Document:

EX-10.2

Exhibit 10.2

JOINT OWNERSHIP AGREEMENT

     THIS JOINT OWNERSHIP AGREEMENT (this “Agreement”), entered into this 15th day of
July, 2009, by and between Seminole Gas Company, L.L.C. (“Seminole”) and NGAS Gathering II, LLC, a
Kentucky limited liability company (“NNG”), also hereinafter referred to individually or
collectively as “Owner” or “Owners” or “Party” or “Parties”, respectively.

RECITALS:

     WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of May 11, 2009, by and
among Daugherty Petroleum, Inc. (“DPI”), NGAS Gathering, L.L.C. (“Old NGAS”), NNG, and Seminole (as
the same was or may be amended, the “APA” or “Asset Purchase Agreement”): (i) Seminole acquired
from DPI and Old NGAS as undivided 50% interest in the Gathering System (as defined in the APA) and
certain other interests described in the APA as the “Purchased Assets”; (ii) DPI and Old NGAS
contributed and conveyed the remaining undivided 50% interest in and to such interests to NNG
(referred to in the APA as the “Retained Gathering Assets”);

     WHEREAS, the Parties desire to set forth the terms and provisions of their agreement to
jointly own, operate, maintain, extend or expand the Gathering System (as hereinafter defined), and
the other Purchased Assets and Retained Gathering Assets, and address the same with regard to
certain other interests and properties, acquired or developed in accordance with the terms hereof;

     NOW THEREFORE, in consideration of the mutual terms, conditions, and covenants 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 Defined Terms. As used in this Agreement, the following words and terms shall have the meanings here ascribed
to them:

     “AFE” (or “Authority for Expenditure”) shall mean an Authority for Expenditure prepared by the
Manager or any Owner for the purpose of estimating the costs to be incurred in accordance with this
Agreement.

     “Affiliate” means, as to any Person, any other Person or entity that, directly or indirectly
through one or more intermediaries, controls, is controlled by or is under common control with such
Person, whether by contract, voting power or otherwise. As used in this definition, the term
“control,” including the correlative terms “controlling,” “controlled by” and “under common control
with,” shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through ownership of voting
securities, by contract or otherwise.

     “Applicable Law” means any applicable law, statute, rule, regulation, ordinance order or other
pronouncements, actions or requirements of any Governmental Authorities, including, without
limitation, Environmental Laws or those relating to safety or welfare of humans or the environment.

     “Approval Budget” means with regard to the Gathering System, any Budget approved (or deemed
approved) by the Committee in accordance with Section 2.3(d).

     “Asset Purchase Agreement” or “APA” shall have the meaning set forth in the Recitals.

     “Bankruptcy” means, with respect to any Person, if such Person (i) makes an assignment for the
benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt
or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency
proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v)
files an answer or other pleading admitting or failing to contest the material allegations of a
petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial
part of its properties, or (vii) if one hundred twenty (120) days after the commencement of any
proceeding against the Person seeking reorganization, arrangement,

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composition, readjustment, liquidation or similar relief under any statute, law or regulation,
if the proceeding has not been dismissed, or if within ninety (90) days after the appointment
without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person
or of all or any substantial part of its properties, the appointment is not vacated or stayed, or
within ninety (90) days after the expiration of any such stay, the appointment is not vacated.

     “Budgets” (or singular, a “Budget”) shall mean any Capital Budget or Operating Budget
contemplated under this Agreement, including, without limitation, the Initial Approved Budget and
any subsequent Approved Budget.

     “Calendar Year” means a year beginning on the first day of January and ending on the last day
of December.

     “Capital Budget” means an annual budget covering all Capital Projects which Manager deems it
advisable and proposes to the Committee, with regard to the Gathering System.

     “Capital Project” means a capital project or Extension Proposal or more for the purpose of
expanding the Gathering System (in a manner that would increase the capacity of the Gathering
System and allow the Gathering System to gather greater volumes of gas than the current Gathering
System would gather) or extending the Gathering System (whether through acquisition of additional
properties or constructing and developing additional natural gas pipeline systems to be connected
to the Gathering System, wherein the expanded or extended portions, if approved by the Committee
and funded by the Owner’s in accordance with their Ownership Interests, would be owned by both
Owners in accordance with their Ownership Interests; provided, however, that “Capital Projects”
shall not include any costs relating to Emergencies, nor to operating costs, to projects relating
to the repair or replacement of all or a portion of the Gathering System (insofar as replacement
involves comparable quality and capacity).

     “Change of Control” means when applied to an entity (“Private Entity”), such time as any of
the following occur after the date of this Agreement: (i) a tender offer or exchange offer is made
and consummated for the ownership of 50 percent (50%) or more of the outstanding voting securities
of the Private Entity, (ii) the Private Entity is merged or consolidated with another entity
(“Constituent Party”) and as a result of such merger or consolidation 50 percent (50%) or less of
the outstanding voting securities of the surviving or resulting entity is owned directly or
indirectly in the aggregate by the Persons formerly owning such voting securities of the Private
Entity or their Affiliates, other than Affiliates of the Constituent Party, as the same existed
immediately prior to such merger or consolidation, (iii) the Private Entity sells or otherwise
transfers substantially all of its assets to another entity which is not wholly-owned, directly or
indirectly, by the Private Entity, one of its Subsidiaries or its Parent, (iv) a Person (which is
not wholly-owned, directly or indirectly, by such Person or one of its Subsidiaries or its Parent),
within the meaning of section 3(a)(9) or of section 13(d)(3) of the Exchange Act, acquires 50
percent (50%) or more of the outstanding voting securities of the Private Entity (whether directly,
indirectly, beneficially or of record) or (v) a distribution or sale of voting securities of the
Private Entity is consummated and as a result of such distribution 50 percent (50%) or less of the
outstanding voting securities of the Private Entity is owned directly or indirectly in the
aggregate by the former stockholder(s) of the Private Entity or their Affiliates.

     “Committee” is defined in Section 2.3(a) hereto.

     “Contract Operating Agreement” is defined in Section 3.1(a).

     “Contract Operator” shall mean the Initial Contract Operator, and any successor to the Initial
Contract Operator.

     “Defaulting Owner” is defined in Section 6.4.

     “Direct Parent” means, with respect to an Owner, the Person that directly owns or holds the
limited liability company interests, membership interests or other equity interests of such Owner,
but shall not include any Affiliates, who may own or control such Person or who may indirectly own
such Owner indirectly by virtues of its direct or indirect ownership of such Person.

     “DPI” means Daugherty Petroleum, Inc., a Kentucky corporation.

     “DPI Contract Operating Agreement” is defined in Section 3.1.

     “Emergency” means a sudden or unexpected event which causes, or creates an imminent risk of
causing, material damage to the Gathering System, or imminent injury, illness or death to
individuals and is of such a nature that responding to the event cannot, in the good faith opinion
of the Manager, await the decision of the Committee.

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     “Environmental Laws” means any and all local, state or federal laws, rules, regulations,
orders, or judgments relating to the prevention of pollution, the preservation and restoration of
environmental quality, or the protection of human health, wildlife or environmentally sensitive
areas, the remediation of contamination or the handling, transportation, disposal or release into
the environment of Hazardous Materials, including, without limitation, those arising under or by
virtue of any lease, contract, agreement, document, permit, applicable statute or rule or
regulation or order of any governmental authority, specifically including, without limitation, any
governmental request or requirement to take any clean-up or other action with respect to any of the
Gathering System or any Solely Owned Segments or premises, including hazardous waste cleanup costs
under the Solid Waste Disposal Act, 42 U.S.C. 6901, et seq., the Resource Conservation and Recovery
Act of 1976 (RCRA), 42 U.S.C. 6901, et seq., the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA), 42 U.S.C. 9601, et seq., the Clean Air Act, the Federal Water Pollution
Control Act, the Toxic Substances Act, the Oil Pollution Act of 1990.

     “Extension Proposal” is defined in Section 2.2(a).

     “Event of Force Majeure” is defined in Section 10.1(a).

     “FERC” means the Federal Energy Regulatory Commission.

     “Gathering System” shall mean the (i) Gathering System, as defined in the APA, including,
without limitation, those interests and properties described in Schedule A, Schedule
B, Schedule F, Schedule G, Exhibit G and Exhibit O attached to
the APA, together with any modifications, alterations, replacements, extensions or expansions of
such Gathering System approved by the Parties in accordance with this Agreement; provided, however,
that the term “Gathering System” shall not include any Solely Owned Segments or NNG SOS Segments or
any modifications, alterations, replacements, extensions or expansions of such Solely Owned
Segments or NNG SOS Segments.

     “Governmental Authorities” means any court, government (federal, state, local or foreign),
department, political subdivision, commission, board, bureau, agency, official or other regulatory,
administrative or governmental authority, including but not limited to the FERC, the Federal Trade
Commission, the Securities and Exchange Commission, any state public service or public utility or
similar commission, any other governmental, quasi-governmental or nongovernmental body
administering, regulating or having general oversight over natural gas, or other markets or
transmission systems.

     “Governing Documents” means, with respect to an entity, (a) in the case of a corporation, the
applicable articles of incorporation, by-laws, or charter documents, of such corporation, (b) in
the case of a limited liability company, the applicable certificate of formation, limited liability
company agreement, operating agreement, or similar agreement for such company, (c) in the case of a
partnership, the applicable certificate of limited partnership, partnership agreement or limited
partnership agreement, as the case may be, or (d) any other instrument, document or agreement
relating to the formation, ownership, management, voting rights, or operation of such entity.

     “Hazardous Materials” means any substance or material that is designated, classified,
characterized or regulated as a “hazardous substance”, “hazardous waste”, “hazardous material”,
“toxic substance”, “pollutant” or “contaminant” under Environmental Laws.

     “Initial Contract Operator” is defined in Section 3.1(a).

     “IRR” means shall be the cumulative internal rate of return determined for an Owner or an SOS
Owner, as the case may be, as of the applicable IRR Calculation Date to determine whether the
following annually compounded rate of return which results in the following amount having a net
present value equal to zero: (i) first, determine the date and amount of all IRR Funded Capital
made by such Owner or SOS Owner hereunder on or prior to the applicable IRR Calculation Date; (ii)
second, determine the date and amount of all payments to such Owner or SOS Owner of all IRR Paid
Proceeds received on or prior to such IRR Calculation Date; then (iii) apply the IRR Specified
Discount Rate to determine whether an IRR has been met; with such IRR, using the IRR Specified
Discount Rate, being deemed met, as of an applicable IRR Calculation Date, if and when the present
value (calculated on a pre-tax, cash-on-cash, un-levered basis) of the aggregate IRR Funded
Capital, minus the aggregate IRR Paid Proceeds equals zero (0). An example of an IRR calculation
is set forth on Exhibit D attached hereto.

     “IRR Calculation Date” means as of 11:59 p.m., Eastern Time, on December 31 of each Calendar
Year during the term of this Agreement.

     “IRR Default Funding Date” means (i) with respect to any IRR Funded Capital in respect of the
Gathering System the first date that a Non-Defaulting Owner paid or funded IRR Funded Capital
relative to the Gathering System and for which an IRR calculation will be made, and (ii) with
respect to any IRR Funded Capital in respect of

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a Solely Owned Segment, the first date that a Non-Defaulting Owner (in such case, a
non-defaulting SOS Owner) paid or funded IRR Funded Capital relative to the Solely Owned Segment
and for which an IRR calculation will be made.

     “IRR Funded Capital” means (i) with regard to the Gathering System, the term “IRR Funded
Capital” means the aggregate amount that a Non-Defaulting Owner paid on behalf of a Defaulting
Owner under the terms of this Agreement relating to the Gathering System or otherwise to the
ownership, use, expansion, extension, operation, maintenance, repair, replacement, marketing,
abandonment or other disposition of the Gathering System, whether required under Applicable Law,
under contract, under this Agreement or otherwise, including, without limitation, amounts that a
Non-Defaulting Owner may pay but for which the Defaulting Owner fails to reimburse the
Non-Defaulting Owner as contemplated herein (whether paid under the SES Contract Operating
Agreement, to Governmental Authorities or to Third Parties), and any internal and personnel costs
or expenses incurred by the Manager or its Affiliates (assuming the Manager is not the
Non-Defaulting Owner) (and (ii) with regard to a Solely Owned Segment, all costs, expenses, taxes,
assessments, liabilities of any kind whatsoever, paid by an SOS Owner relating to such Solely Owned
Segment, including, without limitation, any costs, expenses taxes, assessments, or liabilities
relating to acquisition, construction, installation, ownership, use, expansion, extension,
operation, maintenance, repair, replacement, marketing, abandonment or other disposition of the
Solely Owned Segment, whether required under Applicable Law, under contract, under this Agreement
or otherwise, including, without limitation, any internal and personnel costs or expenses incurred
by the Manager or its Affiliates (assuming the Manager is the Non-Defaulting Owner).

     “IRR Paid Proceeds” means (i) with regard to the Gathering System: any payments/fees received
by Manager under the SES Gathering Agreement that are allocable to Ownership Interest of the
Non-Defaulting Owner attributable to periods from and after the applicable IRR Default Funding
Date, and (ii) with regard to a Solely Owned Segment: any payments received by the SOS Owner
thereof under the SOS SES Gathering Agreement (to the extent a Solely Owned Segment relates to an
expansion of the capacity of the then existing Gathering System (as opposed to the IRR Funded
Capital for repair, replacement, maintenance, operation, or other costs relative to the Gathering
System) and if a separate SOS SES Gathering Agreement is not warranted or practicable, then the
IRR Paid Proceeds shall be deemed, as much as is practicable, to include the payments/fees received
under the SES Gathering Agreement attributable to the incremental expansion).

     “IRR Specified Discount Rate” means the per annum discount rate compounded quarterly,
expressed as a percentage and applied on a pre-tax, cash-on-cash, and un-levered basis.

     “Manager” is defined in Section 3.1(a).

     “Major Decisions” is defined in Section 2.3(d).

     “Master Netting Agreement” shall have the meaning assigned to such term in the Asset Purchase
Agreement.

     “NAESB Purchase Agreement” shall have the meaning attributed to it in the Asset Purchase
Agreement.

     “Net Profits” means, with respect to a Solely Owned Segment, the excess, if any (as calculated
in good faith by the SOS Owners, each as of 11:59 p.m. Eastern Time, on December 31 with respect to
such Calendar Year), following the Net Profits Trigger Date of the applicable Net Profits Proceeds
over the applicable Net Profits Costs attributable to such Solely Owned Segment.

     “Net Profits Costs” means, with respect to a Solely Owned Segment, all costs, expenses, taxes,
assessments, and liabilities of any kind whatsoever, paid by an SOS Owner in respect of such Solely
Owned Segment, including, without limitation, any costs, expenses taxes, assessments, or
liabilities relating to acquisition, construction, installation, ownership, use, expansion,
extension, operation, maintenance, repair, replacement, marketing, abandonment or other disposition
of the Solely Owned Segment, whether required under Applicable Law, under contract, under this
Agreement or otherwise, including, without limitation, internal and personnel costs or expenses
incurred by the SOS Owners related to any of the same. To the extent that the SOS Owners, in good
faith, believe that the Net Profits Costs for the current or the next Calendar Year are expected to
exceed the Net Profits Proceeds due to the need for repairs, maintenance, abandonment or compliance
with Applicable Law, then such SOS Owners may include in the calculation of Net Profits Costs for
the current Calendar Year certain reserves calculated as an estimate of the amount by which such
Net Profits Costs are expected to exceed such Net Profits Proceeds.

     “Net Profits Interest” means, with respect to a Solely Owned Segment or NNG SOS Segments, a
contractual net profits interest equal to an amount, expressed as a percentage of the Net Profits,
if any, of such

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Solely Owned Segment or NNG SOS Segments, calculated with regard to any such Net Profits
attributable to periods on or after the Net Profits Trigger Date; provided, however, that
notwithstanding anything stated herein to the contrary, a “Net Profits Interest” shall neither
create nor be deemed to establish any direct right, title or ownership or other interest in and to
any Solely Owned Segment or NNG SOS Segments.

     “Net Profits Proceeds” means, with regard to a Solely Owned Segment, any payments received by
the SOS Owner in respect of such Solely Owned Segment or NNG SOS Segments under the SOS SES
Gathering Agreements (to the extent a Solely Owned Segment in question relates to an expansion of
the capacity of the then existing Gathering System (as opposed to the Net Profits Costs for repair,
replacement, maintenance, operation, or other costs relative to the Gathering System) and if a
separate SOS SES Gathering Agreement is not warranted or practicable, then the Net Profits Proceeds
shall be deemed, as much as is practicable, to include the payments/fees received under the SES
Gathering Agreement attributable to the incremental expansion).

     “Net Profits Trigger Date” shall mean as of 12:01 a.m., Eastern Time, on January 1 of this
next Calendar Year immediately following the applicable IRR Calculation Date, after the
commencement of commercial operations of a Solely Owned Segment or NNG SOS Segments, on which the
SOS Owner(s) of such Solely Owned Segment or NNG SOS Segments have achieved at least a 25% IRR
(being an IRR using an IRR Specified Discount Rate of 25%) with respect thereto.

     “NGAS Capital Project” means any Capital Project (whether conducted by both Owners in
accordance with their respective Ownership Interests in the Gathering System, or whether conducted
on a Solely Owned Segment) which is intended to service, directly or indirectly, any DPI Producers
(as defined under the APA) in connection with the NAESB Purchase Agreement.

     “NGAS Mortgages” shall have the meaning set forth in the Asset Purchase Agreement, provided,
however, that the NGAS Mortgages shall also include any amendments or supplements to include any
modifications, amendments, expansions or extensions of the Gathering System, as well as any rights
(whether as an SOS Owner or with regard to any Net Profits as a Non-Participating Owner) that NNG
may have in any Solely Owned Segments.

     “NNG Group” means NNG, NGAS Resources, Inc., Daugherty Petroleum, Inc., and any subsidiary or
Affiliate of NNG, NGAS Resources, Inc. or Daugherty Petroleum, Inc., respectively.

     “NNG Option Interests” means and includes an undivided 100% of all of the limited liability
company interests, membership interests or any other equity interests of NNG.

     “NNG SOS Segments” is defined in Section 2.2(b).

     “Non-Defaulting Owner” is defined in Section 6.4.

     “Non-Participating Owner(s)” shall have the meaning assigned to such term in Section
2.2(c).

     “Operating Budget” means a budget covering all expenditures chargeable to operating expense
which Manager deems advisable to make during a Calendar Year, together with any other costs,
expenses, liabilities relating to the ownership, use, operation, maintenance, repair, replacement,
abandonment or other disposition of the Gathering System, other than for Capital Projects.

     “Owner Representative” shall have the meaning assigned to such term in Section 2.3(a).

     “Ownership Interest” shall mean the undivided ownership interest, usually expressed as a
percentage, in and to the assets comprising the Gathering System or any Solely Owned Segment (but
such term shall not apply to the membership interests or other equity interests held in and to NNG
or Seminole, respectively). As of the date of this Agreement, the Ownership Interests of NNG and
Seminole in and to the Gathering System is 50% each. With regard to any Solely Owned Segment, the
Ownership Interests of the SOS Owner(s) thereof shall correspond to the proportionate share that
such SOS Owner(s) thereof actually funded with respect to the acquisition, construction or
installation and the commencement of commercial operations of such Solely Owned Segment, and the
Ownership Interests therein of the Non-Participating Owners is limited to the back-in rights
described in Section 2.2(c) below.

     “Ownership Ratio” shall refer to the relative ratio that the Owners’ Ownership Interest bear
to each other. For example, as of the date of this Agreement, with regard to the Gathering System,
the initial Ownership Ratio shall be 50:50 (corresponding to NNG’s fifty percent (50%) undivided
ownership interest in the Gathering System and Seminole’s fifty percent (50%) undivided ownership
interest in the Gathering System). Except as otherwise set forth in this Agreement, all revenues,
income, costs, expenses and liabilities shall be allocated, paid and borne in accordance with the
Ownership Ratio.

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     “Permitted Transfer” means, with respect to the “ROFR Interests,” the following: (i) exercise
of either of the NNG Options described in the Asset Purchase Agreement (whether by Seminole or in
accordance with the put options described therein), (ii) any Transfer by Seminole to any Affiliate
of either (which may be a master limited partnership controlled by Seminole or an Affiliate), (iii)
any Transfer by Seminole in connection with any loan, credit agreement or other financing
transaction involving Seminole or an Affiliate or (iv) any Transfer by NNG or any of its Affiliates
of the Seminole Mortgages and any other collateral pledged as security for the obligations of
Seminole or any of its Affiliates to any member of the NNG Group in connection with NNG’s
obligations as a guarantor under the NGAS Credit Agreement (as such term is defined in the APA);
provided that such obligations of NNG do not exceed in the aggregate $7,500,000, and provided
further that upon the exercise of the NGAS Option (as defined in the APA) and payment by Seminole
pursuant to the terms thereunder, such collateral assignment shall be released.

     “Person” means any individual, corporation, partnership, joint venture, limited liability
company, association (whether incorporated or unincorporated), joint-stock company, trust,
Governmental Authorities, unincorporated organization or other entity.

     “Rights of Way” mean easements, rights-of-way, servitudes, fee lands, surface and subsurface
lease agreements, surface use agreements and other rights and agreements related to the use of the
surface and subsurface.

     “ROFR Interests” means and includes any direct or indirect interests, claims or rights in, to
or under (i) either of the Gathering System or any Solely Owned Segment or any NNG SOS Segments, as
well as any real, personal or mixed property interests related thereto or used in connection with
the Gathering System or the Solely Owned Segment, respectively, including, without limitation,
spare parts, inventories, and equipment used solely for the Gathering System or the Solely Owned
Segment or any NNG SOS Segments, as the case may be as well as any corresponding rights, interests
and obligations under this Agreement, the SES Gathering Agreement or the SOS SES Gathering
Agreement, as the case may be, or and (ii) any issued or outstanding or newly issued membership
interests, stock, partnership interests or other equity interests of any kind of an Owner (or any
successor to an Owner).

     “SES” means Seminole Energy Services, LLC.

     “SES Contract Operating Agreement” is defined in Section 3.1.

     “SES Gathering Agreement” means the Gathering Agreement, dated as of the same date as this
Agreement, by and among each of the Owners and SES, pursuant to which the Owners shall agree and
commit to SES an undivided 100% of the capacity of the Gathering System (as the Gathering System
and its capacity may hereafter be modified, extended or increased), in substantially the form
attached as an exhibit to the Asset Purchase Agreement.

     “Solely Owned Segments” is defined in Section 2.2(b), and this term shall include,
when applicable, any NNG SOS Segments.

     “SOS Owner” is defined in Section 2.2(b); and with regard to any NNG SOS Segments, SOS
Owner shall include the permitted NNG Affiliate contemplated under Section 2.3(b).

     “SOS SES Gathering Agreement” means with regard to any Solely Owned Segment, the Gathering
Agreement to be entered into by and among each SOS Owner thereof and SES, pursuant to which such
SOS Owner(s) shall agree and commit to SES an undivided 100% of the capacity of such Solely Owned
Segment (as such Solely Owned Segment and its capacity may hereafter be modified, extended or
increased), in substantially the form attached hereto as Exhibit F.

     “Third Parties” means any Person who is not either a Party, an Affiliate of any Party, nor an
employee, agent or representative of any Party or any Party’s Affiliate.

     “Voting Interests” shall have the meaning assigned to such term in Section 2.3(a).

     If any provision of any Exhibit is inconsistent with any provision contained in the body of
this Agreement, then the provisions in the body of this Agreement shall prevail.

     1.2 Construction.

     Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural, and vice-versa, (b) the gender (or lack of gender) of all words
used in this Agreement includes the masculine, feminine and neuter; (c) references to Articles and
Sections refer to Articles and Sections of this

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Agreement; (d) references to Exhibits or Schedules refer to the Exhibits or Schedules attached
to this Agreement, each of which is made a part hereof for all purposes; (e) references to
Applicable Laws refer to such Applicable Laws as they may be amended from time to time, and
references to particular provisions of a Applicable Law include any corresponding provisions of any
succeeding Applicable Law; (f) the term “include”, “includes”, “including” or words of like report
shall be deemed to be followed by the words “without limitation”; (g) the terms “hereof”, “herein”
or “hereunder” refer to this Agreement as a whole and not to any particular provision of this
Agreement; (h) references to money refer to legal currency of the United States of America; and (i)
when calculating the period of time before which, within which or following which any act is to be
done or step taken pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. The table of contents and headings contained in this Agreement are
for reference purposes only, and shall not affect in any way the meaning or interpretation of this
Agreement.

ARTICLE II

INTERESTS OF PARTIES; SOLELY OWNED SEGMENTS; OWNERS’ COMMITTEE;

RIGHTS OF FIRST REFUSAL; BUSINESS

     2.1 Ownership Ratio. 
Unless changed by written agreement of the Owners, all revenues, income, costs, expenses and
liabilities incurred in and related to the operation or ownership of the Gathering System under
this Agreement shall be allocated among the Owners severally, not jointly, in accordance with their
respective Ownership Interests and the Ownership Ratio. All equipment, materials and supplies
acquired related to the operation and ownership of the Gathering System shall be paid for and owned
in accordance with the Ownership Ratio.

     2.2 Solely Owned Segments. 

     (a) Proposal of Expansion/Extension. Any Owner, via its designated
representative or the Committee, may propose a capital expansion or extension of the
Gathering System not already covered by an Approved Budget or an approved AFE (an “Extension
Proposal”). If all Owners approve the Extension Proposal (via a unanimous approval of the
Committee), then each Owner shall fund, and such Owners shall own, the expanded or extended
Gathering System in accordance with its then current, respective Ownership Ratio, and the
Parties shall make any conveyance or cross-conveyances necessary to cause record title to
the expanded or extended portion of the Gathering System to be so owned by each Owner as
provided herein. If less than all Owners, via its designated Owner Representatives on the
Committee, vote to approve an Extension Proposal, the provisions of Section 2.2(b)
below shall apply.

     (b) Solely Owned Segments. If less than all Owners approve any Extension
Proposal on or before the close of business on the ten (10) day after such Extension
Proposal is submitted to the Committee for approval, then all of the Owners hereby agree
that the Owner(s) whose Owner Representatives voted for the Extension Proposal shall
thereafter be free to pursue the acquisition, construction, installation, operation and
marketing of capacity for the extended/expanded portion of the Gathering System comprising
such Extension Proposal (in each case, the portion of such extended/expanded facilities,
together with any modifications, alterations, replacements, extensions or expansions
thereof, and all Rights of Way attributable to, used solely in connection with, or relating
to the above, and all permits and authorizations of any kind held by such pursuing Owners in
respect thereof that are necessary for or incident to the use and operation of such extended
or expanded portion, and all land or other real property interests underlying the
compressors attributable solely to such extended or expanded portion, and all inventories of
pipe, materials and supplies used solely for such extended or expanded segment, is
collectively herein referred to as a “Solely Owned Segment”). Any Owner(s), whose Owner
Representative did not vote in favor of such Extension Proposal shall not (nor shall their
Affiliates), directly or indirectly, pursue such project for its own account.
Notwithstanding anything stated in this Agreement to the contrary, to the extent NNG’s Owner
Representatives vote in favor of an Extension Proposal but Seminole’s Owner Representations
do not, then to the extent NNG desires to pursue such Extension Proposal project as a Solely
Owned Segment, such project may not be pursued or owned (legally or beneficially) by NNG (or
any direct or indirect subsidiary of NNG, but must be pursued only by another Affiliate of
NNG which is not a direct or indirect subsidiary of NNG (in such case, an “NNG SOS
Segment”). Each Solely Owned Segment shall be owned (and title shall solely be held) by the
Owner(s) (or in the case of NNG SOS Segment, by the permitted Affiliate of NNG) who fund the
acquisition, construction and installation of such Solely Owned Segment (collectively with
regard to such applicable Solely Owned Segment, the “SOS Owners”, and individually, an “SOS
Owner”); such ownership interests of each such SOS Owner in such Solely Owned Segment to be
based on the ratio that the costs of

7

 

acquiring, constructing, installing and commencing commercial operations of such Solely
Owned Segment funded by such SOS Owner bears to the total amount of such costs funded by all
the SOS Owners thereof; and the SOS Owner(s) of such Solely Owned Segment shall enter into a
separate SOS SES Gathering Agreement with SES pursuant to which SES shall be granted an
undivided 100% of the capacity of the Solely Owned Segment. Subject to the provisions
hereof regarding Net Profits and of Section 3.5 below, the SOS Owners shall be
entitled to retain all benefits attributable to their Solely Owner Segment, including all
payments received under the SOS SES Gathering Agreement attributable thereto; and the SOS
Owners shall be responsible for all costs, expenses, liabilities and operations
attributable to the Solely Owned Segments.

     (c) Back-In-Rights. With regard to each Solely Owned Segment, from and after
the applicable Net Profits Trigger Date for such Solely Owned Segment, the SOS Owners shall
be deemed to have granted to those remaining Owners who did not participate in the funding
of such Solely Owned Segment (collectively, the “Non-Participating Owners” and,
individually, a “Non-Participating Owner”) a contractual Net Profits Interest in the Solely
Owned Segment, such that the SOS Owners and each Non-Participating Owners shall thereafter
receive future cash payments from the SOS Owners of such Solely Owned Segment equal to the
product of the future Net Profits, if any, attributable to such Solely Owned Segment times
such Non-Participating Owner’s then current Ownership Interest in the Gathering System
(expressed as a percentage); provided, however, that such Net Profits Interest shall (i)
constitute only a contractual right to the Non-Participating Owner(s) to receive payment of
the Net Profits from such Solely Owned Segment, and (ii) neither constitute, nor shall any
such Non-Participating Owner be entitled to seek or claim, any record or beneficial right,
title or other ownership interest in or to such Solely Owned Segment; and (iii) to the
extent an IRR calculation must be done hereunder, the SOS Owners shall make such IRR
calculation on or before each May 1 following an IRR Calculation Date (even though the
calculation, itself, will be to determine whether such applicable IRR has been achieved by
the prior December 31st IRR Calculation Date), and to the extent the IRR calculation results
in a determination that the 25% IRR target has been achieved and, therefore, the Net Profits
Trigger Date (being the January 1 of the same Calendar Year) had occurred, then such SOS
Owner shall pay, within ten (10) business days thereafter, to the Non-Defaulting Owners.
Thereafter, the SOS Owner shall make a calculation of Net Profits with regard to such Solely
Owned Segments annually (“Net Profits Calculation Date”) and pay any Net Profits due to the
Non-Participating Owners within ten (10) business days after such Net Profits Calculation
Date. Notwithstanding the above, if after the Net Profits Trigger Date for a Solely Owned
Segment the SOS Owners thereof pay additional capital relative to the Solely Owned Segment,
no further Net Profits will be due or accrue until the SOS Owners achieve a 25% IRR with
regarding thereto. To the extent that the SOS Owners pay to the Non-Participating Owners
more in Net Profits than they are entitled, then any over-payments shall be applied and
deducted from any subsequent Net Profits payments such Non-Participating Owners would
otherwise be entitled to from such SOS Owners under this Agreement.

     (d) Termination of Section 2.2 Provisions. Notwithstanding the above, to the
extent that an NGAS Options (as defined in the APA) is exercised (whether by Seminole or in
accordance with the put options described therein), the obligation set forth in this
Section 2.2 shall automatically terminate upon the closing and consummation of such
NGAS Option, and the Parties shall execute such further amendments to this Agreement or
other instruments as may be necessary or appropriate to reflect the termination thereof.

     2.3 Owners’ Committee.

     (a) Establishment of the Committee; Representatives; Voting Rights. Each of
the Owners shall appoint two (2) representatives (each an “Owner Representative”) to a
committee of the Owners (collectively, the “Committee”). The Owner Representatives
appointed by the Owners shall vote the interests of, and at the direction of, the Owners.
An Owner Representative shall not owe any duty, fiduciary or otherwise, to any Owner who did
not appoint such person as its Owner Representative. The Owners may replace or substitute
any alternative representative as its appointee(s) to the Committee (with or without cause,
in its sole discretion), upon written notice to the other Owners and may fill any vacancy in
the event that one of the Owner Representatives it appointed either resigns, dies or becomes
incapacitated. Any one or more Owner Representatives appointed by an Owner shall vote as a
block with an aggregate voting power equal to the then current Ownership Interest of the
Owner who appointed them (collectively, the “Voting Interests”) and to the extent that less
than all of the Owner Representatives appointed by an Owner are present at a duly called
meeting of the Committee, at which a quorum is present, then those one or more Owner
Representatives appointed by such Owner who are present at such meeting, nonetheless, shall
continue to vote as a block and shall continue to have the same aggregate voting

8

 

power (being the then existing Ownership Interest of the Owner who appointed them) as
if all such Owner Representatives were present. Any vote or approval of an Owners’
Committee representative with regard to a Budget, an AFE, an expenditure, or other matter
shall bind (and be deemed a commitment of) the Owner who appointed such representative.

     (b) Committee Meetings. The Committee shall meet (whether in person or by
telephone) at such times as the members of the Committee deem necessary or appropriate, but
no less than every once each calendar quarter (on December 1st, March 1st, July 1st and
September 1st) and shall exchange, review, consider and approve such written materials and
reports that are considered to be relevant or useful to the conduct of the Committee’s work.
Not less than one Owner Representative appointed by each Owner shall be required in order
for there to be a quorum. A quorum must be present at any regular or special meeting in
order for the Committee to conduct business, and the concurrence of those Owner
Representatives who are present at a meeting at which a quorum is present and who, in the
aggregate have a sufficient Voting Interest to approve a particular matter shall be required
for any act of the Committee.

     (c) General Duties of the Committee. Unless otherwise agreed to by the Owners,
the Committee shall serve as a liaison between the Owners and the Manager, and shall do the
following:

     (i) review on an ongoing basis the operational results of the Gathering System
and make recommendations concerning the configuration and future operational status
of the Gathering System, including recommendations concerning day to day operations,
modifications, alterations, or expansions of the Gathering System requiring either
capital contributions by the Owners or the purchase of gas compression or treating
facilities;

     (ii) prepare and evaluate initial and revised drafts of budgets required by
Section 3(a)(8) of this Agreement, including amendments thereto requested by
any Owners or the Manager;

     (iii) develop and approve operational guidelines, policies and directives
concerning the Gathering System and work with the Manager to insure compliance
therewith;

     (iv) undertake such other matters or special projects that the Owners request
in writing be addressed by the Committee; and

     (v) Vote on any Major Decisions, Budgets, Capital Projects (including, without
limitation, any Extension Proposals) AFE’s or other matters presented to the
Committee.

     (d) Major Decisions of Committee. Except to extent the same is already covered
in an Approved Budget, an approved AFE, or is otherwise an expense or liability authorized
or permitted under Section 3.1(i) or under Article IV, Article VI or
Article IX, neither the Manager, nor any Owners shall have any right or
authorization to take or to cause to be taken any of the following actions (each a “Major
Decision”, and collectively, the “Major Decisions”) without the unanimous vote of the
Committee (i.e., approval of such Owner Representatives who, in the aggregate hold 100% of
the Voting Interests), excluding any approval required relative to any costs, expenses or
liabilities relating to a Solely Owned Segment (which shall be subject to the agreement or
approval of the SOS Owners thereof):

     (i) Any amendment to this Agreement;

     (ii) Approval of the annual budget contemplated under Section 3.1(c)
below, subject to the other provisions of Article III and Article VI
below;

     (iii) Filing, consenting to, or acquiescing in any act or event that would
constitute an event of bankruptcy with respect to a Party;

     (iv) Acquiring by lease, purchase, or otherwise any real or personal property
or fixture in an amount greater than $50,000;

     (v) Amending the Budget in an amount, individually or in any series of related
transactions, greater than $50,000, except in response to an emergency;

     (vi) Entering into any contract or arrangement that requires any payments in an
amount, individually or in any series of related transactions, greater than $25,000
to an Affiliate of a Party, except with regard to the SES Gathering Agreement, any
SOS SES Gathering Agreement, the initial Contract Operator Agreement, or the NAESB
Purchase Agreement or as otherwise expressly authorized by this Agreement;

9

 

     (vii) Capital expenditures in an amount, individually or in a series of related
transactions, greater than $50,000;

     (viii) The lease, sale, exchange, transfer, or other disposition of any
material assets of the Gathering System in an amount, individually or in any series
of related transactions, greater than $50,000;

     (ix) The incurrence of any liens, burdens, or encumbrances against any assets
of the Gathering System;

     (x) Any contracting out of an integral portion of the business or operations of
Manager, except as otherwise set forth in an Approved Budget;

     (xi) Any material change in the amounts of and risks to be covered by insurance
as set forth on Exhibit H  attached hereto;

     (xii) any amendments to, pursuit of any remedies for allegation of breach
under, the SES Gathering Agreement; or

     (xiii) Any other action that is not in the ordinary course of business as
Manager of the Gathering System.

     (e) Failure to Approve Certain Budgets. If the Committee fails to approve by
December 15th of any calendar year the Operating Budget that will be applicable for the
immediately succeeding calendar year, then the current year’s Operating Budget, plus ten
percent (10%), shall be deemed to apply to the next, succeeding calendar year until an
alternative or Amended Operating Budget is approved with regard thereto.

     (f) Conference Telephone Meetings. Meetings of the Committee or the Owners may
be held by means of conference telephone, video or similar communications equipment so long
as all Persons participating in the meeting can hear each other. Participation in a meeting
by means of conference telephone or video shall constitute presence in person at such
meeting, except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business thereat on the ground that the meeting is not
lawfully called or convened.

     (g) Termination of Section 2.3 Provisions. Notwithstanding the above, to the
extent that an NGAS Options (as defined in the APA) is exercised (whether by Seminole or in
accordance with the put options described therein), the obligation set forth in this
Section 2.3 shall automatically terminate upon the closing and consummation of such
NGAS Option, and the Parties shall execute such further amendments to this Agreement or
other instruments as may be necessary or appropriate to reflect the termination thereof.

     2.4 Transfer Restrictions; Right of First Refusal.

     (a) Transfers of Ownership Interests. An Owner shall not (and any Direct
Parent of an Owner shall not, nor permit its directly owned Owner to), directly or
indirectly, voluntarily or involuntarily, by operation of Applicable Law or otherwise sell,
assign, distribute (whether in liquidation or otherwise), pledge, mortgage, exchange,
encumber, hypothecate, donate, gift, exchange or otherwise transfer or dispose (“Transfer”)
of any interest in the ROFR Interests, except for (i) a Transfer effected in accordance with
the terms of this Section 2.4 or (ii) a Permitted Transfer. Any other Transfer or
attempted Transfer (whether by operation of Applicable Law or otherwise) shall be null and
void. Any Transfer made in accordance with the terms of this Section 2.4, as well
as any Permitted Transfer shall be made expressly subject to the terms and provisions of
this Agreement (and any Transfer of an undivided interest in the Gathering System shall be
deemed to Transfer a corresponding undivided interest (and Ownership Interest) under this
Agreement, the SES Gathering Agreement and, with regard to any continuing obligations,
covenants or options thereunder, the APA (and, likewise, any Transfer of an undivided
interest in the Solely Owned Segments shall be deemed to Transfer a corresponding undivided
interest (and Ownership Interest) under this Agreement, the applicable SOS SES Gathering
Agreement, or with regard to any back-in rights pursuant to Section 2.2(c) with
respect thereto, and with regard to any continuing obligations, covenants or options
thereunder, the APA). If an Owner desires to Transfer all or part of such Owner’s Ownership
Interest or any interest portion thereof, such Owner will be responsible for compliance with
all conditions of Transfer imposed by this Agreement and under Applicable Law and for any
expenses incurred by the other Owners or the Undivided Interest Property for legal and/or
accounting services in connection with reviewing any proposed Transfer or issuing opinions
in connection therewith. Notwithstanding the above, any transfer of an interest in the
Gathering System or any Solely Owned Segments shall not relieve the transferor from any

10

 

liability or obligation hereunder, or under the SES Gathering Agreement or any SOS SES
Gathering Agreement or under the APA, as the case may be; nor shall the non-Transferring
Owners be required to recognize such Transfer until: (x) the transferee has executed an
agreement, in form and substance satisfactory to the Manager, assuming and agreeing to be
bound by the terms and provisions of this Agreement relative to the interest acquired, and
(y) copies of such agreement, as well as copies of the applicable conveyance instruments
(executed and delivered in accordance with the provisions and limitations of this agreement)
have been provided to Manager, the transferor Owner shall continue for all purposes of this
Agreement to constitute the Owner of the ROFR Interest to be Transferred and to be entitled
to exercise any rights or powers of a Owner with respect to the Ownership Interest
transferred review on an ongoing basis the operational results of the Gathering System and
make recommendations concerning the configuration and future operational status of the
Gathering System, including recommendations concerning day to day operations, modifications,
alterations, or expansions of the Gathering System requiring either capital contributions by
the Owners or the purchase of gas compression or treating facilities; and (z) such
transferor has otherwise complied with the other provisions of this Section 2.4.
Regardless of whether a Transfer is a Permitted Transfer, or a Transfer which otherwise
complies with the requirements of this Section 2.4, any Transfer of an Ownership
Interest in the Gathering System or any Solely Owned Segment which does not expressly
require (by contract or by operation of Applicable Law) the transferee to assume and be
bound by the terms and provisions of this Agreement relative to the interest acquired shall
be void. It is further acknowledged herein that under the Asset Purchase Agreement, the
ability of NNG or its Direct Parent to make any Transfer within the term of the NGAS
Options, as defined in the APA (other than a Transfer to Buyer in connection therewith) is
expressly prohibited, and any attempted Transfer by NNG or its Direct Parent during the NGAS
Option Period, as defined in the APA (other than a Transfer to Buyer in connection
therewith) shall be null and void.

     (b) ROFR. Each Owner and its respective Direct Parent (each, an “Owner
Offeror”) hereby grants to the other then current Owners (each, an “Owner Offeree”) the
exclusive, irrevocable, and continuing right of first refusal (herein sometimes called
“ROFR”) during the term of this Agreement to purchase or otherwise acquire any ROFR
Interests, as applicable, to be made the subject of any Transfer or other distribution by
the Owner Offeror to any other person or entity (collectively, a “Sale”) in the event of a
bona fide written offer (whether binding or non-binding) in respect of a Sale received by
the Owner Offeror from any Person (a “Third Party Offer”), which Third Party Offer the
Owner Offeror desires to accept, except with regard to a Permitted Transfer.

     (c) Notice of Offer. If at any time or times an Owner Offeror receives a Third
Party Offer, which Third Party Offer the Owner Offeror desire to accept, such Owner Offeror
promptly shall give written notice to all Owner Offerees setting out in reasonable detail
the terms of the Third Party Offer (the “Notice of Offer”). The delivery of such Notice of
Offer to the Owner Offerees shall constitute an offer (herein called “Owner’s Offer”) by
Owner Offeror to Owner Offerees to effect a Transfer in favor of Owner Offerees of the same
type and on the same terms as contemplated in the Third Party Offer described in such Notice
of Offer. Any Notice of Offer shall include (i) the bona fide cash price or other
consideration (and the cash value thereof) for the Sale; (ii) the name of the prospective
purchaser; (iii) the interest to be sold; and (iv) the other material terms upon which such
Sale is to be made, including the date of the anticipated closing, any proposed post-closing
adjustments to such consideration, the time and method of payment or delivery of such
consideration, any material conditions, restrictions, or limitations on the receipt of such
consideration, and any additional material obligations or liabilities associated with the
exchange of consideration, or otherwise made part of the proposed Sale. Each Notice of
Offer shall be accompanied by true and complete copies of any term sheets, letters of
intent, proposed agreement of assignment or purchase agreement, in each case then existing
and relating to such Third Party Offer. If the consideration for any such Sale is other
than cash, or if there is an exchange of like kind property, and Owner Offerees disagree
with the value of the interest sold or exchanged, Owner Offeror and Owners Offeree, at each
party’s own expense, shall each select one independent appraiser and each party shall
provide its respective appraiser with a proposal setting forth its determination of the
value of the interest sold or exchanged together with such information or evidence as such
party shall deem relevant. The two selected appraisers shall have fifteen (15) days to
determine whether the Owner Offeror’s or the Owners Offeree’s proposed valuation should be
utilized. In the event that the two appraiser are unable to agree on either the Owner
Offeror’s or the Owners Offeree’s proposal within such fifteen (15) day period, then such
appraisers shall select a third appraiser within five (5) days after the expiration of such
fifteen (15) day period. The cost of such third appraiser shall be shared equally by Owner
Offeror and Owners Offeree. If the three appraiser, within fifteen (15) days thereafter,
cannot unanimously agree upon either the Owner

11

 

Offeror’s or the Owners Offeree’s proposed valuation, then each of the three appraisers
shall select one of the two proposals and the selection of either the Owner Offeror’s
proposal or the Owners Offeree’s proposal by any two of the three appraisers shall be final
and conclusive for all purposes in determining the value of the interest sold or exchanged.
The parties understand, stipulate and agree that the valuation selected by the foregoing
arbitration procedure shall be final, binding, conclusive and effective on Owner Offeror and
Owners Offeree for purposes under this Agreement, and same shall not be subject to judicial
review, mediation or any other legal proceeding. The determination of the appraiser shall
be final, non-appealable, and binding upon the Parties hereto. Except with respect to the
substitution of cash for the other consideration to be tendered, the other terms and
conditions of such a Sale for other than cash or an exchange shall remain the same if any
Owner Offerees decides to accept the appraisal and elect to exercise the ROFR.

     (d) Exercise of ROFR Option. Each Owner Offeree shall have the right, at its
option, exercisable as hereinafter provided, to accept Owner’s Offer. The Owner Offerees
shall then have the right for a period of thirty (30) days following receipt of the Notice
of Offer (or after a determination of the value of the non-cash consideration has been made
under (b) above, if later) to elect to purchase for cash all, but not less than all, of the
interest to be sold on terms and conditions no less favorable than the terms and conditions
set forth in the Notice of Offer (whether such purchase price is in the form of cash or
non-cash consideration). If more than one Owner Offeree properly elects to exercise the
Owner Option, then the Ownership Interest offered shall be acquired by the exercising Owner
Offerees in proportion to the relative, then current Ownership Interests of the exercising
Owner Offerees (which Ownership Interests may be different depending on whether Ownership
Interests in Gathering System or Solely Owned Segments are involved). The ROFR shall be
exercised by an Owner Offeree, if at all, by such Owner Offeree delivering to the Owner
Offeror written notice of the exercise thereof within thirty (30) calendar days after Owner
Offeree’s receipt of the Notice of Offer. Failure of an Owner Offeree to affirmatively
exercise the ROFR within such thirty (30) day period shall be deemed conclusively to be an
election not to exercise the ROFR with regard to such Owner’s Offer.
Notwithstanding Owner Offeree’s election or deemed election, as applicable, not to exercise
the ROFR with respect to any Sale from Owner Offeror to a Third Party, the rights of Owner
Offerees set forth herein shall be a continuing right, as the ROFR shall remain in full
force and effect throughout the term of this Agreement with respect to any future Sale of
any of the Ownership Interests (in the Gathering System or Solely Owned Segments) or
interests in the hands of any Third Party buyer or any subsequent transferee.

     (e) Failure to Exercise; Obligations of Successors and Assigns. If all Owner
Offerees fail to timely exercise the ROFR with respect to a Notice of Offer, Owner Offeror
may effect the transaction covered by the original Third Party Offer substantially in
accordance with such Third Party Offer; provided, however, that if the economic, financial,
or environmental terms of the original Third Party Offer presented in such Notice of Offer
are charged, amended or modified in a manner that is more favorable to the Third Party, then
such changed, modified or amended terms shall constitute a new Third Party Offer hereunder,
the new Third Party Offer shall be the subject of a new Notice of Offer in the manner
hereinabove provided, and Owner Offerees’ ROFR hereunder shall apply thereto (except the
time period for exercise of the ROFR shall be thirty (30) days commencing on Owner
Offerees’s receipt of such new Notice of Offer). Any assignment or Transfer of (and any
successor, assignee or transferee of) a ROFR Interest must accept such ROFR Interest
expressly subject to (and agree to assume and be bound by all of) the terms and provisions
of this Agreement (and any Transfer of an undivided interest in the Gathering System shall
be deemed to Transfer a corresponding undivided interest (and Ownership Interest) under this
Agreement, the SES Gathering Agreement, and, likewise, any Transfer of an undivided interest
in the Solely Owned Segments shall be deemed to Transfer a corresponding undivided interest
(and Ownership Interest) under this Agreement, the applicable SOS SES Gathering Agreement,
or with regard to any back-in rights pursuant to Section 2.2(c) with respect
thereto, and with regard to any continuing obligations, covenants or options thereunder, the
APA, including, without limitation, the following: (i) any successor, assignee or
transferee of NNG must acquire and maintain such ROFR Interests in an entity which complies
with the sole business purpose obligations set forth in Section 2.5 below with
regard to the ROFR Interests acquired, (ii) any successor, assignee or transferee of NNG
must agree to appoint an maintain an Independent Director (as defined and as contemplated in
the APA) for the periods required in the APA, (iii) any successor, assignee or transferee of
NNG must provide a parent guaranty or a replacement parent guaranty, acceptable in form and
substance to the Manager, relative to the obligations and liabilities assumed under this
Agreement, the APA, the SES Gathering Agreement and any SOS SES Gathering Agreement, and
(iv) any successor, assignee or transferee must accept the interests subject to (and must
re-

12

 

affirm the grant) of the liens, security interests, pledges, covenants and agreements
under the NGAS Mortgages or the Buyer Mortgages, as the case may be, relative to the
interests acquired. Any Transfer, or attempted Transfer, that does not comply with the
above requirements shall be null and void.

     (f) Post-Closing Notice. Within thirty (30) days after the date of
consummation of any Sale with respect to which the Owner Offerees fail or refuse to timely
elect to exercise the ROFR, Owner Offeror shall provide Owner Offerees with copies of the
purchase agreement and conveyance documents for such Sale. If Owner Offeror does not
consummate a proposed Sale within three (3) months after the date on which the last Owner
Offeree notifies (or is deemed to have notified) Owner Offeror of Owner Offeree’s election
not to exercise the ROFR, then all of the restrictions hereof shall thenceforth
apply again to such Third Party Offer as though no written Notice of Offer had been given by
Owner Offeror to Owner Offerees, and the Owner Offeror shall not thereafter consummate any
sale pursuant to such Third Party Offer until the Owner Offer thereafter complies with the
requirements of Sections 2.4(c), (d) and (e). Notwithstanding
anything in this Agreement to the contrary, if Owner Offeror (i) consummates a proposed Sale
within the three (3) months after the date on which the last Owner Offeree notifies (or is
deemed to have notified) Owner Offeror of Owner Offerees’s election not to exercise the ROFR
and (ii) provides the Owner Offerees with copies of the purchase agreement and conveyance
documents of such Sale, then Owner Offerees shall cease to have any further right to
exercise the ROFR with respect to the particular Sale, although the ROFR shall continue for
the term of this Agreement to be applicable in the event of any future Sale or Sales by the
Third Party grantee.

     (g) Application of a Change of Control. As used herein, the capitalized term
Sale shall also include any sale, conveyance, assignment or other transfer, whether as a
result of a single or multiple transactions that result in a Change of Control of any Direct
Parent of an Owner.

     (h) Further Restrictions on Transfers by NNG. Notwithstanding anything stated
in this Agreement to the contrary, and notwithstanding compliance the ROFR provisions of
this Section 2.4, NNG shall not make any Transfer of any of its assets, properties
or interests, whether real, personal or mixed, including, without limitation, the ROFR
Interests (other than distributions of cash), without the prior, expressed, written consent
of Seminole, in its sole discretion; provided, however, that subject to an earlier
termination hereof under Section 2.4(k) below, then Section 2.4 (h) shall
automatically terminate and be of no further force and effect on 5:00 pm, Eastern Time, on
December 31, 2011.

     (i) Bulk Sales. If any acceptable Third Party Offer that is subject to the
ROFR rights hereunder shall include other property in addition to the ROFR Interests, this
Agreement shall be applicable only to the sale of the ROFR Interests, as applicable, at a
consideration or purchase price that shall constitute the portion of the aggregate purchase
price applicable to such property as determined by a disinterested appraiser in accordance
with Section 2.4(c) above.

     (j) Survival. Subject to the last sentence of Section 2.4(f) above,
the ROFR hereby granted to Owner Offerees shall survive the types of Transfers specified as
Permitted Transfers (or any series of such Transfers by Owner Offeror or subsequent
transferees) until termination of this Agreement as provided herein.

     (k) Termination of Section 2.4 Provisions. Notwithstanding the above, to the
extent that an NGAS Options (as defined in the APA) is exercised (whether by Seminole or in
accordance with the put options described therein), the obligation set forth in this
Section 2.4 shall automatically terminate upon the closing and consummation of such
NGAS Option, and the Parties shall execute such further amendments to this Agreement or
other instruments as may be necessary or appropriate to reflect the termination thereof.

     2.5 Sole Business Purpose of NNG. NNG shall not engage in any other business or
activity, except solely with regard to the ownership of its interests in the Gathering System, and
its entering into and performing this Agreement and the SES Gathering Agreement. No other business
or activity by NNG shall be permitted without the prior written consent of Seminole.
Notwithstanding the above, to the extent that the NGAS Options (as defined in the APA) are
exercised (whether by Seminole or in accordance with the put options described therein), the
obligation of NNG to limit its purpose solely as described above shall automatically terminate upon
the closing and consummation of such NGAS Option, and the Parties shall execute such further
amendments to the NNG LLC Agreement (as defined in the APA) or other instruments as may be
necessary or appropriate to reflect the termination thereof.

     2.6 Initial Budgets. Attached hereto as Exhibit A is the initial Capital Budget for the remainder of 2009
(“Initial Capital Budget”); and attached hereto as Exhibit B is the initial Operating
Budget for the remainder

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of 2009 (“Initial Operating Budget”). The Initial Capital Budget and the Initial Operating Budget are hereby
deemed approved by the Parties and no further approval is required by the Committee or the Owners.

     2.7 Notice of Default. To the extent that NNG receives any notice or becomes aware of any of the following exists, it
shall provide immediate written notice to Seminole that, NNG is: (i) in breach or default under any
contract, agreement, commitment, or arrangement to which it or its assets are bound or otherwise
subject, (ii) in violation of Applicable Law, (iii) subject to the imposition of any accreditation
or other remedy available to an third party, (iv) obligated under any guaranty, indemnity or
similar obligation, or (v) any condition exists that, with the lapse of time, could give rise to
any of (i) — (iv) above. In such event, Seminole shall have the right, but not the obligation, to
cure, satisfy or remedy such condition (whether in whole or in part) and to the extent Seminole
does and pays or incurs any expense or liability with regard thereto, it shall be treated the same
as if NNG was a Defaulting Owner with regard thereto and Seminole is the Non-Defaulting Owner who
paid such amounts on the Defaulting Owner’s behalf, as contemplated in Section 6.4.

ARTICLE III

MANAGER

     3.1 Designation and Responsibilities of Manager; Contract Operator.

     (a) Appointment; General Responsibilities; Contract Operator. The Parties
hereby appoint Seminole (and Seminole hereby accepts the appointment) as “Manager”. The
Manager shall conduct and direct and have full and exclusive control (relative to any other
Owners) of all operations, use, maintenance, repair, replacement, abandonment or other
disposition of the Gathering System as permitted and required by, and within the limits of
this Agreement, and marketing (as described in Section 3.5 below. Notwithstanding
the above, it is expressly agreed and acknowledged that Seminole and NNG will enter into a
contract operating agreement with SES in substantially the form attached hereto as
Exhibit J-1 (the “SES Contract Operating Agreement”), and SES will enter into a
corresponding contract operating agreement with another Person to perform the functions of
manager of the Gathering System and of SES under the SES Contract Operating Agreement (each
such contract operating agreement entered into by SES, a “Contract Operating Agreement”).
The initial contract operator will be SES (the “Initial Contract Operator”), The initial
Contract Operating Agreement entered into by SES shall be with Daugherty Petroleum, Inc.
substantially the form set forth on Exhibit J-2 (the “DPI Contract Operating
Agreement”) attached hereto. The selection, termination, replacement or substitution of the
Initial Contract Operator, as well as any successor contract operator of the Gathering
System, shall be determined as follows:

     (i) from and after the exercise of an NGAS Option (as defined in the APA),
the determination shall be made in the sole discretion of Seminole;

     (ii) prior to the exercise of NGAS Option (as defined in the APA), the
determination shall be: (A) if the desire to remove, replace or substitute
such Initial Contract Operator or subsequent contract operator is based on
reasons or causes for removing a Manager described in Section
3.2(a)(ii) below, then with regard to such Initial Contract Operator or
subsequent contract operator, the determination to remove, replace or
substitute the same shall be made in the sole discretion of Seminole; and
(B) if the desire to remove, replace or substitute such Initial Contract
Operator or subsequent contract operator is based on reasons or causes other
than those described in Section 3.2(a)(ii)(A) above, then the
determination to remove, replace or substitute the same shall be made by the
Committee, as if it were a Major Decision.

Subject to the obligations described under Section 2.2(b) and Section 3.5,
the ownership, operation, use, maintenance, repair, replacement, abandonment or other
disposition of: any Solely Owned Segments shall be directed and controlled pursuant to the
agreement of the SOS Owners thereof.

     (b) Reimbursements; Advances; Reasonable Reserves. Notwithstanding anything
stated herein to the contrary in this Agreement, each Owner (other than Seminole) commits to
pay and reimburse the Manager for such Owner’s Ownership Interest share of any costs,
expenses, fees, taxes, assessments or liabilities of any kind whatsoever incurred by
Manager, whether directly or paid under the SES Contract Operating Agreement, within ten
(10) business days of any written request therefor. Without limiting the generality of the
immediately prior sentence, Manager shall be entitled to immediate reimbursement or offset
relating to any costs, expenses, or liabilities of any kind incurred by Manager pursuant to
an
Approved Budget, any approved AFE, any authorized Major Decision, as well as any costs,
expenses or

14

 

liabilities paid or incurred which are permitted, authorized or deemed
authorized under Section 3.1(i), 3.3, Article IV, Article
VI, Article VIII, Article IX, or under the SES Contract Operating
Agreement. In addition, upon written notice by Manager to the Owners, Manager may demand
that the Owners pay to Manager (or directly to a Third Party or the Contract Operator, if so
directed by Manager) in advance, and within ten (10) business days after receipt of such
notice, such Owner’s share of any authorized or permitted costs, expenses or liabilities
(which would be costs, expenses or liabilities reimbursable hereunder to Manager if paid by
Manager). Further, Manager may demand that the Owners pay to Manager in advance, and within
ten (10) business days after receipt of such notice, any amount necessary to fund certain
reasonable reserves by Manager to pay such Owner’s share of foreseeable authorized or
permitted costs, expenses or liabilities (which would be costs, expenses or liabilities
reimbursable hereunder to Manager if paid by Manager). Failure of an Owner to pay any
amounts to the Manager when due under this Section 3.1(b) shall constitute a default
by such Owner for which the Manager shall have all rights and remedies provided under this
Agreement, the Master Netting Agreement, Applicable Law or otherwise.

     (c) Budgets. Manager shall prepare (or cause the Contract Operator to prepare)
and submit to the Committee for review and approval, an annual Operating Budget and Capital
Budget relating to the Gathering System. Manager shall submit the draft annual budget to
the Committee on or before each December 15th of the year immediately prior to the next
calendar year to which such annual budget applies. Manager shall have no obligation to any
other Owners to incur any expense of liability relative to the Gathering System which has
not either been approved under an Approved Budget, an approved AFE or for which Manager is
not otherwise entitled to be reimbursed for by all Owners relative to their respective
Ownership Interest share thereof.

     (d) Liens. In accordance with the terms of the NGAS Mortgages, NNG shall grant
a first lien and security interest to Seminole on NNG’s Ownership Interest in the Gathering
System, as well as any Solely Owned Segments, Net Profits Interests, or other assets or
properties that NNG owns or holds to support, among other obligations or liabilities
described therein, all of NNG’s, DPI’s, and Old NGA’s obligations and liabilities under this
Agreement, the SES Gathering Agreement, any SOS SES Gathering Agreement, the NAESB Purchase
Agreement the SES Contract Operating Agreement, the Master Netting Agreement (as defined in
the APA), the APA and the Seller Parent Guaranty (as defined in the APA). In accordance
with the terms of the Buyer Mortgages (as defined in the APA), Buyer shall grant a
subordinated, second lien on its Ownership Interest in the Gathering System, as well as any
Solely Owned Segments , Net Profits Interests, or other assets to support the Buyer Secured
Obligations, as defined in the APA. Notwithstanding the above, to the extent that an NGAS
Options (as defined in the APA) is exercised (whether by Seminole or in accordance with the
put options described therein), the liens, security interests, and obligation under NGAS
Mortgages and the Buyer Mortgages shall automatically terminate and be released upon the
closing and consummation of such NGAS Option, and the Parties shall execute such further
releases or other instruments as may be necessary or appropriate to reflect the termination
and release thereof.

     (e) Set Off. In addition to any other rights or remedies that Manager may have
under Applicable Law, any amounts that NNG or any other Owner may owe Seminole, whether as
Manager or otherwise, may be from time to time and at any time throughout the term hereof,
at the sole discretion of Seminole, be setoff against any accrued, liquidated amount or
monetary obligation owed to NNG by Seminole or an Affiliate of Seminole, including, without
limitation, any amounts to be paid to NNG under the SES Gathering Agreement.

     (f) Independent Contractor; Not a Fiduciary. In its performance of services
and duties hereunder for the Owners, Manager shall be an independent contractor, subject to
the limitations or Manager’s authority under Section 2.3 and except as to the type
of operations to be undertaken pursuant to the SES Gathering Agreement. Manager is not
intended to be, nor shall it be deemed to be, a fiduciary or trustee, nor shall it have any
fiduciary or similar duty or obligation to the Owners or Manager with regard to its role as
Manager (AND NOTWITHSTANDING ANYTHING STATED HEREIN TO THE CONTRARY, ANY FIDUCIARY OR
SIMILAR DUTIES OR OBLIGATIONS, AS WELL AS ANY OTHER DUTIES OR OBLIGATIONS OF MANAGER NOT
EXPRESSLY SET FORTH IN THIS AGREEMENT, ARE HEREBY EXPRESSLY WAIVED, DISCLAIMED AND NEGATED).

     (g) Standards of Performance. Manager shall conduct its activities under this
Agreement as a reasonable prudent Manager, in a good and workmanlike manner, and in
compliance with Applicable Law
and regulation and in accordance with customary industry practices.

15

 

     (h) Limitation of Liability. In its capacity as Manager, the Manager shall
have no liability as Manager to the other Parties for losses sustained or liabilities
incurred (including, without limitation, any damages, loss or destruction of the Gathering
System, any Solely Owned Segments or NNG SOS Segments), except such as may result from gross
negligence or willful misconduct of Seminole, REGARDLESS OF THE SOLE, JOINT, CONCURRENT
NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OR RESPONSIBILITY OF MANAGER, ANY OWNER, OR ANY
OTHER PERSON.

     (i) Payment of Expenses. Subject to the provisions of Section 2.3,
this Article III, Article VI and Article IX, Manager shall promptly
pay and discharge all expenses, costs and liabilities incurred in operating, maintaining,
using, repairing, replacing or other approved disposition of the Gathering System and in
providing replacements and additions thereto, making charges therefore in accordance with
the terms of this Agreement, including the following:

     (i) Approved Budgets and AFEs. Any expenses, costs or liabilities
covered by an Approved Operating Budget, an Approved Capital Budget, an approved AFE
or an approved Major Decision, shall be deemed authorized and approved by the
Owners.

     (ii) Authority for Expenditure. During such next succeeding Calendar
Year or calendar quarter, as the case may be, Manager shall have the right and
authority with respect to the Approved Operating Budget and Approved Capital Budget
(as they may be amended by any Approved Budget Amendments), or an approved Major
Decision, or other authorized expenditures expressly set forth under this Agreement,
to make expenditures therefore up to 100% of the respective amount provided for such
Approved Budget, approved Major Decision, other approved expenditure, cost or
liability expressly set forth in this Agreement. To the extent not otherwise
covered by an Approved Budget (as amended), an approved Major Decision, and is not
otherwise expressly authorized or permitted under another provision of this
Agreement, then the Manager may incur (and be reimbursed by the other Owners
relative to their share, or demand advance payment of the Owners relative to their
share of) any cost, expense or liability which it is not estimated in excess of
Fifty Thousand Dollars ($50,000), except in case of Emergencies as hereinafter
provided, without the need to be approved by the Committee; and to the extent such
cost, expense or liability would be estimated to exceed such amount, then the same
shall be incurred by Manager only with the prior written consent of the Committee in
the form of an AFE.

     (iii) Emergencies. Notwithstanding any provision of this Section, in
cases of emergency, Manager may proceed with maintenance or repair work when
necessary to keep the line operating or to restore the facilities to operating
condition or to minimize damage, without necessity for prior consent of the
Committee even though the cost and expense shall exceed five hundred thousand
dollars ($500,000). Manager shall notify the Committee, as quickly as practicable
of such emergency. Such notification shall be by method deemed most appropriate by
Manager.

     (iv) Applicable Law. Any costs, expenses or liabilities paid or
incurred by Manager relating to the ownership, use, expansion, extension, operation,
maintenance, repair, replacement, marketing, abandonment or other disposition of the
Gathering System, paid to any Governmental Authorities, or directed by any
Governmental Authorities to be paid to any other Person, or under Applicable Law.
All of such costs, expenses or liabilities paid or incurred by Manager shall be
deemed authorized by the Owners.

     3.2 Resignation or Removal of Manager and Selection of Successor.

     (a) Resignation or Removal of Manager.

     (i) Manager may resign at any time by giving not less than ninety (90) days’
prior written notice thereof to Owners. If Manager terminates its legal existence
or is no longer capable of serving as Manager, Manager shall be deemed to have
resigned without any action by Owners, except the selection of a successor.

     (ii) Manager may be removed by the affirmative vote of Owners owning a majority
of the remaining interest in the Gathering System after excluding the Ownership
Interest held by the Manager, only for

     (a) material breach, material failure or inability to perform its
obligations

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under this Agreement,

     (b) gross negligence or willful misconduct of Manager,

     (c) Manager becomes bankrupt or insolvent or otherwise makes an
assignment for the benefit of creditors,

     (d) In the event any execution or attachment is issued against Manager
pursuant to which all or a substantial part of the assets of Manager are
seized or otherwise taken by a creditor or by any custodian, receiver,
trustee or other legal authority,

     (e) dissolution, liquidation or cessation of Manager.

Such vote shall not be deemed effective until a written notice has been delivered to the
Manager by one or more Owners holding the required interests described above detailing the
alleged default and Manager has failed to cure the default within sixty (60) days from its
receipt of the notice. Such resignation or removal shall not become effective until 7:00
o’clock A.M. on the first day of the calendar month following the expiration of ninety (90)
days after the giving of notice of resignation by Manager or action by the Owners to remove
Manager, unless a successor Manager has been selected and assumes the duties of Manager at
an earlier date. Manager, after effective date of resignation or removal, shall be bound by
the terms hereof as an Owner. A change of corporate name or structure of Manager or
transfer of Manager’s interest to any single subsidiary, parent or successor corporation
shall not be the basis for removal of Manager. Any successor Manager must accept an
assignment of, and assume and agree to be bound by, the SES Contract Operating Agreement
then in effect. Any removal, substitution, or replacement of the Manager shall in no way
affect the continued validity of the SES Contract Operating Agreement then in effect, nor
shall it affect the continued validity of the SES Gathering Agreement or any SOS SES
Gathering Agreement.

     (b) Selection of Successor Manager. Upon the resignation or removal of Manager
under any provision of this Agreement, a successor Manager shall be selected by the Owners.
The former Manager shall promptly deliver to the successor Manager all records and data
relating to the operations conducted by the former Manager to the extent such records and
data are not already in the possession of the successor Manager. Any cost of obtaining or
copying the former Manager’s records and data shall be charged to the joint account of the
Owners in accordance with the Ownership Ratio.

     (c) Effect of Bankruptcy. If Manager becomes insolvent, bankrupt or is placed
in receivership, it shall be deemed to have resigned without any action by Owners, except
the selection of a successor. If a petition for relief under the federal bankruptcy laws is
filed by or against Manager, and the removal of Manager is prevented by the federal
bankruptcy court, all Owners and Manager shall comprise an interim operating committee to
serve until Manager has elected to reject or assume this Agreement and the SES Gathering
Agreement pursuant to the Bankruptcy Code. An election to reject this Agreement by Manager
as a debtor in possession, or by a trustee in bankruptcy shall be deemed a resignation as
Manager without any action by Owners, except the selection of a successor. During the
period of time the operating committee controls operations; all actions shall require the
approval of two (2) or more Parties owning a majority interest based on ownership. In the
event there are only two (2) Parties to this Agreement, during the period of time the
operating committee controls operations, a third party acceptable to Manager, Owners and the
federal bankruptcy court shall be selected as a member of the operating committee, and all
actions shall require the approval of two (2) members of the operating committee without
regard for their Ownership Interest.

     3.3 Custody of Funds; Offset by Manager; Statement of Account.
The Owners shall direct that any fees, amounts or other payments received from provision of
gathering services utilizing, or commitments of capacity on, the Gathering System (including,
without limitation, any fees, amounts or other payments from SES under the SES Gathering Agreement)
shall be paid to the Manager for the benefit of the Owners. Manager shall hold for the account of
the Owners any funds of the Owners including any fees advanced or paid to the Manager, either for
the conduct of operations hereunder or as a result of fees paid under the SES Gathering Agreement,
and such funds shall remain the funds of the Owners on whose account they are advanced or paid
until used for their intended purpose or otherwise delivered to the Owners or applied toward the
payment of, and Manager shall have the right to offset or deduct from any portion of the funds
otherwise payable to an Owner any amounts attributable to such Owner’s share of: (i) any amounts
reimbursable or advanced to Manager for any costs or expenses incurred or paid by Manager under
this Agreement, under the SES Contract Operating Agreement, or paid to any Governmental Authorities
or otherwise paid to any Person by Manager relating to the
ownership, use, expansion, extension, operation, maintenance, repair, replacement, abandonment
or other disposition of the Gathering System;

17

 

(ii) any amounts of the type described in subpart (i)
above to be paid directly to the Contract Operator, Governmental Authorities, or other Persons, at
the direction of the Manager; and (iii) reasonable reserves to be retained by Manager for amounts
of the type described in subparts (i) or (ii) above. Nothing in this paragraph shall require the
maintenance by Manager of separate accounts for the funds of Owners unless the Parties otherwise
specifically agree. Manager shall provide a statement of account to the Owners within sixty (60)
days following the end of each fiscal quarter, setting forth the amounts and proceeds paid under
the SES Gathering Agreement to Manager during the prior fiscal quarter, and the amounts deducted or
offset therefrom for such same time period; and to the extent such SES Gathering Agreement proceeds
exceed the offsets and deductions, Manager shall pay to each Owner such Owner’s allocable share
thereof when it delivers such statement.

     3.4 Additional Offset Rights Relative To NAESB Purchase Agreement Payments and SES
Gathering Agreement Payments. In addition to the rights of offset or similar rights set forth
in Section 3.3 of this Agreement, or elsewhere in this Agreement, to the extent any members
of the NNG Group (a) fail to make any payment or take any action required to maintain in effect any
oil and gas lease, farm-out agreement, development agreement or other agreement with respect to the
geographic region for which natural gas production is dedicated to gathering by the Gathering
System pursuant to the SES Gathering Agreement and SES or Seminole makes a payment or incurs a
liability in respect of such obligation on behalf of any member of the NNG Group, or (b) fail to
pay SES, when due, any amounts or payments under the NAESB Purchase Agreement (the amounts referred
to in clause (a) and (b) are referred to collectively as the “NNG Group GAM Default Amounts”),
then, without waiving or being deemed to have elected any remedies that SES or Seminole may have
available to it under the NAESB Purchase Agreement, Applicable Law or otherwise, the Manager shall
also thereafter deduct and offset from any fees or payments actually received from SES under the
SES Gathering Agreement which would otherwise be allocable to NNG’s Ownership Interest (or the net
allocable share thereof, after deducting and offsetting any other costs, expenses or liabilities
owed or payable by NNG hereunder), regardless of whether the source of such payments received from
SES were paid to SES by members of the NNG Group or other Third Parties, such amounts as are or
would be necessary to deliver to Seminole an amount equal to 50% (or Seminole’s then existing
Ownership Interest, if not 50%) of the NNG Group GAM Default Amounts, plus any SOS returns (ie, the
25% IRR thereon) and 50% of returns on Capital Projects made by both Parties; and Manager shall
pay, and continue to pay, such offset and deducted amounts hereunder to Seminole until Seminole
has, in fact, received an amount equal to 50% (or Seminole’s then existing Ownership Interest, if
not 50% during the period applicable to the NNG Group’s default), all as described in further
detail on Exhibit C. Notwithstanding anything stated herein to the contrary, to the extent
Manager offsets and deducts the amounts described above prior the application and deduction of any
costs, expenses or liabilities that NNG may owe or are payable by NNG under this Agreement, then
such offset or deduction by Manager shall in no way release, relieve or reduce NNG’s obligation and
liability relating to any of such costs, expenses or liabilities.

     3.5 Marketing Rights/Duties.

     (a) Exclusive Right to Approve Marketing. Subject to the commitments, duties and
obligations under the SES Gathering Agreement, the Manager shall also solely and exclusively
conduct and direct and have full control, on behalf of the Owners of all marketing or any
gathering or transportation capacity of the Gathering System and no Owner, other than the
Manager, shall have the right to take or commit to any Person (other than SES) any capacity
on, or gathering services utilizing, the Gathering System or Solely Owned Segments.

     (b) Satisfaction of Marketing Duties. The commitments, duties and obligations of
Manager under this Section 3.5 shall be deemed satisfied as long as the SES
Gathering Agreement remains in force and effect.

     (c) SES Gathering Agreement. Notwithstanding the general authority and duties of
Manager with regard to marketing the available capacity of the Gathering System, it is
contemplated that 100% of the available capacity of the Gathering System will be committed
by each Owner to SES under the terms of the SES Gathering Agreement; and simultaneous with
the execution and delivery of this Agreement, each Owner shall execute and deliver the SES
Gathering Agreement.

     (d) SOS SES Gathering Agreement. It is contemplated that 100% of the available
capacity of the Solely Owned Segments will be committed to SES under the terms of the
applicable SOS SES Gathering Agreement; and each SOS Owner shall execute and deliver a SOS
SES Gathering Agreement with respect thereto prior to the commencement of operations of the
applicable Solely Owned Segment, unless SES expressly waives this requirement in writing.

     (e) Disclaimers, Limitations and Rights. All of the provisions of Sections
3.1-3.4 above

18

 

shall apply with regard to Manager’s performance under this Section
3.5.

     (f) Termination of Section 3.5 Provisions. Notwithstanding the above, to the
extent that an NGAS Options (as defined in the APA) is exercised (whether by Seminole or in
accordance with the put options described therein), the obligation set forth in this
Section 3.5 shall automatically terminate upon the closing and consummation of such
NGAS Option, and the Parties shall execute such further amendments to this Agreement or
other instruments as may be necessary or appropriate to reflect the termination thereof.

     3.6 Certain Capital Projects Resulting in Change of Certain Rates. In the event that
an NGAS Capital Project is conducted, the SES Gathering Agreement and any SOS SES Gathering
Agreement contemplated that the Gathering Fees to be charged thereunder shall be increased in a
manner to provide the Owners (or SOS Owners under a SOS SES Gathering Agreement) and additional 20%
IRR (meaning an IRR with an IRR Specified Discount Rate of 20%), over the then remaining term of
such SES Gathering Agreement (or SOS SES Gathering Agreement), on all capital spent on such NGAS
Capital Project in accordance with a monthly Capital Fee thereunder. The NAESB Purchase Agreement
shall provide for a corresponding increase in the monthly Gathering Fee and monthly Operating Fee
(and or a monthly Capital Fee) thereunder.

ARTICLE IV

INSURANCE

     4.1 Insurance.

     At all times while operations are conducted hereunder, Manager and Owners shall comply with
the insurance requirements set forth on Exhibit H attached hereto and made a part hereof.
Manager may also carry or provide insurance for the benefit of the joint account of the Parties to
the extent set forth on Exhibit H. Manager shall require all contractors engaged in work
on or for the Gathering System to comply with the workers compensation law of the state where the
operations are being conducted and to maintain such other insurance as or Owners may require.

ARTICLE V

(Intentionally
Omitted)

ARTICLE VI

EXPENDITURES AND LIABILITY OF PARTIES

     6.1 Liability of Parties.

     (a) Several; No Partnership. The liability of the Parties shall be several,
not joint or collective. Except as expressly set forth herein to the contrary, each Party
shall be responsible only for its obligations, and shall be liable only for its
proportionate share of the costs related to the Gathering System in accordance with the
Ownership Ratio, unless otherwise specified herein to the contrary. It is not the intention
of the Parties to create, nor shall this Agreement be construed as creating, a partnership,
joint venture, agency relationship or association, or to render the Parties liable as
partners, co-venturers, or principals. In the event that an Owner (in such case, a
“Responsible Owner”) is ultimately held liable or responsible to a third party or
Governmental Authority for costs, claims or liabilities of any kind attributable to the
other Owner’s Ownership Interests, under a theory of joint and several liability or
otherwise, then the Responsible Owner shall be entitled to an immediate reimbursement of any
amounts actually paid out of pocket attributable to the other Owner’s Ownership Interest.
In their relations with each other under this Agreement, the Parties shall not be considered
fiduciaries but rather shall be free to act on an arm’s-length basis in accordance with
their own respective self-interest, subject, however, to the obligation of the Parties to
act in good faith in their dealings with each other with respect to activities hereunder.

     (b) Actual Costs and Expenses. It is contemplated and agreed herein that the
Manager shall not earn or be paid a separate fee for performing the functions of the
Manager. To the extent that Manager incurs and pays any out of pocket costs, expenses or
liabilities to Third Parties, to the Contract Operator, or with regard to internal personnel
and labor costs of Manager (or its Affiliates) pursuant to authorities
granted to them in this Agreement, under an Approved Budget (or a deemed Approved
Budget) or an Approved AFE’s, approved Major Decisions, or other costs, expenses or
liabilities authorized or permitted to be incurred by Manager under this Agreement or are
otherwise attributable to the Ownership Interests of the other Owners, then such Manager
shall be entitled to reimbursement from the other Owners of such

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other Owner’s proportionate
Ownership Ratio share of such costs, expenses and liabilities actually incurred and paid.
To the extent reasonably available, all reimbursable costs, expenses and liabilities shall
be supported by invoices, receipts or other appropriate documentation.

     6.2 Liens and Security Interests.

     In accordance with the terms of the NGAS Mortgages, NNG shall grant a first lien and security
interest to Seminole on NNG’s Ownership Interest in the Gathering System, as well as any Solely
Owned Segments, Net Profits Interests, or other assets or properties that NNG owns or holds to
support, among other obligations or liabilities described therein, all of NNG’s obligations and
liabilities under this Agreement. In accordance with the terms of the Seminole Mortgages, Seminole
shall grant a subordinated, second lien and security interest to NNG on Seminole’s Ownership
Interest in the Gathering System, as well as any Solely Owned Segments, Net Profits Interests, or
other assets or properties that Seminole owns or holds to support, among other obligations or
liabilities described therein, all of Seminole’s obligations and liabilities under this Agreement.
Neither NNG nor Seminole shall assign the Seminole Mortgages nor the NGAS Mortgages, respectively,
without the consent of the other Party; provided however, that NNG may assign the Seminole
Mortgages to the Administrative Agent (as such term is defined in the NGAS Credit Agreement, as
defined in the APA) for the benefit of the lenders under the NGAS Credit Agreement, as collateral
for the Obligations (as such term is defined therein) so long as the obligations of NNG thereunder
do not exceed in the aggregate $7,500,000 and upon exercise of the NGAS Option (as defined in the
APA) and the payment by Seminole pursuant to the terms thereunder, such collateral assignment shall
be released.

     6.3 Advances.

     Manager, at its election, shall have the right from time to time to demand and receive from
one or more of the other Parties, payment in advance of their respective shares of the estimated
amount of capital improvement costs or the expense to be incurred in operating the Gathering
System, including working capital hereunder during the next succeeding month, which right may be
exercised only by submission to each such Party of an itemized statement of such estimated expense,
together with an invoice for its share thereof. Each such statement and invoice for the payment in
advance of estimated expense shall be submitted on or before the twentieth (20th) day of
the next preceding month.

     Each Party shall pay to Manager its proportionate share in accordance with the Ownership Ratio
of such estimate within fifteen (15) days after such estimate and invoice is delivered to such
Party. If any Party fails to pay its share of said estimate within said time, the amount due shall
bear interest at the maximum legal rate until paid. Proper adjustment shall be made monthly
between advances and actual expense to the end that each Party shall bear and pay its proportionate
share in accordance with the Ownership Ratio of actual expenses incurred, and no more.

     6.4 Defaults and Remedies.

     If any Party fails to discharge any financial obligation under this Agreement, including,
without limitation, the failure to pay any amount when due, or make any advance, or any other
provision of this Agreement, within the period required for such payment or performance hereunder
(in such case, a “Defaulting Owner”), then in addition to the remedies provided herein or elsewhere
in this Agreement, or the remedies available under Applicable Law, the remedies specified below
shall be applicable, and the other Owners (the “Non-Defaulting Owners”, and individually, a
“Non-Defaulting Owner) shall be entitled to pursue such remedies. For purposes of this Article VI,
all notices and elections shall be delivered only by Manager, except that when Manager is the
Defaulting Owner, the applicable notices and elections can be delivered by any Owner. Election of
any one or more of the following remedies shall not preclude the subsequent use of any other remedy
specified below or otherwise available to a Non-Defaulting Owner:

     (a) Suspension of Rights. Any Party may deliver to the Defaulting Owner a
Notice of Default, which shall specify the default, specify the action that needs to be
taken to cure the default, and specify that failure to take such action will result in the
exercise of one or more of the remedies provided in this Article. If the default is not
cured within thirty (30) days of the delivery of such Notice of Default, all of the rights
of the Defaulting Owner granted by this Agreement may upon notice from any Non-Defaulting
Owner be suspended until the default is cured, without prejudice to the right of the
Non-Defaulting Owner or Parties to continue to enforce the obligations of the Defaulting
Owner previously accrued or thereafter
accruing under this Agreement. The rights of a Defaulting Owner that may be suspended
hereunder at the election of the non-defaulting Parties shall include, without limitation,
the right to receive information as to any operation conducted hereunder during the period
of such default, the right to participate in an operation being conducted under this
Agreement and the right to receive proceeds from operations.

20

 

     (b) Advance Payment. If a default is not cured within twenty (20) days after
the delivery of a Notice of Default, Manager, or any Non-Defaulting Owners if Manager is the
Defaulting Owner, may thereafter require advance payment from the Defaulting Owner Party of
such Defaulting Owner’s anticipated share of any item of expense for which Manager, or
Non-Defaulting Owners, as the case may be, would be entitled to reimbursement under any
provision of this Agreement, whether or not such expense was the subject of the previous
default. If the Defaulting Owner fails to pay the required advance payment, the
Non-Defaulting Owners may pursue any of the remedies provided in this Agreement. Any excess
of funds advanced remaining when the operation is completed and all costs have been paid
shall be promptly returned to the advancing Party.

     (c) Default Interest. If either Party fails or refuses to make any payment to
the other in a timely manner in accordance with the provisions contained in this Agreement,
the unpaid balance shall bear interest which shall be paid to the non-defaulting Party. The
rate of interest shall be calculated as commencing on the date due of the defaulted payment
and continue until the default amount, plus the interest, shall have been paid in full to
the non-defaulting Party. The rate of interest applied (the “Default Interest Rate”) shall
be calculated as the sum of (i) a variable rate equal to the prime rate of interest as
published from time to time in The Wall Street Journal, each change in the prime
rate to be effective without notice on the effective date of each change in the prime rate
as so published, plus (ii) eight percent (8%); provided, however, that the Default Interest
Rate chargeable hereunder shall never exceed the maximum non-usurious rate of interest
allowed by Applicable Law.

     (d) Recovery of 25% IRR. To the extent a Non-Defaulting Owner pays, or elects
(in its sole discretion) to pay any IRR Funded Capital, then any and all payments that would
otherwise be made under the SES Gathering Agreement to the Defaulting Owner shall instead be
paid to such Non-Defaulting Owner until such Non-Defaulting Owner recovers from such
Defaulting Owner’s share of such payments, the lesser of (i) a 25% IRR (meaning an IRR using
an IRR Specified Discount Rate of 25%) relative to all of the IRR Funded Capital it paid,
and (ii) an amount equal to the aggregate IRR Funded Capital it paid, plus a rate of
interest thereon equal to the maximum, non-usurious rate of interest permitted under
Applicable Law.

     6.5 Taxes.

     Beginning with the first calendar year after the effective date hereof, Manager shall render
for ad valorem taxation all property subject to this Agreement which by law should be rendered for
such taxes, and it shall pay all such taxes assessed thereon before they become delinquent.
Manager shall bill the other Parties for their proportionate shares of all tax payments.

     6.6 Assignment; Maintenance of Uniform Interest; Successor Bound.

     For the purpose of maintaining uniformity of ownership in the Gathering System (and
including/excluding any Solely Owned Segments) covered by this Agreement, and subject to the other
restrictions in Section 2.4, no Owner shall Transfer its interest in the Gathering System
except as otherwise expressly permitted in this Agreement (whether as a Permitted Transfer or
otherwise permitted under this Agreement) and no such Transfer shall be effected unless it covers
the entire interest of the Party in the Gathering System(and including/excluding any Solely Owned
Segments). Subject to the other restrictions in Section 2.4, every Transfer made by any
Party shall be made expressly subject this Agreement. Subject to the other restrictions in
Section 2.4, no assignment or other disposition of interest by a Owner shall relieve such
Owner of obligations or liabilities hereunder with regard to the interest transferred, and the lien
and security interest granted shall continue to burden the interest transferred to secure payment
of any such obligations. Any recipient or assignee of an interest in the Gathering System or the
Solely Owned Segments or any Net Profits Interests (other than the pledge to the Administrative
Agent under the NGAS Credit Agreement of 100% of the equity interest in NNG) must execute an
amendment to this Agreement (the form of which shall be as agreed to by the non-Transferring
Owner(s)), agreeing to become a Party to this Agreement with regard to the interest received or
assigned and agreeing to be bound hereby. Any conveyance, transfer or assignment of any interest
(whether by operation of Applicable Law or otherwise) in the Gathering System or the Solely Owned
Segments or any Net Profits Interests which does not require that the recipient or assignee to so
agree will be void.

ARTICLE VII

INTERNAL REVENUE CODE ELECTION

     If, for federal income tax purposes, this Agreement and the operations hereunder are regarded
as a

21

 

partnership, and if the Parties have not otherwise agreed to form a tax partnership or other
agreement between them, each Party thereby affected elects to be excluded from the application of
all of the provisions of Subchapter “K,” Chapter 1, Subtitle “A,” of the Internal Revenue Code of
1986, as amended (“Code”), as permitted and authorized by Section 761 of the Code and the
regulations promulgated hereunder. Manager is authorized and directed to execute on behalf of each
Party hereby affected such evidence of this election as may be required by the Secretary of the
Treasury of the United States or the Federal Internal Revenue Service, including specifically, but
not by way of limitation, all of the returns, statements, and the data required by Treasury
Regulation §1.761. Should there be any requirement that each Party hereby affected give further
evidence of this election each such Party shall execute such documents and furnish such other
evidence as may be required by the Federal Internal Revenue Service or as may be necessary to
evidence this election. No such Party shall give any notices or take any other action inconsistent
with the election made hereby. If any present or future income tax laws of the state or states in
which the Facility is located or any future income tax laws of the United States contain provisions
similar to those in Subchapter “K,” Chapter 1, Subtitle “A,” of the Code, under which an election
similar to that provided by Section 761 of the Code is permitted, each Party hereby affected shall
make such election as may be permitted or required by such laws. In making the foregoing election,
each such Party states that the income derived by such Party from operations hereunder can be
adequately determined without the computation of partnership taxable income.

ARTICLE VIII

INDEMNITY

     Each Owner, in proportion to its Ownership Interest:

     (i) shall RELEASE, INDEMNIFY, DEFEND and HOLD HARMLESS from and against any
claims, losses, damages, lawsuits, costs (including, without limitation, attorney
fees, court costs and other costs of investigation or defense), fines, charges,
assessments or liabilities of any kind whatsoever (collectively “Indemnity Claims”)
against any Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the right
of the Owner), by reason of the fact that he, she or it is or was an Owner
Representative,

     (ii) with regard to their Ownership Interest, shall RELEASE, INDEMNIFY, DEFEND
and HOLD HARMLESS the Manager, its Affiliates, and any of their respective
employees, officers, directors, managers, agents, and representatives from and
against any Indemnity Claims relating to bodily injury, personal injury, illness,
death, or any loss of, destruction of or damage to property of any kind (including,
without limitation, economic loss) arising from or related to their function as
Manager hereunder or the acquisition, construction, installation, ownership, use,
expansion, extension, operation, maintenance, repair, replacement, marketing,
abandonment or other disposition of the Gathering System or any Solely Owned
Segments,

REGARDLESS OF WHETHER ANY SUCH INDEMNITY CLAIMS ARE ATTRIBUTABLE TO, IN WHOLE OR IN PART, TO THE
SOLE, JOINT, CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OR RESPONSIBILITY OF MANAGER,
ANY OWNER, OR ANY OTHER PERSON.

ARTICLE IX

CLAIMS AND LAWSUITS

     The Owners hereby stipulate and agree that Manager may settle any single uninsured third party
damage claim or suit arising from operations hereunder if the expenditure does not exceed Fifty
Thousand Dollars ($50,000.00) and if the payment is in complete settlement of such claim or suit.
If the amount required for settlement exceeds the above amount, the Parties hereto shall assume and
take over the further handling of the claim or suit, unless such authority is delegated to Manager.
All costs and expenses of handling settling or otherwise discharging such claim or suit shall be a
joint expense of the Owners participating in the operation from which the claim or suit arises. If
a claim is made against any Owner or if any Owner is sued on account of any matter arising
from operations hereunder over which such individual has no control because of the rights
given Manager by this Agreement, such Owner shall immediately notify all other Owners, and the
claim or suit shall be treated as any other claim or suit involving operations hereunder.

ARTICLE X

22

 

FORCE MAJEURE

     10.1 Force Majeure.

     (a) In General. In the event of any Party being rendered unable, wholly or in
part, by an Event of Force Majeure to carry out its obligations under this Agreement, except
payment of money or provision of indemnity and defense obligations, it is agreed that on
such Party giving notice in the manner herein contained and reasonably full particulars of
such Event of Force Majeure to the other Party within a reasonable time after the occurrence
of the cause relied on, the then obligations of the Party giving such notice, so far as it
is affected by such Event of Force Majeure, shall be suspended during the continuance of any
inability so caused, but for no longer period, and such cause shall so far as possible be
remedied with all reasonable dispatch.

     (b) Definition. The term “Event of Force Majeure,” as employed herein, shall
mean acts of God, strikes, lockouts, or other industrial disturbances, acts of the public
enemy, wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, storms, floods, high water, washouts, arrests and restraints of governments and
people, civil disturbances, explosions, breakage or accident to machinery or lines of pipe,
freezing of wells or lines of pipe, partial or entire failure of wells, and any other
causes, whether of the kind herein enumerated or otherwise, not at the time involved,
reasonably within the control of the Party claiming suspension; and such term shall likewise
include (i) in those instances where any Party hereto is required to obtain servitudes,
rights of way, grants, permits, or licenses to enable such Party to fulfill its obligations
hereunder, the inability of such Party to acquire, or the delays on the part of such Party
in acquiring, at reasonable costs and after the exercise of reasonable diligence, such
servitudes, rights of way, grants, permits, or licenses, and (ii) in those instances where
any Party hereto is required to furnish materials and supplies for the purpose of
constructing or maintaining facilities or is required to secure permits or permissions from
any Governmental Authorities to enable such Party to fulfill its obligations hereunder, the
inability of such Party to acquire, or the delays on the part of such Party in acquiring, at
reasonable costs and after the exercise of reasonable diligence, such materials and
supplies, permits and permissions.

     (c) Labor Disputes. It is understood and agreed that the settlement of strikes
or lockouts shall be entirely within the discretion of the Party having difficulty, and the
above requirement that any Event of Force Majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes or lockouts by acceding to the demands
of the Party having the difficulty.

ARTICLE XI

TERM

     This Agreement shall commence as of the effective date set forth in the introductory paragraph
of this Agreement and shall continue in force and effect until the none of the Gathering System nor
any Solely Owned Segments are being used to gather or transport natural gas, and all have been
permanently removed and abandoned in accordance with all Applicable Law, and there remain no
further payment obligations by any Owner to any other Owner under this Agreement. Notwithstanding
the above, to the extent that the NGAS Asset Option (as defined in the APA) is exercised (whether
by Seminole or in accordance with the put options described therein), the term of this Agreement
shall automatically terminate upon the closing and consummation of such NGAS Option, and the
Parties shall execute such further amendments to this Agreement or other instruments as may be
necessary or appropriate to reflect the termination thereof; provided, however, that termination of
this Agreement shall in no way relieve or release any Party for obligations or liabilities accrued
prior to the termination hereof.

ARTICLE XII

NOTICES

     All notices authorized or required between the Parties by any of the provisions of this
Agreement, unless otherwise specifically provided, shall be in writing and delivered in person or
by United States mail, courier service, telegram, telex, telecopier or any other form of facsimile,
postage or charges prepaid, and addressed to such Parties
at the addresses as follows:

Seminole Gas Company, L.L.C.

1323 E. 7lst Street, Suite 300

Tulsa, Oklahoma 74136

23

 

(918) 477-3451 (fax)

Attention: Alex Goldberg

NGAS Gathering II, LLC

120 Prosperous Place, Suite 201

Lexington, Kentucky 40509

(859) 263-4228 (fax)

Attention: William G. Barr III, Chief Executive Officer

All telephone or oral notices permitted by this Agreement shall be confirmed immediately thereafter
by written notice. The originating notice given under any provision hereof shall be deemed
delivered only when received by the Party to whom such notice is directed, and the time for such
Party to deliver any notice in response thereto shall run from the date the originating notice is
received. “Receipt” for purposes of this Agreement with respect to written notice delivered
hereunder shall be actual delivery of the notice to the address of the Party to be notified
specified in accordance with this Agreement, or to the telecopy, facsimile or telex machine of such
Party. The second or any responsive notice shall be deemed delivered when deposited in the United
States mail or at the office of the courier or telegraph service, or upon transmittal by telex,
telecopy or facsimile, or when personally delivered to the Party to be notified, provided, that
when response is required within 24 or 48 hours, such response shall be given orally or by
telephone, telex, telecopy or other facsimile within such period. Each Party shall have the right
to change its address at any time, and from time to time, by giving written notice thereof to all
other Parties. If a Party is not available to receive notice orally or by telephone when a Party
attempts to deliver a notice required to be delivered within 24 or 48 hours, the notice may be
delivered in writing by any other method specified herein and shall be deemed delivered in the same
manner provided above for any responsive notice.

ARTICLE XIII

COMPLIANCE WITH LAWS AND REGULATIONS

     13.1 Laws, Regulations and Orders.

     This Agreement shall be subject to all Applicable Laws, including, without limitation, those
of the state in which the Gathering System are located, and to the valid rules, regulations, and
orders of any duly constituted regulatory body of said state; and to all other applicable federal,
state, and local laws, ordinances, rules, regulations and orders. Each Owner and SOS Owner agrees
to comply with all Applicable Law relative to their ownership or obligations regarding the
Gathering System or any Solely Owned Segments.

     13.2 Regulatory Agencies.

     Nothing herein contained shall grant, or be construed to grant, Manager the right or authority
to waive or release any rights, privileges, or obligations which Owners may have under federal or
state laws or under rules, regulations or orders promulgated. With respect to the operations
hereunder, Owners agree to RELEASE, WAIVE AND FULLY DISCHARGE Manager from any and all losses,
damages, injuries, claims and causes of action arising out of, incident to or resulting directly or
indirectly from Manager’s interpretation or application of Applicable Law, including, without
limitation, any rules, rulings, regulations or orders of the Department of Energy or Federal Energy
Regulatory Commission or predecessor or successor agencies to the extent such interpretation or
application was made in good faith and does not constitute gross negligence, REGARDLESS OF WHETHER
ANY SUCH CLAIMS ARE ATTRIBUTABLE TO, IN WHOLE OR IN PART, TO THE SOLE, JOINT, CONCURRENT
NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OR RESPONSIBILITY OF MANAGER, ANY OWNER, OR ANY OTHER
PERSON. Each Owner further agrees to reimburse Manager for such Owner’s share of any refund, fine,
levy or other governmental sanction that Manager may be required to pay as a result of such an
incorrect interpretation or application, together with interest and penalties thereon owing by
Manager as a result of such incorrect interpretation or application.

ARTICLE XIV

MISCELLANEOUS

     14.1 Execution.

     This Agreement shall be binding upon each Owner when this Agreement or a counterpart thereof
has been executed by such Owners.

     14.2 Successors and Assigns.

24

 

     This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective heirs, devisees, legal representatives, successors and assigns. Any Transfers of
any interests in the Gathering System or Solely Owned Segments must comply with the terms,
provisions or limitations set forth in Section 2.4, including, without limitation, the
obligation for any successor in interest to the Gathering System or any Solely Owned Segments to
take their interest subject to the terms and provisions of this Agreement, the SES Gathering
Agreement and any applicable SOS SES Gathering Agreement, and must agree to assume and agree to be
bound by the obligations and liabilities under this Agreement and such other agreements relative to
the interests acquired.

     14.3 No Waiver.

     Failure of either Party to require performance of any provision of this Agreement shall not
affect either Party’s right to require full performance thereof at any time thereafter, and the
waiver by either Party of a breach of any provisions hereof shall not constitute a waiver of a
similar breach in the future or of any other breach of nullify the effectiveness of such provision.

     14.4 Injunctive Relief.

     The Parties acknowledge that a breach of the provisions of this Agreement may cause
irreparable injury to the Owners for which monetary damages are inadequate, difficult to compute,
or both. Accordingly, the Parties to this Agreement agree that in such event the provisions of
this Agreement may be enforced by injunctive action or specific performance.

     14.5 Entire Agreement.

     This Agreement, together with the exhibits attached hereto, the SES Contract Operating
Agreement, the SES Gathering Agreement, NAESB Purchase Agreement, any SOS SES Gathering Agreement,
the Asset Purchase Agreement (and any agreements executed in connection therewith), constitute the
entire agreement and understanding between the Parties with regard to the subject matter hereof and
terminate, supersede, and render null and void and of no further force and effect any prior
understandings, negotiations or agreements between the Parties and their predecessors relating to
the subject matter hereof.

     14.6 Memorandum of this Agreement.

     The Parties shall execute and deliver a Memorandum of Options and Agreement, in substantially
the form attached to the Asset Purchase Agreement as Exhibit N (the “MOA”), acknowledging
that the undersigned Parties have entered into this Agreement. The MOA shall also acknowledge the
intent that the right of first refusal and other obligations, commitments and dedications set forth
herein be deemed covenants running with the land, binding upon any transferee of an interest in any
the Gathering System or any Solely Owned Segments; and the MOA shall be filed of record in each
County or Parish in which any part of the Gathering System or Solely Owned Segments sit.

     14.7 Counterparts.

     This instrument may be executed in any number of counterparts, each of which shall be
considered an original for all purposes.

     14.8 Amendments.

     Except as expressly provided herein, this Agreement may only be amended upon the written
consent of all Owners.

     14.9 No Consequential Damages.

     Notwithstanding anything contained to the contrary in this Agreement, the Parties agree that
the recovery by any Party of any damages suffered or incurred by it as a result of any breach by
another Party of any of its obligations under this Agreement shall be limited to the actual damages
suffered or incurred by the non-breaching Party as a result of the breach by the breaching Party of
its obligations hereunder and in no event shall the breaching
Party be liable to the non-breaching Party for any indirect, consequential, special,
exemplary, or punitive damages (including any damages on account of lost profits or opportunities
or lost or delayed generation) suffered or incurred by the non-breaching Party as a result of the
breach by the breaching Party of any of its obligations hereunder; provided, however, that the
foregoing shall not be considered a waiver of cover damages, nor shall it be deemed a waiver of any
Indemnity Claims asserted by third parties for which one Party has expressly agreed to indemnify
the other under the terms of this Agreement.

     14.10 Further Assurances.

     In connection with this Agreement and the transactions contemplated hereby, each Owner shall
execute and

25

 

deliver any additional documents and instruments and perform any additional acts that
may be necessary or appropriate to effectuate and perform the provisions of this Agreement and such
transactions.

     14.11 Severability.

     For the purposes of assuming or rejecting this Agreement as an executory contract pursuant to
federal bankruptcy laws, this Agreement shall not be severable, but rather must be assumed or
rejected in its entirety, and the failure of any Party to this Agreement to comply with all of its
financial obligations provided herein shall be a material default.

     14.12 Governing Law; Jurisdiction & Venue.
This Agreement shall be construed, enforced and interpreted according to the laws of the State
of Texas, without regard to the conflicts of law rules thereof; provided, however, that the Parties
acknowledged that the right of first refusal provisions under Section 2.4, shall be
construed, enforced and interpreted according to the laws of the state where the applicable
properties sit. Each Party hereby irrevocably submits to the jurisdiction of the courts of the
State of and the federal courts of the United States of America located in Harris County, Texas
over any dispute or proceeding arising out of or relating to this Agreement or any of the
transactions contemplated hereby or thereby, and each Party irrevocably agrees that all claims in
respect of such dispute or proceeding shall be heard and determined in such courts. Each Party
hereby irrevocably waives, to the fullest extent permitted by Applicable Law, any objection which
it may now or hereafter have to the venue of any dispute arising out of or relating to this
Agreement or any Ancillary Agreement or any of the transactions contemplated hereby or thereby
brought in such court or any defense of inconvenient forum for the maintenance of such dispute or
action. Each Party agrees that a judgment in any dispute heard in the venue specified by this
section may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Applicable Law.

     14.13 WAIVER OF JURY TRIAL.
EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT.

     14.14 Rule Against Perpetuities. It is not the intent of that Parties that any
provision herein violate any applicable law regarding the rule against perpetuities, the suspension
of the absolute power of alienation, or other rules regarding the vesting or duration of estates.
This Agreement shall be construed as not violating any such rule to the extent the same can be so
construed consistent with the intent of the Parties. In the event that any provision hereof is
determined to violate any such rule, then such provision shall nevertheless be effective for the
maximum period (but not longer than the maximum period) permitted by such rule that will result in
no violation. To the extent the maximum period is permitted to be determined by reference to
“lives in being,” the Parties agree that “lives in being” shall refer to the lifetime of the last
to die of the living lineal descendants of the late Joseph P. Kennedy (father of the late President
of the United States of America).

[Remainder of page intentionally left blank.]

26

 

     IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have executed this
Agreement through their authorized representatives as of the date first set forth above.

	 	 	 	 	 
	 	SEMINOLE GAS COMPANY, L.L.C.

 	 
	 	By:  	/s/ Robert B. Rosene, Jr.
 	 
	 	 	Robert B. Rosene, Jr., 	 
	 	 	President 	 
	 
	 	NGAS GATHERING II, LLC

 	 
	 	By:  	./s/ William G. Barr III
 	 
	 	 	William G. Barr III, 	 
	 	 	Chief Executive Officer 	 
	 

27EX-10.3

Exhibit 10.3

OPTION AGREEMENT

     This OPTION AGREEMENT (this “Agreement”) is made as of the 15th day of July, 2009,
by and among Seminole Energy Services, LLC, an Oklahoma limited liability company (“SES”), NGAS
Gathering, LLC, a Kentucky limited liability company (“NGL”), Daugherty Petroleum, Inc., a Kentucky
corporation (“DPI”), and NGAS Gathering II, LLC, a Kentucky limited liability company wholly owned
by DPI (“New NGAS Gathering”). SES, NGL, DPI and New NGAS Gathering are sometimes referred to
herein individually as a “Party” and collectively as the “Parties.” Other capitalized terms used
herein and not defined below shall have the respective meanings set for the in the Purchase
Agreement (as hereinafter defined).

RECITALS

     WHEREAS, the Parties entered into that certain Asset Purchase Agreement dated as of May 11,
2009, as amended by that certain First Amendment to Asset Purchase Agreement (“First Amendment”)
dated the date hereof (as further amended, modified and supplemented, the “Purchase Agreement”),
relating to various gathering systems owned by NGL and DPI in Kentucky, Tennessee and Virginia,
together with related assets, as furthered described in the Purchase Agreement (collectively, the
“Gathering Assets”).

     WHEREAS, pursuant to the terms of the Purchase Agreement, NGL and DPI have (i) sold and
conveyed an undivided 50% interest in the Gathering System to Seminole Gas Company, L.L.C., an
Oklahoma limited liability company wholly owned by SES (“SGC”) and (ii) contributed the remaining
undivided 50% interest in the Gathering System to New NGAS Gathering.

     WHEREAS, in accordance with the Purchase Agreement and as partial consideration for the
transactions contemplated thereby, NGL, DPI and New NGAS Gathering agreed that at the closing of
the transactions contemplated by the Purchase Agreement (the “APA Closing”) such parties would
grant options to SES, and SES agreed to accept the options, to either (i) purchase 100% of the
equity interests of, in and to New NGAS Gathering or (ii) purchase the 50% undivided interest in
the Gathering System held by New NGAS Gathering.

     WHEREAS, as part of the modifications to the Purchase Agreement provided in the First
Amendment, the Parties and SGC have agreed, with the consent of SES, to set forth the terms and
conditions of such options in this Agreement rather than in the Purchase Agreement or the exhibits
or schedules thereto.

     NOW, THEREFORE, FOR AND IN CONSIDERATION of the sum of Ten Dollars ($10.00), the premises,
mutual covenants, representations, warranties, conditions and agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:

     1. Definitions. Where used herein, except where the context otherwise requires, the
following terms shall be defined as set forth below. Other capitalized terms used herein and not
defined below have the respective meaning set forth in the Purchase Agreement.

     ”NGAS Option Assets” means and includes all real, personal and mixed property interests
of New NGAS Gathering of any kind whatsoever, including, without limitation, the Retained
Gathering Assets (as defined in the Purchase Agreement).

     ”NGAS Option Equity Interests” means 100% of all of the limited liability company
interests, membership interests or any other equity interests in New NGAS Gathering.

     ”NGAS Option Period” shall have the meaning set forth in Section 2 hereof.

     ”NGAS Options Price” shall have the meaning set forth in Section 2 hereof.

     ”NGAS Option Promissory Note” means the promissory note of SES in substantially the
form of Exhibit A attached hereto.

     ”NGAS Qualified Offering” means either (1) a private placement of shares of NRI common
stock in reliance on Reg. D under the Securities Act, (2) a registered direct “best efforts”
placement of shares of NRI common stock under the NGAS Shelf or (3) a firm commitment
underwritten public offering of the shares of common stock of NRI, which (A) is consummated
no later than 5:00 p.m. Tulsa, Oklahoma time on the second Business Day before the
expiration of the NGAS Option Period, (B) is conducted in

1

 

accordance with applicable Law, including the Securities Act and the applicable Nasdaq
listing standards, and (C) provides NRI with net cash proceeds of not less than US
$5,000,000.

     ”NNG LLC Agreement” shall mean the limited liability company agreement, operating
agreement, or applicable governing document and agreement for New NGAS Gathering dated as of
the date hereof, as amended and as the same may be amended in accordance with the terms
thereof and the other Transaction Documents.

     ”NRI Shelf” means registration statement on Form S-3 (File No. 333-144417) filed by NRI
with the Securities and Exchange Commission to register up to an aggregate of $100,000,000
of its equity or debt securities for sale from time to time was declared effective on
November 7, 2007.

     ”NRI” means NGAS Resources, Inc., a British Columbian corporation, and the ultimate
parent company of Sellers and New NGAS Gathering.

     ”Securities Act” means the Securities Act of 1933, as amended, supplemented or restated
from time to time, and any successor statute.

     2. Option. For the period commencing on the date of this Agreement and ending at 5:00
p.m. Tulsa, Oklahoma time on January 15, 2010 (the “NGAS Option Period”):

     (a) DPI hereby grants to SES the exclusive, irrevocable, and continuing right and
option (the “NGAS Equity Option”) to purchase all of the NGAS Option Equity Interests, free
and clear of all Liens other than any lien or encumbrance arising under the NNG LLC
Agreement or restrictions on transfer under applicable securities laws), in accordance with
the other terms and provisions hereof; and

     (b) New NGAS Gathering hereby grants to SES the exclusive and irrevocable and
continuing right and option (the “NGAS Assets Option”) to purchase all of the NGAS Option
Assets, free and clear of all Liens (other than Permitted Encumbrances) in accordance with
the other terms and provisions hereof.

     The purchase price (the “NGAS Option Price”) for either the NGAS Equity Option or the NGAS
Asset Option (collectively referred to herein as the “NGAS Options” and, individually as an “NGAS
Option”) shall be paid in the forms specified in Section 3 and otherwise in accordance with
Section 6 in an amount equal to TWENTY-TWO MILLION DOLLARS (US$22,000,000), minus the sum
of (A) the third-party costs incurred by SES to remove and obtain a full and final release of any
Liens on the NGAS Option Equity Interests or NGAS Option Assets (other than Permitted Encumbrances)
or to remove and obtain a full and final release of any guaranties issued or agreed to by New NGAS
Gathering, and (B) any Tax or expenses attributable to New NGAS Gathering or the NGAS Option
Assets, insofar as they relate to periods prior to the closing of the NGAS Option, for which SES
(or New NGAS Gathering after such closing) will be liable (and SES agrees to timely pay the amounts
deducted pursuant to this sub-clause (b) to the governmental body or other party or parties
entitled to such payment when due, but in no event shall SES be obligated to pay an aggregate
amount in excess of the amount credited against the NGAS Option Price).

     3. Forms of Payment of NGAS Option Price. The NGAS Option Price shall be payable as
follows: (1) $7,500,000 by wire transfer to a designated account of DPI at KeyBank National
Association, to be applied as a partial repayment of outstanding borrowings under the NGAS Credit
Agreement; and (2) the remainder in the form of the NGAS Option Promissory Note, payable to the
order if DPI, as described in Section 7 below.

     4. Exercise of the NGAS Options. If SES elects to exercise an NGAS Option, it shall
give written notice thereof (the “NGAS Option Election Notice”) at any time prior to the expiration
of the NGAS Option Period to DPI and New NGAS Gathering, specifying whether its election covers the
NGAS Option Equity Interests (“NGAS Equity Option”) or the NGAS Option Assets (“NGAS Assets
Option”).

     5. Put Option. Subject to the provisions of Section 5.1(b) of the Purchase
Agreement, if an NGAS Qualified Offering is consummated at any time prior to the expiration of the
NGAS Option Period and any Required Consents not obtained prior to Closing have been obtained
within sixty days after the Closing under the Purchase Agreement, and are in full force and effect,
DPI, upon written notice to SES (“Put Notice”), shall have the irrevocable right to require that
SES purchase the NGAS Option Equity Interests for the NGAS Option Price, in accordance with the
terms hereof, subject, however, to all of the other applicable conditions and covenants set forth
herein. NRI intends to consummate an NGAS Qualified Offering prior to the end of the NGAS Option
Period.

     6. Conditions. Notwithstanding anything stated herein to the contrary, and
notwithstanding delivery of an NGAS Option Election Notice by SES or delivery of a Put Notice by
DPI, the Parties shall have no obligation to, nor any liability for refusing to, close and
consummate the transactions contemplated by this Agreement unless

2

 

the following conditions are satisfied, and New NGAS Gathering and DPI, at their sole cost and
expense, shall use their respective best efforts to cause such conditions to be satisfied as
promptly as possible after the NGAS Option Election Notice is delivered to DPI and New NGAS
Gathering or the Put Notice is furnished to SES, as the case may be:

     (a) If the NGAS Equity Option is exercised, DPI shall properly execute and deliver to
Buyer, at the closing of the exercise of the NGAS Equity Option, two (2) original copies of
the Assignment of NGAS Equity Option Interests, dated as of the date thereof, in
substantially the form attached hereto as Exhibit B (the “NNG Equity Assignment”),
providing for the assignment and conveyance to SES of all of the NGAS Option Equity
Interests, free and clear of all Liens;

     (b) DPI and New NGAS Gathering shall have delivered to SES, at Sellers’ sole cost and
expense, release documentation, in form and substance satisfactory to SES, sufficient to
establish clear, marketable and unencumbered title to the NGAS Option Assets, free of all
Liens (other than Permitted Encumbrances) including the release of any and all liens or
collateral assignments created under the NGAS Credit Agreement;

     (c) At Seller’s sole cost and expense, Sellers shall cause Keybank National
Association, as administrative agent for the lenders under the NGAS Credit Agreement (and
any other lenders under the NGAS Credit Agreement) to properly execute, have notarized and
deliver to SES, two (2) original copies of the Release of Liens and Pledge, in substantially
the form attached hereto as Exhibit C (the “Equity Releases”), fully releasing all
security interests, Liens, claims, guaranties or encumbrances of any kind whatsoever that
Keybank National Association (and any other lenders under the NGAS Credit Agreement) may
have regarding the NGAS Option Equity Interests, New NGAS Gathering, any of the NGAS Option
Assets or any of the Ancillary Agreements and consenting to the closing of the exercise of
an NGAS Option, and with regard to the NGAS Equity Option, no Liens (other than Permitted
Encumbrances) shall remain in effect on any of the NGAS Option Equity Interests, the NGAS
Option Assets (other than pursuant to the NGAS Mortgages) or any of the Ancillary Agreements
all of which shall be fully released at Sellers’ sole cost and expense upon closing and
consummation of the exercise of the NGAS Equity Option;

     (d) with regard to NGAS Assets Option, subject to the payment of the NGAS Option Price
in accordance with Section 7, the NGAS Option Assets shall be conveyed to SES (or
its designated Affiliate), at the closing and consummation of the exercise of the NGAS
Assets, free and clear of any and all Liens (other than Permitted Encumbrances) under such
forms of conveyance substantially the same as the Bill of Sale;

     (e) all consents and approvals of any Person required or necessary to close and
consummate the exercise of the NGAS Option and the related actions contemplated in this
Section 6 shall have been obtained at Sellers’ sole cost and expense;

     (f) all covenants and agreements of New NGAS Gathering and DPI to be performed at or
prior to the closing of the exercise of an NGAS Option shall have been fully performed and
satisfied;

     (g) with regard to NGAS Equity Option, New NGAS Gathering shall have delivered to SES
property executed instruments providing for the resignation of all officers, directors and
managers of New NGAS Gathering, effective as of the closing date of the exercise of the NGAS
Equity Option;

     (h) New NGAS Gathering shall have delivered to SES property executed instruments
providing for the termination and cancellation of any powers of attorney, agency agreements,
or similar arrangements granted by New NGAS Gathering;

     (i) New NGAS Gathering shall continue to have no employees;

     (j) all representations and warranties set forth in Article 3 to the Purchase
Agreement with regard to New NGAS Gathering and the NGAS Options Assets shall be deemed made
and shall be true and correct, in all material respects, as of the date of the closing and
consummation of the exercise of an NGAS Option, and all covenants and agreements to be
performed by NGL, DPI or New NGAS Gathering on or before the closing and consummation of the
exercise of an NGAS Option shall have been fully performed, in all material respects;

     (k) SES shall have obtained all necessary approvals sufficient for SES to close the
exercise of an NGAS Option (whether pursuant to exercise by SES hereunder or pursuant to
exercise by DPI of its put option in accordance with Section 5); and

3

 

     (l) the Parties shall have closed and consummated the transactions contemplated in the
Purchase Agreement, including the satisfaction or waiver of all conditions thereunder or
therein; and all of the conditions precedent to the Buyer’s obligations to close and
consummate the transactions under the Purchase Agreement will continue to be satisfied in
all material respects as specified thereunder.

     7. Payment of the NGAS Option Price. The NGAS Option Price shall be paid in the
manner described in Section 3. At the closing and consummation of any exercise of the NGAS
Assets Option, SES shall issue the NGAS Option Promissory Note to New NGAS Gathering, and the NGAS
Option Promissory Note shall expressly permit its assignment to DPI and by DPI to the
Administrative Agent, as collateral security for the Obligations (as defined in the NGAS Credit
Agreement), without the consent of the SES. At the closing and consummation of any exercise of the
NGAS Equity Option, SES shall issue the NGAS Option Promissory Note to DPI, and DPI shall endorse
the same to evidence its agreement to the offset provisions included therein, and the NGAS Option
Promissory Note shall expressly permit its assignment to the Administrative Agent, as collateral
security for the Obligations (as defined in the NGAS Credit Agreement), without the consent of the
SES, so long as prior to effectiveness of any such assignment, DPI provides written notice to SES.

     8. Closing; Post-Closing Operations. Subject to satisfaction of the conditions set
forth in this Agreement, the closing and consummation of the exercise of an NGAS Options shall
occur within thirty (30) days following either SES’s exercise of the applicable NGAS Option, or
within thirty (30) days following receipt of the Put Notice, as the case may be. If SES exercises
an NGAS Option or DPI properly and timely delivers the Put Notice, and SES closes the purchase of
either the NGAS Option Assets or the NGAS Option Equity Interests, as the case may be, then SES
shall retain its Operating and Maintenance Agreement with DPI, if still in force and effect as of
the date of the closing of the exercise of an NGAS Option.

     9. Termination; Effect of Termination. In the event of any termination of the
Purchase Agreement as provided in Section 10.1 thereunder, this Agreement shall forthwith
be of no further force and effect and there shall be no liability hereunder on the part of any
Party hereto except as set forth in the Purchase Agreement.

     10. Representations and Warranties; Certain Amendments to Purchase Agreement; Negative
Covenants.

     (a) Representations and Warranties; Certain Amendments to Indemnities. New
NGAS Gathering and DPI shall be deemed to have made to SES the representations and
warranties in Article 3 of the Purchase Agreement with regard to New NGAS Gathering
and the NGAS Option Assets hereto as the date of the closing and consummation of the
applicable NGAS Option, which shall survive such closing, subject to the limitations (other
than the Deductible) set forth in Article 8 of the Purchase Agreement; provided,
however, that upon the closing of the NGAS Option, the indemnities shall also be deemed to
apply and additionally extended to SES with regard to the representations, warranties and
covenants relating to New NGAS Gathering, the NGAS Option Assets and the NGAS Option Equity
Interests, and the Maximum Indemnity Amount (set forth in Section 8.4 of the
Purchase Agreement) shall automatically be amended and increased to an aggregate of
$50,000,000, and the survival periods relative to the representations, warranties and
covenants (including, without limitation indemnities) relating to New NGAS Gathering, the
NGAS Option Assets and the NGAS Option Equity Interests shall be extended for an additional
period beyond the survival period stated in Section 8.1 of the Purchase Agreement,
which additional period shall be equal to the number of days between the date hereof and the
date of the closing of the exercise of an NGAS Option.

     (b) Negative Covenants. From and after the date of the Purchase Agreement and
continuing until the first to occur of (A) the termination of the NGAS Option Period if
prior to such termination SES has not elected to exercise either of the NGAS Options and DPI
has not delivered the Put Notice to SES, and (B) the closing and consummation of either NGAS
Option (whether by exercise by SES or in connection with Put Notice from DPI) in accordance
with the terms hereof, neither DPI nor New NGAS Gathering shall, nor shall either of them
permit, directly or indirectly, do or agree to do any of the following, except to the extent
provided in the Governing Documents of New NGAS Gathering or in any of the other Transaction
Documents, without the prior written consent of SES, which shall not be unreasonably
withheld or delayed:

     (i) amend or otherwise change any of New NGAS Gathering’s Governing
Documents;

     (ii) issue, sell, pledge, dispose of, grant, encumber or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any limited
liability company interests,

4

 

membership interests, or other equity interests, (including, without
limitation, the NGAS Option Equity Interests) or make any grants under
options, warrants, or similar rights to issue any limited liability company
interests, membership interests, or other equity interests;

     (iii) declare, set aside, make or pay any dividend or other distribution,
other than distributions of cash prior to the exercise of the NGAS Equity
Option;

     (iv) reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its any limited liability company
interests, membership interests, or other equity interests;

     (v) acquire or dispose of (including by merger, consolidation or acquisition
or disposition of equity securities or assets) any equity securities in any
Person, or any division or business thereof, and any other acquisition or
disposition of assets;

     (vi) incur (or Guaranty) any indebtedness, or pledge or mortgage any of its
assets or otherwise (including, without limitation, the Retained Gathering
Assets or other NGAS Option Assets);

     (vii) cause or permit any liens, security interests, pledges or other
encumbrance to exist against any of the assets of New NGAS Gathering
(including, without limitation, the Retained Gathering Assets, or other
rights, titles or interests of New NGAS Gathering);

     (viii) materially delay or postpone the payment of accounts payable and
other liabilities or materially accelerate the payment of receivables, in
each such case, other than in the ordinary course of business;

     (ix) allow New NGAS Gathering to make any loans, guaranties or advances to
any Person;

     (x) allow New NGAS Gathering to commit to make or make capital expenditures
or the acquisition or construction of fixed assets in excess of the amounts
in respect of such period expressly permitted under the Joint Ownership
Agreement;

     (xi) allow New NGAS Gathering to amend or terminate early any contract,
agreement or commitment or enter into any agreement or arrangement, other
than as expressly permitted under the Joint Ownership Agreement;

     (xii) allow New NGAS Gathering to hire or engage any employees, or grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or employee;

     (xiii) allow New NGAS Gathering to establish, adopt, enter into or amend any
collective bargaining agreement or employee benefit or welfare plan;

     (xiv) allow New NGAS Gathering to take any material action with respect to
accounting policies or procedures except to the extent required by GAAP;

     (xv) allow New NGAS Gathering to make, change or revoke any material Tax
election, settle or compromise any material Tax claim or liability with
respect to Taxes or change any material method of accounting for Tax
purposes;

     (xvi) allow New NGAS Gathering to pay, discharge or satisfy any claim,
liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) in excess of $100,000; or

     (xvii) agree, whether in writing or otherwise, to do any of the foregoing.

     11 Memorandum of NGAS Options. DPI, New NGAS Gathering and SES shall execute and
deliver a Memorandum of Options and Agreements (the “MOA”), acknowledging, among other things, that
such Parties have entered into this Agreement, which contains these NGAS Options and the covenants
relating to the Retained Gathering Assets and the other NGAS Option Assets. The MOA shall also
acknowledge the intent that the obligations, commitments and dedications set forth herein be deemed
covenants running with the land, binding upon

5

 

any transferee of an interest of New NGAS Gathering in any of the Retained Gathering Assets or
NGAS Option Assets; and the MOA shall be filed of record in each County in which any of such assets
are located.

     12. Amendment. No modification or amendment of this Agreement shall be effective
unless such modification or amendment shall be set forth in writing and executed by all of the
Parties hereto.

     13 Waivers. The failure of any Party to exercise any of its rights under this
Agreement shall in no way constitute a waiver of those rights, nor shall such failure excuse the
other Parties from any of its obligations under this Agreement.

     14. Notices and Termination. All notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and shall be delivered personally
(including by courier), sent by facsimile transmission or sent by certified, registered or express
mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, or if
sent by facsimile transmission, when transmitted, or, if mailed, two business days (a business day
being any day as which commercial banks are open in Tulsa, Oklahoma, other than Saturday and
Sunday), after the date of deposit in the United States mail, and addressed as set forth below or
to such other Person or address as each Party may from time to time designate by notice to the
other Party:

	 	(a)	 	If to NGL, DPI or New NGAS Gathering, to:
	 
	 	 	 	Daugherty Petroleum, Inc.

120 Prosperous Place, Suite 201

Lexington, Kentucky 40509

Attention: William G. Barr III

	 	(b)	 	If to SES, to:
	 
	 	 	 	Seminole Energy Services, LLC

1323 E. 71st Street

Suite 300

Tulsa, Oklahoma

Attention: Alex Goldberg

     A Party may from time to time change its address or designees for notification purposes by
giving the other Party prior notice in the manner specified above of the new address or the new
designee and the subsequent date upon which the change shall be effective.

     15. Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by applicable law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect to the maximum
extent permitted by applicable law.

     16. Entire Agreement. This Agreement (and all exhibits hereto) constitutes the entire
agreement between the Parties hereto with regard to the subject matter hereof and supersedes all
prior agreements, promises, correspondence, discussions, representations and understandings, except
those expressly set forth herein.

     17. Third Parties. This Agreement shall not be construed to confer any benefit on any
third party not a party to this Agreement nor shall it provide any rights to such third party to
enforce its provisions.

     18. Binding. This Agreement shall extend to and be binding upon the Parties hereto or
their respective successors and permitted assigns.

     19. Further Assurances. Each Party shall, at the request of any other Party, at any
time and from time to time following the date of Closing promptly execute and deliver, or cause to
be executed and delivered, to such requesting Party all such further instruments and take all such
further actions as may be reasonably necessary or appropriate to consummate the transactions
contemplated herein.

     20. Counterparts. This Agreement may be executed in multiple counterparts (including,
without limitation, faxed and electronic counterparts), each of which shall be deemed an original,
but all of which taken together shall constitute one and the same instrument.

     21. Rules of Construction Additional Definitions.

     (a) All section, titles or captions contained in this Agreement or in any Schedule or
Exhibit annexed hereto or referred to herein, are for convenience only, shall not be deemed
a part of this Agreement and shall not affect the meaning or interpretation of this
Agreement.

6

 

     (b) The Parties hereto represent that in the negotiation and drafting of this Agreement
they have been represented by and relied upon the advice of counsel of their choice. The
Parties affirm that their counsel have had a substantial role in the drafting and
negotiation of this Agreement and, therefore, the rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any Schedule or Exhibit attached hereto.

     (c) As used in this Agreement “Affiliate” “or “Affiliated “ means with respect to any
person or entity, another person or entity directly or indirectly controlling, controlled by
or under common control of such person or entity.

     22. Relationship of the Parties: Nothing in this Agreement is intended to imply or
create a partnership, joint venture, agency, or similar association or relationship among the
parties.

     IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the
Parties as of the date first above written.

	 	 	 	 	 
	 	NGAS GATHERING, LLC

 	 
	 	By:  	DAUGHERTY PETROLEUM, INC.
its Sole Member
 	 
	 	 	 
	 
	 	By:  	                               /s/ William G. Barr III
 	 
	 	 	William G. Barr III, 	 
	 	 	Chief Executive Officer 	 
	 
	 
	 	DAUGHERTY PETROLEUM, INC.

 	 
	 	By:  	./s/ William G. Barr III
 	 
	 	 	William G. Barr III, 	 
	 	 	Chief Executive Officer 	 
	 
	 
	 	NGAS GATHERING II, LLC

 	 
	 	By:  	./s/ William G. Barr III
 	 
	 	 	William G. Barr III, 	 
	 	 	Chief Executive Officer 	 
	 
	 
	 	SEMINOLE ENERGY SERVICES, LLC

 	 
	 	By:  	/s/ Robert B. Rosene, Jr.
 	 
	 	 	Robert B. Rosene, Jr., 	 
	 	 	President 	 
	 

7

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