoe Street

 

10

 

Tower 2, Suite 700

Denver, Colorado 80202-2126

Attention: General Counsel

 

If
to the Company:

 

MarkWest Liberty Midstream & Resources,
L.L.C.

1515 Arapahoe Street

Tower 2, Suite 700

Denver, Colorado 80202-2126

Attention: Senior Vice President, Chief Operations
Officer

 

and

 

MarkWest Liberty Midstream & Resources,
L.L.C.

1515 Arapahoe Street

Tower 2, Suite 700

Denver, Colorado 80202-2126

Attention: General Counsel

 

and

 

M&R MWE Liberty, LLC

1401 McKinney, Suite 1025

Houston, Texas 77010

Attention: Jeffrey C. Rawls

 

with
a copy to:

 

Locke Lord Bissell &
Liddell, LLP

600 Travis Street, Suite 3400

Houston, Texas 77002

Fax  (713) 226-1143

Attention: H. William
Swanstrom

 

A
Party may change its address for the purposes of notices hereunder by giving
notice to the other Party specifying such changed address in the manner
specified in this Section 7.3.

 

7.4           Further
Assurances.  The Parties agree to
execute such additional instruments, agreements and documents, and to take such
other actions, as may be necessary to effect the purposes of this Agreement.

 

7.5           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.

 

7.6           Effect
of Waiver or Consent.  No waiver or
consent, express or implied, by any Party to or of any breach or default by any
Person in the performance by such Person of its

 

11

 

obligations hereunder shall be deemed or construed to be a
consent or waiver to or of 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.

 

7.7                                 Amendment or Modification.  This Agreement may be amended, modified or
supplemented from time to time only by a written agreement executed by all the
Parties.

 

7.8                                 Assignment; Third-Party Beneficiaries.  No Party shall have
the right to assign its rights or obligations under this Agreement without the
prior written consent of the other Parties.

 

7.9                                 Counterparts.  This Agreement may be executed in any number
of counterparts with the same effect as if all Parties had signed the same
document.  All counterparts shall be construed
together and shall constitute one and the same instrument.  Execution and delivery of this Agreement by
exchange of facsimile or other electronically transmitted counterparts bearing
the signature of a Party shall be equally as effective as delivery of a
manually executed counterpart by such Party.

 

7.10                           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.

 

7.11                           Interpretation.  In this Agreement, unless a clear contrary
intention appears: (a) the singular includes the plural and vice versa; (b) reference
to a Person includes such Person’s successors and assigns but, in the case of
Party, only if such successors and assigns are permitted by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any
other capacity; (c) reference to any gender includes each other gender; (d) reference
to any agreement (including this Agreement), document or instrument means such
agreement, document, or instrument as amended or modified and in effect from
time to time in accordance with the terms thereof and, if applicable, the terms
of this Agreement; (e) reference to any Section or Article means
such Section or Article of this Agreement, and references in any Section or
Article or definition to any clause means such clause of such Section, Article or
definition; (f) “hereunder,” “hereof,” “hereto” and words of similar
import are references to this Agreement as a whole and not to any particular
provision hereof; and (g) the word “or” is not exclusive, and the word “including”
(in its various forms) means including without limitation.  Section titles and headings in this
Agreement are inserted for convenience of reference only and are not intended
to be a part of, or to affect the meaning or interpretation of, this Agreement.

 

7.12                           Relationship of the Parties.  Nothing in this Agreement shall cause MWE
Hydrocarbon, MWE Liberty or the Company to become members of any partnership,
joint venture, association, syndicate or other entity.

 

7.13                           Binding Effect.  This Agreement will be binding upon, and will
inure to the benefit of, the Parties and their respective successors, permitted
assigns and legal representatives.

 

12

 

7.14                           Time of the Essence.  Time is of the essence in the performance of
this Agreement.

 

7.15                           Withholding or Granting of Consent.  Unless otherwise
provided 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.

 

7.16                           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.

 

7.17                           No Recourse Against Officers or Directors.  For the avoidance of
doubt, the provisions of this Agreement shall not give rise to any right of
recourse against any officer, director or manager of MWE Hydrocarbon or MWE
Liberty, any officer, director or manager of any MWE Entity or any officer,
director or manager of any Company Entity.

 

7.18                           Signatories Duly Authorized.  Each of the signatories to this Agreement
represents that he is duly authorized to execute this Agreement on behalf of
the Party for which he is signing, and that such signature is sufficient to
bind the Party purportedly represented.

 

7.19                           Incorporation of Exhibits by References.  Any reference herein
to any exhibit to this Agreement will incorporate it herein, as if it were set
out in full in the text of this Agreement.

 

7.20                           Dispute Resolution and Arbitration.

 

(a)                                  Should a dispute arise between the Parties, the Parties shall
promptly seek to amicably resolve any such dispute by negotiations between the
Parties prior to the initiation of binding arbitration in accordance with Section 7.20(b).  The Parties shall meet at a mutually
acceptable time and place within 15 days after written notice by any Party to
any other Party seeking resolution of a dispute under this Section 7.20(a) and
thereafter as often as they reasonably determine to be necessary or appropriate
to exchange relevant information and to attempt to resolve the dispute.  All negotiations and communications pursuant
to this Section 7.20(a) shall be treated and maintained by the
Parties as confidential information and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence. If
the matter is not resolved within 30 days after the initial meeting of the
Parties, or such longer period as may be mutually agreed upon, either Party may
initiate arbitration in accordance with Section 7.20(b).

 

(b)                                 Any disputes hereunder, including the inability of the
Parties to agree to an adjustment to the invoices payable pursuant to Sections
2.2, 3.3 and 4.4, must be resolved through the use of binding
arbitration using three 

 

13

 

arbitrators, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, as
supplemented to the extent necessary to determine any procedural appeal
questions by the Federal Arbitration Act (Title 9 of the United States Code).
If there is any inconsistency between this Section and the Commercial
Arbitration Rules or the Federal Arbitration Act, the terms of this Section 7.20
will control the rights and obligations of the Parties. Arbitration must be
initiated within the applicable time limits set forth in this Agreement and not
thereafter or if no time limit is given, within the time period allowed by the
applicable statute of limitations. Arbitration may be initiated by a party (“Claimant”) serving written notice on
another party (“Respondent”) that the
Claimant elects to refer a particular dispute to binding arbitration. Claimant’s
notice initiating binding arbitration must identify the arbitrator Claimant has
appointed. The Respondent shall respond to Claimant within 30 days after
receipt of Claimant’s notice, identifying the arbitrator Respondent has
appointed. If the Respondent fails for any reason to name an arbitrator within
the 30-day period, Claimant shall petition to the American Arbitration
Association for appointment of an arbitrator for Respondent’s account. The two
arbitrators so chosen shall select a third arbitrator within 30 days after the
second arbitrator has been appointed. The Claimant will pay the compensation
and expenses of the arbitrator named by or for it, and the Respondent will pay
the compensation and expenses of the arbitrator named by or for it. The costs
of petitioning for the appointment of an arbitrator, if any, shall be paid by
Respondent. The Claimant and Respondent will each pay one-half of the
compensation and expenses of the third arbitrator. All arbitrators must (a) be
neutral parties with no prior relationships to any participants, parties,
attorneys or law firms involved in the proceedings, (b) have never been
officers, directors, managers or employees of the Company Entities or the MWE
Entities and (c) have not less than seven years experience in the energy
industry. The hearing will be conducted in Houston, Texas and commence within
30 days after the selection of the third arbitrator. The Parties and the
arbitrators should proceed diligently and in good faith in order that the award
may be made as promptly as possible. Except as provided in the Federal
Arbitration Act, the decision of the arbitrators will be binding on and
non-appealable by the Parties hereto. The arbitrators shall have no right to
grant or award indirect, consequential, punitive or exemplary damages of any
kind.

 

7.21                           Legal Compliance.  The Parties acknowledge and agree that this
Agreement, and all Services provided under this Agreement including the
termination thereof, are intended to comply with any and all laws and legal
obligations and that this Agreement should be construed and interpreted with
this purpose in mind.

 

7.22                           Books & Records.  MWE Hydrocarbon shall keep, or cause the MWE
Entities to keep, full and adequate books of account and such other records as
are necessary to reflect the results of operation of the Company, such books
and records to be maintained at the offices of 

 

14

 

the Company (it being agreed that MWE Hydrocarbon may keep
its own books and records related to the performance of this Agreement at a location
of its choosing).  Such books of account
shall be kept in accordance with GAAP, or as otherwise reasonably directed by
the Company.  All of such books and
records shall be and remain at all times the property of the Company and upon
any termination of this Agreement, all of such books and records (together with
any copies thereof except to the extent that MWE Hydrocarbon or any MWE Entity
shall be required to retain such copies in accordance with applicable laws)
shall be turned over to the Company forthwith so as to ensure the orderly
continuance of the operation of the Company.

 

7.23                           Audit Rights.  Upon reasonable notice of not less than ten
business days, the Company (and its representatives and agents) shall have the
right to audit and inspect, the books, records and other documents applicable
to the Services and invoices set forth herein during normal business hours at
the Operator’s principal place of business for a period of one year following
the date an invoice is delivered to the Company, provided
that any such audit or inspection shall be subject to the rights of the Company
and the Operator set forth in Section 10.2 of the Company Operating
Agreement regarding Unrelated Information (as defined in the Company Operating
Agreement).

 

[Signature page follows]

 

15

 

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

 

 

	
   

  	
  MARKWEST
  HYDROCARBON, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank M. Semple

  
	
   

  	
  Name:

  	
  Frank
  M. Semple

  
	
   

  	
  Title:

  	
  President
  and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MARKWEST
  LIBERTY GAS GATHERING, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank M. Semple

  
	
   

  	
  Name:

  	
  Frank
  M. Semple

  
	
   

  	
  Title:

  	
  President
  and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank M. Semple

  
	
   

  	
  Name:

  	
  Frank
  M. Semple

  
	
   

  	
  Title:

  	
  President
  and CEO

  

 

F-1

 

EXHIBIT G

 

CAPITAL EXPENDITURES FOR AGREEMENTS

 

**

 

G-1

 

EXHIBIT H

 

PRE-APPROVED AFFILIATED TRANSACTIONS

 

	
  1.

  	
  Services
  Agreement

  
	
   

  	
   

  
	
  2.

  	
  Fractionation
  and NGL Purchase Agreement

  
	
   

  	
   

  
	
  3.

  	
  The execution of the
  Company’s acknowledgment of the pledge by MWE Liberty of its Class B
  Interest in the Company to the Royal Bank of Canada pursuant to that certain
  Credit Agreement, dated as of February 20, 2008, among MWE, certain
  subsidiary guarantors, Royal Bank of Canada, as Administrative Agent and
  Collateral Agent, and the other lenders party thereto.

  

 

H-1

 

EXHIBIT I

 

BRING DOWN CERTIFICATE

 

The
undersigned,
[                                        ],
[President] of MarkWest Liberty Gas Gathering, L.L.C., a Delaware limited
liability company, acting in its capacity as the Operator of MarkWest Liberty
Midstream & Resources, L.L.C., a Delaware limited liability company
(the “Company”), is delivering this
Bring Down Certificate to each Class A Member in accordance with Section 4.1(b)(i) of
the Amended and Restated Limited Liability Company Agreement of the Company,
dated as of February 27th, 2009 (as amended, supplemented and restated
from time to time, the “Operating Agreement”),
in connection with the Capital Call properly made by the Board to the Class A
Members, in accordance with the terms of the Operating Agreement, dated
                            ,
20     (the “Current Quarter Capital
Call”), and, acting in his capacity as [President] of the
Operator, hereby certifies to each Class A Member, as of
                      ,
20    , that:

 

1.                                       The Company has
spent or committed to spend all previous Capital Contributions made by the Class A
Members in accordance with an Approved Budget; and

 

2.                                       The Company
will spend the Capital Contribution to be made pursuant to the Current Quarter
Capital Call in accordance with an Approved Budget.

 

All
capitalized terms used but not defined herein shall have their respective
meanings given to such terms in the Operating Agreement.

 

IN
WITNESS WHEREOF, the undersigned has executed this Bring-Down Certificate in
the capacity aforesaid as of
                        ,
20      .

 

 

	
   

  	
  MARKWEST
  LIBERTY GAS GATHERING, L.L.C.,

  
	
   

  	
  in
  its capacity as Operator of MarkWest Liberty 

  Midstream & Resources, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

I-1

 

EXHIBIT J

 

ESCROW AGREEMENT

 

(see attached)

 

J-1

 

Execution Version

 

ESCROW AGREEMENT

 

This
Escrow Agreement dated this 27th day of February, 2009 (the “Escrow Agreement”),
is entered into by and among MarkWest Liberty Gas Gathering, L..L.C. (“MWE
Liberty”), MarkWest Liberty Midstream & Resources, L.L.C. (“MarkWest
Liberty”), M&R MWE Liberty, LLC  (“NGPMR”) (MWE Liberty,
MarkWest Liberty and NGPMR collectively, the “Parties,” and individually, a “Party”),
and Wells Fargo Bank, National Association, as escrow agent (“Escrow Agent”).

 

RECITALS

 

A.            Pursuant to the terms of the
Amended and Restated Limited Liability Company Agreement of MarkWest Liberty,
dated as of the date hereof (the “LLC Agreement”), as security for NGPMR’s
investment in MarkWest Liberty, capital contributions made by NGPMR, as a
member of MarkWest Liberty, are to be paid into an Escrow Account until such
time as the Parties agree to release such funds.

 

B.            NGPMR agrees to place in
escrow certain funds and the Escrow Agent agrees to hold and distribute such
funds in accordance with the terms of this Escrow Agreement.

 

In
consideration of the promises and agreements of the Parties and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties and the Escrow Agent agree as follows:

 

ARTICLE 1

ESCROW DEPOSIT

 

Section
1.1.            Receipt of
Escrow Property.  Upon execution hereof, NGPMR shall
deliver to the Escrow Agent the amount of ** in
immediately available funds, and from time to time hereafter NGPMR shall
deliver additional funds to the Escrow Agent (the “Escrow Property”).

 

Section
1.2.            Investments.

 

(a)            The Escrow
Agent is authorized and directed to deposit, transfer, hold and invest the
Escrow Property and any investment income thereon in such investment or
investments as MWE Liberty, MarkWest Liberty and NGPMR shall from time to time
mutually direct in writing in the form of Exhibit A to this Escrow
Agreement.  In the absence of such
written direction, the Escrow Agent is hereby authorized and directed to hold
the Escrow Property uninvested in a non-interest bearing transaction account
eligible for unlimited insurance coverage from the Federal Deposit Insurance
Corporation (“FDIC”) through December 31, 2009 (or other date, which may be
earlier, as ordered or announced by the FDIC), and if the Escrow Agent is not
otherwise directed in writing after such date, it is authorized and directed to
continue to hold the Escrow Property uninvested in a non-interest bearing
transaction account whether or not such account remains eligible for any insurance
coverage from the FDIC.  Any investment
earnings 

 

 

and
income on the Escrow Property shall become part of the Escrow Property, and
shall be disbursed in accordance with Section 1.3 or Section 1.5 of this Escrow
Agreement.

 

(b)            The Escrow
Agent is hereby authorized and directed to sell or redeem any such investments
as it deems necessary to make any payments or distributions required under this
Escrow Agreement.  The Escrow Agent shall
have no responsibility or liability for any loss which may result from any
investment or sale of investment made pursuant to this Escrow Agreement.  The Escrow Agent is hereby authorized, in
making or disposing of any investment permitted by this Escrow Agreement, to
deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether it or any such affiliate is acting as agent of the Escrow
Agent or for any third person or dealing as principal for its own account.  The Parties acknowledge that the Escrow Agent
is not providing investment supervision, recommendations, or advice.

 

Section
1.3.            Disbursements.  The Escrow Agent is hereby authorized and
directed to make disbursements of the Escrow Property if a distribution has
been jointly agreed to, in writing, by NGPMR, MWE Liberty and MarkWest Liberty.  The Escrow Agent shall, promptly upon receipt
of such joint written instructions from NGPMR, MWE Liberty and MarkWest
Liberty, release the Escrow Property (or any portion thereof) in accordance
with such joint written instructions. 
The Parties agree that, where terms of the LLC Agreement require
disbursements of the Escrow Property, NGPMR, MWE Liberty and MarkWest Liberty,
as applicable, shall use their best efforts in complying with such terms with
respect to a joint written instruction required hereunder.

 

Section
1.4.            Income Tax
Allocation and Reporting.

 

(a)            The
Parties agree that, for tax reporting purposes, all interest and other income
from investment of the Escrow Property shall, as of the end of each calendar
year and to the extent required by the Internal Revenue Service, be reported as
having been earned by MarkWest Liberty, whether or not such income was
disbursed during such calendar year.

 

(b)            Prior
to closing, the Parties shall provide the Escrow Agent with certified tax
identification numbers by furnishing appropriate forms W-9 or W-8 and such
other forms and documents that the Escrow Agent may request.  The Parties understand that if such tax
reporting documentation is not provided and certified to the Escrow Agent, the
Escrow Agent may be required by the Internal Revenue Code of 1986, as amended,
and the Regulations promulgated thereunder, to withhold a portion of any
interest or other income earned on the investment of the Escrow Property.

 

(c)            To the
extent that the Escrow Agent becomes liable for the payment of any taxes in
respect of income derived from the investment of the Escrow Property, the
Escrow Agent shall satisfy such liability to the extent possible from the
Escrow Property.  The Parties, jointly
and severally, shall indemnify, defend and hold the Escrow Agent harmless from
and against any tax, late payment, interest, penalty or other cost or expense
that may be assessed against the Escrow Agent on or with respect to the Escrow
Property and the investment thereof unless such tax, late payment, interest,
penalty or other expense was directly caused by the gross negligence or willful

 

2

 

misconduct of the Escrow Agent.  The indemnification provided by this Section 1.4(c)
is in addition to the indemnification provided in Section 3.1 and shall survive
the resignation or removal of the Escrow Agent and the termination of this
Escrow Agreement.

 

Section
1.5.            Termination.  This Escrow Agreement shall terminate on December
31, 2011 unless the Escrow Property has already been fully disbursed (in which
case the Escrow Agreement shall terminate upon such final disbursement), at
which time the Escrow Agent is authorized and directed to disburse the Escrow
Property in accordance with Section 1.3 and this Escrow Agreement shall be of
no further force and effect except that the provisions of Sections 1.4(c), 3.1
and 3.2 hereof shall survive termination.

 

ARTICLE 2

DUTIES OF THE ESCROW AGENT

 

Section
2.1.            Scope of
Responsibility.  Notwithstanding
any provision to the contrary, the Escrow Agent is obligated only to perform
the duties specifically set forth in this Escrow Agreement, which shall be
deemed purely ministerial in nature. 
Under no circumstances will the Escrow Agent be deemed to be a fiduciary
to any Party or any other person under this Escrow Agreement.  The Escrow Agent will not be responsible or
liable for the failure of any Party to perform in accordance with this Escrow
Agreement. The Escrow Agent shall neither be responsible for, nor chargeable
with, knowledge of the terms and conditions of any other agreement, instrument,
or document other than this Escrow Agreement, whether or not an original or a
copy of such agreement has been provided to the Escrow Agent; and the Escrow Agent
shall have no duty to know or inquire as to the performance or nonperformance
of any provision of any such agreement, instrument, or document.  References in this Escrow Agreement to any
other agreement, instrument, or document are for the convenience of the
Parties, and the Escrow Agent has no duties or obligations with respect
thereto.  This Escrow Agreement sets
forth all matters pertinent to the escrow contemplated hereunder, and no
additional obligations of the Escrow Agent shall be inferred or implied from
the terms of this Escrow Agreement or any other agreement.

 

Section
2.2.            Attorneys and
Agents.  The Escrow Agent shall be
entitled to rely on and shall not be liable for any action taken or omitted to
be taken by the Escrow Agent in accordance with the advice of counsel or other
professionals retained or consulted by the Escrow Agent.  The Escrow Agent shall be reimbursed as set
forth in Section 3.1 for any and all compensation (fees, expenses and other
costs) paid and/or reimbursed to such counsel and/or professionals.  The Escrow Agent may perform any and all of
its duties through its agents, representatives, attorneys, custodians, and/or
nominees.

 

Section
2.3.            Reliance.  The Escrow Agent shall not be liable for any
action taken or not taken by it in accordance with the direction or consent of
the Parties or their respective agents, representatives, successors, or
assigns.  The Escrow Agent shall not be
liable for acting or refraining from acting upon any notice, request, consent,
direction, requisition, certificate, order, affidavit, letter, or other paper
or document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, without further inquiry into the person’s
or 

 

3

 

persons’
authority.  Concurrent with the execution
of this Escrow Agreement, the Parties shall deliver to the Escrow Agent
authorized signers’ forms in the form of Exhibit B-1 and Exhibit B-2 to this
Escrow Agreement.

 

Section
2.4.            Right Not Duty
Undertaken.  The
permissive rights of the Escrow Agent to do things enumerated in this Escrow
Agreement shall not be construed as duties.

 

Section
2.5.            No Financial
Obligation.  No
provision of this Escrow Agreement shall require the Escrow Agent to risk or
advance its own funds or otherwise incur any financial liability or potential
financial liability in the performance of its duties or the exercise of its
rights under this Escrow Agreement.

 

ARTICLE 3

PROVISIONS CONCERNING THE ESCROW AGENT

 

Section
3.1.            Indemnification.  The
Parties, jointly and severally, shall indemnify, defend and hold harmless the
Escrow Agent from and against any and all loss, liability, cost, damage and
expense, including, without limitation, attorneys’ fees and expenses or other
professional fees and expenses which the Escrow Agent may suffer or incur by
reason of any action, claim or proceeding brought against the Escrow Agent,
arising out of or relating in any way to this Escrow Agreement or any
transaction to which this Escrow Agreement relates, unless such loss,
liability, cost, damage or expense shall have been finally adjudicated to have
been directly caused by the willful misconduct or gross negligence of the
Escrow Agent. The provisions of this Section
3.1 shall survive the resignation or removal of the Escrow Agent and the
termination of this Escrow Agreement.

 

Section 3.2.            Limitation of Liability.  THE ESCROW
AGENT SHALL NOT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES
OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES,
LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY
RESULTED FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II)
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER
(INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM
OF ACTION.

 

Section
3.3.            Resignation or
Removal.  The Escrow Agent may resign by
furnishing written notice of its resignation to the Parties, and the Parties
may remove the Escrow Agent by furnishing to the Escrow Agent a joint written
notice of its removal along with payment of all fees and expenses to which it
is entitled through the date of termination. 
Such resignation or removal, as the case may be, shall be effective
thirty (30) days after the delivery of such notice or upon the earlier
appointment of a successor, and the Escrow Agent’s sole responsibility
thereafter shall be to safely keep the Escrow Property and to deliver the same
to a successor escrow agent as shall be appointed by the Parties, as evidenced
by a joint written notice filed with the Escrow Agent or in accordance with a
court order.  If the Parties have failed
to appoint a successor escrow agent prior to the expiration of thirty (30) days
following the delivery of such 

 

4

 

notice
of resignation or removal, the Escrow Agent may petition any court of competent
jurisdiction for the appointment of a successor escrow agent or for other
appropriate relief, and any such resulting appointment shall be binding upon
the Parties.

 

Section
3.4.            Compensation.  The
Escrow Agent shall be entitled to compensation for its services as stated in
the fee schedule attached hereto as Exhibit C, which compensation shall be paid
by MarkWest Liberty. The fee agreed upon for the services rendered hereunder is
intended as full compensation for the Escrow Agent’s services as contemplated
by this Escrow Agreement; provided, however, that in the event that the
conditions for the disbursement of funds under this Escrow Agreement are not
fulfilled, or the Escrow Agent renders any service not contemplated in this
Escrow Agreement, or there is any assignment of interest in the subject matter
of this Escrow Agreement, or any material modification hereof, or if any
material controversy arises hereunder, or the Escrow Agent is made a party to
any litigation pertaining to this Escrow Agreement or the subject matter
hereof, then the Escrow Agent shall be compensated for such extraordinary
services and reimbursed for all costs and expenses, including reasonable
attorneys’ fees and expenses, occasioned by any such delay, controversy,
litigation or event.  If any amount due
to the Escrow Agent hereunder is not paid within thirty (30) days of the date
due, the Escrow Agent in its sole discretion may charge interest on such amount
up to the highest rate permitted by applicable law.  The Escrow Agent shall have, and is
hereby granted, a prior lien upon the Escrow Property with respect to its
unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights,
superior to the interests of any other persons or entities and is hereby
granted the right to set off and deduct any unpaid fees, non-reimbursed
expenses and unsatisfied indemnification rights from the Escrow Property.

 

Section
3.5.            Disagreements.  If any conflict, disagreement or dispute
arises between, among, or involving any of the parties hereto concerning the
meaning or validity of any provision hereunder or concerning any other matter
relating to this Escrow Agreement, or the Escrow Agent is in doubt as to the
action to be taken hereunder, the Escrow Agent is authorized to retain the Escrow
Property until the Escrow Agent (i) receives a final non-appealable order of a
court of competent jurisdiction or a final non-appealable arbitration decision
directing delivery of the Escrow Property, (ii) receives a written agreement
executed by each of the parties involved in such disagreement or dispute
directing delivery of the Escrow Property, in which event the Escrow Agent
shall be authorized to disburse the Escrow Property in accordance with such
final court order, arbitration decision, or agreement, or (iii) files an
interpleader action in any court of competent jurisdiction, and upon the filing
thereof, the Escrow Agent shall be relieved of all liability as to the Escrow
Property and shall be entitled to recover attorneys’ fees, expenses and other
costs incurred in commencing and maintaining any such interpleader action.  The Escrow Agent shall be entitled to act on
any such agreement, court order, or arbitration decision without further
question, inquiry, or consent.

 

Section
3.6.            Merger or Consolidation.  Any corporation or association into which the
Escrow Agent may be converted or merged, or with which it may be consolidated,
or to which it may sell or transfer all or substantially all of its corporate
trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger,
consolidation or transfer to which the Escrow Agent is a party, shall be and
become the successor escrow agent under this Escrow Agreement and shall have
and succeed to the 

 

5

 

rights,
powers, duties, immunities and privileges as its predecessor, without the
execution or filing of any instrument or paper or the performance of any
further act.

 

Section
3.7.            Attachment of
Escrow Property; Compliance with Legal Orders.  In the event that any Escrow Property shall
be attached, garnished or levied upon by any court order, or the delivery
thereof shall be stayed or enjoined by an order of a court, or any order,
judgment or decree shall be made or entered by any court order affecting the
Escrow Property, the Escrow Agent is hereby expressly authorized, in its sole
discretion, to respond as it deems appropriate or to comply with all writs,
orders or decrees so entered or issued, or which it is advised by legal counsel
of its own choosing is binding upon it, whether with or without
jurisdiction.  In the event that the
Escrow Agent obeys or complies with any such writ, order or decree it shall not
be liable to any of the Parties or to any other person, firm or corporation,
should, by reason of such compliance notwithstanding, such writ, order or
decree be subsequently reversed, modified, annulled, set aside or vacated.

 

ARTICLE 4

MISCELLANEOUS

 

Section
4.1.            Successors and Assigns.  This Escrow Agreement shall be binding on and
inure to the benefit of the Parties and the Escrow Agent and their respective
successors and permitted assigns. No other persons shall have any rights under
this Escrow Agreement.  No assignment of
the interest of any of the Parties shall be binding unless and until written
notice of such assignment shall be delivered to the other Party and the Escrow
Agent and shall require the prior written consent of the other Party and the
Escrow Agent (such consent not to be unreasonably withheld).

 

Section
4.2.            Escheat.  The Parties are aware that under applicable
state law, property which is presumed abandoned may under certain circumstances
escheat to the applicable state.  The
Escrow Agent shall have no liability to the Parties, their respective heirs,
legal representatives, successors and assigns, or any other party, should any
or all of the Escrow Property escheat by operation of law.

 

Section
4.3.            Notices.  All notices, requests, demands, and other communications
required under this Escrow Agreement shall be in writing, in English, and shall
be deemed to have been duly given if delivered (i) personally, (ii) by
facsimile transmission with written confirmation of receipt, (iii) by overnight
delivery with a reputable national overnight delivery service, or (iv) by mail
or by certified mail, return receipt requested, and postage prepaid.  If any notice is mailed, it shall be deemed
given five business days after the date such notice is deposited in the United
States mail.  Any notice given shall be
deemed given upon the actual date of such delivery.  If notice is given to a party, it shall be
given at the address for such party set forth below.  It shall be the responsibility of the Parties
to notify the Escrow Agent and the other Party in writing of any name or
address changes.  In the case of
communications delivered to the Escrow Agent, such communications shall be
deemed to have been given on the date received by the Escrow Agent.

 

6

 

If to MarkWest Liberty:

MarkWest
Liberty Midstream & Resources, L.L.C.

1515 Arapahoe Street, Tower 2, Suite 700

Denver, CO 80202

Attention:  Andrew Schroeder, Treasurer

Telephone:
 303 925-9256

Facsimile:  303 662-8870

 

If to MWE Liberty:

MarkWest
Liberty Gas Gathering, L.L.C.

1515 Arapahoe Street, Tower 2, Suite 700

Denver, CO 80202

Attention:  Andrew Schroeder, Treasurer

Telephone:
 303 925-9256

Facsimile:  303 662-8870

 

If to NGPMR:

M&R MWE Liberty, LLC

1401 McKinney, Suite 1025

Houston, TX 77010

Attention:  Jeffrey C. Rawls

Telephone:
 (713) 579-5007

Facsimile:  (713) 579-5017

 

With
a copy to:

 

Locke
Lord Bissell & Liddell LLP

600
Travis, Suite 3400

Houston,
TX 77002

Attention:  H. William Swanstrom

Telephone:  (713) 226-1143

Facsimile:  (713) 229-2518

 

If to the Escrow Agent:

 

Wells
Fargo Bank, National Association

1445 Ross Avenue – 2nd Floor

Dallas, Texas 75202-2812

Attention:
 Patrick Giordano - VP, Corporate Trust
and Escrow Services

Telephone:
 214-740-1573

Facsimile:  214-777-4086

 

Section
4.4.            Governing Law.  This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.

 

7

 

Section
4.5.            Entire
Agreement.  This Escrow
Agreement sets forth the entire agreement and understanding of the parties
related to the Escrow Property.

 

Section
4.6.            Amendment.  This Escrow Agreement may be amended,
modified, superseded, rescinded, or canceled only by a written instrument
executed by the Parties and the Escrow Agent.

 

Section
4.7.            Waivers.  The failure of any party to this Escrow
Agreement at any time or times to require performance of any provision under
this Escrow Agreement shall in no manner affect the right at a later time to
enforce the same performance.  A waiver
by any party to this Escrow Agreement of any such condition or breach of any
term, covenant, representation, or warranty contained in this Escrow Agreement,
in any one or more instances, shall neither be construed as a further or
continuing waiver of any such condition or breach nor a waiver of any other
condition or breach of any other term, covenant, representation, or warranty
contained in this Escrow Agreement.

 

Section
4.8.            Headings.  Section headings of this Escrow Agreement
have been inserted for convenience of reference only and shall in no way
restrict or otherwise modify any of the terms or provisions of this Escrow
Agreement.

 

Section
4.9.            Counterparts.  This Escrow Agreement may be executed in one
or more counterparts, each of which when executed shall be deemed to be an
original, and such counterparts shall together constitute one and the same
instrument.

 

[The remainder of this page left intentionally blank.]

 

8

 

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

 

	
   

  	
  MarkWest
  Liberty Midstream & Resources, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank M. Semple

  
	
   

  	
  Name:

  	
  Frank
  M. Semple

  
	
   

  	
  Title:

  	
  President
  and CEO

  
	
   

  	
   

  
	
   

  	
  MarkWest
  Liberty Gas Gathering, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank M. Semple

  
	
   

  	
  Name:

  	
  Frank
  M. Semple

  
	
   

  	
  Title:

  	
  President
  and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  M&R
  MWE Liberty, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John T. Raymond

  
	
   

  	
  Name:

  	
  John
  T. Raymond

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer & Managing Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Wells
  Fargo Bank, National Association, as Escrow Agent

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Patrick T. Giordano

  
	
   

  	
  Name:
  

  	
  Patrick
  T. Giordano

  
	
   

  	
  Title: 

  	
  Vice President

  

 

S-1

 

EXHIBIT A

 

Agency
and Custody Account Direction

For Cash
Balances

 

Direction to use Wells
Fargo Advantage Funds for Cash Balances for the escrow account or accounts (the
“Account”) established under the Escrow Agreement to which this Exhibit A is
attached.

 

You are hereby directed
to invest, as indicated below or as I shall direct further from time to time,
all cash in the Account in the following money market portfolio of Wells Fargo
Advantage Funds (the “Fund”) or another permitted investment of my choice
(Check One):

 

o Wells Fargo Advantage Funds, 100%
Treasury Money Market Fund

o Wells Fargo Advantage Funds, Government
Money Market Fund

o Wells Fargo Advantage Funds, Cash
Investment Money Market Fund

o Wells Fargo Advantage Funds, Prime
Investment Money Market Fund

o Wells Fargo Advantage Funds, Treasury
Plus Money Market Fund

o Wells Fargo Advantage Funds, Heritage
Money Market Fund

o Wells Fargo Advantage Funds, National
Tax-Free Money Market Fund

 

I acknowledge that I have
received, at my request, and reviewed the Fund’s prospectus and have determined
that the Fund is an appropriate investment for the Account.

 

I understand from reading
the Fund’s prospectus that Wells Fargo Funds Management, LLC (“Wells Fargo
Funds Management”), a wholly-owned subsidiary of Wells Fargo & Company,
provides investment advisory and other administrative services for the Wells Fargo Advantage Funds.  Other affiliates of Wells Fargo & Company
provide sub-advisory and other services for the Funds.  Boston Financial Data Services serves as
transfer agent for the Funds.  The Funds
are distributed by Wells Fargo Funds Distributor, LLC, Member NASD/SIPC, an
affiliate of Wells Fargo & Company.  I also understand that Wells Fargo &
Company will be paid, and its bank affiliates may be paid, fees for services to
the Funds and that those fees may include Processing Organization fees as
described in the Fund’s prospectus.

 

I understand that you
will not exclude amounts invested in the Fund from Account assets subject to
fees under the Account agreement between us.

 

I understand that
investments in the Fund are not obligations of, or endorsed or guaranteed by,
Wells Fargo Bank or its affiliates and are not insured by the Federal Deposit
Insurance Corporation.

 

I acknowledge that I have
full power to direct investments of the Account.

 

I understand that I may
change this direction at any time and that it shall continue in effect until
revoked or modified by me by written notice to you.

 

I understand that if I
choose to communicate this investment direction solely via facsimile, then the
investment direction will be understood to be enforceable and binding.

 

	
   

  	
   

  	
   

  
	
  Authorized
  Representative

  	
   

  	
  Authorized
  Representative

  
	
  MarkWest Liberty

  	
   

  	
  NGPMR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized
  Representative

  	
   

  	
   

  
	
  MWE Liberty

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

 

EXHIBIT B-1

CERTIFICATE AS TO
AUTHORIZED SIGNATURES

 

The specimen signatures shown below are the
specimen signatures of the individuals who have been designated as authorized
representatives of MarkWest Liberty and are authorized to initiate and approve
transactions of all types for the escrow account or accounts established under
the Escrow Agreement to which this Exhibit B-1 is attached, on behalf of
MarkWest Liberty and MWE Liberty.

 

	
  Name / Title

  	
   

  	
  Specimen Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Frank
  Semple

  	
   

  	
  /s/ Frank M. Semple

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  President

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Nancy
  Buese

  	
   

  	
  /s/ Nancy K. Buese

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Chief
  Financial Officer

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Andrew
  Schroeder

  	
   

  	
  /s/ Andrew L. Schroeder

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Vice
  President, Treasurer

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  John
  Mollenkopf

  	
   

  	
  /s/ John C. Mollenkopf

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Chief
  Operations Officer

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  

 

 

EXHIBIT B-2

CERTIFICATE AS TO
AUTHORIZED SIGNATURES

 

The specimen signatures shown below are the
specimen signatures of the individuals who have been designated as authorized
representatives of NGPMR and are authorized to initiate and approve
transactions of all types for the escrow account or accounts established under
the Escrow Agreement to which this Exhibit B-2 is attached, on behalf of NGPMR.

 

	
  Name / Title

  	
   

  	
  Specimen Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  John
  T. Raymond

  	
   

  	
  /s/ John T. Raymond

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Chief
  Executive Officer and Managing Partner

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  John
  G. Calvert

  	
   

  	
  /s/ John G. Calvert

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Chief
  Operating Officer and Managing Partner

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Jill
  W. Lampert

  	
   

  	
  /s/ Jill W. Lampert

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Chief
  Financial Officer and Secretary

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  

 

 

EXHIBIT C

 

	
  Acceptance
  Fee:

  	
  Waived

  

Initial Fees as they relate
to Wells Fargo Bank acting in the capacity of Escrow Agent – includes review of
the Escrow Agreement; acceptance of the Escrow appointment; setting up of
Escrow Account(s) and accounting records; and coordination of receipt of funds
for deposit to the Escrow Account(s). 
The Acceptance Fee is payable at time of Escrow Agreement execution.

 

	
  Annual
  Escrow Agent Administration Fee:

  	
  $3,500.00

  

For
ordinary administrative services by Escrow Agent – includes daily routine
account management; investment transactions; cash transaction processing
(including wire and check processing); monitoring claim notices pursuant to the
agreement; disbursement of funds in accordance with the agreement; and mailing
of trust account statements to all applicable parties. Float credit received by
the bank for receiving funds that remain un-invested are deemed part of the
Escrow Agent’s compensation. Tax reporting is included for up to two (2) entities
or individuals.  In the event additional
reporting is necessary, a $25 per reporting charge will be assessed.

 

This
fee is payable in advance, with the first installment due at the time of Escrow
Agreement execution. The Annual Escrow Agent Administration Fee covers the full
term of the escrow and will not be prorated or refunded in the year of early
termination, if any.

 

Wells Fargo’s bid is based on the following
assumptions:

·      Number of
Escrow Accounts to be established:  One
(1)

·      Number of
Deposits to Escrow Account:  One (1)

·      Number of Withdrawals from Escrow Fund:  Estimated One (1)

·      Term of
Escrow:  Approximately Twelve (12) Months

·      APPOINTMENT
SUBJECT TO RECEIPT OF REQUESTED DUE DILIGENCE INFORMATION AS PER THE USA
PATRIOT ACT

·      THIS
PROPOSAL ASSUMES THAT BALANCES IN WILL BE INVESTED IN WELLS FARGO MONEY MARKET
DEMAND ACCOUNT OR WELLS FARGO ADVANTAGE FUNDS

·      ALL
FUNDS WILL BE RECEIVED FROM OR DISTRIBUTED TO A DOMESTIC OR AN APPROVED FOREIGN
ENTITY

·      IF THE
ACCOUNT(S) DOES NOT OPEN WITHIN THREE (3) MONTHS OF THE DATE SHOWN BELOW, THIS
PROPOSAL WILL BE DEEMED TO BE NULL AND VOID

 

	
  Out-of
  Pocket Expenses:

  	
  At Cost

  

We will charge for out-of-pocket expenses in
response to specific tasks assigned by the client or provided for in the escrow
agreement.  Possible expenses would be,
but are not limited to, express mail and messenger charges, travel expenses to
attend closing or other meetings.  There
are no charges for indirect out-of- pocket expenses.

 

This fee schedule is based upon the
assumptions listed above which pertain to the responsibilities and risks
involved in Wells Fargo undertaking the role of Escrow Agent.  These assumptions are based on information provided
to us as of the date of this fee schedule. 
Our fee schedule is subject to review and acceptance of the final
documents.  Should any of 

 

 

the assumptions, duties or responsibilities
change, we reserve the right to affirm, modify or rescind our fee schedule.
Extraordinary services (services other than the ordinary administration
services of Escrow Agent described above) are not included in the annual
administration fee and will be billed as incurred at the rates in effect from
time to time.

 

 

EXHIBIT K

 

FRACTIONATION AND NGL
PURCHASE AGREEMENT

 

(see attached)

 

K-1

 

FRACTIONATION AND NATURAL GAS LIQUIDS PURCHASE AGREEMENT

 

This
Fractionation and Natural Gas Liquids Purchase Agreement (“Agreement”) is made
and entered into this 27th day of February, 2009, by and between MARKWEST
LIBERTY MIDSTREAM & RESOURCES, L.L.C., a Delaware limited liability company
(“Liberty”), and MARKWEST HYDROCARBON, INC., a Delaware corporation (“MarkWest”).  Liberty and MarkWest may be referred to
individually as “Party”, or collectively as “Parties”.

 

Section
1.               Scope
of Agreement and General Terms and Conditions.  Liberty agrees to deliver, or cause to be
delivered, and to sell to MarkWest the Raw Make (and the Plant Products
contained therein) it delivers to MarkWest, as defined below, and MarkWest
agrees to receive and purchase such Raw Make (and the Plant Products contained
therein), to cause such Raw Make to be fractionated into Plant Products, and to
use commercially reasonable efforts to market such Plant Products, all in
accordance with this Agreement. This Agreement incorporates and is subject to
all of the General Terms and Conditions attached hereto, together with any
other Exhibits attached hereto.

 

Section
2.               Effective
Date.  The date on
which the obligations and duties of the Parties shall commence, being the “Effective
Date”, shall be February 27, 2009.

 

Section
3.               Term. This
Agreement shall remain in full force and effect from the Effective Date for a
period of ** thereafter (“Primary Term”), and
Liberty may renew this Agreement on a year-to-year basis thereafter upon 60
days written notice in advance of the expiration of the Primary Term or of any
yearly extension thereof (the Primary Term collectively with any renewal term,
the “Term”).

 

Section
4.               Consideration.

 

A.            As full consideration for the sale of the
Raw Make and the Plant Products contained therein and the fractionation of the
Raw Make into Plant Products, as defined below, MarkWest shall pay Liberty as
follows:

 

i.              For each Accounting Period during the
Term, MarkWest shall pay to Liberty **, multiplied
by the gallons of individual Plant Products contained in the Raw Make delivered
by Liberty to MarkWest during that Accounting Period, as determined at the
Measurement Point and as adjusted for Incidental Losses and Gains, less the
following fees:

 

a.             A fractionation fee for the fractionation
of the Raw Make into Plant Products, equal to the gallons of Raw Make delivered
by Liberty to MarkWest during that Accounting Period, as determined at the
Measurement Point, multiplied by ** (the “Fractionation
Fee”);

 

b.             The cost of Fuel utilized in the Siloam
Facility, which shall equal the **;

 

1

 

c.             Should Liberty deliver any Raw Make by
railcar, an unloading fee of ** per gallon
of Raw Make unloaded from railcars (the “Unloading Fee”); and

 

d.             The **
transportation costs incurred in connection with transporting the Raw Make from
the Delivery Point to the Siloam Facility.

 

ii.             The Fractionation Fee and the Unloading
Fee (collectively, the “Fees”) shall be adjusted annually as set forth
below.  **
the Fees shall be adjusted on an annual basis in proportion to the percentage
change, from the preceding year in the Producer Price Index for oil and gas
field services (SIC 138) as published by the Department of Labor (the “PPI”).
The adjustment of the Fractionation Fee shall be made effective January 1 of
each year, and shall reflect the percentage change in the PPI as it existed for
the immediately preceding January from the PPI for the second immediately
preceding January.

 

iii.            In the event that storage of Plant
Products is required, the Parties shall negotiate in good faith regarding the
terms and conditions relating to such storage.

 

Section
5.               Notices.  All notices, statements, invoices or other
communications required or permitted between the Parties shall be in writing
and shall be considered as having been given if delivered by mail, courier,
hand delivery, or facsimile to the other Party at the designated address or
facsimile numbers. Normal operating instructions can be delivered by telephone
or other agreed means. Notice of events of Force Majeure may be made by
telephone and confirmed in writing within a reasonable time after the
telephonic notice. Monthly statements, invoices, payments and other
communications shall be deemed delivered when actually received. Either Party
may change its address or facsimile and telephone numbers upon written notice
to the other Party:

 

MarkWest:

 

Address:                1515 Arapahoe Street, Tower 2, Suite 700

Denver,
Colorado 80202

Attn:
Senior Vice President and Chief Operations Officer

Phone:  (303) 925-9246

Fax:
 (303) 925-9305

 

With
a copy to:

 

1515
Arapahoe Street, Tower 2, Suite 700

Denver,
Colorado 80202

Attn:
 Senior Vice President and General
Counsel

Phone:  (303) 925-9220

Fax:
 (303) 925-9308

 

Liberty:

 

Address:                1515 Arapahoe Street, Tower 2, Suite 700

Denver,
Colorado 80202

 

2

 

Attn:
Senior Vice President and Chief Operations Officer

Phone:  (303) 925-9246

Fax:
 (303) 925-9305

 

With
a copy to:

 

1515
Arapahoe Street, Tower 2, Suite 700

Denver,
Colorado 80202

Attn:
Senior Vice President and General Counsel

Phone:  (303) 925-9220

Fax:
 (303) 925-9308

 

and
to:

 

M&R
MWE Liberty, LLC

1401
McKinney, Suite 1025

Houston,
Texas 77010

Attn:
Jeffrey C. Rawls

 

and
to:

 

Locke
Lord Bissell & Liddell, LLP

600
Travis Street, Suite 3400

Houston,
Texas 77002

Fax  (713) 226-1143

Attention:
 H. William Swanstrom

 

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

 

[signature page follows]

 

3

 

IN
WITNESS WHEREOF, the Parties have executed this Fractionation and Natural Gas
Liquids Purchase Agreement on the date first set forth above.

 

 

	
   

  	
  MARKWEST
  HYDROCARBON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank M. Semple

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Frank
  M. Semple

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President
  and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank M. Semple

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Frank
  M. Semple

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President
  and CEO

  

 

4

 

GENERAL TERMS AND CONDITIONS

Attached to and made a part of that certain

Fractionation and Natural Gas Liquids Purchase Agreement

between

MarkWest Hydrocarbon, Inc., as “MarkWest”

and

MarkWest Liberty Midstream & Resources, L.L.C., as “Liberty”

Dated:

February 27, 2009

 

ARTICLE
1: DEFINITIONS

 

Accounting
Period.  The period commencing at 10:00 a.m.,
Eastern Time, on the first day of a calendar month and ending at 10:00 a.m.,
Eastern Time, on the first day of the next succeeding month.

 

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

 

Delivery
Point.  The point at which Raw Make is
delivered to MarkWest, being the outlet flange of the Raw Make loading
facilities of Liberty’s processing facilities near Houston, PA or Marshall
County, WV.

 

Force
Majeure.  Any cause or condition not
within the commercially reasonable control of the Party claiming suspension and
which by the exercise of commercially reasonable diligence, such Party is
unable to prevent or overcome.

 

Fuel.  All Gas, Plant Products, vapors or other
forms of energy utilized as fuel in the Siloam Facility.

 

Fuel
Price.  **
for natural gas plus **, calculated
each month on the last trading day of the month for the applicable month of
delivery.

 

Fuel
Utilization Rate.  ** MMbtu/gallon.

 

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

 

Incidental
Losses or Gains.  The
incidental losses of Raw Make and/or Plant Products incurred in MarkWest’s
facilities, or the losses or gains of Raw Make and/or Plant Products incurred
due to variations in measurement equipment.

 

Indemnifying
Party and Indemnified Party.  As defined in Article 8, below.

 

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

 

5

 

sustained
in connection with or arising out of the matters for which the Indemnifying
Party has indemnified the applicable Indemnified Party.

 

Measurement
Point.  The measurement facilities at
the Siloam Facility.

 

MMBtu.  1,000,000 Btu’s.

 

Net
Sales Price.   The
volume-weighted average net sales price per gallon of each individual component
of the Plant Products received by MarkWest, or by an affiliated agent of
MarkWest, from unaffiliated third party purchasers (excluding any sales to
affiliates of MarkWest) for all Plant Products sold by MarkWest or by an
affiliated agent of MarkWest at the Siloam Facility during the applicable
Accounting Period, or for Plant Products not sold at the Siloam Facility, the
net sales price shall be a calculated amount of the proceeds from unaffiliated
third party purchasers (excluding any sales to affiliates of MarkWest) netted
back to the Siloam Facility after deduction of all unaffiliated third party
transportation and storage related charges and, in the event of affiliated
transportation charges, the actual costs, to include amortization costs for
railcars owned by MarkWest or its affiliates **.

 

Plant
Products.  Ethane, propane,
iso-butane, normal butane, iso-pentane, normal pentane, hexanes plus, any other
liquid hydrocarbon product, or any mixtures thereof, and any incidental methane
included in any of the foregoing, as contained in the Raw Make delivered by
Liberty to MarkWest under this Agreement.

 

Raw
Make.  A combined stream of propane
and heavier liquefied hydrocarbons, including incidental ethane.

 

Siloam
Facility.  MarkWest
Energy Appalachia, L.L.C.’s Siloam fractionation facility located near South
Shore, Kentucky, including any treating equipment, Plant Products separation
and fractionation vessels, all above ground Plant Products storage vessels and
all below ground Plant Products storage caverns and facilities, and associated
condensing, heating, pumping, conveying, and other equipment and
instrumentation; including all structures associated with those facilities; and
all Plant Products loading facilities, including railcar loading, truck loading
and barge loading facilities and including all easements, rights-of-way, and
other property rights pertaining to the construction and operation of those
facilities; wherever those facilities, structures, easements, rights-of-way,
and other property rights are located.

 

ARTICLE
2: LIBERTY’S COMMITMENTS

 

2.1.          Liberty hereby commits and
agrees to sell to MarkWest, at the Delivery Point, all of the Raw Make (and all
of the Plant Products contained therein) that Liberty elects to deliver at the
Delivery Point, as adjusted for Incidental Losses or Gains.

 

ARTICLE
3: MARKWEST’S COMMITMENTS

 

3.1.          MarkWest hereby commits and
agrees to (a) receive and purchase from Liberty, at the Delivery Point,
all of the Raw Make (and the Plant Products contained therein) delivered by
Liberty at the Delivery Point, as adjusted for Incidental Losses or Gains, ** at Siloam to fractionate **,
in which case MarkWest shall **, (b) subject
to the foregoing clause (a), cause the Raw Make to be fractionated into Plant
Products in accordance with this Agreement, and (c) use commercially
reasonable efforts to market the Plant Products.  MarkWest’s 

 

6

 

acceptance
of Raw Make from Liberty is ** as of the
date of this Agreement and **, and ** Raw Make.

 

ARTICLE
4:  OPERATION OF MARKWEST’S FACILITIES

 

4.1           All facilities operated by
MarkWest which are required for the performance of the services provided herein
shall be maintained and operated at MarkWest’s sole cost and expense.  MarkWest will provide, or will cause its
affiliates to provide, Fuel for the Siloam Facility.

 

4.2           All Incidental Losses and
Gains incurred at the Siloam Facility shall be allocated to Liberty and the
other parties for whom MarkWest is causing Raw Make to be fractionated at the
Siloam Facility on a pro rata basis based upon the volume of Raw Make that
MarkWest is causing to be fractionated at the Siloam Facility.

 

ARTICLE
5: QUALITY

 

5.1.          As long as the Raw Make
delivered hereunder for fractionation is of a quality which, when fractionated,
meets the applicable specifications set forth on Exhibit A attached
hereto, then MarkWest agrees to receive the Raw Make and to cause the Raw Make
to be fractionated  into Plant Products
meeting the specifications set forth herein.

 

5.2           Should any of the Raw Make
fail to meet the above specifications, then:

 

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

 

B.            MarkWest may, at its sole
discretion, cease receiving the non-conforming Raw Make, and shall notify
Liberty that it has, or will, cease receiving the non-conforming Raw Make.

 

5.3           MarkWest shall cause all Raw
Make meeting the requirements under Section 5.1 to be fractionated to
produce Plant Products meeting the specifications set forth on Exhibit A
attached hereto.

 

5.4           MarkWest shall cause Plant
Products to be odorized in accordance with the directions of Liberty.

 

ARTICLE
6: MEASUREMENT EQUIPMENT AND PROCEDURES AND ANALYSES

 

6.1           Raw Make.  Raw Make shall be measured
at the Measurement Point and shall conform to applicable API and GPA standards
for truck and rail car measurement as follows:

 

A.            The trucks shall be weighed
empty and full.  GPA Standard 8186, as
revised, is the standard to be used on all truck deliveries.

 

B.            Rail cars shall be measured
using strapping tables and liquid spew gauges. 
Vapor correction calculations will be made as required by applicable
industry standards.

 

6.2.          Plant Products.  Measurement of all Plant
Products and deliveries shall be converted to 60° F and shall conform to
applicable API and GPA standards for truck and rail car measurement:

 

A.            The trucks shall be weighed
both empty and full.  GPA Standard 8186,
as revised, is the standard to be used on all truck deliveries.

 

B.            Rail cars shall be measured
using strapping tables and liquid spew gauges. 
Vapor correction calculations will 

 

7

 

be
made as required by applicable industry standards.

 

6.3           Measurement Inaccuracies.  If any measuring equipment
used herein is out of service or, upon test, is found to be in error by an
amount exceeding 1%, at a recording rate corresponding to the average rate of
flow for the period since the last preceding test, then any preceding
recordings of that equipment since the last preceding test shall be corrected
to zero error for any period which is known definitely or agreed upon.  If the period is not known definitely or
agreed upon, the correction shall be for a period extending back one-half of
the time elapsed since the last test.  In
the event a correction is required for previous deliveries, the volumes
delivered shall be calculated by the first of the following methods which is
feasible:  (i) by using the
registration of any check meter or meters if installed and accurately
registering; or (ii) by correcting the error if the percentage of error is
ascertainable by calibration, test, or mathematical calculations; or (iii) by
Liberty estimating the quantity of delivery by deliveries during periods of
similar conditions when the meter was registering accurately.

 

6.4           Analyses.

 

A.            MarkWest shall, at its sole
cost, risk and expense, install, operate and maintain,  or cause to be installed, operated and
maintained, equipment to analyze the composition of the Raw Make and of the
Plant Products in accordance with applicable GPA standards.

 

B.            With respect to Raw Make
delivered by tank and truck cars, and with respect to Plant Products, samples
shall be analyzed in accordance with applicable GPA standards.  The analysis shall also include the
determination of the molecular weight, density and heating value of the
pentanes and heavier hydrocarbons, quarterly in accordance with industry
recognized standards.  Liberty or
MarkWest or their representatives may take samples for verification of
composition and may be present during any of the other party’s sampling
operations.

 

ARTICLE
7: PAYMENTS

 

7.1.          Based on the measurements
set forth in this Agreement, MarkWest shall provide Liberty with a statement
explaining how all payments due under the terms of this Agreement were
determined not later than the 20th day of the
Accounting Period following the Accounting Period for which the consideration
is due.  Any sums due MarkWest or Liberty
under this Agreement shall be paid no later than the last day of the Accounting
Period in which the statement provided pursuant to the preceding sentence was
received.

 

7.2           Either Party, on 10 days
prior written notice, shall have the right at its expense, at reasonable times
during business hours, to audit the books and records of the other Party to the
extent necessary to verify the accuracy of any statement, measurement,
computation, charge, or payment made under or pursuant to this Agreement.  The scope of any audit shall be limited to
the 24 month period immediately prior to the month in which the audit is
completed. However, no audit may include any time period for which a prior
audit hereunder was conducted, and no audit may occur more frequently than once
each 12 months.  All statements,
allocations, measurements, computations, charges, or payments made in any
period prior to the 24 month period immediately prior to the month in which the
audit is requested, or made in any 24 month period for which the audit is
requested but for which a written claim for adjustments is 

 

8

 

not
made within 90 days after the audit is requested shall be conclusively deemed
true and correct and shall be final for all purposes.  To the extent that the foregoing varies from
any applicable statute of limitations, the Parties expressly waive all such
other applicable statutes of limitations.

 

ARTICLE
8: FORCE MAJEURE

 

8.1.          In the event a Party is
rendered unable, wholly or in part, by Force Majeure, to carry out its
obligations under this Agreement, other than the obligation to make any
payments due hereunder, the obligations of that Party, so far as they are
affected by Force Majeure, shall be suspended from the inception and during the
continuance of the inability, and the cause of the Force Majeure, as far as
possible, shall be remedied with commercially reasonable diligence. The Party
affected by Force Majeure shall provide the other Party with a reasonably
detailed written notice of the Force Majeure event within a reasonable time
after the affected Party learns of the occurrence of the Force Majeure event.
The settlement of strikes, lockouts, and other labor difficulty shall be
entirely within the discretion of the Party having the difficulty and nothing
herein shall require the settlement of strikes, lockouts, or other labor
difficulty.

 

ARTICLE
9: LIABILITY AND INDEMNIFICATION

 

9.1.          As among the Parties hereto,
Liberty and any of its designees shall be in custody, control and possession of
the Raw Make and Plant Products hereunder, until the Raw Make and Plant
Products are delivered to MarkWest at the Delivery Point.

 

9.2.          As among the Parties hereto,
MarkWest and any of its designees shall be in custody, control and possession
of the Raw Make and Plant Products hereunder after the Raw Make and Plant
Products are delivered at the Delivery Point.

 

9.3.          Each Party (“Indemnifying
Party”) hereby covenants and agrees with the other Party, and its affiliates
(except for the Indemnifying Party itself), and each of their directors, officers,
managers, partners, members and employees (“Indemnified Parties”), that except
to the extent caused by the Indemnified Parties’ gross negligence or willful
conduct, the Indemnifying Party shall protect, defend, indemnify and hold
harmless the Indemnified Parties from, against and in respect of any and all
Losses incurred by the Indemnified Parties to the extent those Losses arise
from or are related to: (a) the Indemnifying Party’s facilities; or (b) the
Indemnifying Party’s possession and control of the Raw Make or Plant Products,
as applicable.

 

ARTICLE
10: MISCELLANEOUS

 

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

 

10.2.        This Agreement shall be
governed by, construed, and enforced in accordance with the laws of the State
of Kentucky without regard to choice of law principles.

 

10.3.        This Agreement shall extend
to and inure to the benefit of and be binding upon the Parties, and their
respective successors and assigns, including any assigns of MarkWest’s
interests covered by this Agreement. No assignment of this Agreement shall be
binding on either of the Parties until the first day of the Accounting Period
following the date a certified copy of the instrument evidencing that sale,
transfer, assignment or conveyance has been 

 

9

 

delivered
to the other Party. Further, each assigning Party shall notify its assignee of
the existence of this Agreement and obtain a ratification of this Agreement
prior to such assignment. No assignment by either Party shall relieve that
Party of its continuing obligations and duties hereunder without the express
consent of the other Party.

 

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

 

10.5         This Agreement, including
all exhibits and appendices, contains the entire agreement between the Parties
with respect to the subject matter hereof, and there are no oral or other
promises, agreements, warranties, obligations, assurances, or conditions
precedent, affecting it.

 

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

 

10.7         Any dispute arising under
this Agreement (“Arbitrable Dispute”) shall be referred to and resolved by
binding arbitration in Houston, Texas, by three (3) arbitrators, in
accordance with the rules and procedures of the American Arbitration
Association (“AAA”); and, to the maximum extent applicable, the Federal
Arbitration Act (Title 9 of the United States Code). If there is any
inconsistency between this Section and any statute or rules, this Section shall
control. Arbitration shall be initiated within the applicable time limits set
forth in this Agreement and not thereafter or if no time limit is given, within
the time period allowed by the applicable statute of limitations, by one party
(“Claimant”) giving written notice to the other party (“Respondent”) and to
AAA, that the Claimant elects to refer the Arbitrable Dispute to arbitration,
and that the Claimant has appointed an arbitrator, who shall be identified in
such notice. The Respondent shall notify the Claimant and AAA within thirty
(30) days after receipt of Claimant’s notice, identifying the arbitrator the
Respondent has appointed. The two (2) arbitrators so chosen shall select a
third arbitrator within thirty (30) days after the second arbitrator has been
appointed (upon failure of a party to act within the time specified for naming
an arbitrator, such arbitrator shall be appointed by the AAA in accordance with
its rules). MarkWest shall pay the compensation and expenses of the arbitrator
named by or for it, Liberty shall pay the compensation and expenses of the
arbitrator named by or for it, and MarkWest and Liberty shall each pay one-half
of the compensation and expenses of the third arbitrator. All arbitrators must
be neutral parties who have never been officers, directors, employees,
contractors or agents of the parties or any of their Affiliates, must have not
less than ten (10) years experience in the oil and gas industry, and must
have a formal financial/accounting, engineering or legal education. The parties
shall have all rights of discovery in accordance with the Federal Rules of
Civil Procedure. The hearing shall be commenced within thirty (30) days after
the selection of the third arbitrator. The parties and the arbitrators 

 

10

 

shall
proceed diligently and in good faith in order that the arbitral award shall be
made as promptly as possible.  To the
maximum extent allowed by law, in all arbitration proceedings the laws of
Kentucky shall be applied, without regard to any conflicts of laws principles.
All statutes of limitation and of repose that would otherwise be applicable
shall apply to any arbitration proceeding. The tribunal shall not have the
authority to grant or award indirect or consequential damages, punitive damages
or exemplary damages.

 

11

 
EXHIBIT A
 
PRODUCTS QUALITY SPECIFICATIONS
 
PROPANE
 

	
  Product Characteristics

  	
   

  	
  Minimum

  	
   

  	
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  Test Methods

  Latest Revision

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  **

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 
12

 

NORMAL BUTANE
 

	
  Product Characteristics

  	
   

  	
  Minimum

  	
   

  	
  Maximum

  	
   

  	
  Test Methods

  Latest Revision

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  **

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 
13

 

ISOBUTANE
 

	
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  **

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 
14

 

NATURAL GASOLINE

 

	
  Product Characteristics

  	
   

  	
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  **

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 
15Exhibit 4.1

 

DG FASTCHANNEL, INC.

2006 LONG-TERM STOCK INCENTIVE PLAN

(As Amended April 29, 2009)

 

1.  ESTABLISHMENT OF PLAN.  DG FastChannel, Inc. establishes
the “DG FastChannel, Inc. 2006 Long-Term Stock Incentive Plan,”
effective as of the Effective Date. Options granted under the Plan shall be
subject to the terms and conditions of the Plan as set forth herein, as it may
be amended from time to time.

 

2.  PURPOSE. 
The purposes of the Plan are (i) to offer selected Employees,
including Officers, Directors and Consultants of the Company and its Affiliates
an equity ownership interest and opportunity to participate in the growth and
financial success of the Company, (ii) to provide the Company an
opportunity to attract and retain the best available personnel for positions of
substantial responsibility, (iii) to create long-term value and to provide
incentives to such Employees, Directors and Consultants by means of
market-driven and performance-related stock-based awards to achieve long-term
performance goals, and (iv) to promote the growth and success of the
Company’s business by aligning the financial interests of Employees, Directors
and Consultants with that of the other stockholders of the Company. Toward
these objectives, the Plan provides for the grant of Options, Stock
Appreciation Rights and Restricted Stock Awards, some of which may be
Performance Awards.

 

3.  DEFINITIONS.  As used herein, unless the context requires
otherwise, the following terms shall have the meanings indicated below:

 

(a)  “Affiliate”  means (i) any corporation, partnership
or other entity which owns, directly or indirectly, a majority of the voting
equity securities of the Company, (ii) any corporation, partnership or
other entity of which a majority of the voting equity securities or equity
interest is owned, directly or indirectly, by the Company, and (iii) with
respect to an Option that is intended to be an Incentive Stock Option, (A) any
“parent corporation” of the Company, as defined in Section 424(e) of
the Code or (B) any “subsidiary corporation” of the Company as defined in Section 424(f) of
the Code, any other entity that is taxed as a corporation under Section 7701(a)(3) of
the Code and is a member of the “affiliated group” as defined in Section 1504(a) of
the Code of which the Company is the common parent, and any other entity as may
be permitted from time to time by the Code or by the Internal Revenue Service
to be an employer of Employees to whom Incentive Stock Options may be granted;
provided, however, that in each case the Affiliate must be consolidated in the
Company’s financial statements.

 

(b)  “Award”  means any right granted under the Plan,
including an Option, a Stock Appreciation Right, a Restricted Stock Award and a
Performance Award, and whether granted singly or in combination, to a Grantee
pursuant to the terms, conditions and limitations that the Committee may
establish in order to fulfill the objectives of the Plan.

 

(c)  “Award Agreement”  means a written agreement with a Grantee with
respect to any Award, including any amendments thereto, and includes an Option
Agreement, a Stock Appreciation Rights Agreement and a Restricted Stock
Agreement.

 

(d)  “Board”  means the Board of Directors of the Company.

 

(e)  “Cause”  means the meaning set forth in a then-effective
written employment agreement between the Grantee and the Company or an
Affiliate or, in the absence of such a definition in a then-effective written
employment agreement (in the determination of the Committee), shall mean (i) the
habitual neglect of the Grantee’s duties or failure by the Grantee to perform
or observe any substantial lawful obligation of the Grantee’s duties to the
Company or any Affiliate that is not remedied within thirty (30) days
after written notice thereof from the Company or the Board, (ii) an
intentional violation or failure by the Grantee to satisfy any policy or
written agreement with the Company or an Affiliate, (iii) the involvement
by the Grantee in a transaction or act in connection with the performance of
duties to the Company or any Affiliate which transaction or

 

 

act is adverse to the
interests of the Company or any Affiliate, (iv) the intentional engagement
by the Grantee in unfair competition with the Company or any Affiliate, (v) the
use of alcohol or drugs by the Grantee in a manner that affects the Grantee’s
job performance or could reasonably be expected to adversely affect the
reputation of the Company or any Affiliate, or (vi) the conviction of, or
plea of nolo contendere by the
Grantee to, a felony or misdemeanor involving fraud, embezzlement, theft or
dishonesty or other criminal conduct against the Company or any Affiliate.

 

(f)  “Change in Control”  of the Company means the occurrence of any of
the following events: (i) any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50 percent or more
of the combined voting power of the Company’s then outstanding securities; (ii) as
a result of, or in connection with, any tender offer or exchange offer, merger,
or other business combination (a “Transaction”), the persons who were directors
of the Company immediately before the Transaction shall cease to constitute a
majority of the Board of the Company or any successor to the Company; (iii) the
Company is merged or consolidated with another corporation and as a result of
the merger or consolidation less than 50 percent of the outstanding voting
securities of the surviving or resulting corporation shall then be owned in the
aggregate by the former stockholders of the Company; (iv) a tender offer
or exchange offer is made and consummated for the ownership of securities of
the Company representing 50 percent or more of the combined voting power
of the Company’s then outstanding voting securities; or (v) the Company
transfers substantially all of its assets to another corporation which is not
controlled by the Company.

 

(g)  “Chief Executive Officer”  means the individual serving at any relevant
time as the chief executive officer of the Company.

 

(h)  “Code”  means the Internal Revenue Code of 1986, as
amended, and any successor statute. Reference in the Plan to any section of the
Code shall be deemed to include any amendments or successor provisions to such
section and any Treasury regulations promulgated under such section.

 

(i)  “Committee”  means the committee (or committees), as
constituted from time to time, of the Board that is appointed by the Board to
administer the Plan, or if no such committee is appointed (or no such committee
shall be in existence at any relevant time), the term “Committee” for purposes
of the Plan shall mean the Board; provided, however, that while the Common Stock
is publicly traded, the Committee shall be a committee of the Board consisting
solely of two or more Outside Directors, in accordance with Section 162(m) of
the Code, and/or solely of two or more Non-Employee Directors, in accordance
with Rule 16b-3, as necessary and deemed desirable by the Board from time
to time in each case to satisfy such requirements with respect to Awards
granted under the Plan. While the Common Stock is listed for trading on any
national securities exchange or quoted on the Nasdaq Stock Market, the
Committee’s members shall also satisfy the “independence” criteria or be “independent
directors” to the extent required under the rules and regulations of the
exchange or the Nasdaq Stock Market, as applicable. While the Common Stock is not
listed for trading on any national securities exchange or quoted on the Nasdaq
Stock Market, within the scope of such authority, the Board or the Committee
may (i) delegate to a committee of one or more members of the Board who
are not Outside Directors the authority to grant Awards to eligible persons who
are either (A) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such
Awards or (B) not persons with respect to whom the Company wishes to
comply with Section 162(m) of the Code and/or (ii) delegate to a
committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Awards to eligible persons who are not then
subject to Section 16 of the Exchange Act. The Board may assume any or all
of the powers and responsibilities prescribed for the Committee, and to the
extent it does so, the term “Committee” as used herein shall also be applicable
to the Board.

 

 

(j)  “Common Stock”  means the Common Stock, $0.001 par value per
share, of the Company or the common stock that the Company may in the future be
authorized to issue (as long as the common stock varies from that currently
authorized, if at all, only in amount of par value) in replacement or substitution
thereof.

 

(k)  “Company”  means DG FastChannel, Inc., a
Delaware corporation.

 

(l)  “Consultant”  means any person (other than an Employee or a
Director, solely with respect to rendering services in such person’s capacity
as a Director) who is engaged by the Company or any Affiliate to render
consulting or advisory services to the Company or such Affiliate and who is a “consultant
or advisor” within the meaning of Rule 701 promulgated under the
Securities Act or Form S-8 promulgated under the Securities Act, including
any foreign national who, but for the laws of his country, would be an employee
of the Company or an Affiliate.

 

(m)  “Continuous Service”  means that the provision of services to the
Company or an Affiliate in any capacity of Employee, Director or Consultant is
not interrupted or terminated. Except as otherwise provided in a particular
Award Agreement, service shall not be considered interrupted or terminated for
this purpose in the case of (i) any approved leave of absence, (ii) transfers
among the Company, any Affiliate, or any successor, in any capacity of
Employee, Director or Consultant, or (iii) any change in status as long as
the individual remains in the service of the Company or an Affiliate in any
capacity of Employee, Director or Consultant. An approved leave of absence
shall include sick leave, military leave, or any other authorized personal
leave. For purposes of each Incentive Stock Option, if such leave exceeds
ninety (90) days, and re-employment upon expiration of such leave is not
guaranteed by statute or contract, then the Incentive Stock Option shall be
treated as a Non-Qualified Stock Option on the day that is three (3) months
and one (1) day following the expiration of such ninety (90)-day period.

 

(n)  “Covered Employee”  means the Chief Executive Officer and the
four other most highly compensated officers of the Company for whom total
compensation is required to be reported to stockholders under
Regulation S-K, as determined for purposes of Section 162(m) of
the Code.

 

(o)  “Director”  means a member of the Board.

 

(p)  “Disability”  means the “disability” of a person (i) as
defined in a then-effective written employment agreement with the Company or an
Affiliate that covers such person, (ii) if such person is not covered by a
then-effective written employment agreement with the Company or an Affiliate,
as defined in a then-effective long-term disability plan maintained by the
Company that covers such person, or (iii) if neither a then-effective
employment agreement or a long-term disability plan exists at any relevant time
covering such person, “Disability” means the permanent and total disability of
a person within the meaning of Section 22(e)(3) of the Code. For
purposes of determining the time during which an Incentive Stock Option may be
exercised under the terms of an Option Agreement, “Disability” means the
permanent and total disability of a person within the meaning of Section 22(e)(3) of
the Code. Section 22(e)(3) of the Code provides that an individual is
totally and permanently disabled if he or she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
twelve (12) months.

 

(q)  “Effective Date”   means the date the Plan was approved by the
stockholders at the Company’s 2006 annual meeting.

 

 

(r)  “Employee”   means any person, including an Officer or
Director, who is employed, within the meaning of Section 3401 of the Code,
by the Company or an Affiliate. The provision of compensation by the Company or
an Affiliate to a Director solely with respect to such individual rendering
services in the capacity of a Director, however, shall not be sufficient to
constitute “employment” by the Company or that Affiliate.

 

(s)  “Exchange Act”   means the Securities Exchange Act of 1934,
as amended, and any successor statute. Reference in the Plan to any section of
the Exchange Act shall be deemed to include any amendments or successor
provisions to such section and any rules and regulations relating to such
section.

 

(t)  “Fair Market Value”   means, as of any date, the value of the
Common Stock determined as follows:

 

(i)            If Common Stock has
an established market by virtue of being listed on any established stock
exchange, traded on the Nasdaq National Market or the Nasdaq SmallCap Market or
reported on the Over-the-Counter Bulletin Board published by the National
Quotation Bureau, Inc., the Fair Market Value of a share of Common Stock
shall be the closing sales price for such a share of Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or market
(or if the Common Stock is listed or traded on more than one exchange or
market, the exchange or market with the greatest volume of trading in the
Common Stock) or reported on the Over-the-Counter Bulletin Board for the last
market trading day prior to the day of determination, as reported in The Wall Street Journal or such other
source as the Committee deems reliable. If the relevant date does not fall on a
day on which the Common Stock has traded on such securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Common Stock was so traded prior to the relevant
date, or such other appropriate day as shall be determined by the Board, in its
sole discretion consistent with Section 409A of the Code.

 

(ii)           In the absence of
any such established market for the Common Stock, the Fair Market Value shall
be determined in good faith by the reasonable application by the Committee of a
reasonable valuation method in accordance with Section 409A of the Code.

 

(u)  “Grantee”   means an Employee, Director or Consultant to
whom an Award has been granted under the Plan.

 

(v)  “Incentive Stock Option”   means an Option granted to an Employee under
the Plan that meets the requirements of Section 422 of the Code.

 

(w)  “Non-Employee Director”   means a Director who either (i) is not
an Employee or Officer, does not receive compensation (directly or indirectly)
from the Company or an Affiliate in any capacity other than as a Director
(except for an amount as to which disclosure would not be required under
Item 404(a) of Regulation S-K), does not possess an interest in
any other transaction as to which disclosure would be required under
Item 404(a) of Regulation S-K and is not engaged in a business
relationship as to which disclosure would be required under Item 404(b) of
Regulation S-K or (ii) is otherwise considered a “non-employee
director” for purposes of Rule 16b-3.

 

(x)  “Non-Qualified Stock
Option”   means an Option
granted under the Plan that is not intended to be an Incentive Stock Option.

 

(y)  “Officer”   means a person who is an “officer” of the
Company or any Affiliate within the meaning of Section 16 of the Exchange
Act (whether or not the Company is subject to the requirements of the Exchange
Act).

 

 

(z)  “Option”   means an Award in the form of a stock option
granted pursuant to Section 8 of the Plan to purchase a specified number
of shares of Common Stock during the Option period for a specified exercise
price, whether granted as an Incentive Stock Option or as a Non-Qualified Stock
Option.

 

(aa) 
“Option Agreement”  
means the written agreement evidencing the grant of an Option executed
by the Company and the Optionee, including any amendments thereto. Each Option
Agreement shall be subject to the terms and conditions of the Plan.

 

(bb) 
“Optionee”   means an
individual to whom an Option has been granted under the Plan.

 

(cc) 
“Outside Director”  
means a Director who either (i) is not a current employee of the
Company or an “affiliated corporation” (within the meaning of the Treasury
regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an “affiliated corporation” receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), has not been an officer of the Company or an “affiliated
corporation” at any time and is not currently receiving (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the
Code) direct or indirect remuneration from the Company or an “affiliated
corporation” for services in any capacity other than as a Director, or (ii) is
otherwise considered an “outside director” for purposes of Section 162(m) of
the Code.

 

(dd) 
“Performance Award”  
means a Restricted Stock Award granted under Section 11 of the Plan
to a Grantee who is an Employee that becomes vested and earned solely on
account of the attainment of a specified performance target in relation to one
or more Performance Goals.

 

(ee) 
“Performance Goals”  
mean, with respect to any Performance Award, the business criteria (and
related factors) selected by the Committee at the time of grant to measure the
level of performance of the Company during the Performance Period, in each
case, prepared on the same basis as the financial statements published for financial
reporting purposes, except as adjusted pursuant to Section 11(f). The
Committee may select as the Performance Goals for a Performance Period any one
or combination of the following business criteria that apply to the Grantee of
the Performance Award, one or more business units, divisions or Affiliates or
the applicable sector of the Company, or the Company as a whole, and if so
desired by the Committee, by comparison with a peer group of companies, as
interpreted and defined, in each case, by the Committee, which business
criteria (to the extent applicable) will be determined in accordance with
generally accepted accounting principles:

 

(i)            Net income as a
percentage of revenue;

 

(ii)           Earnings per share
of Common Stock;

 

(iii)          Earnings before
interest, taxes, depreciation and amortization;

 

(iv)          Return on net assets
employed before interest and taxes;

 

(v)           Operating margin as
a percentage of revenue;

 

(vi)          Safety performance
relative to industry standards and the Company annual target;

 

(vii)         Strategic team
goals;

 

(viii)        Net operating profit
after taxes;

 

(ix)           Net operating
profit after taxes per share of Common Stock;

 

(x)            Return on invested
capital;

 

(xi)           Return on assets or
net assets;

 

 

(xii)          Total stockholder
return;

 

(xiii)         Relative total
stockholder return (as compared with a peer group of the Company);

 

(xiv)        Earnings before
income taxes;

 

(xv)         Net income;

 

(xvi)        Free cash flow;

 

(xvii)       Free cash flow per
share of Common Stock;

 

(xviii)      Revenue (or any
component thereof);

 

(xix)         Revenue growth; or

 

(xx)          Any other
performance objective approved by the stockholders of the Company in accordance
with Section 162(m) of the Code.

 

(ff) 
“Performance Period”  
means that period established by the Committee at the time any
Performance Award is granted or, except in the case of any grant to a Covered
Employee, at any time thereafter, during which any Performance Goals specified
by the Committee with respect to such Award are to be measured.

 

(gg) 
“Plan”   means this
Digital Generation Systems, Inc. 2006 Long-Term Stock Incentive Plan as
set forth herein and as it may be amended from time to time.

 

(hh) 
“Qualifying Shares”  
means shares of Common Stock which either (i) have been owned by
the Grantee for more than six (6) months and have been “paid for” within
the meaning of Rule 144 promulgated under the Securities Act, or (ii) were
obtained by the Grantee in the public market.

 

(ii)  “Regulation S-K”   means Regulation S-K promulgated under
the Securities Act, as it may be amended from time to time, and any successor
to Regulation S-K. Reference in the Plan to any item of
Regulation S-K shall be deemed to include any amendments or successor
provisions to such item.

 

(jj) 
“Restriction Period”  
means the period during which the Common Stock under a Restricted Stock
Award is nontransferable and subject to “Forfeiture Restrictions” as defined in
Section 10(b) of the Plan and set forth in the related Restricted
Stock Agreement.

 

(kk) 
“Restricted Stock Agreement”  
means the written agreement evidencing the grant of a Restricted Stock
Award executed by the Company and the Grantee, including any amendments
thereto. Each Restricted Stock Agreement shall be subject to the terms and
conditions of the Plan.

 

(ll) 
“Restricted Stock Award”  
means an Award granted under Section 10 of the Plan to a Grantee of
shares of Common Stock issued to the Grantee for such consideration, if any,
and subject to such restrictions on transfer, forfeiture provisions and other
terms and conditions as are established by the Committee.

 

(mm) 
“Rule 16b-3”  
means Rule 16b-3 promulgated under the Exchange Act, as it may be
amended from time to time, and any successor to Rule 16b-3.

 

(nn) 
“Section”   means a
section of the Plan unless otherwise stated or the context otherwise requires.

 

(oo) 
“Securities Act”  
means the Securities Act of 1933, as amended, and any successor statute.
Reference in the Plan to any section of the Securities Act shall be deemed to
include any amendments or successor provisions to such section and any rules and
regulations relating to such section.

 

 

(pp) 
“Stock Appreciation Right”  
means an Award granted under Section 9 of the Plan to receive all
or some portion of the increase in the value of the shares of Common Stock to
which such right relates as provided in Section 9 hereof.

 

(qq) 
“Stock Appreciation Right Agreement”   means a written agreement with a Grantee
with respect to an Award of Stock Appreciation Rights, including any amendments
thereto. Each Stock Appreciation Right Agreement shall be subject to the terms
and conditions of the Plan.

 

(rr) 
“Ten Percent Stockholder”  
means a person who owns (or is deemed to own pursuant to Section 424(d) of
the Code) at the time an Option is granted stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

 

4.  TYPES OF INCENTIVE AWARDS AVAILABLE UNDER THE PLAN.  Awards granted under the Plan may be (i) Incentive
Stock Options, (ii) Non-Qualified Stock Options, (iii) Stock
Appreciation Rights, (iv) Restricted Stock Awards, and (v) Performance
Awards. An Option may be granted in tandem with a Stock Appreciation Right.

 

5.  SHARES SUBJECT TO PLAN.

 

(a)  Maximum Shares Subject to
Plan.  Subject to adjustment
pursuant to Section 13(a) hereof, the total amount of Common Stock
with respect to which Awards may be granted under the Plan shall not exceed
2,200,000 shares. At all times during the term of the Plan, the Company
shall reserve and keep available such number of shares of Common Stock as will
be required to satisfy the requirements of outstanding Awards under the Plan.
The number of shares reserved for issuance under the Plan shall be reduced only
to the extent that shares of Common Stock are actually issued in connection with
the exercise or settlement of an Award. Any shares of Common Stock covered by
an Award (or a portion of an Award) that is forfeited or canceled or that
expires without being exercised or settled shall be deemed not to have been
issued for purposes of determining the maximum aggregate number of shares of
Common Stock which may be issued under the Plan and shall again be available to
be subject to Awards under the Plan. If an Option is issued in tandem with a
Stock Appreciation Right and all or a portion of the Option is cancelled as
provided for in Section 9(b)(iii) in connection with the exercise of
the related Stock Appreciation Right, the shares of Common Stock that were
subject to the portion of the Option so cancelled will not again be available
for grant under the Plan. In addition, shares of Common Stock withheld pursuant
to the Plan to pay taxes and shares of Common stock used in the exercise of an
Option as described in Section 8(d) in a “same day” or “margin”
arrangement shall reduce the number of shares available for Awards under the
Plan. Nothing in this Section 5 shall impair the right of the Company to
reduce the number of outstanding shares of Common Stock pursuant to
repurchases, redemptions, or otherwise; provided, however, that no reduction in
the number of outstanding shares of Common Stock shall (i) impair the
validity of any outstanding Award, whether or not that Award is fully vested or
exercisable, or (ii) impair the status of any shares of Common Stock
previously issued pursuant to an Award as duly authorized, validly issued,
fully paid and nonassessable. The shares to be delivered under the Plan shall
be made available from (i) authorized but unissued shares of Common Stock,
or (ii) Common Stock held in the treasury of the Company, in each
situation as the Committee may determine from time to time in its sole
discretion.

 

 

(b)  Registration and Listing
of Shares.  From time to time,
the Board and appropriate Officers shall be and are authorized to take whatever
actions are necessary to file required documents with governmental authorities,
stock exchanges and other appropriate persons to register, list and otherwise
make shares of Common Stock available for issuance pursuant to Awards.

 

6.  ELIGIBILITY.  Awards other than Incentive Stock Options may
be granted to Employees, Officers, Directors, and Consultants. Incentive Stock
Options may be granted only to Employees (including Officers and Directors who
are also Employees), as limited by clause (iii) of Section 3(a).
The Committee, in its sole discretion, shall select the recipients of Awards. A
Grantee may be granted more than one Award under the Plan, and Awards may be
granted at any time or times during the term of the Plan. The grant of an Award
to an Employee, Officer, Director or Consultant shall not be deemed either to
entitle that individual to, or to disqualify that individual from,
participation in any other grant of Awards under the Plan.

 

7.  LIMITATION ON INDIVIDUAL AWARDS.  No person shall be granted Awards during any
fiscal year of the Company covering more than 100,000 shares of Common Stock.
Notwithstanding the preceding sentence, in connection with the commencement of
a person’s Continuous Service, a person may be granted Awards covering up to an
additional 50,000 shares of Common Stock that shall not count against the limit
in the preceding sentence. The limitations set forth in the preceding sentences
shall be applied in a manner which will permit compensation generated under the
Plan, where appropriate, to constitute “performance-based” compensation for
purposes of Section 162(m) of the Code, including counting against
such maximum number of shares, to the extent required under Section 162(m) of
the Code and applicable interpretive authority thereunder, any shares of Common
Stock subject to Options or other Awards that are canceled or repriced.

 

8.  OPTIONS.

 

(a)  Grant of Options.  The Committee shall determine (i) whether
each Option shall be granted as an Incentive Stock Option or as a Non-Qualified
Stock Option and (ii) the provisions, terms, and conditions of each Option
including, but not limited to, the vesting schedule, the number of shares of
Common Stock subject to the Option, the exercise price of the Option, the
period during which the Option may be exercised, forfeiture provisions, methods
of payment, and all other terms and conditions of the Option.

 

(b)  Limitations on Incentive
Stock Options.  The aggregate
Fair Market Value (determined as of the date of grant of an Option) of Common
Stock which any Employee is first eligible to purchase during any calendar year
by exercise of Incentive Stock Options granted under the Plan and by exercise
of incentive stock options (within the meaning of Section 422 of the Code)
granted under any other incentive stock option plan of the Company or an
Affiliate shall not exceed $100,000. If the Fair Market Value of stock with
respect to which all incentive stock options described in the preceding
sentence held by any one Optionee are exercisable for the first time by such Optionee
during any calendar year exceeds $100,000, the Options (that are intended to be
Incentive Stock Options on the date of grant thereof) for the first $100,000
worth of shares of Common Stock to become exercisable in such year shall be
deemed to constitute incentive stock options within the meaning of Section 422
of the Code and the Options (that are intended to be Incentive Stock Options on
the date of grant thereof) for the shares of Common Stock in the amount in
excess of $100,000 that become exercisable in that calendar year shall be
treated as Non-Qualified Stock Options. If the Code is amended after the
effective date of the Plan to provide for a different limit than the one
described in this Section 8(b), such different limit shall be incorporated
herein and shall apply to any Options granted after the effective date of such
amendment.

 

 

(c)  Acquisitions and Other
Transactions.  Notwithstanding
the provisions of Section 12(g), in the case of an Option issued or
assumed pursuant to Section 12(g), the exercise price and number of shares
for the Option shall be determined in accordance with the principles of
Sections 409A and 424(a) of the Code. The Committee also may grant
Options under the Plan in settlement of or substitution for, outstanding options
or obligations to grant future options in connection with the Company or an
Affiliate acquiring another entity, an interest in another entity or an
additional interest in an Affiliate whether by merger, stock purchase, asset
purchase or other form of transaction.

 

(d)  Payment or Exercise.  Payment for the shares of Common Stock to be
purchased upon exercise of an Option may be made in cash (by check) or, if
elected by the Optionee and approved by the Committee, in one or more of the
following methods which must be stated in the Option Agreement (at the date of
grant with respect to any Option granted as an Incentive Stock Option) and
where permitted by law: (i) if the Common Stock has an established market
as described in clause (i) of Section 3(t), through a “same day
sale” arrangement between the Optionee and a broker-dealer that is a member of
the National Association of Securities Dealers, Inc. (an “NASD Dealer”)
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares of Common Stock so purchased to pay for the exercise
price and whereby the NASD Dealer irrevocably commits upon receipt of such
shares of Common Stock to forward the exercise price directly to the Company; (ii) if
the Common Stock has an established market as described in clause (i) of
Section 3(t), through a “margin” commitment from the Optionee and an NASD
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the shares of Common Stock so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
exercise price, and whereby the NASD Dealer irrevocably commits upon receipt of
such shares of Common Stock to forward the exercise price directly to the
Company; or (iii) by surrender for cancellation of Qualifying Shares at
the Fair Market Value per share at the time of exercise (provided that such
surrender does not result in an accounting charge for the Company). No shares
of Common Stock may be issued until full payment of the purchase price therefor
has been made.

 

(e)  Modification, Extension
and Renewal of Options.  The
Committee shall have the power to modify, cancel, extend or renew outstanding
Options and to authorize the grant of new Options and/or Restricted Stock
Awards in substitution therefor (regardless of whether any such action would be
treated as a repricing for financial accounting or other purposes), provided
that (except as permitted by Section 13(a) of the Plan) any such
action may not reprice any outstanding
Option, directly or indirectly,
or replace an Option with another Award or cash with a higher intrinsic value
than the value of the Option at the time of its replacement without the
approval of the stockholders of the Company, and without the written
consent of any affected
Optionee, (i) impair any rights under any Option previously granted to
such Optionee, (ii) cause the Option or the Plan to become subject to Section 409A
of the Code, or (iii) cause any Option to lose its status as “performance-based”
compensation under Section 162(m) of the Code. Any outstanding
Incentive Stock Option that is modified, extended, renewed or otherwise altered
will be treated in accordance with Section 424(h) of the Code.

 

(f)  Privileges of Stock
Ownership.  No Optionee will
have any of the rights of a stockholder with respect to any shares of Common
Stock subject to an Option until such Option is properly exercised and the
purchased shares are issued and delivered to the Optionee, as evidenced by an
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to such date
of such issuance and delivery, except as provided in the Plan.

 

 

9.  STOCK APPRECIATION RIGHTS.

 

(a)  Stock Appreciation Rights.  A Stock Appreciation Right is a right to
receive, upon exercise of the right, shares of Common Stock or their cash
equivalent in an amount equal to the increase in Fair Market Value of the
Common Stock between the grant and exercise dates. The Committee, from time to
time, subject to the terms and provisions of the Plan, may grant to an eligible
Employee, Director or Consultant Stock Appreciation Rights if (i) the
exercise price of the Stock Appreciation Right is not less than the Fair Market
Value of the Common Stock on the grant date of the Award, (ii) the Stock
Appreciation Right will be settled only in shares of Common Stock (unless
settlement in the form of cash would not cause a Stock Appreciation Right or
the Plan to become subject to Section 409A of the Code), and (iii) the
Stock Appreciation Right does not include any feature for the deferral of
compensation other than the time between the Stock Appreciation Right grant and
exercise or any other feature that would cause the Stock Appreciation Right or
the Plan to become subject to Section 409A of the Code. In addition, a
Stock Appreciation Right may be related to an Option, or issued “in tandem”
with an Option, only if such an arrangement would not cause the Stock
Appreciation Right, the Option or the Plan to become subject to Section 409A
of the Code. The terms and conditions of a Stock Appreciation Right shall be
set forth in a Stock Appreciation Right Agreement or may be included in an
Option Agreement (which need not be the same for each Grantee) in such form as
the Committee approves, but which is not inconsistent with the Plan. With
respect to Stock Appreciation Rights that are subject to Section 16 of the
Exchange Act, the Committee shall retain sole discretion (i) to determine
the form in which payment of the Stock Appreciation Right will be made (i.e., cash, securities or any combination
thereof), or (ii) to approve an election by a Grantee to receive cash in
full or partial settlement of Stock Appreciation Rights. The number of shares
reserved for issuance under the Plan shall be reduced only to the extent that
shares of Common Stock are actually issued in connection with the exercise or
settlement of an Award and as provided in Section 9(b)(iii).

 

(b)  Stock Appreciation Right
Related to an Option.  If
permitted pursuant to the conditions and limitations contained in Section 9(a),
a Stock Appreciation Right granted in connection with an Option shall cover the
same shares of Common Stock covered by the Option (or such lesser number of
shares of Common Stock as the Committee may determine) and shall, except as
provided in this Section 9(b), be subject to the same terms and conditions
as the related Option and the following:

 

(i)  Exercise.  A Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and only
to the extent that the related Option is exercisable, and will not be
transferable except to the extent the related Option may be transferable.

 

(ii)  Amount Payable.  Upon the exercise of a Stock Appreciation
Right related to an Option, the Grantee shall be entitled to receive an amount
payable in whole shares of Common Stock determined by multiplying (A) the
excess of the Fair Market Value of a share of Common Stock on the date of
exercise of such Stock Appreciation Right over the Option exercise price of the
Stock Appreciation Right, by (B) the number of shares of Common Stock as
to which such Stock Appreciation Right is being exercised. Notwithstanding the
foregoing, the Committee may limit in any manner the amount payable with
respect to any Stock Appreciation Right by including such a limit in the
applicable Stock Appreciation Right Agreement.

 

(iii)  Treatment of Related
Options and Stock Appreciation Rights Upon Exercise.  Upon the exercise of a Stock Appreciation
Right granted in connection with an Option, the Option shall be canceled to the
extent of the number of shares of Common Stock as to which the Stock
Appreciation Right is exercised, and upon the exercise of an Option granted in
connection with a Stock Appreciation Right, the Stock Appreciation Right shall
be canceled to the extent of the number of shares of Common Stock as to which
the Option is exercised or surrendered. The shares reserved for issuance under
the Plan shall be reduced by the number of shares of Common Stock that were
covered by the Option cancelled in connection with the exercise of the Stock
Appreciation Right.

 

 

(c)  Stock Appreciation Right
Unrelated to an Option.  A
Stock Appreciation Right unrelated to an Option shall cover such number of
shares of Common Stock as the Committee shall determine.

 

(i)  Terms; Duration.  A Stock Appreciation Right unrelated to an
Option shall contain such terms and conditions as to exercisability, vesting
and duration as the Committee shall determine, but in no event shall any such
right have a term of greater than ten (10) years. However, each Stock
Appreciation Right shall be exercisable only during such portion of its term as
the Committee shall determine and, unless provided otherwise by the specific
provisions of the Stock Appreciation Right Agreement, only if the Grantee’s
Continuous Service has not terminated at the time of such exercise.

 

(ii)  Amount Payable.  Upon exercise of a Stock Appreciation Right
unrelated to an Option, the Grantee shall be entitled to receive an amount
payable in whole shares of Common Stock determined by multiplying (A) the
excess of the Fair Market Value of a share of Common Stock on the date of
exercise of such Stock Appreciation Right over the Fair Market Value of a share
of Common Stock on the date the Stock Appreciation Right was granted, by (B) the
number of shares of Common Stock as to which the Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the applicable Stock Appreciation Right Agreement.

 

(iii)  Non-Transferability.  No Stock Appreciation Right unrelated to an
Option shall be transferable by the Grantee otherwise than by will or the laws
of descent and distribution, and such Stock Appreciation Right shall be
exercisable during the lifetime of such Grantee only by the Grantee or his
guardian or legal representative.

 

10.  RESTRICTED STOCK AWARDS.

 

(a)  Restricted Stock Awards.  A Restricted Stock Award is a grant of shares
of Common Stock for such consideration, if any, and subject to such
restrictions on transfer, forfeiture provisions and other terms and conditions
as are established by the Committee. Each Restricted Stock Agreement shall be
in such form and shall contain such terms and conditions as the Committee shall
deem appropriate. The terms and conditions of such Restricted Stock Agreements
may change from time to time, and the terms and conditions of separate
Restricted Stock Agreements need not be identical, but each such Restricted
Stock Agreement shall be subject to the terms and conditions of this Section 10.

 

(b)  Forfeiture Restrictions.  Shares of Common Stock that are the subject
of a Restricted Stock Award shall be subject to restrictions on disposition by
the Grantee and to an obligation of the Grantee to forfeit and surrender the
shares to the Company under certain circumstances (the “Forfeiture Restrictions”).
The Forfeiture Restrictions shall be determined by the Committee in its sole
discretion, and the Committee may provide that the Forfeiture Restrictions
shall lapse on the passage of time, the attainment of one or more performance
targets established by the Committee, or the occurrence of such other event or
events determined to be appropriate by the Committee. The Forfeiture
Restrictions, if any, applicable to a particular Restricted Stock Award (which
may differ from any other such Restricted Stock Award) shall be stated in the
Restricted Stock Agreement.

 

 

(c)  Rights as Stockholder.  At the time any Restricted Stock Award is
granted under the Plan, the Company and the Grantee shall enter into a
Restricted Stock Agreement setting forth each of the matters addressed in this Section 10
and such other matters as the Committee may determine to be appropriate. Shares
of Common Stock awarded pursuant to a Restricted Stock Award shall be
represented by a stock certificate registered in the name of the Grantee of
such Restricted Stock Award or by a book entry account with the Company’s
transfer agent. The Grantee shall have the right to receive dividends with
respect to the shares of Common Stock subject to a Restricted Stock Award, to
vote the shares of Common Stock subject thereto and to enjoy all other
stockholder rights with respect to the shares of Common Stock subject thereto,
except that, unless provided otherwise in the Plan or in the Restricted Stock
Agreement, (i) the Grantee shall not be entitled to delivery of the share
certificate evidencing the shares of Common Stock until the Forfeiture
Restrictions have expired, (ii) the Company or an escrow agent shall
retain custody of the share certificate evidencing the shares of Common Stock
(or such shares shall be held in a book entry account with the Company’s transfer
agent) until the Forfeiture Restrictions expire, (iii) the Grantee may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the
shares of Common Stock until the Forfeiture Restrictions have expired, and (iv) a
breach of the terms and conditions established by the Committee pursuant to the
Restricted Stock Agreement shall cause a forfeiture of the Restricted Stock
Award. At the time of such Award, the Committee may, in its sole discretion,
prescribe additional terms, conditions or restrictions relating to Restricted
Stock Award, including rules pertaining to the termination of the Grantee’s
Continuous Service (by retirement, Disability, death or otherwise) prior to
expiration of the Forfeiture Restrictions. Such additional terms, conditions or
restrictions shall also be set forth in a Restricted Stock Agreement made in
connection with the Restricted Stock Award.

 

(d)  Stock Certificate Delivery and Rights and
Obligations of the Grantee. 
One or more stock certificates representing shares of Common Stock, free
of Forfeiture Restrictions, shall be delivered to the Grantee promptly after,
and only after, the Forfeiture Restrictions have expired and the Grantee has
satisfied all applicable Federal, state and local income and employment tax
withholding requirements. Each Restricted Stock Agreement shall require that (i) the
Grantee, by his or her acceptance of the Restricted Stock Award, shall
irrevocably grant to the Company a power of attorney to transfer any shares so
forfeited to the Company, agrees to execute any documents requested by the
Company in connection with such forfeiture and transfer, and (ii) such
provisions regarding transfers of forfeited shares shall be specifically
performable by the Company in a court of equity or law.

 

(e)  Restriction Period.  The Restriction Period for a Restricted Stock
Award shall commence on the date of grant of the Restricted Stock Award and,
unless otherwise established by the Committee and stated in the Restricted
Stock Award Agreement, shall expire upon satisfaction of the conditions set
forth in the Restricted Stock Agreement pursuant to which the Forfeiture
Restrictions will lapse.

 

(f)  Securities Restrictions.  The Committee may impose other conditions on
any shares of Common Stock subject to a Restricted Stock Award as it may deem
advisable, including (i) restrictions under applicable state or federal
securities laws, and (ii) the requirements of any stock exchange or
national market system upon which shares of Common Stock are then listed or
quoted.

 

(g)  Payment for Restricted Stock.  The Committee shall determine the amount and
form of any payment for shares of Common Stock received pursuant to a
Restricted Stock Award. In the absence of such a determination, the Grantee
shall not be required to make any payment for shares of Common Stock received
pursuant to a Restricted Stock Award, except to the extent otherwise required
by law.

 

 

(h)  Forfeiture of Restricted Stock.  Subject to the provisions of the particular
Restricted Stock Agreement, upon termination of the Grantee’s Continuous
Service during the Restriction Period, the shares of Common Stock subject to
the Restricted Stock Award shall be forfeited by the Grantee. Upon any
forfeiture, all rights of the Grantee with respect to the forfeited shares of
the Common Stock subject to the Restricted Stock Award shall cease and
terminate, without any further obligation on the part of the Company, except
that if so provided in the Restricted Stock Agreement applicable to the
Restricted Stock Award, the Company shall repurchase each of the shares of
Common Stock forfeited for the purchase price per share, if any, paid by the
Grantee. The Committee will have discretion to determine whether the Continuous
Service of a Grantee has terminated and the date on which such Continuous
Service terminates and whether the Grantee’s Continuous Service terminated as a
result of the Disability of the Grantee.

 

(i)  Lapse of Forfeiture Restrictions in Certain Events;
Committee’s Discretion. 
Notwithstanding the provisions of Section 10(h) or any other
provision in the Plan to the contrary, the Committee may, in its discretion and
as of a date determined by the Committee, fully vest any or all Common Stock
awarded to the Grantee pursuant to a Restricted Stock Award, and upon such
vesting, all Forfeiture Restrictions applicable to such Restricted Stock Award
shall lapse or terminate. Any action by the Committee pursuant to this Section 10(i) may
vary among individual Grantees and may vary among the Restricted Stock Awards
held by any individual Grantee. Notwithstanding the preceding provisions of
this Section 10(i), the Committee may not take any action described in
this Section 10(i) with respect to a Restricted Stock Award that has
been granted to a Covered Employee if such Award has been designed to meet the
exception for performance-based compensation under Section 162(m) of
the Code.

 

(j)  Notice of Election Under 83(b).  Each Grantee making an election under Section 83(b) of
the Code shall provide a copy thereof to the Company within thirty
(30) days of the filing of such election with the Internal Revenue
Service.

 

11.  PERFORMANCE AWARDS.

 

(a)  Designation as a Performance Award.  The Committee shall have the right to
designate any Restricted Stock Award as a Performance Award. Performance Awards
may be granted only to Employees.

 

(b)  Performance Awards.  In the case of any Restricted Stock Award to
any person who is or may become a Covered Employee during the Performance
Period or before payment of the Award, the Committee may grant such Award as a
Performance Award that is intended to comply with the requirements of Section 162(m) of
the Code, as determined by the Committee, in the amount and pursuant to the
terms and conditions that the Committee may determine and set forth in the
Restricted Stock Agreement, subject to the provisions of this Section 11.

 

(c)  Performance Period.  Performance Awards will be awarded in
connection with a Performance Period, as determined by the Committee in its
discretion; provided, however, that a Performance Period may be no shorter than
twelve (12) months for any Performance Awards granted to a Covered Employee.

 

(d)  Eligible Grantees.  Prior to the commencement of a Performance
Period, the Committee shall determine the Employees who will be eligible to
receive a Performance Award with respect to that Performance Period; provided
that the Committee may determine the eligibility of any Employee, other than a
Covered Employee, after the commencement of the Performance Period. The
Committee shall provide a Restricted Stock Agreement, as applicable, to each
Grantee who receives a grant of a Performance Award under the Plan as soon as
administratively feasible after such Grantee receives such Award. A Restricted
Stock Agreement for a Performance Award shall specify the applicable
Performance Period, and the Performance Goals, specific performance factors and
targets related to the Performance Goals, award criteria and the targeted
amount of his or her Performance Award, as well as any other applicable terms
of the Performance Award for which the Grantee is eligible.

 

 

(e)  Performance Goals; Specific Performance Targets;
Award Criteria.  Prior to the
commencement of each Performance Period, the Committee shall fix and establish
in writing (i) the Performance Goals that will apply to that Performance
Period with respect to each Performance Award; (ii) with respect to
Performance Goals, the specific performance factors and targets related to each
Grantee and, if achieved, the targeted amount of the Grantee’s Performance
Award; and (iii) subject to Section 11(f) below, the criteria
for computing the amount that will be paid with respect to each level of
attained performance. The Committee shall also set forth the minimum level of
performance, based on objective factors and criteria, that must be attained
during the Performance Period before any Performance Goal is deemed to be
attained and any Performance Award will be earned and become payable, and the
percentage of the Performance Award that will become earned and payable upon
attainment of various levels of performance that equal or exceed the minimum
required level.

 

(f)  Adjustments.

 

(i)            In order to assure the incentive
features of the Plan and to avoid distortion in the operation of the Plan, the
Committee may make adjustments in the Performance Goals, specific performance
factors and targets related to those Performance Goals and award criteria
established by it for any Performance Period under this Section 11(f) whether
before or after the end of the Performance Period to the extent it deems
appropriate in its sole discretion, which shall be conclusive and binding upon
all parties concerned, to compensate for or reflect any changes which may have
occurred during the Performance Period which significantly affect factors that
formed part of the basis upon which such Performance Goals, specific
performance targets related to those Performance Goals and award criteria were
determined. Such changes may include, without limitation, changes in accounting
practices, tax, regulatory or other laws or regulations or economic changes not
in the ordinary course of business cycles. The Committee also reserves the
right to adjust Performance Awards to insulate them from the effects of
unanticipated, extraordinary, major business developments, such as a special
asset writedown, sale of a division and other unusual events. The determination
of financial performance achieved for any Performance Period may, but need not
be, adjusted by the Committee to reflect such extraordinary, major business
developments. Any such determination shall not be affected by subsequent
adjustments or restatements.

 

(ii)           In the event of any change in
outstanding shares of the Company by reason of any stock dividend or split,
recapitalization, merger, consolidation, combination or exchange of shares or
other similar corporate change, the Committee shall make such adjustments, if
any, that it deems appropriate in the Performance Goals, specific performance
factors and targets related to those Performance Goals and award criteria
established by it under this Section 11(f) for any Performance Period
not then completed. Any and all such adjustments shall be conclusive and
binding upon all parties concerned.

 

(iii)          Notwithstanding the foregoing
provisions of this Section 11(f), the Committee shall have no discretion
to modify or waive the Performance Goals or conditions to the grant or vesting
of a Performance Award or to increase the amount payable to any Grantee that
would otherwise be due upon attainment of the Performance Goals, unless such
Award is not intended to qualify as qualified performance-based compensation
under Section 162(m) of the Code and the relevant Restricted Stock
Agreement provides for such discretion.

 

(g)  Section 162(m) of the Code.  If the Committee intends for a Performance
Award to be granted and administered in a manner designed to preserve the
deductibility of the compensation resulting from such Award in accordance with Section 162(m) of
the Code, it is the intent of the Company and the Committee that this Section 11
be interpreted in a manner that satisfies the applicable requirements of Section 162(m)(4)(C) of
the Code, and that the Plan be operated so that the Company may take a full tax
deduction for such Performance Awards. If any provision of the Plan or any
Performance Award would otherwise frustrate or conflict with this intent, that
provision shall be interpreted and deemed amended so as to avoid this conflict
and such terms or provisions shall be deemed inoperative to the extent
necessary to avoid the conflict with the requirements of Section 162(m) of
the Code without invalidating the remaining provisions hereof. Without limiting
the generality of the preceding provisions of this Section 11(g), the
Committee may apply any restrictions it deems appropriate to the payment of
dividends declared with respect to shares of Common Stock covered by a
Performance Award, such that the dividends and/or the shares of Common Stock
maintain eligibility for the “performance-compensation exception” under Section 162(m) of
the Code. In the event that any dividend constitutes a derivative security or
an equity security pursuant to the rules under Section 16 of the
Exchange Act, if applicable, such dividend shall be subject to a vesting period
equal to the remaining vesting period of the shares of Common Stock subject to
the Performance Award with respect to which the dividend is paid.

 

 

12.  GENERAL PROVISIONS REGARDING AWARDS.

 

(a)  Form of Award Agreement.  Each Award granted under the Plan shall be
evidenced by a written Award Agreement in such form (which need not be the same
for each Grantee) as the Committee from time to time approves, but which is not
inconsistent with the Plan, including any provisions that may be necessary to
assure that any Option that is intended to be an Incentive Stock Option will
comply with Section 422 of the Code.

 

(b)  Awards Criteria.  In determining the amount and value of Awards
to be granted, the Committee may take into account the responsibility level,
performance, potential, other Awards and such other considerations with respect
to a Grantee as it deems appropriate. The terms of an Award Agreement may
provide that the amount payable as an Award may be adjusted for dividends or
dividend equivalent.

 

(c)  Date of Grant.  The date of grant of an Award will be the
date specified by the Committee as the effective date of the grant of an Award
or, if the Committee does not so specify, will be the date on which the
Committee makes the determination to grant such Award. The Award Agreement
evidencing the Award will be delivered to the Grantee with a copy of the Plan
and other relevant Award documents within a reasonable time after the date of
grant.

 

(d)  Stock Price.  The exercise price or other measurement of
stock value relative to any Award shall be the price determined by the
Committee (but, if required by applicable law, shall be not less than the par
value of the shares of Common Stock on the date of grant of the Award). The exercise
price of any Option shall not be less than 100% of the Fair Market Value of the
shares of Common Stock for the date of grant of the Option; provided, however,
the exercise price of any Option granted to a Ten Percent Stockholder shall not
be less than 110% of the Fair Market Value of the shares of Common Stock for
the date of grant of the Option.

 

(e)  Period of Award.  Awards shall be exercisable or payable within
the time or times or upon the event or events determined by the Committee and
set forth in the Award Agreement. Unless otherwise provided in an Award
Agreement, Awards other than Restricted Stock Awards shall terminate on (and no
longer be exercisable or payable after) the earlier of: (i) ten (10) years
from the date of grant of the Award; (ii) for an Incentive Stock Option
granted to a Ten Percent Stockholder, five (5) years from the date of
grant of the Option; (iii) three (3) months after the Grantee is no
longer serving in any capacity as an Employee, Consultant or Director of the
Company for a reason other than the death or Disability of the Grantee; (iv) six
(6) months after death of the Grantee; or (v) six (6) months
after Disability of the Grantee.

 

(f)  Transferability of Awards.  Awards granted under the Plan, and any
interest therein, shall not be transferable or assignable by the Grantee, and
may not be made subject to execution, attachment or similar process, otherwise
than by will or by the laws of descent and distribution, and shall be
exercisable or payable during the lifetime of the Grantee only by the Grantee;
provided, that the Grantee may, however, designate persons who or which may
exercise or receive his or her Awards following the Grantee’s death.
Notwithstanding the preceding sentence, Non-Qualified Stock Options may be transferred
to such family members, family member trusts, family limited partnerships and
other family member entities as the Committee, in its sole discretion, may
approve prior to any such transfer. No such transfer will be approved by the
Committee if the Common Stock issuable under such transferred Award would not
be eligible to be registered on Form S-8 promulgated under the Securities
Act.

 

(g)  Acquisitions and Other Transactions.  The Committee may, from time to time, cause
the Company to assume outstanding awards granted by another entity, whether in
connection with an acquisition of such other entity or otherwise, by either (i) granting
an Award under the Plan in replacement of or in substitution for the awards
assumed by the Company, or (ii) treating the assumed award as if it had
been granted under the Plan if the terms of such assumed award could be applied
to an Award granted under the Plan. Such assumption shall be permissible if the
holder of the assumed award would have been eligible to be granted an Award
hereunder if the other entity had applied the rules of this Plan to such
grant.

 

 

(h)  Payment. 
Payment of an Award (i) may be made in cash, Common Stock or a
combination thereof, as determined by the Committee in its sole discretion, (ii) shall
be made in a lump sum or in installments as prescribed by the Committee in its
sole discretion, and (iii) to the extent applicable, shall be based on the
Fair Market Value of the Common Stock for the payment or exercise date. Payment
of the amount determined under Section 9(b) or 9(c) shall be
made solely in whole shares of Common Stock in a number determined by their
Fair Market Value on the date of exercise of the Stock Appreciation Right. If
the amount payable results in a fractional share of Common Stock, the amount
payable for the fractional share will be withheld pursuant to Section 12(j) hereof
by the Company in connection with satisfying its tax withholding obligations
with respect to the exercise of the Stock Appreciation Right. Notwithstanding
the foregoing provisions of this Section 12(h), payment of the amount
determined under Section 9(b) or 9(c) in connection with the
exercise of a Stock Appreciation Right may be paid in cash, if such form of
payment would not cause the Stock Appreciation Right or the Plan to be subject
to Section 409A of the Code.

 

(i)  Notice. 
If an Award involves an exercise, it may be exercised only by delivery
to the Company of a written exercise agreement approved by the Committee (which
need not be the same for each Grantee), stating the number of shares of Common
Stock being purchased or with respect to which an Award is being exercised, the
method of payment, and such other matters as may be deemed appropriate by the
Company in connection with the issuance of shares upon exercise of the Award,
together with payment in full of any exercise price for any shares of Common
Stock being purchased. Such exercise agreement may be part of a Grantee’s Award
Agreement.

 

(j)  Withholding Taxes.  The Committee may establish such rules and
procedures as it considers desirable in order to satisfy any obligation of the
Company to withhold the statutory prescribed minimum amount of Federal, state
or local income taxes or other taxes with respect to the grant, exercise or
payment of any Award under the Plan, including procedures for a Grantee to have
shares of Common Stock withheld from the total number of shares of Common Stock
to be issued or purchased upon grant or exercise of an Award. The shares of
Common Stock reserved for issuance under the Plan shall be reduced by the
number of shares of Common Stock withheld for the payment of taxes pursuant to
this Section 12(j). Prior to issuance of any shares of Common Stock or, if
applicable, payment of cash, upon exercise of an Award, the Grantee shall pay
or make adequate provision acceptable to the Committee for the satisfaction of
the statutory minimum prescribed amount of any Federal, state or local income
or other tax withholding obligations of the Company, if applicable.

 

(k)  Exercise of Award Following Termination of
Continuous Service.

 

(i)            An Award may not be exercised after
the expiration date of such Award set forth in the Award Agreement and may be
exercised following the termination of a Grantee’s Continuous Service only to
the extent provided in the Award Agreement.

 

(ii)           Where the Award Agreement permits a
Grantee to exercise an Award following the termination of the Grantee’s
Continuous Service for a specified period, the Award shall terminate to the
extent not exercised on the last day of the specified period or the last day of
the original term of the Award, whichever occurs first.

 

(iii)          Any Option designated as an Incentive
Stock Option, to the extent not exercised within the time permitted by law for
the exercise of Incentive Stock Options following the termination of an
Optionee’s Continuous Service, shall convert automatically to a Non-Qualified
Stock Option and thereafter shall be exercisable as such to the extent
exercisable by its terms for the period specified in the Option Agreement.

 

(iv)          The Committee shall have discretion to
determine whether the Continuous Service of a Grantee has terminated and the
effective date on which such Continuous Service terminates and whether the
Grantee’s Continuous Service terminated as a result of the Disability of the
Grantee.

 

 

(l)  Limitations on Exercise.

 

(i)            The Committee may specify a
reasonable minimum number of shares of Common Stock or a percentage of the
shares subject to an Award that may be purchased on any exercise of an Award;
provided, that such minimum number will not prevent a Grantee from exercising
the full number of shares of Common Stock as to which the Award is then
exercisable.

 

(ii)           The obligation of the Company to
issue any shares of Common Stock pursuant to the exercise of any Award or
otherwise make payments hereunder shall be subject to the condition that such
exercise and the issuance and delivery of such shares and other actions
pursuant thereto comply with Section 409A of the Code, the Securities Act,
all applicable state securities and other laws and the requirements of any
stock exchange or national market system upon which the shares of Common Stock
may then be listed or quoted, as in effect on the date of exercise. The Company
shall be under no obligation to register the shares of Common Stock with the
Securities and Exchange Commission or to effect compliance with the
registration, qualification or listing requirements of any state securities
laws or stock exchange or national market system, and the Company shall have no
liability for any inability or failure to do so.

 

(iii)          As a condition to the exercise of an
Award, the Company may require the person exercising such Award to represent
and warrant at the time of any such exercise that the shares of Common Stock
are being purchased only for investment and without any present intention to
sell or distribute such shares of Common Stock if, in the opinion of counsel
for the Company, such a representation is required by any securities or other
applicable laws.

 

(m)  Privileges of Stock Ownership.  Except as provided in the Plan with respect
to Restricted Stock Awards, no Grantee will have any of the rights of a
stockholder with respect to any shares of Common Stock subject to an Award
until such Award is properly exercised and the purchased or awarded shares of
Common Stock are issued and delivered to the Grantee, as evidenced by an
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to such date
of issuance and delivery of shares of Common Stock, except as provided in the
Plan.

 

(n)  Breach; Additional Terms.  A breach of the terms and conditions of this
Plan or established by the Committee pursuant to the Award Agreement shall
cause a forfeiture of the Award. At the time of such Award, the Committee may,
in its sole discretion, prescribe additional terms, conditions or restrictions
relating to the Award, including provisions pertaining to the termination of
the Grantee’s employment (by retirement, Disability, death or otherwise) prior
to expiration of the Forfeiture Restrictions or other vesting provisions. Such
additional terms, conditions or restrictions shall also be set forth in an
Award Agreement made in connection with the Award.

 

13.  ADJUSTMENT UPON CHANGES IN CAPITALIZATION AND
CORPORATE EVENTS.

 

(a)  Capital Adjustments.  The number of shares of Common Stock (i) covered
by each outstanding Award granted under the Plan, the exercise, target or
purchase price of each outstanding Award, and any other terms of the Award that
the Committee determines requires adjustment, and (ii) available for
issuance under Sections 5 and 7 shall be adjusted to reflect, as deemed
appropriate by the Committee, any increase or decrease in the number of shares
of Common Stock resulting from a stock dividend, stock split, reverse stock
split, combination, reclassification or similar change in the capital structure
of the Company without receipt of consideration, subject to any required action
by the Board or the stockholders of the Company and compliance with applicable
securities laws; provided, however, that the exercise, target or purchase price
may not be decreased to below the par value, if any, for the shares of Common
Stock as adjusted pursuant to this Section 13(a). Except as the Committee
determines, no issuance by the Company of shares of capital stock of any class,
or securities convertible into shares of capital stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Award. Notwithstanding
the foregoing provisions of this Section 13(a), no adjustment may be made
by the Committee with respect to an outstanding Award that would cause such
Award and/or the Plan to become subject to Section 409A of the Code.

 

(b)  Dissolution or Liquidation.  The Committee shall notify the Grantee at
least twenty (20) days prior to any proposed dissolution or liquidation of
the Company. Unless specifically provided otherwise in an individual Award or
Award Agreement or in a then-effective written employment agreement between the
Grantee and the Company or an Affiliate, to the extent that an Award has not
been previously exercised, or the Forfeiture Restrictions have not lapsed, any
such Award that is an Option or Stock Appreciation Right shall expire, and any
such Award that is a Restricted Stock Award shall be forfeited, and the shares
of Common Stock subject to such Award shall be returned to the Company, in each
case, immediately prior to consummation of such dissolution or liquidation, and
such Award shall terminate immediately prior to consummation of such
dissolution or liquidation.

 

                (c)  Change in
Control.  Unless specifically
provided otherwise with respect to Change in Control events in an individual
Award or Award Agreement or in a then-effective written employment agreement
between the Grantee and the Company or an Affiliate, if, during the term of the
Plan, a Change in Control occurs, the surviving entity or purchaser described
in Section 3(f), the “Purchaser,” shall either assume the obligations of
the Company under the outstanding Awards or convert the outstanding Awards into
awards of at least equal value as to capital stock of the Purchaser. In the
event such Purchaser refuses to assume or substitute Awards pursuant to a
Change in Control, each Award which is at the time outstanding under the Plan
shall (i) except as provided otherwise in an individual Award or Award
Agreement, automatically become, subject to all other terms of the Award or
Award Agreement, fully vested and exercisable or payable, as appropriate, and
be released from any repurchase or forfeiture provisions, immediately prior to
the specified effective date of such Change in Control, for all of the shares
of Common Stock at the time represented by such Award, (ii) the Forfeiture
Restrictions applicable to all outstanding Restricted Stock Awards shall lapse
and shares of Common Stock subject to such Restricted Stock Awards shall be
released from escrow (or transferred from book entry with the Company’s
transfer agent, if applicable), and delivered (subject to Grantee’s
satisfaction of the requirements of Section 12(j)) to the Grantees of the
Awards free of any Forfeiture Restriction, (iii) all other Awards shall
become fully vested and payment thereof shall be accelerated using, if
applicable, the then-current Fair Market Value to measure any payment that is based
on the value of the Common Stock or using such higher amount as the Committee
may determine to be more reflective of the actual value of such stock, and (iv) notwithstanding
any contrary terms in the Award or Award Agreement, expire on a date at least
twenty (20) days after the Committee gives written notice to Grantees
specifying the terms and conditions of the acceleration of vesting of their
Awards and, if applicable, the remaining period to exercise their Options.

 

 

To the extent that a Grantee
exercises an Award before or on the effective date of the Change in Control, (i) the
Company shall issue all Common Stock purchased or issuable by exercise of that
Award (subject to the Grantee’s satisfaction of the requirements of Section 12(j)),
and those shares of Common Stock shall be treated as issued and outstanding for
purposes of the Change in Control, and (ii) with respect to a Stock
Appreciation Right that is to be settled in the form of a cash payment, the
Company shall make such payment to the Grantee (subject to Grantee’s
satisfaction of the requirements of Section 12(j)). Upon a Change in
Control, if the outstanding Awards are not assumed or substituted by the
Purchaser, the Plan shall terminate and any unexercised Awards outstanding
under the Plan at that date shall terminate as of the expiration of the period
specified in the notice to be provided in the immediately preceding paragraph.

 

14.  STOCKHOLDER APPROVAL.  The Company shall obtain the approval of the
Plan by the Company’s stockholders to the extent required to satisfy
Sections 162(m) or 422 of the Code or to satisfy or comply with any
applicable laws or the rules of any stock exchange or national market
system on which the Common Stock may be listed or quoted. No Award that is
granted as a result of any increase in the number of shares of Common Stock
authorized to be issued under the Plan may be exercised or forfeiture
restrictions lapse prior to the time such increase has been approved by the
stockholders of the Company. No Award shall be made hereunder unless and until
such stockholder approval of the Plan is obtained.

 

15.  ADMINISTRATION.  The Plan shall be administered by the
Committee. The Committee shall interpret the Plan and any Awards granted
pursuant to the Plan and shall prescribe such rules and regulations in
connection with the operation of the Plan as it determines to be advisable for
the administration of the Plan. The Committee may rescind and amend its rules and
regulations from time to time. The interpretation by the Committee of any of
the provisions of the Plan or any Award granted under the Plan shall be final
and binding upon the Company and all persons having an interest in any Award or
any shares of Common Stock purchased or other payments received pursuant to an Award.
Notwithstanding the authority hereby delegated to the Committee to grant Awards
to Employees, Directors and Consultants under the Plan, the Board shall have
full authority, subject to the express provisions of the Plan, to grant Awards
to Employees, Directors and Consultants under the Plan, to interpret the Plan,
to provide, modify and rescind rules and regulations relating to the Plan,
to determine the terms and provision of Awards granted to Employees,
Consultants and Directors under the Plan and to make all other determinations
and perform such actions as the Board deems necessary or advisable to
administer the Plan. No member of the Committee or the Board shall be liable
for any action taken or determination made in good faith with respect to the Plan
or any Award granted hereunder.

 

16.  EFFECT OF PLAN.  Neither the adoption of the Plan nor any
action of the Board or the Committee shall be deemed to give any Employee,
Director or Consultant any right to be granted an Award or any other rights
except as may be evidenced by the Award Agreement, or any amendment thereto,
duly authorized by the Committee and executed on behalf of the Company, and
then only to the extent and on the terms and conditions expressly set forth
therein. The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right of the Board, the Committee or the stockholders of
the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its
business, any merger or consolidation or other transaction involving the
Company, any issue of bonds, debentures, or shares of preferred stock ranking
prior to or affecting the Common Stock or the rights thereof, the dissolution
or liquidation of the Company or any sale or transfer of all or any part of the
Company’s assets or business, or any other corporate act or proceeding by or
for the Company. Nothing contained in the Plan or in any Award Agreement or in
other related documents shall confer upon any Employee, Director or Consultant
any right with respect to such person’s Continuous Service or interfere or
affect in any way with the right of the Company or an Affiliate to terminate
such person’s Continuous Service at any time, with or without cause.

 

17.  NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS.  Except as specifically provided in a
retirement or other benefit plan of the Company or an Affiliate, Awards shall
not be deemed compensation for purposes of computing benefits or contributions
under any retirement plan of the Company or an Affiliate, and shall not affect
any benefits under any other benefit plan of any kind or any benefit plan
subsequently instituted under which the availability or amount of benefits is
related to level of compensation. The Plan is not a “Retirement Plan” or “Welfare
Plan” under the Employee Retirement Income Security Act of 1974, as amended.

 

18.  AMENDMENT OR TERMINATION OF PLAN.  The Board in its discretion may, at any time
or from time to time after the date of adoption of the Plan, terminate or amend
the Plan in any respect, including amendment of any form of Award Agreement,
exercise agreement, or instrument to be executed pursuant to the Plan;
provided, however, to the extent necessary to comply with the Code, including
Sections 162(m) and 422 of the Code, other applicable laws, or the
applicable requirements of any stock exchange or national market system, the
Company shall obtain stockholder approval of any Plan amendment in such manner
and to such a degree as required. No Award may be granted after termination of
the Plan. Any amendment or termination of the Plan shall not affect Awards
previously granted, and such Awards shall otherwise remain in full force and
effect as if the Plan had not been amended or terminated, unless mutually
agreed otherwise in a writing (including an Award Agreement) signed by the
Grantee and the Company.

 

 

19.  EFFECTIVE DATE AND TERM OF PLAN.  The Plan shall become effective as of the
Effective Date, which is the date the Plan was approved by the Company’s
stockholders. The Plan shall continue in effect for a term of ten (10) years
from the Effective Date, and shall terminate on the day before the tenth
anniversary of the Effective Date, unless sooner terminated by action of the
Board.

 

20.  SEVERABILITY AND REFORMATION.  The Company intends all provisions of the
Plan to be enforced to the fullest extent permitted by law. Accordingly, should
a court of competent jurisdiction determine that the scope of any provision of
the Plan is too broad to be enforced as written, the court should reform the
provision to such narrower scope as it determines to be enforceable. If,
however, any provision of the Plan is held to be wholly illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable and severed, and the Plan shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions of the Plan shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance.

 

21.  GOVERNING LAW.  The Plan and all issues or matters relating
to the Plan shall be governed by, determined and enforced under, and construed
and interpreted in accordance with the laws of the State of Texas.

 

22.  INTERPRETIVE MATTERS.  Whenever required by the context, pronouns
and any variation thereof shall be deemed to refer to the masculine, feminine,
or neuter, and the singular shall include the plural, and visa versa. The term “include”
or “including” does not denote or imply any limitation. The term “business day”
means any Monday through Friday other than such a day on which banks are
authorized to be closed in the State of Texas. The captions and heading used in
the Plan are inserted for convenience and shall not be deemed a part of the
Plan for construction or interpretation.

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