Document:

4.1 Form of Warrant

Exhibit 4.1

WAVE SYSTEMS CORP.
Warrant To Purchase Common Stock
Warrant No.:             
Number of Shares of Common Stock:_____________
Date of Issuance:  May 27, 2015 ("Issuance Date")
Wave Systems Corp., a company organized under the laws of the Delaware (the "Company"), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [HOLDER], the registered holder hereof or its permitted assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date, (as defined below), ______________ (_____________)fully paid nonassessable shares of Class A Common Stock, par value $0.01 per share, of the Company ("Common Stock"), subject to adjustment as provided herein (the "Warrant Shares").  Except as otherwise defined herein, capitalized terms in this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, this "Warrant"), shall have the meanings set forth in Section 17.  This Warrant is one of the Warrants to purchase Common Stock (the "Warrants") issued pursuant to (i) that certain Underwriting Agreement, dated as of May 21, 2015 (the "Subscription Date") by and between the Company and Roth Capital Partners, LLC, (ii) the Company's Registration Statement on Form S-3 (File number 333-200316) (the "Registration Statement") and (iii) the Company's prospectus supplement dated as of May 21, 2015 (not taking into account any amendments, the “Prospectus Supplement”).
1.EXERCISE OF WARRANT.

(a)Mechanics of Exercise.  Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by the Holder at any time or times on or after the Issuance Date, in whole or in part, by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the "Exercise Notice"), of the Holder's election to exercise this Warrant and (ii) (A) payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "Aggregate Exercise Price") in cash by wire transfer of immediately available funds or (B) if the provisions of Section 1(d) are applicable, by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)).  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares.  On or before the first (1st) Trading Day following the date on which the Company has received the Exercise Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the Company's transfer agent (the "Transfer Agent").  On or before the third (3rd) Trading Day

1

following the date on which the Company has received the Exercise Notice, so long as the Holder delivers the Aggregate Exercise Price (or notice of a Cashless Exercise) on or prior to the second (2nd) Trading Day following the date on which the Company has received the Exercise Notice (the "Share Delivery Date") (provided that if the Aggregate Exercise Price has not been delivered by such date, the Share Delivery Date shall be one (1) Trading Day after the Aggregate Exercise Price (or notice of a Cashless Exercise) is delivered), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company's share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise.  The Company shall be responsible for all fees and expenses of the Transfer Agent and all fees and expenses with respect to the issuance of Warrant Shares via DTC, if any.  Upon delivery of the Exercise Notice, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder's DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be.  If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) Trading Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares issuable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.  No fractional Warrant Shares are to be issued upon the exercise of this Warrant, but rather the number of Warrant Shares to be issued shall be rounded up to the nearest whole number.  The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.  The Company's obligations to issue and deliver Warrant Shares in accordance with the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination.  

(b)Exercise Price.  For purposes of this Warrant, "Exercise Price" means $0.81, subject to adjustment as provided herein.

(c)Company's Failure to Timely Deliver Securities.  If the Company shall fail for any reason or for no reason to issue to the Holder on or prior to the Share Delivery Date either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, a certificate for the number of shares of Common Stock to which the Holder is entitled and register such Common Stock on the Company's share register or if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, to credit the Holder's balance account with DTC, for such number of shares of Common Stock to which the

2

Holder is entitled upon the Holder's exercise of this Warrant or (II) if a registration statement (which may be the Registration Statement) covering the issuance or resale of the Warrant Shares that are the subject of the Exercise Notice (the "Unavailable Warrant Shares") is not available for the issuance or resale, as applicable, of such Unavailable Warrant Shares and the Company fails to promptly, but in no event later than one Business Day after such registration statement becomes unavailable (x) so notify the Holder and (y) deliver the Warrant Shares electronically without any restrictive legend by crediting such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit / Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a "Notice Failure" and together with the event described in clause (I) above, an "Exercise Failure"), then, in addition to all other remedies available to the Holder, if on or prior to the Share Delivery Date either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company's share register or, if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit the Holder's balance account with DTC for the number of Shares of Common Stocks to which the Holder is entitled upon the Holder's exercise hereunder or pursuant to the Company's obligation pursuant to clause (ii) below or (II) a Notice Failure occurs, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Trading Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to issue such shares of Common Stock) or credit such Holder's balance account with DTC for such shares of Common Stock shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit such Holder's balance account with DTC, as applicable, and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) any trading price of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the applicable Exercise Date and ending on the applicable Share Delivery Date. Nothing shall limit the Holder's right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing Warrant Shares (or to electronically deliver such Warrant Shares) upon the exercise of this Warrant as required pursuant to the terms hereof.  While this Warrant is outstanding, the Company shall cause its transfer agent to participate in the DTC Fast Automated Securities Transfer Program

(d)Cashless Exercise.  Notwithstanding anything contained herein to the contrary, if a registration statement (which may be the Registration Statement) covering the issuance or resale of the Unavailable Warrant Shares is not available for the issuance or resale, as applicable, of such Unavailable Warrant Shares, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect

3

instead to receive upon such exercise the "Net Number" of shares of Common Stock determined according to the following formula (a "Cashless Exercise"):

Net Number = (A x B) - (A x C)
D
For purposes of the foregoing formula:
A= the total number of shares with respect to which this Warrant is then being exercised.
B= the arithmetic average of the Closing Sale Prices of the Common Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.
C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
D= the Closing Sale Price of the Common Stock on the date of the Exercise Notice.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares.  The Company agrees not to take any position contrary to this Section 1(d).

(e)Disputes.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 12.

(f)Beneficial Ownership.  Notwithstanding anything to the contrary contained herein, the Company shall not effect the exercise of any portion of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant and any such exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise, the Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (the "Maximum Percentage") of the number of shares of Common Stock outstanding immediately after giving effect to such exercise.  For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of

4

the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants, including the other Warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 1(f).  For purposes of this Section 1(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act").  For purposes of this Warrant, in determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Current Reports on Form 8-K or other public filing with the Securities and Exchange Commission (the "SEC"), as the case may be, (y) a more recent public announcement by the Company or (3) any other written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding (the "Reported Outstanding Share Number").  If the Company receives an Exercise Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall (i) notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Exercise Notice would otherwise cause the Holder's beneficial ownership, as determined pursuant to this Section 1(f), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be purchased pursuant to such Exercise Notice (the number of shares by which such purchase is reduced, the "Reduction Shares") and (ii) as soon as reasonably practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares.  For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported.  In the event that the issuance of Common Stock to the Holder upon exercise of this Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder's and the other Attribution Parties' aggregate beneficial ownership exceeds the Maximum Percentage (the "Excess Shares") shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares.  As soon as reasonably practicable after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price paid by the Holder for the Excess Shares.  Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder of Warrants that is not an Attribution Party of the Holder.  For purposes of clarity, the

5

shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall not be deemed to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act.  No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(f) to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 1(f) or to make changes or supplements necessary or desirable to properly give effect to such limitation.  The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Warrant.

(g)Insufficient Authorized Shares.  If at any time while this Warrant remains outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of this Warrant at least a number of shares of Common Stock equal to the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of this Warrant then outstanding (the "Required Reserve Amount" and the failure to have such sufficient number of authorized and unreserved shares of Common Stock, an "Authorized Share Failure"), then the Company shall immediately take all action necessary to increase the Company's authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for this Warrant then outstanding.  Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders' approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.  Notwithstanding the foregoing, if any such time of an Authorized Share Failure, the Company is able to obtain the written consent of a majority of the shares of its issued and outstanding shares of Common Stock to approve the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent and submitting for filing with the SEC an Information Statement on Schedule 14C.
2.ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

a.Adjustment Upon Issuance of Common Stock.  If and whenever on or after the Subscription Date, the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities for a consideration per share (the "New Issuance Price") less than a price (the "Applicable Price") equal to the Exercise Price in effect immediately prior to such

6

issue or sale or deemed issuance or sale (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Exercise Price under this Section 2(a), the following shall be applicable:

(i)    Issuance of Options.  If the Company in any manner grants or sells any Options and the lowest price per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such Common Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share.  For purposes of this Section 2(a)(i), the "lowest price per share for which one Common Share is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Common Share upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such one Common Share upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option.  No further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities. 

(ii)    Issuance of Convertible Securities.  If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one Common Share is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such Common Share shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share.  For the purposes of this Section 2(a)(ii), the "lowest price per share for which one Common Share is issuable upon the conversion, exercise or exchange thereof" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one Common Share upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security less any consideration paid or payable by the Company with respect to such one Common Share upon the issuance or sale of such Convertible Security and upon conversion, exercise or exchange of such Convertible Security.  No further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(a), no further adjustment of the Exercise Price shall be made by reason of such issue or sale.

7

(iii)    Change in Option Price or Rate of Conversion.  If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price, which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold.  For purposes of this Section 2(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Subscription Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease.  No adjustment pursuant to this Section 2(a) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(iv)    Calculation of Consideration Received.  In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Options will be deemed to have been issued for the Option Value of such Options and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued or sold for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value; provided, that if the value determined pursuant to clause (y) above would result in a value less than $0, then the value shall be deemed to be $0.  If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration other than cash received therefor will be deemed to be the net amount received by the Company therefor.  If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the Closing Sale Price of such publicly traded securities on the date of receipt.  If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be.  The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Required Holders.  If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Required Holders.  The determination of such appraiser shall be final and binding

8

upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

(v)    Record Date.  If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

b.(vi)No Readjustments. For the avoidance of doubt, in the event the Exercise Price has been adjusted pursuant to this Section 2(a) and the Dilutive Issuance that triggered such adjustment does not occur, is not consummated, is unwound or is cancelled after the facts for any reason whatsoever, in no event shall the Exercise Price be readjusted to the Exercise Price that would have been in effect if such Dilutive Issuance had not occurred or been consummated.Voluntary Adjustment By Company.  The Company may at any time during the term of this Warrant, with the prior written consent of the Required Holders, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

c.Adjustment Upon Subdivision or Combination of Common Stock.  If the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased.  If the Company at any time on or after the Subscription Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased.  Any adjustment under this Section 2(c) shall become effective at the close of business on the date the subdivision or combination becomes effective.

d.Other Events.  If any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares, as mutually determined by the Company’s Board of Directors and the Required Holders, so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 2(d) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

3.RIGHTS UPON DISTRIBUTION OF ASSETS.  If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without

9

limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder's right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).

4.    PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

a. Reserved. 

b.Fundamental Transactions.  The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant and to deliver to each holder of the Warrants in exchange for such Warrants a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant and on terms consistent with this clause (b)Upon the occurrence or consummation of any Fundamental Transaction, the Company and the Successor Entity or Successor Entities, jointly and severally, shall succeed to, and the Company shall cause any Successor Entity or Successor Entities to jointly and severally succeed to, and be added to the term "Company" under this Warrant (so that from and after the date of such Fundamental Transaction, each and every provision of this Warrant referring to the "Company" shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Company and the Successor Entity or Successor Entities, jointly and severally, may exercise every right and power of the Company prior thereto and shall assume all of the obligations of the Company prior thereto under this Warrant with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company in this Warrant.  Solely at the request of the Holder, if Common Stock is exchanged or exchangeable for Successor Capital Stock (as defined below) in such Fundamental Transaction and the Successor Entity and/or Successor Entities is a publicly traded corporation whose shares of common stock are quoted on or listed for trading on an Eligible Market, the Successor Entity shall deliver (in addition to and without limiting any right under this Warrant) to the Holder in exchange for this Warrant a security of the Successor Entity and/or Successor Entities evidenced by a written instrument substantially similar in form and substance

10

to this Warrant and exercisable for a corresponding number of shares of capital stock of the Successor Entity and/or Successor Entities (the "Successor Capital Stock") equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction (such corresponding number of shares of Successor Capital Stock to be delivered to the Holder shall be equal to the greater of (A) the quotient of (i) the aggregate dollar value of all consideration (including cash consideration and any consideration other than cash ("Non-Cash Consideration"), in such Fundamental Transaction, as such values are set forth in any definitive agreement for the Fundamental Transaction that has been executed at the time of the first public announcement of the Fundamental Transaction) that the Holder would have been entitled to receive upon the happening of such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction, had this Warrant been exercised immediately prior to such Fundamental Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction (without regard to any limitations on the exercise of this Warrant) (the "Aggregate Consideration") divided by (ii) the per share Closing Sale Price of such Successor Capital Stock on the Trading Day immediately prior to the consummation or occurrence of the Fundamental Transaction and (B) the product of (i) the Aggregate Consideration and (ii) the highest exchange ratio pursuant to which any stockholder of the Company may exchange shares of Common Stock for Successor Capital Stock) (provided, however, to the extent that the Holder's right to receive any such shares of publicly traded common stock (or their equivalent) of the Successor Entity would result in the Holder and its other Attribution Parties exceeding the Maximum Percentage, if applicable, then the Holder shall not be entitled to receive such shares to such extent (and shall not be entitled to beneficial ownership of such shares of publicly traded common stock (or their equivalent) of the Successor Entity as a result of such consideration to such extent) and the portion of such shares shall be held in abeyance for the Holder until such time or times, as its right thereto would not result in the Holder and its other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be delivered such shares to the extent as if there had been no such limitation), and with an identical aggregate exercise price to the aggregate Exercise Price hereunder (such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting after the consummation or occurrence of such Fundamental Transaction the economic value of this Warrant that was in effect immediately prior to the consummation or occurrence of such Fundamental Transaction).  Prior to the occurrence or consummation of any Fundamental Transaction pursuant to which holders of Common Stock are entitled to receive securities, cash, assets or other property with respect to or in exchange for Common Stock (a "Corporate Event"), the Company shall make appropriate provision to insure that, and any applicable Successor Entity or Successor Entities shall ensure that, and it shall be a required condition to the occurrence or consummation of such Corporate Event that, the Holder will thereafter have the right to receive upon exercise of this Warrant at any time after the occurrence or consummation of the Corporate Event, shares of Common Stock or Successor Capital Stock or, if so elected by the Holder, in lieu of the shares of Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event (but not in lieu of such items still issuable under Sections 3 and 4(a), which shall continue to be receivable on the shares of Common Stock or on the such shares of stock, securities, cash, assets or any other property otherwise receivable with respect to or in exchange for shares of Common Stock), such shares of stock, securities, cash, assets or any other

11

property whatsoever (including warrants or other purchase or subscription rights and any shares of Common Stock) which the Holder would have been entitled to receive upon the occurrence or consummation of such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate Event, had this Warrant been exercised immediately prior to such Corporate Event or the record, eligibility or other determination date for the event resulting in such Corporate Event (without regard to any limitations on exercise of this Warrant).  The provisions of this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events.

c.Notwithstanding the foregoing, in the event of Fundamental Transaction, at the request of the Holder delivered before the ninetieth (90th) day after the occurrence or consummation of such Fundamental Transaction, the Company (or the Successor Entity) shall purchase this Warrant from the Holder by paying to the Holder, within five (5) Business Days after such request (or, if later, on the effective date of the Fundamental Transaction), cash in an amount equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of such Fundamental Transaction.

5.NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all of the provisions of this Warrant and take all action as may be required to protect the rights of the Holder.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any of the Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrants, the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Warrants then outstanding (without regard to any limitations on exercise).

6.    WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise specifically provided herein, the Holder, solely in such Person's capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person's capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

12

Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

7.    REISSUANCE OF WARRANTS.

a.Transfer of Warrant.  If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

b.Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

c.Exchangeable for Multiple Warrants.  This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender.

d.Issuance of New Warrants.  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

8.NOTICES.  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in writing, (a) if delivered from within the domestic United States, by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered from outside the United States, by International Federal Express or facsimile, and (c) will be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after

13

so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed and (iv) if delivered by facsimile, upon electronic confirmation of receipt, and will be delivered and addressed as follows:
(i)    if to the Company, to:
Wave Systems Corp. 
480 Pleasant Street 
Lee, Massachusetts 01238 
Attention: Walter Shephard
Facsimile: 413.243.0045
Email: wshephard@wave.com

(ii) if to the Holder, at such address or other contact information delivered by the Holder to Company or as is on the books and records of the Company or Roth Capital Partners, LLC.
The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor.  Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation; provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.  It is expressly understood and agreed that the time of exercise specified by the Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company.
9.    AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant may be amended or waived and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

10.    GOVERNING LAW; JURISDICTION; JURY TRIAL.  This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the

14

adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the Company at the following address: Wave Systems Corp., 480 Pleasant Street, Lee, Massachusetts 01238 or such other address as the Company subsequently delivers to the Holder and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company's obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

11.    CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly drafted by the Company and all the Buyers and shall not be construed against any Person as the drafter hereof.  The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

12.    DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder.  If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder  or (b) the disputed arithmetic calculation of the Warrant Shares to the Company's independent, outside accountant.  The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations.  Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

13.    REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the

15

terms of this Warrant.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.  The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

14.    TRANSFER.    This Warrant and the Warrant Shares may be offered for sale, sold, transferred, pledged or assigned without the consent of the Company.

15.    SEVERABILITY.    If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

16.DISCLOSURE.  Upon receipt or delivery by the Company of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise.  In the event that the Company believes that a notice contains material, nonpublic information relating to the Company or its subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its subsidiaries.

17.    CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:

a."1933 Act" means the Securities Act of 1933, as amended.

b."Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that "control" of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

16

c."Attribution Parties" means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder's investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other Persons whose beneficial ownership of the Company's Common Stock would or could be aggregated with the Holder's and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act.  For clarity, the purpose of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.  

d."Approved Stock Plan" means any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer or director for services provided to the Company.

e."Black Scholes Value" means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the "OV" function on Bloomberg determined as of the day immediately following the public announcement of the applicable Fundamental Transaction, or, if the Fundamental Transaction is not publicly announced, the date the Fundamental Transaction is consummated, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of such date of request, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the day immediately following the public announcement of the applicable Fundamental Transaction, or, if the Fundamental Transaction is not publicly announced, the date the Fundamental Transaction is consummated, (iii) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in the Fundamental Transaction, (iv) a zero cost of borrow and (v) a 360 day annualization factor.

f."Bloomberg" means Bloomberg Financial Markets.

g."Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

h."Closing Bid Price" and "Closing Sale Price" means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such

17

security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.).  If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.

i."Common Stock" means (i) the Company's Common Stock, par value $0.01 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.

j."Convertible Securities" means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

k."Eligible Market" means the Principal Market, the NYSE MKT LLC, The NASDAQ Global Select Market, The NASDAQ Global Market or The New York Stock Exchange, Inc.

l."Excluded Securities" means any shares of Common Stock issued or issuable: (i) pursuant to the Prospectus Supplement, (ii) in connection with any Approved Stock Plan, (iii) upon exercise of the Warrants; provided, that the terms of such Warrants are not amended, modified or changed on or after the Subscription Date and (iv) upon exercise of any Options or Convertible Securities which are outstanding on the day immediately preceding the Subscription Date; provided, that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the Subscription Date. 

m."Expiration Date" means the date sixty (60) months after the Issuance Date or, if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a "Holiday"), the next day that is not a Holiday. 

n."Fundamental Transaction" means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its "significant subsidiaries" (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its shares of Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of

18

Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock, (B) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other stockholders of the Company to surrender their Common Stock without approval of the stockholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.

o."Group" means a "group" as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.

p."Lead Investor" means Empery Asset Master, Ltd.

q."Option Value" means the value of an Option based on the Black and Scholes Option Pricing model obtained from the "OV" function on Bloomberg determined as of 

19

(A) the Trading Day prior to the public announcement of the issuance of the applicable Option, if the issuance of such Option is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Option if the issuance of such Option is not publicly announced, for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the applicable date of determination, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of (A) the Trading Day immediately following the public announcement of the applicable Option if the issuance of such Option is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Option if the issuance of such Option is not publicly announced, (iii) the underlying price per share used in such calculation shall be the highest Weighted Average Price of the Common Stock during the period beginning on the Trading Day prior to the execution of definitive documentation relating to the issuance of the applicable Option and ending on (A) the Trading Day immediately following the public announcement of such issuance, if the issuance of such Option is publicly announced or (B) the Trading Day immediately following the issuance of the applicable Option if the issuance of such Option is not publicly announced, (iv) a zero cost of borrow and (v) a 360 day annualization factor.

r."Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

s."Parent Entity" of a Person means an entity that, directly or indirectly, controls the applicable Person, including such entity whose common stock or equivalent equity security is quoted or listed on an Eligible Market (or, if so elected by the Required Holders, any other market, exchange or quotation system), or, if there is more than one such Person or such entity, the Person or such entity designated by the Required Holders or in the absence of such designation, such Person or entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

t."Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

u."Principal Market" means The NASDAQ Capital Market.

v."Required Holders" means the holders of the Warrants representing at least a majority of the shares of Common Stock underlying the Warrants then outstanding and shall include the Lead Investor so long as the Lead Investor or any of its Affiliates holds any Warrants.

w."Subject Entity" means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.

x."Successor Entity" means one or more Person or Persons (or, if so elected by the Holder, the Company or Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or one or more Person or Persons (or, if so elected by the Holder, the

20

Company or the Parent Entity) with which such Fundamental Transaction shall have been entered into.

y."Trading Day" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).
z."Weighted Average Price" means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its "Volume at Price" function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as such market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.).  If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12 with the term "Weighted Average Price" being substituted for the term "Exercise Price." All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.
[Signature Page Follows]

21

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

WAVE SYSTEMS CORP.

By:___________________________
Name:    
Title:    

EXHIBIT A

EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON SHARES

WAVE SYSTEMS CORP. 
The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock ("Warrant Shares") of Wave Systems Corp., a company organized under the laws of Delaware (the "Company"), evidenced by the attached Warrant to Purchase Common Stock (the "Warrant").  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1.  Form of Exercise Price.  The Holder intends that payment of the Exercise Price shall be made as:

____________    a "Cash Exercise" with respect to _________________ Warrant Shares; and/or

____________    a "Cashless Exercise" with respect to _______________ Warrant Shares.

2.  Payment of Exercise Price.  In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

3.  Delivery of Warrant Shares.  The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.

Date: _______________ __, ______

                    
   Name of Registered Holder

By:                    
Name:
Title:

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs [TRANSFER AGENT] to issue the above indicated number of shares of Common Stock within three (3) trading days of the date of the Exercise Notice.

WAVE SYSTEMS CORP.

By:________________________________
Name:
Title:Exhibit 10.1

 

CONTRIBUTION AND TRANSFER AGREEMENT

 

dated as of May 27, 2015

 

by and between

 

ACACIA NATURAL GAS CORP I, INC.

 

and

 

ENLINK MIDSTREAM PARTNERS, LP

 

 

TABLE OF CONTENTS

 

	
ARTICLE I DEFINITIONS
    	
2
    
	
Section 1.1
    	
Definitions
    	
2
    
	
Section 1.2
    	
Construction
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE II CONVEYANCE AND CLOSING
    	
5
    
	
Section 2.1
    	
Conveyance
    	
5
    
	
Section 2.2
    	
Consideration
    	
6
    
	
Section 2.3
    	
Closing
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACACIA
    	
6
    
	
Section 3.1
    	
Organization of Acacia
    	
6
    
	
Section 3.2
    	
Authority and Approval
    	
6
    
	
Section 3.3
    	
No Conflict; Consents
    	
7
    
	
Section 3.4
    	
Title to Transferred Interests
    	
7
    
	
Section 3.5
    	
Compliance
    	
8
    
	
Section 3.6
    	
Litigation; Laws and Regulations
    	
8
    
	
Section 3.7
    	
Brokerage Arrangements
    	
8
    
	
Section 3.8
    	
Investment Intent
    	
8
    
	
Section 3.9
    	
No Other Representations or Warranties
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
    	
9
    
	
Section 4.1
    	
Organization and Existence
    	
9
    
	
Section 4.2
    	
Authority and Approval
    	
9
    
	
Section 4.3
    	
No Conflict; Consents
    	
9
    
	
Section 4.4
    	
Delivery of Opinion
    	
10
    
	
Section 4.5
    	
Periodic Reports
    	
10
    
	
Section 4.6
    	
No Material Adverse Change
    	
11
    
	
Section 4.7
    	
Consideration Units
    	
11
    
	
Section 4.8
    	
Brokerage Arrangements
    	
12
    
	
Section 4.9
    	
Litigation
    	
12
    
	
Section 4.10
    	
Investment Intent
    	
12
    
	
Section 4.11
    	
No Other Representations or Warranties
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE V TAX MATTERS
    	
13
    
	
Section 5.1
    	
Transfer Taxes
    	
13
    
	
Section 5.2
    	
Tax Treatment
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE VI INDEMNIFICATION
    	
13
    
	
Section 6.1
    	
Indemnification of the Partnership
    	
13
    
	
Section 6.2
    	
Indemnification of Acacia
    	
13
    
	
Section 6.3
    	
Survival
    	
14
    
	
Section 6.4
    	
Demands
    	
14
    
	
Section 6.5
    	
Right to Contest and Defend
    	
15
    
	
Section 6.6
    	
Cooperation
    	
16
    
	
Section 6.7
    	
Right to Participate
    	
16
    
	
Section 6.8
    	
Payment of Damages
    	
16
    

 

i

 

Table of Contents
 (Continued)

 

	
Section 6.9
    	
Direct Claim
    	
16
    
	
Section 6.10
    	
Limitations on Indemnification
    	
17
    
	
Section 6.11
    	
Sole Remedy
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE VII MISCELLANEOUS
    	
17
    
	
Section 7.1
    	
Acknowledgements
    	
17
    
	
Section 7.2
    	
Cooperation; Further Assurances
    	
18
    
	
Section 7.3
    	
Expenses
    	
18
    
	
Section 7.4
    	
Notices
    	
18
    
	
Section 7.5
    	
Governing Law
    	
19
    
	
Section 7.6
    	
Public Statements
    	
20
    
	
Section 7.7
    	
Entire Agreement; Amendments and Waivers
    	
20
    
	
Section 7.8
    	
Action by the Partnership
    	
20
    
	
Section 7.9
    	
Conflicting Provisions
    	
20
    
	
Section 7.10
    	
Binding Effect and Assignment
    	
20
    
	
Section 7.11
    	
Severability
    	
21
    
	
Section 7.12
    	
Interpretation
    	
21
    
	
Section 7.13
    	
Headings
    	
21
    
	
Section 7.14
    	
Multiple Counterparts
    	
21
    

 

	
EXHIBITS
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
-
    	
Form of   Assignment Agreement
    
	
Exhibit B
    	
-
    	
Form of   Partnership Agreement Amendment
    
	
 
    	
 
    	
 
    
	
APPENDICES
    
	
 
    	
 
    	
 
    
	
Appendix   A
    	
-
    	
The   Partnership and Acacia Designated Personnel
    

 

ii

 

CONTRIBUTION AND TRANSFER AGREEMENT

 

This Contribution and Transfer Agreement (this “Agreement”) is made and effective as of May 27, 2015, by and among Acacia Natural Gas Corp I, Inc., a Delaware corporation (“Acacia”), and EnLink Midstream Partners, LP, a Delaware limited partnership (the “Partnership”).  Capitalized terms used herein without definition have the respective meanings set forth in Section 1.1.

 

RECITALS

 

WHEREAS, Acacia and EnLink Midstream Operating, LP, a Delaware limited partnership and a wholly-owned subsidiary of the Partnership (“Operating”), are the sole limited partners of EnLink Midstream Holdings, LP, a Delaware limited partnership (“Holdings”);

 

WHEREAS, the general partner of Holdings is a wholly-owned subsidiary of Operating;

 

WHEREAS, Acacia owns 25% of the Limited Partner Interests (as defined in the Holdings Partnership Agreement) of Holdings and Operating owns 75% of the Limited Partner Interests of Holdings;

 

WHEREAS, Acacia desires to contribute, transfer, assign and convey the 25% of the Limited Partner Interests that it owns (the “Transferred Interests”) to the Partnership (which may, in turn, contribute the Transferred Interests to Operating, in which case the Partnership may direct that the assignment be made directly to Operating), pursuant to the terms of this Agreement and the Assignment Agreement;

 

WHEREAS, the Partnership desires to accept and acquire the Transferred Interests in accordance with the terms of this Agreement and the Assignment Agreement;

 

WHEREAS, consistent with Section 6.4 of the Holdings Partnership Agreement, the Partnership will direct Acacia to contribute, transfer, assign and convey the Transferred Interests directly to Operating pursuant to the Assignment Agreement; and

 

WHEREAS, the Conflicts Committee has previously (i) received an opinion of Simmons & Company International, the financial advisor to the Conflicts Committee (the “Financial Advisor”), that the terms of the transactions contemplated by this Agreement and all related agreements described in this Agreement are fair to the Partnership and the holders of the Partnership’s Common Units (other than EnLink Midstream, Inc., Acacia and their respective controlling affiliates) from a financial point of view, and (ii) found the Transaction to be fair and reasonable to the Partnership and the holders of its Common Units (other than EnLink Midstream, Inc., Acacia and their respective controlling affiliates) and recommended that the board of directors (the “Board of Directors”) of the General Partner approve the Transaction and, subsequently, the Board of Directors approved the Transaction.

 

NOW, THEREFORE, in consideration of the premises and the respective representations, warranties, covenants, agreements and conditions contained herein, the parties hereto agree as follows:

 

1

 

ARTICLE I
  DEFINITIONS

 

Section 1.1                                   Definitions.

 

The respective terms defined in this Section 1.1 shall, when used in this Agreement, have the respective meanings specified herein, with each such definition equally applicable to both singular and plural forms of the terms so defined:

 

“Acacia” has the meaning ascribed to such term in the preamble.

 

“Acacia Fundamental Representations” has the meaning ascribed to such term in Section 6.3.

 

“Acacia Indemnified Parties” has the meaning ascribed to such term in Section 6.2.

 

“Affiliate,” when used with respect to a Person, means any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such first Person; provided, however, that (i) with respect to Acacia, the term “Affiliate” shall exclude the Partnership, the General Partner and the Partnership’s subsidiaries and (ii) with respect to the Partnership, the term “Affiliate” shall exclude EnLink Midstream, Inc., Acacia and their Controlling Affiliates.  No Person shall be deemed an Affiliate of any Person solely by reason of the exercise or existence of rights, interests or remedies under this Agreement.

 

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

 

“Applicable Law” means any applicable law or administrative rule or regulation or any judicial, administrative or arbitration order, award, judgment, writ, injunction or decree of any Governmental Authority having valid jurisdiction.

 

“Assignment Agreement” means that Assignment and Assumption Agreement substantially in the form of Exhibit A attached hereto, to be executed by Acacia, the Partnership and Operating, pursuant to which Acacia will assign the Transferred Interests to the Partnership or Operating.

 

“Board of Directors” has the meaning ascribed to such term in the recitals.

 

“Ceiling Amount” has the meaning ascribed to such term in Section 6.10(a).

 

“Closing” has the meaning ascribed to such term in Section 2.3.

 

“Closing Date” has the meaning ascribed to such term in Section 2.3.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Units” means the Partnership’s Common Units representing limited partner interests of the Partnership having the terms set forth in the Partnership Agreement.

 

2

 

“Conflicts Committee” means the conflicts committee of the Board of Directors.

 

“Consideration Units” has the meaning ascribed to such term in Section 2.2.

 

“Control” and its derivatives mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.  The terms “Controlling” and “Controlled” shall have correlative meanings.

 

“Damages” means liabilities and obligations, including all losses, deficiencies, costs, expenses, fines, interest, expenditures, claims, suits, proceedings, judgments, damages, and reasonable attorneys’ fees and reasonable expenses of investigating, defending and prosecuting litigation.

 

“Direct Claim” has the meaning ascribed to such term in Section 6.9.

 

“DRULPA” means the Delaware Revised Uniform Limited Partnership Act.

 

“Enforceability Exceptions” has the meaning ascribed to such term in Section 3.2(b).

 

“ENLC Credit Agreement” means that certain Credit Agreement, dated as of March 7, 2014, among EnLink Midstream, LLC, Bank of America, N.A., Citibank, N.A., Wells Fargo Bank, National Association, Royal Bank of Canada and Bank of Montreal.

 

“ENLK Class E Common Units” means the Partnership’s Class E Common Units representing limited partner interests of the Partnership having the terms set forth in the Partnership Agreement Amendment.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Financial Advisor” has the meaning ascribed to such term in the recitals.

 

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

 

“General Partner” means EnLink Midstream GP, LLC, the general partner of the Partnership.

 

“Governmental Approval” means any consent, approval, license, permit, order, or authorization of, or registration, declaration, or filing with, any Governmental Authority.

 

“Governmental Authority” means any federal, state, municipal or other government, governmental court, department, commission, board, bureau, agency or instrumentality.

 

“Holdings” has the meaning ascribed to such term in the recitals.

 

“Holdings Assets” means all of the assets owned on the Closing Date by Holdings.

 

3

 

“Holdings Material Adverse Effect” means a material adverse effect on or material adverse change in (i) the assets, liabilities, financial condition or results of operations of Holdings, taken as a whole, other than any effect or change (a) that impacts the oil and gas midstream industry generally (including any change in the prices of crude oil, condensate, natural gas or other hydrocarbon products, industry margins or any regulatory changes or changes in Applicable Law or GAAP), (b) in United States or global political or economic conditions or financial markets in general, or (c) resulting from the announcement of the transactions contemplated by this Agreement and the Assignment Agreement and the taking of any actions contemplated by this Agreement or the Assignment Agreement, provided, that in the case of clauses (a) and (b), the impact on Holdings is not materially disproportionate to the impact on similarly situated parties in the oil and gas midstream industry, or (ii) the ability of Acacia to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

 

“Holdings Partnership Agreement” means that certain First Amended and Restated Agreement of Limited Partnership of Holdings, dated as of March 7, 2014.

 

“Knowledge,” as used in this Agreement with respect to a party hereof, means the actual knowledge of that party’s designated personnel, after reasonable inquiry.  The designated personnel for Acacia and the Partnership are set forth on Appendix A.

 

“Lien” means any mortgage, deed of trust, lien, security interest, pledge, conditional sales contract, charge or encumbrance.

 

“Notice” has the meaning ascribed to such term in Section 7.4.

 

“Operating” has the meaning ascribed to such term in the recitals.

 

“Partnership” has the meaning ascribed to such term in the preamble.

 

“Partnership Agreement” means that certain Seventh Amended and Restated Limited Partnership Agreement of the Partnership, dated as of July 7, 2014, as amended by that certain Amendment No. 1 to the Partnership Agreement, dated as of February 17, 2015, that certain Amendment No. 2 to the Partnership Agreement, dated as of March 16, 2015 and the Partnership Agreement Amendment.

 

“Partnership Agreement Amendment” means Amendment No. 3 to the Partnership Agreement, dated as of the date hereof, in the form attached hereto as Exhibit B.

 

“Partnership Financial Statements” has the meaning ascribed to such term in Section 4.5.

 

“Partnership Fundamental Representations” has the meaning ascribed to such term in Section 6.3.

 

“Partnership Indemnified Parties” has the meaning ascribed to such term in Section 6.1.

 

4

 

“Person” means an individual or entity, including any partnership, corporation, association, trust, limited liability company, joint venture, unincorporated organization or other entity.

 

“SEC Documents” has the meaning ascribed to such term in Section 4.5.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Third Party Indemnity Claim” has the meaning ascribed to such term in Section 6.4(a).

 

“Transaction” means the sale, transfer, assignment and conveyance of the Transferred Interests and the other transactions contemplated hereby and by the Assignment Agreement pursuant to the terms of, and subject to the conditions set forth in, this Agreement and the Assignment Agreement.

 

“Transfer Taxes” has the meaning ascribed to such term in Section 5.1.

 

“Transferred Interests” has the meaning ascribed to such term in the recitals.

 

Section 1.2                                   Construction.

 

In constructing this Agreement: (a) the word “includes” and its derivatives means “includes, without limitation” and corresponding derivative expressions; (b) the currency amounts referred to herein, unless otherwise specified, are in United States dollars; (c) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless business days are specified; (d) unless otherwise specified, all references in this Agreement to “Article,” “Section,” “Exhibit,” “preamble” or “recitals” shall be references to an Article, Section, Exhibit, preamble or recitals hereto; and (e) whenever the context requires, the words used in this Agreement shall include the masculine, feminine and neuter and singular and the plural.

 

ARTICLE II
  CONVEYANCE AND CLOSING

 

Section 2.1                                   Conveyance.

 

Upon the terms and subject to the conditions set forth in this Agreement and in the Assignment Agreement, on the Closing Date, Acacia shall contribute, transfer, assign and convey the Transferred Interests to the Partnership (which may, in turn, contribute such Transferred Interests to Operating, in which case the Partnership may direct that the assignment be made directly to Operating).  Such contribution, transfer, assignment and conveyance of Transferred Interests shall be effected free and clear of all Liens (other than restrictions under the Holdings Partnership Agreement and applicable federal and state securities laws).

 

5

 

Section 2.2                                   Consideration.

 

As consideration for the contribution, transfer, assignment and conveyance of the Transferred Interests as set forth in Section 2.1, the Partnership shall issue 36,629,888 ENLK Class E Common Units (the “Consideration Units”) to Acacia.

 

Section 2.3                                   Closing.

 

The closing (the “Closing”) of the Transaction will be held on the date hereof (the “Closing Date”) at the offices of the Partnership at 2501 Cedar Springs Rd., Dallas, Texas 75201. At the Closing, (a) Acacia shall deliver to the Partnership, or cause to be delivered to the Partnership, the Assignment Agreement duly executed by Acacia and (b) the Partnership shall deliver to Acacia, or cause to be delivered to Acacia, (i) the Consideration Units specified in Section 2.2 in certificated form, (ii) the Assignment Agreement duly executed by the Partnership and Operating and (iii) a duly executed copy of the Partnership Agreement Amendment.

 

ARTICLE III
  REPRESENTATIONS AND WARRANTIES OF ACACIA

 

Acacia hereby represents and warrants to the Partnership that, as of the date hereof:

 

Section 3.1                                   Organization of Acacia.

 

Acacia is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, operate and lease its properties and assets and to carry on its business as currently conducted.

 

Section 3.2                                   Authority and Approval.

 

(a)                                 Acacia has full corporate power and authority to execute and deliver this Agreement and the Assignment Agreement, to perform all of the obligations hereof and thereof to be performed by it and to consummate the Transaction.  The execution and delivery by Acacia of this Agreement and the Assignment Agreement, the performance of all of the obligations hereof and thereof to be performed by Acacia and the consummation of the Transaction have been duly authorized and approved by all requisite corporate action on the part of Acacia.

 

(b)                                 This Agreement has been duly executed and delivered by Acacia and constitutes the valid and legally binding obligation of Acacia, enforceable against it in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity (whether applied in a proceeding at law or in equity) (collectively, the “Enforceability Exceptions”).  When executed and delivered by each of the parties thereto, the Assignment Agreement will constitute a valid and legally binding obligation of Acacia, enforceable against Acacia in accordance with

 

6

 

its terms, except as such enforcement may be limited by the Enforceability Exceptions.

 

Section 3.3                                   No Conflict; Consents.

 

(a)                                 The execution, delivery and performance of this Agreement and the Assignment Agreement by Acacia do not, and the fulfillment and compliance with the terms and conditions hereof and thereof and the consummation of the Transaction will not, (i) violate, conflict with, result in any breach of, or require the consent of any Person under, any of the terms, conditions or provisions of the certificate of incorporation or bylaws of Acacia; (ii) conflict with or violate any provision of any Applicable Law; (iii) conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, or result in the suspension, termination or cancellation of, or in a right of suspension, termination or cancellation of, any material indenture, mortgage, agreement, contract, commitment, license, concession, permit, lease, joint venture or other instrument to which Acacia is a party or by which it or any of its properties or assets are bound; or (iv) result in the creation of any Lien (except for restrictions on transfer imposed under the Holdings Partnership Agreement or by applicable federal or state securities laws) on any of the Transferred Interests under any such indenture, mortgage, agreement, contract, commitment, license, concession, permit, lease, joint venture or other instrument, except in the case of clauses (ii), (iii) and (iv) for those items which, individually or in the aggregate, would not reasonably be expected to have a Holdings Material Adverse Effect.

 

(b)                                 No consent, approval, license, permit, order or authorization of any Governmental Authority or other Person is required to be obtained or made by Acacia with respect to the Transferred Interests in connection with the execution, delivery and performance of this Agreement and the Assignment Agreement or the consummation of the transactions contemplated hereby or thereby, except (i) as have been waived or obtained or with respect to which the time for asserting such right has expired or (ii) those which individually or in the aggregate would not reasonably be expected to have a Holdings Material Adverse Effect.

 

Section 3.4                                   Title to Transferred Interests.

 

Acacia owns, beneficially and of record, the Transferred Interests and will convey good title, free and clear of all Liens (other than restrictions under the Holdings Partnership Agreement and applicable federal and state securities laws), to the Transferred Interests to the Partnership or Operating.  Except as set forth in the Holdings Partnership Agreement and the ENLC Credit Agreement, the Transferred Interests are not subject to any agreements or understandings with respect to the voting or transfer of any of the Transferred Interests (except the contribution of the Transferred Interests contemplated by this Agreement and restrictions

 

7

 

under applicable federal and state securities laws).  All restrictions and Liens on the Transferred Interests that are imposed by the ENLC Credit Agreement will terminate upon the Closing.

 

Section 3.5                                   Compliance.

 

Acacia’s ownership of the Transferred Interests is and has been in compliance in all material respects with all Applicable Law, and Acacia has not received notice from any Governmental Authority asserting any act of non-compliance.

 

Section 3.6                                   Litigation; Laws and Regulations.

 

There are no civil, criminal or administrative actions, suits, claims, hearings, arbitrations, investigations or proceedings pending or, to Acacia’s Knowledge, threatened that (a) question or involve the validity or enforceability of any of Acacia’s obligations under this Agreement or the Assignment Agreement or (b) seek (or reasonably might be expected to seek) (i) to prevent or delay the consummation by Acacia of the Transaction or (ii) damages in connection with any such consummation.

 

Section 3.7                                   Brokerage Arrangements.

 

Acacia has not entered (directly or indirectly) into any agreement with any Person that would obligate Acacia, Holdings, the Partnership or any of their respective Affiliates to pay any commission, brokerage or “finder’s fee” or other similar fee in connection with this Agreement, the Assignment Agreement or the transactions contemplated hereby or thereby.

 

Section 3.8                                   Investment Intent.

 

Acacia is accepting the Consideration Units for its own account with the present intention of holding the Consideration Units for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or state securities laws.  Acacia does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to such Consideration Units.  Acacia has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risk of an investment in such Consideration Units.  Acacia acknowledges that such Consideration Units, and the Common Units issuable upon conversion thereof, are not currently registered under the Securities Act or any applicable state securities law and might not be registered in the future, and that such Consideration Units, and the Common Units issuable upon conversion thereof, may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable.

 

Section 3.9                                   No Other Representations or Warranties.

 

Except for the representations and warranties contained in this Article III, neither Acacia nor any other Person makes any other express or implied representation or warranty with respect to Acacia, Holdings or the Transaction, and Acacia disclaims any other representations or warranties, whether made by Acacia, Holdings or any of their respective Affiliates, officers,

 

8

 

directors, employees, agents or representatives.  Except for the representations and warranties contained in this Article III, Acacia hereby disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to the Partnership or its Affiliates or representatives (including any opinion, information, projection, or advice that may have been or may be provided to the Partnership by any director, officer, employee, agent, consultant, or representative of Acacia, Holdings or any of their respective Affiliates).

 

ARTICLE IV
  REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP

 

The Partnership hereby represents and warrants to Acacia that, as of the date hereof:

 

Section 4.1                                   Organization and Existence.

 

Each of the Partnership and Operating is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited partnership power and authority to own, operate and lease its properties and assets and to carry on its business as currently conducted.

 

Section 4.2                                   Authority and Approval.

 

(a)                                 Each of the Partnership and Operating has full limited partnership power and authority to execute and deliver this Agreement and the Assignment Agreement, as applicable, to perform all of the obligations hereof and thereof, as applicable, to be performed by it and to consummate the Transaction.  The execution and delivery of this Agreement and the Assignment Agreement, as applicable, the performance of all of its respective obligations hereunder and thereunder, as applicable, and the consummation of the Transaction have been duly authorized and approved by all requisite limited partnership action of each of the Partnership and Operating to the extent applicable.

 

(b)                                 This Agreement has been duly executed and delivered by or on behalf of the Partnership and constitutes the valid and legally binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforcement may be limited by the Enforceability Exceptions.  When executed and delivered by each of the parties thereto, the Assignment Agreement will constitute a valid and legally binding obligation of the Partnership and Operating, enforceable against the Partnership and Operating in accordance with its terms, except as such enforcement may be limited by the Enforceability Exceptions.

 

Section 4.3                                   No Conflict; Consents.

 

(a)                                 The execution, delivery and performance of this Agreement and the Assignment Agreement by the Partnership and Operating, as applicable, do not, and the fulfillment and compliance with the terms and conditions hereof

 

9

 

and thereof, as applicable, and the consummation of the Transaction will not, (i) violate, conflict with, result in any breach of, or require the consent of any Person under, any of the terms, conditions or provisions of the certificate of limited partnership or limited partnership agreement of the Partnership or Operating, in each case as amended as of the date hereof (including, with respect to the Partnership, the Partnership Agreement Amendment); (ii) conflict with or violate any provision of any Applicable Law; or (iii) conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under or result in a right of suspension, termination or cancellation of, any material indenture, mortgage, agreement, contract, commitment, license, concession, permit, lease, joint venture or other instrument to which the Partnership or Operating is a party or by which either is bound or to which any of the Partnership’s or Operating’s property or assets are bound.

 

(b)                                 No consent, approval, license, permit, order or authorization of any Governmental Authority or other Person is required to be obtained or made by the Partnership or Operating in connection with the execution, delivery, and performance of this Agreement and the Assignment Agreement, as applicable, or the consummation of the Transaction, except as have been waived or obtained or with respect to which the time for asserting such right has expired.

 

Section 4.4                                   Delivery of Opinion.

 

The Financial Advisor has delivered an opinion to the Conflicts Committee that the terms of the transactions contemplated by this Agreement and all related agreements described in this Agreement are fair to the Partnership and the holders of the Partnership’s Common Units (other than EnLink Midstream, Inc., Acacia and their respective controlling affiliates) from a financial point of view.

 

Section 4.5                                   Periodic Reports.

 

The Partnership’s forms, registration statements, reports, schedules and statements required to be filed by it under the Exchange Act or the Securities Act (all such documents filed prior to the date hereof, collectively the “SEC Documents”) have been filed with the Commission on a timely basis.  The SEC Documents, including, without limitation, any audited or unaudited financial statements and any notes thereto or schedules included therein (the “Partnership Financial Statements”), at the time filed (or in the case of registration statements, solely on the dates of effectiveness) (except to the extent corrected by a subsequent SEC Document) (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, (c) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, (d) in the

 

10

 

case of the Partnership Financial Statements, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the Commission), and (e) in the case of the Partnership Financial Statements, fairly present (in the case of unaudited statements, subject to normal and recurring audit adjustments) in all material respects the consolidated financial position of the Partnership and its consolidated subsidiaries as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended.  KPMG LLP is an independent registered public accounting firm with respect to the Partnership and has not resigned or been dismissed as independent registered public accountants of the Partnership as a result of or in connection with any disagreement with the Partnership on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

 

Section 4.6                                   No Material Adverse Change.

 

Except as set forth in or contemplated by the SEC Documents and as contemplated by this Agreement, since December 31, 2014, and except for matters relating to the Transaction, the business of the Partnership and its subsidiaries, as applicable, has been conducted only in the ordinary course of business and there has not been any (a) material adverse effect on the Partnership, (b) acquisition or disposition of any material asset by the Partnership or any of its subsidiaries or any contract or arrangement therefore, other than in the ordinary course of business, (c) material change in any of the Partnership’s accounting principles, practices or methods except to the extent required in accordance with GAAP, (d) incurrence of material indebtedness other than in the ordinary course of business, (e) amendment, or approval of any amendment, to the charter documents of the Partnership, (f) material legal, regulatory or other similar proceedings for which the Partnership has been served or (g) material disputes, claims, audits or investigations, whether administrative, judicial or otherwise, instituted or, to the Partnership’s Knowledge, threatened by or against or affecting the Partnership.

 

Section 4.7                                   Consideration Units.

 

(a)                                 The Partnership has taken all limited partnership action necessary to authorize the issuance and delivery to Acacia of the Consideration Units as contemplated by this Agreement and of the Common Units issuable upon conversion of such Consideration Units.

 

(b)                                 When issued in accordance with the provisions of this Agreement, the Consideration Units, and the Common Units issuable upon conversion of such Consideration Units, will be validly issued in accordance with the Partnership Agreement and the DRULPA, fully paid (to the extent required by the Partnership Agreement), nonassessable (except as such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA) and free and clear of all Liens (except for restrictions on transfer imposed under the Partnership Agreement or by applicable federal or state securities laws).

 

11

 

(c)                                  The Partnership Agreement Amendment has been duly and validly authorized and approved by the General Partner, and no other limited partnership or limited liability company proceedings on the part of the General Partner or the Partnership are necessary to authorize and approve the Partnership Agreement Amendment.

 

Section 4.8                                   Brokerage Arrangements.

 

The Partnership has not entered (directly or indirectly) into any agreement with any Person that would obligate Acacia, Holdings, the Partnership or any of their respective Affiliates to pay any commission, brokerage or “finder’s fee” or other similar fee in connection with this Agreement, the Assignment Agreement or the transactions contemplated hereby or thereby.

 

Section 4.9                                   Litigation.

 

There are no civil, criminal or administrative actions, suits, claims, hearings, arbitrations, investigations or proceedings pending or, to the Partnership’s Knowledge, threatened that (a) question or involve the validity or enforceability of any of the Partnership’s or Operating’s obligations under this Agreement or the Assignment Agreement, as applicable, or (b) seek (or reasonably might be expected to seek) (i) to prevent or delay the consummation by the Partnership or Operating of the Transaction or (ii) damages in connection with any such consummation.

 

Section 4.10                            Investment Intent.

 

The Partnership is accepting the Transferred Interests for its own account with the present intention of holding the Transferred Interests (indirectly through Operating) for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or state securities laws.  Other than the Assignment Agreement, the Partnership does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person with respect to, such Transferred Interests.  The Partnership has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risk of an investment in the Transferred Interests.  The Partnership acknowledges that such Transferred Interests are not currently registered under the Securities Act or any applicable state securities law and may not be registered in the future, and that such Transferred Interests may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable.

 

Section 4.11                            No Other Representations or Warranties.

 

Except for the representations and warranties contained in this Article IV, neither the Partnership nor any other Person (including, without limitation, Holdings) makes any other express or implied representation or warranty with respect to the Partnership (or Holdings) or the Transaction, and the Partnership disclaims any other representations or warranties, whether made by the Partnership, Holdings or any of their respective Affiliates, officers, directors, employees, agents or representatives.  Except for the representations and warranties contained in this Article IV, the Partnership and Holdings each hereby disclaims all liability and responsibility for any

 

12

 

representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to Acacia or its Affiliates or representatives (including any opinion, information, projection, or advice that may have been or may be provided to Acacia by any director, officer, employee, agent, consultant, or representative of the Partnership or any of its Affiliates).

 

ARTICLE V
  TAX MATTERS

 

Section 5.1                                   Transfer Taxes.

 

All transfer, documentary, sales, use, stamp, registration and other similar Taxes and fees arising out of or in connection with the transactions effected pursuant to this Agreement (the “Transfer Taxes”) shall be borne equally by Acacia and the Partnership.  Each of Acacia and the Partnership shall file all necessary Tax Returns and other documentation with respect to such Transfer Taxes.  If required by Applicable Law, Acacia and the Partnership shall, and shall cause their respective Affiliates, as applicable, to join in the execution of any such Tax Returns and other documentation.

 

Section 5.2                                   Tax Treatment.

 

The parties acknowledge that the contribution and transfer of the Transferred Interests for the Consideration Units is properly characterized as a transaction described in Sections 721(a) of the Code.  The Parties further agree to file all Tax Returns in a manner consistent with the foregoing treatment.

 

ARTICLE VI
 INDEMNIFICATION

 

Section 6.1                                   Indemnification of the Partnership.

 

Subject to the limitations set forth in this Agreement, Acacia, from and after the Closing Date, shall indemnify, defend and hold the Partnership and its Affiliates and their respective securityholders, directors, officers, and employees (in their capacities as such) (collectively, the “Partnership Indemnified Parties”), harmless from and against any and all Damages suffered or incurred by any Partnership Indemnified Party as a result of or arising out of (i) any breach or inaccuracy of a representation or warranty of Acacia in this Agreement or (ii) any breach of any agreement or covenant on the part of Acacia made under this Agreement or the Assignment Agreement or otherwise in connection with the Transaction.

 

Section 6.2                                   Indemnification of Acacia.

 

Subject to the limitations set forth in this Agreement, the Partnership, from and after the Closing Date, shall indemnify, defend and hold Acacia and its Affiliates and their respective securityholders, directors, officers, and employees (in their capacities as such) (collectively, the “Acacia Indemnified Parties”) harmless from and against any and all Damages suffered or incurred by any Acacia Indemnified Party as a result of or arising out of (i) any breach or inaccuracy of a representation or warranty of the Partnership in this Agreement or (ii) any breach

 

13

 

of any agreement or covenant on the part of the Partnership or Operating made under this Agreement or the Assignment Agreement or otherwise in connection with the Transaction.

 

Section 6.3                                   Survival.

 

All the provisions of this Agreement shall survive the Closing, notwithstanding any investigation at any time made by or on behalf of any party hereto, provided that the representations and warranties set forth in Article III and Article IV shall terminate and expire on the date that is 12 months following the Closing Date, except (a) the representations and warranties of Acacia set forth in Section 3.1 (Organization of Acacia), Section 3.2 (Authority and Approval), Section 3.4 (Title to Transferred Interests) and Section 3.7 (Brokerage Arrangements) (the “Acacia Fundamental Representations”) shall survive indefinitely and (b) the representations and warranties of the Partnership set forth in Section 4.1 (Organization and Existence), Section 4.2 (Authority and Approval) and Section 4.8 (Brokerage Arrangements) (the “Partnership Fundamental Representations”) shall survive indefinitely.  After a representation and warranty has terminated and expired, no indemnification shall or may be sought pursuant to this Article VI on the basis of that representation and warranty by any Person who would have been entitled pursuant to this Article VI to indemnification on the basis of that representation and warranty prior to its termination and expiration, provided that in the case of each representation and warranty that shall terminate and expire as provided in this Section 6.3, no claim presented in writing for indemnification pursuant to this Article VI on the basis of that representation and warranty prior to its termination and expiration shall be affected in any way by that termination and expiration.  The indemnification obligations under this Article VI or elsewhere in this Agreement shall apply regardless of whether any suit or action results solely or in part from the active, passive or concurrent negligence or strict liability of the indemnified party.  The covenants and agreements entered into pursuant to this Agreement to be performed after the Closing shall survive the Closing and shall remain in full force and effect until such covenant or agreement is fully performed in accordance with the terms of this Agreement.

 

Section 6.4                                   Demands.

 

(a)                                 Each indemnified party hereunder agrees that promptly upon its discovery of facts giving rise to a claim for indemnity under the provisions of this Agreement, including receipt by it of notice of any demand, assertion, claim, action or proceeding, judicial or otherwise, by any third party (such claims for indemnity involving third-party claims being collectively referred to herein as the “Third Party Indemnity Claims”), with respect to any matter as to which it claims to be entitled to indemnity under the provisions of this Agreement, it will give prompt notice thereof in writing to the indemnifying party, together with a statement of such information in respect of any of the foregoing as it shall have.  Such notice shall include a formal demand for indemnification under this Agreement.

 

(b)                                 Notwithstanding the foregoing, if the indemnified party fails to notify the indemnifying party thereof in accordance with the provisions of this Agreement in sufficient time to permit the indemnifying party or its counsel to defend against a Third Party Indemnity Claim and to make a timely

 

14

 

response thereto, the indemnifying party’s indemnity obligation relating to such Third Party Indemnity Claim shall not be relieved except in the event and only to the extent that the indemnifying party is prejudiced or damaged by such failure.

 

Section 6.5                                   Right to Contest and Defend.

 

(a)                                 The indemnifying party shall be entitled, at its sole cost and expense, to contest and defend by all appropriate legal proceedings any Third Party Indemnity Claim for which it is called upon to indemnify the indemnified party under the provisions of this Agreement; provided, that notice of the intention to so defend shall be delivered by the indemnifying party to the indemnified party within twenty (20) days from the date of receipt by the indemnifying party of notice by the indemnified party of the assertion of the Third Party Indemnity Claim.  Any such defense may be conducted in the name and on behalf of the indemnifying party or the indemnified party as may be appropriate.  Such defense shall be conducted by reputable counsel employed by the indemnifying party and not reasonably objected to by the indemnified party, but the indemnified party shall have the right but not the obligation to participate in such proceedings and to be represented by counsel of its own choosing at its sole cost and expense.

 

(b)                                 The indemnifying party shall have full authority to determine all action to be taken with respect to legal proceedings relating to any Third Party Indemnity Claim for which it is called upon to indemnify the indemnified party under the provisions of this Agreement; provided, however, that the indemnifying party will not have the authority to subject the indemnified party to any obligation whatsoever, other than the performance of purely ministerial tasks or obligations not involving material expense or injunctive relief.  If the indemnifying party does not elect to defend any such Third Party Indemnity Claim, the indemnified party may pursue such defense and the indemnifying party shall be bound by the result obtained with respect thereto by the indemnified party.  If the indemnifying party assumes the defense of a Third Party Indemnity Claim, the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Indemnity Claim that the indemnifying party may recommend and that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third Party Indemnity Claim, which releases the indemnified party completely in connection with such Third Party Indemnity Claim and which would not otherwise adversely affect the indemnified party as determined by the indemnified party in its sole discretion.

 

(c)                                  Notwithstanding the foregoing, the indemnifying party shall not be entitled to assume the defense of any Third Party Indemnity Claim (but shall be liable for the reasonable fees and expenses of counsel incurred by the indemnified party in defending such Third Party Indemnity Claim) if the Third Party Indemnity Claim seeks an order, injunction or other equitable relief or relief

 

15

 

for other than money damages against the indemnified party which the indemnified party reasonably determines, after conferring with its outside counsel, cannot be separated from any related claim for money damages.  If such equitable relief or other relief portion of the Third Party Indemnity Claim can be so separated from that for money damages, the indemnifying party shall be entitled to assume the defense of the portion relating to money damages.

 

Section 6.6                                   Cooperation.

 

If requested by the indemnifying party, the indemnified party agrees to cooperate with the indemnifying party and its counsel in defending against any Third Party Indemnity Claim that the indemnifying party elects to defend or, if appropriate, in making any counterclaim against the person asserting the Third Party Indemnity Claim, or any cross-complaint against any person, and the indemnifying party will reimburse the indemnified party for any expenses incurred by it in so cooperating.  Likewise, at no cost or expense to the indemnified party, the indemnifying party shall cooperate with the indemnified party and its counsel in the foregoing scenarios with respect to any Third Party Indemnity Claim.

 

Section 6.7                                   Right to Participate.

 

The indemnified party agrees to afford the indemnifying party and its counsel the opportunity to be present at, and to participate in, conferences with all Persons, including Governmental Authorities, asserting any Third Party Indemnity Claim against the indemnified party or conferences with representatives of or counsel for such Persons.  The indemnifying party agrees to provide the same participation rights to the indemnified party and its counsel with respect to any Third Party Claim that the indemnifying party elects to defend in accordance with Section 6.5(a).

 

Section 6.8                                   Payment of Damages.

 

The indemnification required hereunder shall be made by periodic payments of the amount of Damages in connection therewith within ten (10) days as and when reasonably specific bills are received by, or Damages are incurred and reasonable evidence thereof is delivered to, the indemnifying party.  In calculating any amount to be paid by an indemnifying party by reason of the provisions of this Agreement, the amount shall be reduced by all insurance proceeds and any indemnification reimbursement proceeds received from third parties credited to or received by the indemnified party related to the Damages.

 

Section 6.9                                   Direct Claim.

 

Any claim by an indemnified party with respect to any Damages which do not result from a Third Party Indemnity Claim (a “Direct Claim”) will be asserted by giving the indemnifying party reasonably prompt written notice thereof, stating the nature of such claim in reasonable detail and indicating the estimated amount, if practicable.  The indemnifying party will have a period of forty-five (45) days from receipt of such Direct Claim within which to respond to such Direct Claim.  If the indemnifying party does not respond within such forty-five (45) day period, the indemnifying party will be deemed to have accepted such Direct Claim.  If the indemnifying

 

16

 

party rejects such Direct Claim, the indemnified party will be free to seek enforcement of its rights to indemnification under this Agreement.

 

Section 6.10                            Limitations on Indemnification.

 

(a)                                 To the extent that the Partnership Indemnified Parties are entitled to indemnification for Damages pursuant to Section 6.1(i), Acacia’s aggregate liability to the Partnership Indemnified Parties under Section 6.1(i) shall not exceed $135,000,000 (the “Ceiling Amount”).  Notwithstanding the foregoing, the Ceiling Amount shall not apply to breaches or inaccuracies of the Acacia Fundamental Representations.

 

(b)                                 To the extent that the Acacia Indemnified Parties would otherwise be entitled to indemnification for Damages pursuant to Section 6.2(i), the Partnership’s aggregate liability to the Acacia Indemnified Parties under Section 6.2 shall not exceed the Ceiling Amount.  Notwithstanding the foregoing, the Ceiling Amount shall not apply to breaches or inaccuracies of the Partnership Fundamental Representations.

 

(c)                                  Additionally, neither the Partnership, on the one hand, nor Acacia, on the other hand, will be liable as an indemnitor, and each of Acacia and the Partnership hereby waives claims against the other party, under this Agreement for any consequential, incidental, special, indirect, exemplary or punitive damages based on any theory of liability (including lost profits) suffered or incurred by the indemnified party or parties except to the extent resulting pursuant to Third Party Indemnity Claims.

 

Section 6.11                            Sole Remedy.

 

No party shall have liability under this Agreement, the Assignment Agreements or the transactions contemplated hereby or thereby except as is provided in this Article VI (other than claims or causes of action arising from fraud).

 

ARTICLE VII
  MISCELLANEOUS

 

Section 7.1                                   Acknowledgements.

 

Each party acknowledges that it has relied on the representations and warranties of the other party expressly and specifically set forth in this Agreement.  Such representations and warranties constitute the sole and exclusive representations and warranties of the parties hereto in connection with the transactions contemplated hereby, and the parties hereto understand, acknowledge and agree that all other representations and warranties of any kind or nature, whether expressed, implied or statutory, oral or written, past or present, are specifically disclaimed.

 

17

 

Section 7.2                                   Cooperation; Further Assurances.

 

Acacia and the Partnership shall use their respective commercially reasonable efforts, and the Partnership will use commercially reasonable efforts to cause Holdings and Operating, to obtain all approvals and consents required by or necessary for the Transaction.  Each of the parties acknowledges that certain actions may be necessary with respect to the matters and actions contemplated by this Agreement and the Assignment Agreement such as making notifications and obtaining consents or approvals or other clearances that are material to the consummation of the Transaction, and each agrees to take all appropriate action and to do all things necessary, proper or advisable under Applicable Laws and regulations to make effective the Transaction; provided, however, that nothing in this Agreement will require any party hereto to hold separate or make any divestiture not expressly contemplated herein of any asset or otherwise agree to any restriction on its operations or other burdensome condition which would in any such case be material to its assets, liabilities or business in order to obtain any consent or approval or other clearance required by this Agreement or the Assignment Agreement.

 

Section 7.3                                   Expenses.

 

Except as otherwise provided herein and regardless of whether the Transaction is consummated, each party shall pay its own expenses incident to this Agreement and all action taken in preparation for carrying this Agreement into effect.

 

Section 7.4                                   Notices.

 

Any notice, request, instruction, correspondence or other document to be given hereunder by any party hereto to another party hereto (herein collectively called “Notice”) shall be in writing and delivered in person, by courier service requiring acknowledgment of receipt of delivery or by fax, as follows:

 

If to Acacia, addressed to:

 

Acacia Natural Gas Corp I, Inc.

2501 Cedar Springs Rd.

Dallas, TX 75201

Attention: General Counsel

Tel: (214) 953-9500

Fax: (214) 721-9383

 

with copies (which shall not constitute notice) to:

 

Baker Botts L.L.P.

2001 Ross Avenue

Dallas, TX 75201

Attention: Douglass M. Rayburn

Tel: (214) 953-6634

Fax: (214) 661-4634

 

18

 

If to the Partnership or Holdings, addressed to:

 

EnLink Midstream Partners, LP

2501 Cedar Springs Rd.

Dallas, TX 75201

Attention: General Counsel

Tel: (214) 953-9500

Fax: (214) 721-9383

 

with copies (which shall not constitute notice) to:

 

Morris, Nichols, Arsht & Tunnell LLP

1201 North Market Street, 16th Floor

P.O. Box 1347

Attention: Louis G. Hering

Tel: (302) 658-9200

Fax: (302) 658-3989

 

Notice given by personal delivery or courier service shall be effective upon actual receipt.  Notice given by fax shall be confirmed by appropriate answer back and shall be effective upon actual receipt if received during the recipient’s normal business hours, or at the beginning of the recipient’s next business day after receipt if not received during the recipient’s normal business hours.  Any party may change any address to which Notice is to be given to it by giving Notice as provided above of such change of address.

 

Section 7.5                                   Governing Law.

 

(a)                                 This Agreement shall be subject to and governed by the laws of the State of Delaware, without regard to its principles of conflicts of law.  Each Party hereby submits to the exclusive jurisdiction of and venue in the state and federal courts in the State of Delaware for any legal proceeding between the parties arising out of or relating to this Agreement, the Assignment Agreement or the Transaction.

 

(b)                                 Each of the parties agrees that service of summons, complaint or other process in connection with any legal proceeding described in paragraph (a) above may be made by overnight courier addressed to such party at the address provided in Section 7.4 of this Agreement and that service so made shall be as effective as if personally made in the State of Delaware.

 

(c)                                  Each of the parties to this Agreement irrevocably waives any and all right to trial by jury in any legal proceeding between the parties arising out of or relating to this Agreement, the Assignment Agreement or the Transaction.

 

19

 

Section 7.6                                   Public Statements.

 

The parties hereto shall consult with each other and no party shall issue any public announcement or statement with respect to this Agreement or the Transaction without the consent of the other party, unless the party desiring to make such announcement or statement, after seeking such consent from the other parties, obtains advice from legal counsel that a public announcement or statement is required by Applicable Law or stock exchange regulations.

 

Section 7.7                                   Entire Agreement; Amendments and Waivers.

 

(a)                                 This Agreement and the Assignment Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.  Each party to this Agreement agrees that no other party to this Agreement (including its agents and representatives) has made any representation, warranty, covenant or agreement to or with such party relating to this Agreement or the Transaction, other than those expressly set forth herein and in the Assignment Agreement, as applicable.

 

(b)                                 No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by each party to be bound thereby.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided.

 

Section 7.8                                   Action by the Partnership.

 

With respect to any action, Notice, consent, approval or waiver that is required to be taken or given or that may be taken or given by the Partnership with respect to the Transaction, such action, Notice, consent, approval or waiver shall be taken or given by the Conflicts Committee on behalf of the Partnership.

 

Section 7.9                                   Conflicting Provisions.

 

This Agreement and the Assignment Agreement, read as a whole, set forth the parties’ rights, responsibilities and liabilities with respect to the Transaction.  In this Agreement and the Assignment Agreement, and as between them, specific provisions prevail over general provisions.  In the event of a conflict between this Agreement and the Assignment Agreement, this Agreement shall control.

 

Section 7.10                            Binding Effect and Assignment.

 

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns, but neither this Agreement nor any of the rights, benefits or obligations hereunder shall be assigned or transferred, by operation of law or otherwise, by any party hereto without the prior written consent of each other party; provided,

 

20

 

however, that the Partnership may assign any of its rights, interests, obligations or benefits under this Agreement (including its right to acquire some or all of the Transferred Interests at the Closing) to any direct or indirect subsidiary or other Affiliate of the Partnership.  Nothing in this Agreement, express or implied, is intended to confer upon any person or entity other than the parties hereto and their respective permitted successors and assigns, any rights, benefits or obligations hereunder, except for express language with respect to the Partnership Indemnified Parties and the Acacia Indemnified Parties contained in the indemnification provisions of Article VI.

 

Section 7.11                            Severability.

 

If any provision of the Agreement is rendered or declared illegal or unenforceable by reason of any existing or subsequently enacted legislation or by decree of a court of last resort, the Partnership and Acacia shall promptly meet and negotiate substitute provisions for those rendered or declared illegal or unenforceable, but all of the remaining provisions of this Agreement shall remain in full force and effect.

 

Section 7.12                            Interpretation.

 

It is expressly agreed by the parties that neither this Agreement nor the Assignment Agreement shall be construed against any party hereto or thereto, and no consideration shall be given or presumption made, on the basis of who drafted this Agreement, the Assignment Agreement or any provision hereof or thereof or who supplied the form of this Agreement or the Assignment Agreement.  Each party agrees that this Agreement has been purposefully drawn and correctly reflects its understanding of the transactions contemplated by this Agreement and, therefore, waives the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

 

Section 7.13                            Headings.

 

The headings of the several Articles and Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.  The Exhibits and Appendices referred to herein are attached hereto and incorporated herein by this reference, and unless the context expressly requires otherwise, such Exhibits and Appendices are incorporated in the definition of “Agreement.”

 

Section 7.14                            Multiple Counterparts.

 

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

 

*    *    *    *     *

 

21

 

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

 

 

	
 
    	
ACACIA:
    
	
 
    	
 
    
	
 
    	
ACACIA   NATURAL GAS CORP I, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael J. Garberding
    
	
 
    	
 
    	
Name:
    	
Michael   J. Garberding
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and
    
	
 
    	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
THE   PARTNERSHIP:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
ENLINK   MIDSTREAM PARTNERS, LP
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
EnLink   Midstream GP, LLC,
    
	
 
    	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael J. Garberding
    
	
 
    	
 
    	
Name:
    	
Michael   J. Garberding
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and
    
	
 
    	
 
    	
 
    	
Chief   Financial Officer
    
					

 

Signature Page to Contribution and Transfer Agreement

 

 

Exhibit A

 

Form of Assignment Agreement

 

[See Attached]

 

 

ASSIGNMENT AGREEMENT

 

This ASSIGNMENT AGREEMENT (this “Assignment Agreement”), dated as of May 27, 2015, is entered into by and among Acacia Natural Gas Corp I, Inc., a Delaware corporation (“Acacia”), EnLink Midstream Partners, LP, a Delaware limited partnership (the “Partnership”), and EnLink Midstream Operating, LP, a Delaware limited partnership (“Operating”).  Acacia, the Partnership and Operating may be referred to individually as a “Party” or collectively as the “Parties.”

 

RECITALS

 

A.                                    Pursuant to the terms of a Contribution and Transfer Agreement (the “Contribution Agreement”, with capitalized terms used but not defined herein having the respective meanings set forth in the Contribution Agreement), dated as of the date hereof, between Acacia and the Partnership, Acacia has agreed to transfer to the Partnership or its designee the Transferred Interests.

 

B.                                    Pursuant to Section 2.1 of the Contribution Agreement, the Partnership desires to assign to Operating and Operating desires to accept from the Partnership all of the Partnership’s right to acquire the Transferred Interests.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

AGREEMENT

 

1.1.                            Assignment of the Transferred Interests.  At the direction of the Partnership, Acacia hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers the Transferred Interests free and clear of all Liens (other than restrictions under the Holdings Partnership Agreement and applicable federal and state securities laws) to Operating and Operating hereby accepts and assumes obligations arising or accruing from and after the date hereof with respect to the Transferred Interests, effective as of the Closing.

 

1.2.                            Contribution Agreement.  This Assignment Agreement is subject to, in all respects, the terms and conditions of the Contribution Agreement, and nothing contained herein is meant to enlarge, diminish or otherwise alter the terms and conditions of the Contribution Agreement or the Parties’ duties and obligations contained therein.  To the extent there is a conflict between this Assignment Agreement and the Contribution Agreement, the terms of the Contribution Agreement will control.

 

1.3.                            Incorporation of Terms.  The following provisions of the Contribution Agreement are hereby incorporated into and specifically made applicable to this Assignment Agreement (provided, that, unless such incorporated provisions refer specifically to “the Assignment Agreement,” in construing such incorporated provisions, any reference to “this Agreement” shall be deemed to refer to this Assignment Agreement and any reference to “a party” or “the parties” shall be deemed to refer to a Party or the Parties, as applicable):

 

Section 7.2 (Cooperation; Further Assurances)

Section 7.3 (Expenses)

Section 7.5 (Governing Law)

 

 

Section 7.6 (Public Statements)

Section 7.7 (Entire Agreement; Amendments and Waivers)

Section 7.10 (Binding Effect and Assignment)

Section 7.11 (Severability)

Section 7.12 (Interpretation)

Section 7.13 (Headings)

Section 7.14 (Multiple Counterparts)

 

 

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

 

 

 

	
 
    	
ACACIA:
    
	
 
    	
 
    
	
 
    	
ACACIA   NATURAL GAS CORP I, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Michael   J. Garberding
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
THE   PARTNERSHIP:
    
	
 
    	
 
    
	
 
    	
ENLINK   MIDSTREAM PARTNERS, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
EnLink   Midstream GP, LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Michael   J. Garberding
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
OPERATING:
    
	
 
    	
 
    
	
 
    	
ENLINK   MIDSTREAM OPERATING, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
EnLink   Midstream Operating GP, LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Michael   J. Garberding
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and Chief Financial Officer
    

 

[Signature Page to Assignment Agreement]

 

 

Exhibit B

 

Form of Partnership Agreement Amendment

 

[See Attached]

 

 

AMENDMENT NO. 3 TO

SEVENTH AMENDED AND RESTATED 
 AGREEMENT OF LIMITED PARTNERSHIP

OF 
 ENLINK MIDSTREAM PARTNERS, LP

 

This AMENDMENT NO. 3 TO SEVENTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ENLINK MIDSTREAM PARTNERS, LP (this “Amendment”), dated as of May 27, 2015, is entered into by EnLink Midstream GP, LLC, a Delaware limited liability company (the “General Partner”), as general partner of EnLink Midstream Partners, LP, a Delaware limited partnership (the “Partnership”).  Capitalized terms used but not defined herein are used as defined in the Seventh Amended and Restated Agreement of Limited Partnership of EnLink Midstream Partners, LP, dated as of July 7, 2014, as amended by Amendment No. 1 thereto, dated as of February 17, 2015, and Amendment No. 2 thereto, dated as of March 16, 2015 (as so amended, the “Partnership Agreement”).

 

RECITALS:

 

WHEREAS, Section 13.1(d)(i) of the Partnership Agreement provides that the General Partner, without the approval of any Partner or Assignee, may amend any provision of the Partnership Agreement to reflect a change that, in the discretion of the General Partner, does not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect. The General Partner has determined that the following amendment to the Partnership Agreement does not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect.

 

WHEREAS, Section 5.4 of the Partnership Agreement provides that the General Partner, without the approval of any Limited Partners, may issue additional Partnership Securities, or classes or series thereof, for any Partnership purpose at any time and from time to time, and may issue such Partnership Securities for such consideration and on such terms and conditions as shall be established by the General Partner in its sole discretion, all without the approval of any Limited Partners.

 

WHEREAS, Section 13.1(g) of the Partnership Agreement provides that the General Partner, without the approval of any Partner or Assignee, may amend any provision of the Partnership Agreement to reflect an amendment that, in the discretion of the General Partner, is necessary or advisable in connection with the authorization of issuance of any class or series of Partnership Securities pursuant to Section 5.4 of the Partnership Agreement.

 

WHEREAS, Acacia Natural Gas Corp I, Inc., a Delaware corporation (“Acacia”), and the Partnership have entered into that certain Contribution and Transfer Agreement (the “Contribution Agreement”) dated May 27, 2015, pursuant to which Acacia will contribute a 25.0% limited partnership interest in EnLink Midstream Holdings, LP to the Partnership or its designee in exchange for Class E Common Units.

 

 

WHEREAS, the General Partner has determined that it is in the best interest of the Partnership to adopt this Amendment in order to provide for the issuance of the Class E Common Units to certain persons pursuant to the Contribution Agreement.

 

WHEREAS, acting pursuant to the power and authority granted to it: (i) under Section 13.1(d)(i) of the Partnership Agreement, the General Partner has determined that this Amendment to the Partnership Agreement does not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect, and (ii) under Section 13.1(g) of the Partnership Agreement, the General Partner has determined that this Amendment to the Partnership Agreement is necessary and advisable in connection with the authorization of issuance of the Class E Common Units.

 

NOW, THEREFORE, the Partnership Agreement is amended as follows:

 

Section 1.                                           Amendment Relating to Class E Common Units.

 

(a)                                 Section 1.1 is amended to add or amend and restate the following definitions in the appropriate alphabetical order:

 

(i)                                     “Class E Capital Amount” has the meaning ascribed to such term in Section 5.3(a).

 

(ii)                                  “Class E Common Unit” means a Partnership Security representing a fractional part of the Partnership Interests of all Limited Partners and Assignees, and having the rights and obligations specified with respect to the Class E Common Units in this Agreement.

 

(iii)                               “Class E Conversion Effective Date” has the meaning assigned to such term in Section 5.10(b)(vi).

 

(iv)                              “Contribution Agreements” means, collectively, the First Contribution Agreement, the Closing Contribution Agreement, the 2013 Contribution Agreement, the 2015 Contribution Agreement and the Second 2015 Contribution Agreement.

 

(v)                                 “Partnership Security” means any class or series of equity interest in the Partnership (but excluding any options, rights, warrants and appreciation rights relating to an equity interest in the Partnership), including, without limitation, Common Units, Class C Common Units, Class D Common Units, Class E Common Units and Incentive Distribution Rights.

 

(vi)                              “Second 2015 Contribution Agreement” means the Contribution and Transfer Agreement by and between Acacia and the Partnership, dated as of May 27, 2015.

 

(vii)                           “Second 2015 Contribution Agreement Closing Date” means the date of the closing of the contribution of a 25.0% limited partnership interest in EnLink

 

2

 

Midstream Holdings, LP to the Partnership or its designee pursuant to the Second 2015 Contribution Agreement.

 

(viii)                        “Unit” means a Partnership Security that is designated as a “Unit” and shall include Common Units, Class C Common Units, Class D Common Units and Class E Common Units but shall not include (i) General Partner Units (or the General Partner Interest represented thereby) or (ii) Incentive Distribution Rights.

 

(b)                                 Section 1.1 of the Partnership Agreement is hereby further amended to delete the final sentence of the definition of “Common Unit” and replace it with the following:

 

The term “Common Unit” does not refer to a Class C Common Unit, a Class D Common Unit or a Class E Common Unit prior to its conversion into a Common Unit pursuant to the terms hereof.

 

(c)                                  Section 5.3(a) of the Partnership Agreement is amended to add the following at the end of such section:

 

The initial Capital Account balance in respect of each Class E Common Unit shall equal (A) the closing price of a Common Unit on the National Securities Exchange on the Second 2015 Contribution Agreement Closing Date less (B) the excess of (x) the amount of distribution paid per Common Unit with respect to the Quarter commencing on April 1, 2015, over (y) the amount of distribution paid per Class E Common Unit with respect to the Quarter commencing on April 1, 2015 (the “Class E Capital Amount”), and the initial Capital Account balance of each holder of Class E Common Units in respect of all Class E Common Units held shall be the product of such Class E Capital Amount multiplied by the number of Class E Common Units held thereby.

 

(d)                                 Article V is amended to add a new Section 5.10 creating a new series of Units to read in its entirety:

 

Section 5.10.                             Establishment of Class E Common Units.

 

(a)                                 General. The General Partner hereby designates and creates a series of Units to be designated as “Class E Common Units” and consisting of a total of 36,629,888 Class E Common Units, having the same rights and preferences, and subject to the same duties and obligations as the Common Units, except as set forth in this Section 5.10.

 

(b)                                 Rights of Class E Common Units. During the period commencing upon the date of issuance of the Class E Common Units and ending on the Class E Conversion Effective Date, the Class E Common Units shall have the following rights and preferences and shall be subject to the following duties and obligations:

 

(i)                                     Allocations. Except as otherwise provided in this Agreement, all items of Partnership income, gain, loss, deduction and credit shall be allocated to the Class E Common Units to the same extent

 

3

 

as such items would be so allocated if such Class E Common Units were Common Units that were then Outstanding.

 

(ii)                                  Distributions. Except as otherwise provided in this Agreement, the Class E Common Units shall have the right to share in partnership distributions of Available Cash pursuant to Section 6.3, 6.4 or 6.5 on a pro rata basis with the Common Units (excluding distributions with respect to (A) the Quarter commencing on April 1, 2015 and (B) the Quarter commencing on January 1, 2015), so that the amount of any Partnership distribution to each Common Unit will equal the amount of such distribution to each Class E Common Unit.  The Class E Common Units shall have the right to share in Partnership distributions of Available Cash pursuant to Section 6.3, 6.4 or 6.5 with respect to the Quarter commencing on April 1, 2015, so that the amount of any Partnership distribution to each Class E Common Unit in respect of such Quarter will equal (A) the amount of the distribution in respect of such Quarter to each Common Unit multiplied by (B) a fraction, (x) the numerator of which is the number of days commencing with the Second 2015 Contribution Agreement Closing Date and ending with the last day of such Quarter and (y) the denominator of which is the total number of days in such Quarter.  For the avoidance of doubt, the holders of the Incentive Distribution Rights shall be entitled to receive distributions pursuant to subsections (b)-(d) of Section 6.4 for the Quarter commencing on April 1, 2015 in respect of the Class E Common Units, determined as if the Class E Common Units were treated as Common Units, and with appropriate adjustments made to take into account the period in which the Class E Common Units were outstanding during the Quarter commencing on April 1, 2015, each as determined by the General Partner in its discretion.

 

(iii)                               Voting Rights.  Prior to the Class E Conversion Effective Date, the Class E Common Units shall be entitled to vote as a single class with the holders of the Common Units and the Class C Common Units on any matters on which Unitholders are entitled to vote, and shall be entitled to vote as a separate class on any matter that adversely affects the rights or preferences of the Class E Common Units in relation to other classes of Partnership Interests (including as a result of a merger or consolidation) or as required by law.  The approval of a majority of the Class E Common Units shall be required to approve any matter for which the holders of the Class E Common Units are entitled to vote as a separate class.  Each Class E Common Unit will be entitled to the number of votes equal to the number of Common Units into which a Class E Common Unit is convertible at the time of the record date for the vote or written consent on the matter.

 

(iv)                              Certificates.  The Class E Common Units shall be evidenced by certificates in such form as the General Partner may approve and, subject to the satisfaction of any applicable legal, regulatory and

 

4

 

contractual requirements, may be assigned or transferred in a manner identical to the assignment and transfer of other Units.

 

(v)                                 Registrar and Transfer Agent.  The General Partner will act as, or otherwise appoint, the registrar and transfer agent of the Class E Common Units.

 

(vi)                              Conversion.  Each Class E Common Unit shall automatically convert into one Common Unit (subject to appropriate adjustment in the event of any split-up, combination or similar event affecting the Common Units or other Units that occurs prior to the conversion of the Class E Common Units) effective as of the first Business Day following the Record Date for the distribution with respect to the Quarter commencing on April 1, 2015 (the “Class E Conversion Effective Date”) without any further action by the holders thereof and without the approval of any Partner.  The terms of the Class E Common Units will be changed, automatically and without further action, on the Class E Conversion Effective Date so that each Class E Common Unit is converted into one Common Unit and, immediately thereafter, none of the Class E Common Units shall be Outstanding.  Such conversion shall be effective as of the Class E Conversion Effective Date, and the Person entitled to receive the Common Units issuable upon such conversion shall be treated for all purposes as the record holder of such Common Units as of such date.

 

(vii)                           Common Unit Issuance.  On the Class E Conversion Effective Date, each Unitholder holder Class E Common Units shall surrender the certificate or certificates representing the Class E Common Units at the office of the Transfer Agent for such Units, and the Transfer Agent shall issue to such holder a certificate or certificates for the number of Common Units to which such holder is entitled and the Partnership shall cause the Transfer Agent to reflect the issuance of the Common Units book entry on the books and records of the Partnership.

 

(e)                                  Section 6.1(d)(iii)(A) is amended and restated to read in its entirety as follows:

 

(A)                               If the amount of cash or the Net Agreed Value of any property distributed (except (x) for any difference resulting from the application of Section 5.10(b)(ii) to the Quarter commencing on April 1, 2015 or the Quarter commencing on January 1, 2015, (y) for any difference resulting from the application of Section 5.8(b)(ii) to the 2015 Closing Quarter or the Preceding Quarter or (z) cash or property distributed or deemed distributed pursuant to Section 12.4) to any class of Unitholder with respect to its Units (other than to the Series A Preferred Unitholders with respect to the Series A Preferred Units) for a taxable period is greater (on a per Unit basis) than the amount of cash or the Net Agreed Value of property distributed to any other class of Unitholders (other than the class of Unitholders holding Series A Preferred Units) with

 

5

 

respect to their Units (on a per Unit basis) for such taxable period, then (1) each Unitholder receiving such greater cash or property distribution shall be allocated gross income in an amount equal to the product of (aa) the amount by which the distribution (on a per Unit basis) to such Unitholder exceeds the distribution (on a per Unit basis) to the Unitholders (other than the class of Unitholders holding Series A Preferred Units) receiving the smallest distribution and (bb) the number of Units owned by the Unitholder receiving the greater distribution; and (2) the General Partner shall be allocated gross income in an aggregate amount equal to the product obtained by multiplying (aa) the quotient determined by dividing (x) the General Partner’s Percentage Interest at the time in which the greater cash or property distribution occurs, by (y) the sum of 100% less the General Partner’s Percentage Interest at the time in which the greater cash or property distribution occurs times (bb) the sum of the amounts allocated in clause (1) above.

 

Section 2.                                           General Authority. The appropriate officers of the General Partner are hereby authorized to make such further clarifying and conforming changes they deem necessary or appropriate, and to interpret the Partnership Agreement, to give effect to the intent and purpose of this Amendment.

 

Section 3.                                           Ratification of Partnership Agreement. Except as expressly modified and amended herein, all of the terms and conditions of the Partnership Agreement shall remain in full force and effect.

 

Section 4.                                           Governing Law. This Amendment will be governed by and construed in accordance with the laws of the State of Delaware.

 

6

 

 

IN WITNESS WHEREOF, the General Partner has executed this Amendment to be effective as of the date first set forth above.

 

	
 
    	
GENERAL PARTNER:
    
	
 
    	
 
    
	
 
    	
EnLink Midstream GP, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Michael J. Garberding
    
	
 
    	
Title:
    	
Executive Vice President and
    
	
 
    	
 
    	
Chief Financial Officer
    

 

[Signature Page to Amendment No. 3 to Seventh Amended and Restated Agreement of Limited Partnership]

 

 

Appendix A

 

The Partnership and Acacia Designated Personnel

 

Acacia Designated Personnel:

 

·                  Michael Garberding

·                  Alaina Brooks

 

Partnership Designated Personnel:

 

·                  Michael Garberding

·                  Alaina Brooks

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00245-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00245-of-00352.parquet"}]]