Document:

ex_135848.htm

Exhibit 10.2

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

 

SERIES I COMMON STOCK PURCHASE WARRANT

 

GEOVAX LABS, INC.

 

 

	Warrant Shares:  	Issue Date: February __, 2019
	 	 
	 	Initial Exercise Date: August __, 2019

                        

 

THIS SERIES I COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Sabby Healthcare Master Fund, Ltd or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after August __, 2019 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on the five (5) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from GeoVax Labs, Inc., a Delaware corporation (the “Company”), up to _________________ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.     Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated February 25, 2019, as amended, among the Company and the purchasers signatory thereto.

 

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Section 2.        Exercise.

 

a)     Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b)     Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $0.015, subject to adjustment hereunder (the “Exercise Price”).

 

c)     Cashless Exercise. If at any time after the six-month anniversary of the Initial Exercise Date, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder or there are not sufficient shares of Common Stock authorized at such time, this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

	 	
			(A) =

				
			as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;

			

 

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			(B) =

				
			the Exercise Price of this Warrant, as adjusted hereunder; and

			

 

	 	
			(X) =

				
			the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

			

 

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 characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).

 

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

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Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

d)     Mechanics of Exercise.

 

i.     Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming cashless exercise of the Warrants), and otherwise by physical delivery of 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 to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, 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 of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

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ii.     Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of the Warrant Shares, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.     Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d) (i) by the Warrant Share Delivery Date, then the Holder will have the right to elect by written notice to the Company at any time before its receipt of the Warrant Shares, rescind such exercise, in which event the Company and the Holder shall promptly adjust the number of Warrant Shares subject to this Warrant.

 

iv.     Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a 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 the Warrant Shares as required pursuant to the terms hereof.

 

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v.     No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

vi.     Charges, Taxes and Expenses. Issuance Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

 

vii.     Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

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e)     Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing 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 or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

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f)     Issuance Restrictions. If the Company has not effectuated the Reverse Stock Split, then the Company may not issue upon exercise of this Warrant a number of shares of Common Stock, which, when aggregated with any shares of Common Stock issued (i) pursuant to the conversion of any Preferred Stock issued pursuant to the Purchase Agreement and (ii) upon prior exercise of this or any other Warrant issued pursuant to the Purchase Agreement, would exceed 82,700,394, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of the Purchase Agreement plus any other shares of Common Stock that become available for issuance (such number of shares, the “Issuable Maximum”). The Holder and the holders of the other Warrants issued pursuant to the Purchase Agreement shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the Holder’s original Subscription Amount by (y) the aggregate original Subscription Amount of all holders pursuant to the Purchase Agreement. In addition, the Holder may allocate its pro-rata portion of the Issuable Maximum among Warrants held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Purchaser no longer holds any Warrants and the amount of shares issued to such Purchaser pursuant to its Warrants was less than such Purchaser’s pro-rata share of the Issuable Maximum.

 

Section 3.        Certain Adjustments.

 

a)     Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

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b)     Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective price per share less than the Exercise Price then in effect (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation (or, if earlier, the announcement) of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised.

 

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c)     Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, 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 grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

d)     Pro Rata Distributions. During such time as this Warrant is outstanding, 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 limitation, any distribution of cash, stock or other securities, property or options 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 on exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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, the Company shall hold such Distribution in abeyance until such time that the Holder exercises this Warrant, at which time the Holder shall be entitled to ratably receive such portion of the Distribution equal to the proportion of this Warrant being exercised (provided, however, that, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

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e)     Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) or Section 2(f) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) 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 such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) 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, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

11

 

 

f)     Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

g)     Notice to Holder.

 

i.     Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.     Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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Section 4.         Transfer of Warrant.

 

a)     Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)     Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)     Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

 

13

 

 

e)     Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.        Miscellaneous.

 

a)     No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d) (i), except as expressly set forth in Section 3.

 

b)     Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)     Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d)     Authorized Shares.

 

Subject to Schedule 3.1(g) and Section 4.10 of the Purchase Agreement and the effectuating of the Reverse Stock Split, the Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action (but unless required by the Transaction Documents, shall not be required to file a registration statement with the Commission) as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

14

 

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, 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, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)     Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f)     Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)     Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies (unless such delay or failure to exercise a right was subject to a time period for action or exercise specified in this Warrant); however, all rights hereunder terminate on the Termination Date. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

15

 

 

h)     Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

i)     Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)     Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)     Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)     Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)     Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)     Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

 

********************

 

 

(Signature Page Follows)

 

16

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

	 	
			GEOVAX LABS, INC.

			
	 	 
	 	 
	 	By:	 
	 	 	
			Name: David Dodd

			Title:   President & CEO

			

 

17

 

 

NOTICE OF EXERCISE

 

TO:     GEOVAX LABS, INC.

 

(1)     The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)     Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[  ] [if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)     Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

To the extent required by the Warrant, appropriate documentation supporting the permissibility of this change in ownership is included.

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)     Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

 

 

FOR VALUE RECEIVED, [____ all of or [_______ shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

 

_______________________________________________ whose address is

 

_______________________________________________________________.

 

 

 

_______________________________________________________________

 

Dated: ______________, _______

 

 

Holder’s Signature:                                                                 

 

Holder’s Address:smlp-ex101_11.htm

 

EXHIBIT 10.1

Execution Version

 

PURCHASE AND SALE AGREEMENT

between

Meadowlark Midstream Company, LLC, 

as Seller

Tioga Midstream, LLC,

as Tioga

and

Hess North Dakota Pipelines LLC,

as Buyer

dated as of February 22, 2019

 

 

 

 

 

Table of Contents

Page

Article I
DEFINITIONS AND CONSTRUCTION

1.1Definitions2

1.2Rules of Construction12

Article II
PURCHASE AND SALE AND CLOSING

2.1Purchase and Sale13

2.2Purchase Price13

2.3Closing14

2.4Closing Deliveries by Seller to Buyer15

2.5Closing Deliveries by Buyer to Seller15

2.6Settlement Statements15

2.7Express Exclusion of Operations Services from the Purchase and Sale17

2.8Withholding17

Article III
REPRESENTATIONS AND WARRANTIES REGARDING TIOGA AND THE HYDROCARBON GATHERING COMPANY

3.1Organization; Good Standing18

3.2Authority18

3.3Capitalization of the Hydrocarbon Gathering Company18

3.4No Conflicts; Consents and Approvals19

3.5Compliance with Applicable Laws19

3.6Intellectual Property20

3.7Absence of Litigation20

3.8Real Property21

3.9Personal Property22

3.10Purchase Orders23

3.11Regulatory Status23

3.12Environmental Matters23

3.13Taxes24

3.14Contracts25

3.15Employees and Plans26

3.16Transactions with Affiliates27

3.17Broker’s Commissions27

3.18Records27

3.19Surety Bonds and Credit27

3.20No Bankruptcy27

3.21Financial Statements; No Undisclosed Material Liabilities; Indebtedness27

3.22Insurance28

3.23Bank Accounts28

3.24Imbalances28

3.25Preferential Purchase Rights29

i

 

3.26Unrelated Activities and Liabilities29

3.27Absence of Changes29

3.28Use of Proceeds29

Article IV
REPRESENTATIONS AND WARRANTIES OF SELLER

4.1Organization; Good Standing30

4.2Authority30

4.3Ownership of Equity Interests30

4.4No Conflicts; Consents and Approvals30

4.5Broker’s Commissions30

4.6No Bankruptcy31

4.7Legal Proceedings31

Article V
REPRESENTATIONS AND WARRANTIES REGARDING BUYER

5.1Organization; Good Standing31

5.2Authority31

5.3No Conflicts; Consents and Approvals31

5.4Legal Proceedings32

5.5Acquisition as Investment32

5.6Financial Resources32

5.7Opportunity for Independent Investigation32

5.8Broker’s Commissions33

5.9No Knowledge of Breach33

Article VI
COVENANTS

6.1Indebtedness; Distributions; Contributions33

6.2Tax Matters34

6.3Public Announcements36

6.4Regulatory and Other Approvals37

6.5Resignation and Removal37

6.6Removal of Name37

6.7Termination of Agreements with Seller and Non-Company Affiliates37

6.8Replacement of Insurance38

6.9Further Assurances38

6.10Casualty Loss38

6.11Conduct of Business38

6.12No Shop41

6.13Reorganization Transactions42

6.14Financial Statements42

Article VII
BUYER’S CONDITIONS TO CLOSING

7.1Representations and Warranties43

7.2Performance43

7.3Officer’s Certificate43

7.4Orders and Laws43

ii

 

7.5Closing Deliverables43

7.6Indebtedness; Distributions43

7.7Water PSA Closing43

7.8Side Letter44

Article VIII
SELLER’S CONDITIONS TO CLOSING

8.1Representations and Warranties44

8.2Performance44

8.3Officer’s Certificate44

8.4Orders and Laws44

8.5Closing Deliverables44

8.6Water PSA Closing44

8.7Side Letter44

Article IX
TERMINATION

9.1Right of Termination45

9.2Effect of Termination45

9.3Return of Documentation46

9.4Confidentiality46

Article X
LIMITATIONS ON LIABILITY, WAIVERS AND ARBITRATION

10.1Survival of Representations, Warranties and Agreements46

10.2Indemnification of Buyer and the Hydrocarbon Gathering Company by Seller47

10.3Indemnification of Seller by Buyer48

10.4Limitations48

10.5Claims Procedures49

10.6Waiver of Other Representations51

10.7Waiver of Remedies51

10.8Access to Information and Assets; Transition of Operations52

10.9Dispute Resolution and Arbitration53

10.10Arbitration Procedures54

10.11Losses55

10.12Tax Treatment55

10.13Express Negligence55

Article XI
MISCELLANEOUS

11.1Notices56

11.2Entire Agreement57

11.3Expenses57

11.4Disclosure57

11.5Waiver57

11.6Amendment58

11.7No Third Party Beneficiary58

11.8Assignment; Binding Effect58

11.9Invalid Provisions58

iii

 

11.10Counterparts58

11.11Governing Law; Enforcement, Jury Trial Waiver58

11.12Specific Performance59

iv

 

EXHIBITS:

Exhibit A–Company Assignment Agreement

Exhibit B–Hydrocarbon Gathering System

Exhibit C–Form of Release

Exhibit D-1–Form of Hydrocarbon Gathering Shared Easements Assignment

Exhibit D-2–Form of Hydrocarbon Gathering Specified Shared Easements Assignment

Exhibit D-3–Form of Hydrocarbon Gathering Only Assets Assignment

Exhibit E–Form of Easement Agreement

 

SCHEDULES:  

Schedule 1.1-NWC–Sample Net Working Capital Calculation 

Schedule 1.1-CP–Hydrocarbon Contingency Payment

Schedule 1.1-FD–Financing Documents

Schedule 1.1-PL–Permitted Liens

Schedule 3.5–Compliance with Applicable Laws

Schedule 3.5-P–Hydrocarbon Permits

Schedule 3.6(b)–Hydrocarbon Intellectual Property

Schedule 3.7–Absence of Litigation

Schedule 3.8(a)–Hydrocarbon Owned Real Property

Schedule 3.8(b)–Hydrocarbon Real Property Leases

Schedule 3.8(c), Part 1 –Shared Easements

Schedule 3.8(c), Part 2 –Specified Shared Easements

Schedule 3.8(c), Part 3 –Hydrocarbon Gathering Only Easements

Schedule 3.8(d)–Obligations to Dispose of Hydrocarbon Gathering Real Property

Schedule 3.8(e)–Hydrocarbon Gathering System Gaps

Schedule 3.8(g)–Non-Company Owned Hydrocarbon Gathering Real Property

Schedule 3.9(a)–Certain Hydrocarbon Gathering Personal Property

	
Schedule 3.9(b)
	
–Hydrocarbon Gathering Personal Property Projected Capital Maintenance

Schedule 3.10–Hydrocarbon Purchase Orders

Schedule 3.12–Environmental Matters

Schedule 3.13–Taxes

Schedule 3.14–Hydrocarbon Material Contracts

Schedule 3.16–Transactions with Affiliates

Schedule 3.19–Hydrocarbon Surety Bonds and Credit

Schedule 3.21–Indebtedness

Schedule 3.22–Insurance

Schedule 3.23–Bank Accounts; Powers of Attorney

Schedule 3.24–Hydrocarbon Imbalances

Schedule 3.25–Preferential Rights

Schedule 3.27–Absence of Change

Schedule 5.9–No Knowledge of Breach

Schedule 6.11–Conduct of Business

Schedule 10.2(e)–Special Liabilities

 

 

v

 

PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of February 22, 2019 (the “Execution Date”), is made and entered into by and among Meadowlark Midstream Company, LLC, a Delaware limited liability company (“Seller”), Tioga Midstream, LLC, a Delaware limited liability company (“Tioga”) and Hess North Dakota Pipelines LLC, a Delaware limited liability company (“Buyer”).  Hess Infrastructure Partners LP, a Delaware limited partnership (“Water Buyer”), is also joining in the execution of this Agreement solely for purposes of acknowledging the provisions and limitations of Section 10.4(c) and for no other purpose (the Parties acknowledge that Water Buyer shall have no liability hereunder). 

RECITALS

WHEREAS, Seller owns all of the issued and outstanding Equity Interests (as defined below) in Tioga (the “Tioga Company Interests”), which holds assets comprising the Hydrocarbon Gathering Business (as defined below) and the Water Gathering Business (as defined below).

WHEREAS, Seller intends to cause Tioga to convey (and Tioga intends to convey), prior to Closing (as defined below), the Hydrocarbon Gathering Business and Tioga’s assets utilized therein (including the Hydrocarbon Gathering Assets (as defined below)) to Tioga Hydrocarbon Gathering Company, LLC, a Delaware limited liability company (the “Hydrocarbon Gathering Company”) in which Seller owns all of the issued and outstanding Hydrocarbon Company Interests (as defined below).

WHEREAS, Seller intends to cause Tioga to convey (and Tioga intends to convey), prior to Closing, the Water Gathering Business and Tioga’s assets utilized therein (including the Water Gathering Assets (as defined below)) to Tioga Water Gathering Company, LLC, a Delaware limited liability company (the “Water Gathering Company”) in which Seller owns all of the issued and outstanding Water Company Interests (as defined below).

WHEREAS, pursuant to a Purchase and Sale Agreement, dated as of the Execution Date by and between Seller and Water Buyer (such agreement, as the same may be amended, supplemented and/or restated, the “Water PSA”), Seller will sell all of the Tioga Company Interests and all of the Water Company Interests to Water Buyer.

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Hydrocarbon Company Interests, on the terms and subject to the conditions set forth herein.

WHEREAS, Summit Midstream Partners, LP, an Affiliate of Seller, has executed concurrently with the execution of this Agreement a performance guarantee in favor of Buyer guaranteeing the performance and payment of Seller’s obligations under this Agreement, subject to the terms and conditions of such guarantee.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements in this Agreement, and for other good and valuable 

1

 

consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

Article I
DEFINITIONS AND CONSTRUCTION

1.1Definitions

.  As used in this Agreement, the following capitalized terms have the meanings set forth below:

“1933 Act” means the United States Securities Act of 1933 (codified at 15 U.S.C. §§ 77a et seq.).

“Accounting Referee” has the meaning given to it in Section 2.6(c).

“Acquired Company” means any of Tioga, the Water Gathering Company or the Hydrocarbon Gathering Company. 

“Affiliate” means, with respect to any Person, a Person directly or indirectly controlling, controlled by or under common control with such Person.  In this context “control” means the possession, directly or indirectly, through one or more intermediaries, by any Person or group (within the meaning of Section 13(d)(3) under the United States Securities Exchange Act of 1934) of the power or authority, through ownership of voting securities, by contract or otherwise, to control or direct the management and policies of the entity; provided, however, that for purposes of this Agreement and any other agreements and/or instruments entered into in connection herewith, (i) Buyer and its subsidiaries are not Affiliates of Seller and its other Affiliates and (ii) prior to and at the Closing, Tioga, the Hydrocarbon Gathering Company and the Water Gathering Company are each an Affiliate of Seller and after the Closing, the Hydrocarbon Gathering Company will be a subsidiary and an Affiliate of Buyer and each of Tioga and the Water Gathering Company will be a subsidiary and an Affiliate of Water Buyer and thus none of Tioga, the Hydrocarbon Gathering Company and the Water Gathering Company will be an Affiliate of Seller.

“Agreement” has the meaning given to it in the Preamble.

“Allocation Schedule” has the meaning given to it in Section 6.2(f). 

“Asserted Liability” has the meaning given to it in Section 10.5(a).

“Assets” means, collectively, the Hydrocarbon Gathering Assets and the Water Gathering Assets.  For the avoidance of doubt, the “Assets” do not include any Fiberspar inventory.

“Base Purchase Price” has the meaning given to it in Section 2.2(a).

“Business” means, collectively, the Hydrocarbon Gathering Business and the Water Gathering Business. 

“Business Day” means a day other than Saturday, Sunday or any day on which banks located in the State of New York or the State of Texas are authorized or obligated to close.

2

 

“Buyer” has the meaning given to it in the Preamble.

“Buyer Warranty Breach” has the meaning given to it in Section 10.3(a).

“Cash” means money or currency in a deposit account of Tioga and/or the Hydrocarbon Gathering Company at a financial institution, net of checks outstanding as of the time of determination.

“Casualty Loss” has the meaning given to it in Section 6.10. 

“Change of Control Transaction” means (a) the direct or indirect sale, lease, transfer, conveyance or other disposition, in one or a series of transactions, of all or substantially all of the properties or assets of Summit Midstream Partners, LP to a Person that is not an Affiliate of Energy Capital Partners II, LLC or (b) any transaction (including by way of merger or consolidation) the result of which is that any Person that is not an Affiliate of Energy Capital Partners II, LLC, becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the common units (or other voting membership interest, as applicable) of any of the Summit Companies.

“Charter Documents” means with respect to any Person that is not a natural person, the articles of incorporation or organization, memorandum of association, articles of association and by-laws, the limited partnership agreement, the partnership agreement or the limited liability company agreement and/or such other organizational documents of such Person which establish the legal personality of such Person.

“Claim” means any demand, claim, action, investigation or Proceeding.

“Claims Notice” has the meaning given to it in Section 10.5(a).

“Closing” has the meaning given to it in Section 2.3.  

“Closing Date” means the date on which Closing occurs.  

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

“Company Assignment Agreement” has the meaning given to it in Section 2.4(a).

“Company Warranty Breach” has the meaning given to it in Section 10.2(a).

“Confidentiality Agreement” has the meaning given to it in Section 9.4.

“Consolidated Group” means any affiliated, combined, consolidated, unitary or similar group with respect to any Taxes, including any affiliated group within the meaning of Section 1504 of the Code electing to file consolidated federal income Tax Returns and any similar group under foreign, state or local Law.

“Contingency Payment” means the amounts payable pursuant to Schedule 1.1-CP with respect to the Hydrocarbon Gathering Assets.

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“Contract” means any legally binding contract, lease, license, evidence of Indebtedness, mortgage, indenture, purchase order, binding bid, letter of credit, security agreement or arrangement, in each case, whether written or oral.

“Dispute” has the meaning given to it in Section 10.9(a). 

“Dispute Notice” has the meaning given to it in Section 2.6(b).

“Due Diligence Information” has the meaning given to it in Section 5.7(b).

“Easement” means any easement, right-of-way, surface use agreement or similar interest burdening any Real Property.

“Effective Date” means 11:59 p.m. Prevailing Central Time on December 31, 2018.

“Effective Date Net Working Capital” means, as of the Effective Date, (a) the sum of (i) the product of (x) the sum of the current assets of Tioga (other than accounts receivable and Cash) plus Cash multiplied by (y) 68.2% plus (ii) the sum of the current accounts receivable of Tioga attributable to the Hydrocarbon Gathering Business less (b) the product of (i) the sum of the current liabilities of Tioga multiplied by (ii) 68.2%. Notwithstanding anything in this Agreement to the contrary, the following items will be excluded from the calculation of Effective Date Net Working Capital: (A) any Income Tax assets and Income Tax liabilities, (B) any accounts payable related to capital expenditures, (C) any current deferred revenue, (D) any net change in deposits on property, plant and equipment for the period beginning April 16, 2014 and ending on the close of business on the Business Day immediately preceding the Effective Date, (E) any prepaid insurance premiums allocated to Tioga for the insurance listed on Schedule 3.22, (F) any prepaid rents or security deposits allocated to Tioga for office buildings, (G) any accrued obligations to pay bonuses of employees of the Summit Companies allocated to Tioga (but for the avoidance of doubt, the calculation of Effective Date Net Working Capital shall include 68.2% of the accrued obligations to pay expenses allocated to Tioga with respect to (I) salaries and benefits (other than bonuses) of field employees of the Summit Companies performing work for Tioga and (II) vehicles utilized by such employees, which expenses shall not exceed $135,000 per calendar month on a 100% basis) and (H) any Fiberspar inventory or liabilities or accounts payable associated therewith.  For illustrative purposes only, attached as Schedule 1.1-NWC is a sample calculation of Effective Date Net Working Capital prepared by Seller in good faith as of December 31, 2018.  In calculating Effective Date Net Working Capital, there shall be no allowances for doubtful accounts. 

“Environmental Law” means any and all federal, state and local Laws pertaining to protection of the environment or the release, discharge or disposal of Hazardous Material, as in effect on the date hereof, in any and all jurisdictions in which the Hydrocarbon Gathering System operates or is located, including the Clean Air Act, the Federal Water Pollution Control Act, the Oil Pollution Act of 1990, the Rivers and Harbors Act of 1899, the Safe Drinking Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Toxic Substances Control Act, and comparable state and local counterparts.

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“Environmental Permits” means any Permit issued pursuant to Environmental Laws.

“Equity Interests” means capital stock, partnership or membership interests or units (whether general or limited), and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing entity. 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Execution Date” has the meaning given to it in the Preamble.

“Final Settlement Statement” has the meaning given to it in Section 2.6(b).

“Financial Statements” has the meaning given to it in Section 3.21(a).

“Financing Documents” means the agreements and instruments listed on Schedule 1.1-FD.

“Fundamental Representations” has the meaning given to it in Section 10.1.

“GAAP” means generally accepted accounting principles in the United States, applied on a consistent basis.

“Governmental Authority” means any applicable federal, state, tribal or local governmental authority, agency, board, commission, council, court or official in the United States.

“Hazardous Material” means each substance designated or classified as a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant or toxic substance under any Environmental Law.

“Hydrocarbon Company Interests” means 100% of the Equity Interests in the Hydrocarbon Gathering Company. 

“Hydrocarbon Gathering Assets” means all of Tioga’s assets necessary for the ownership and operation of the Hydrocarbon Gathering Business, including:

	
 
	
(i)
	
the Hydrocarbon Gathering System;

	
 
	
(ii)
	
the Hydrocarbon Gathering Easements;

	
 
	
(iii)
	
the Hydrocarbon Gathering Real Property;

	
 
	
(iv)
	
the Hydrocarbon Gathering Personal Property;

	
 
	
(v)
	
the Hydrocarbon Gathering Permits; 

	
 
	
(vi)
	
the Hydrocarbon Gathering Contracts;

	
 
	
(vii)
	
the Intellectual Property Rights (insofar as they relate to the Hydrocarbon Gathering Business); and

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(viii)
	
the Records (insofar as they relate to the Hydrocarbon Gathering Business). 

“Hydrocarbon Gathering Business” means the ownership and operation of the Hydrocarbon Gathering System and other activities conducted by Tioga and/or the Hydrocarbon Gathering Company that are in support thereof or incidental thereto.

“Hydrocarbon Gathering Company” has the meaning given to it in the Recitals. 

“Hydrocarbon Gathering Company LLC Agreement” means the Limited Liability Company Agreement of the Hydrocarbon Gathering Company dated as of February 19, 2019. 

“Hydrocarbon Gathering Contracts” means the Contracts to which Tioga or the Hydrocarbon Gathering Company is a party or is bound insofar as relating to the Hydrocarbon Gathering Business, including the Hydrocarbon Gathering Material Contracts.

“Hydrocarbon Gathering Easements” means (a) insofar as the same are also utilized with respect to the Water Gathering Assets, concurrent rights in and to (i) all of the Easements listed on Schedule 3.8(c), Part 1 and Schedule 3.8(c), Part 2 and (ii) all other Easements associated with the Hydrocarbon Gathering System and (b) insofar as not covered under clause (a), (i) all of the Easements listed on Schedule 3.8(c), Part 3 and (ii) all other Easements associated with the Hydrocarbon Gathering System.

“Hydrocarbon Gathering Material Contracts” has the meaning given to it in Section 3.14(a).

“Hydrocarbon Gathering Permits” means all Permits necessary for the ownership or operation of the Hydrocarbon Gathering System or other Hydrocarbon Gathering Assets.

“Hydrocarbon Gathering Personal Property” means all property listed on Schedule 3.9(a), as well as all other equipment, machinery, fixtures and other personal property, operational or nonoperational, whether owned or leased, in each case, used or held for use in connection with the Hydrocarbon Gathering Business.

“Hydrocarbon Gathering Real Property” means (a) insofar as the same are also utilized with respect to the Water Gathering Assets, (i) concurrent rights in and to all of the Real Property listed on Schedule 3.8(a) or Schedule 3.8(b) and (ii) all other Real Property associated with the Hydrocarbon Gathering Business and (b) insofar as not covered under clause (a), (i) all of the Real Property listed on Schedule 3.8(a) or Schedule 3.8(b) and (ii) all other Real Property associated with the Hydrocarbon Gathering Business.

“Hydrocarbon Gathering System” means the facilities depicted on Exhibit B, including a crude oil, natural gas and natural gas liquids gathering system comprised of approximately 153 miles of pipeline and its associated LACTs, meters, pumps, valves, fittings, equipment, personal property and related facilities and appurtenances located downstream of the point of entry, which is the upstream side of the furthest upstream pipe or equipment used for transporting hydrocarbons that is owned by Tioga prior to the Reorganization Transactions and by the Hydrocarbon Gathering Company after the Reorganization Transactions. 

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“Income Taxes” means all income, gross or modified gross receipts (including the Texas franchise Tax), capital gains and similar Taxes. 

“Indebtedness” means, with respect to any Person, at any date, without duplication, and in each case, with respect to the Hydrocarbon Gathering Business, (a) all obligations of such Person for (i) borrowed money, including all principal, interest, premiums, fees, expenses, overdrafts and, to the extent required to be carried on a balance sheet prepared in accordance with GAAP, penalties with respect thereto, whether short-term or long-term, and whether secured or unsecured or (ii) with respect to deposits or advances of any kind related to the Hydrocarbon Gathering Business (other than any such deposits and advances of any Person relating to the purchase of products or services from Tioga (and, as of Closing, the Hydrocarbon Gathering Company) in the ordinary course of business), (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or debt securities, (c) all obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit or bankers’ acceptances or similar instruments, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all guarantees, whether direct or indirect, by such Person of indebtedness of others or indebtedness of any other Person secured by any assets of such Person, and (f) all other obligations of a Person which would be required to be shown as indebtedness on a balance sheet of such Person prepared in accordance with GAAP.

“Intellectual Property Rights” means all material rights in any of the following to the extent subject to protection under applicable Law: (a) trademarks, service marks, brand names and trade names; (b) patents; (c) copyrights; (d) internet domain names; (e) trade secrets and other proprietary and confidential information and (f) any registrations or applications for registration for any of the foregoing.

“Interim Financial Statements” has the meaning given to it in Section 3.21(a).

“Knowledge” when used (a) in a particular representation or warranty in this Agreement with respect to Tioga, the Hydrocarbon Gathering Company or Seller, means the actual knowledge (as opposed to any constructive or imputed knowledge) of any of Steve Newby, Louise Matthews, Brad Graves, Kim Ward, Mike Smith, Ryan Simmons, Brock Degeyter, Megan Davis, Leonard Mallett, Collin Ellis, Greg Haneiko, Rick Smith, Zak Covar, Marc Stratton, Bill Mault, Blake Motley or David Kimsey, and (b) with respect to Buyer, means the actual knowledge (as opposed to any constructive or imputed knowledge) of any of Michael Frailey, Chad Newton, Vicki Valentine, Dave Schmidt, Steve Maddison or Jerry Tamborski.

“Laws” means all laws, statutes, rules, regulations, ordinances, court or other orders of a Governmental Authority, and other pronouncements having the effect of law of any Governmental Authority.

“Lien” means any mortgage, pledge, deed of trust, assessment, security interest, charge, lien, encumbrance, option, warranty, purchase right, lease or other similar burden or property interest.

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“Loss” means any and all judgments, losses, liabilities, amounts paid in settlement, damages, fines, penalties, deficiencies, expenses (including interest, court costs, reasonable fees of attorneys, accountants and other experts and other reasonable expenses of litigation or other Proceedings or of any Claim, default or assessment); provided, however, that any claim for Loss under the indemnities in Article X shall be subject to Section 10.11.  For all purposes in this Agreement, the term “Losses” shall not include any Non-Reimbursable Damages. 

“Material Adverse Effect” means any change, event, development or occurrence that, individually or in the aggregate with all other changes, events, developments and occurrences, is materially adverse to the business, operations, Hydrocarbon Gathering Assets, liabilities or financial condition of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company but excluding any of the foregoing resulting from (i) general economic conditions, (ii) changes or conditions generally affecting the U.S. economy or financial or capital markets or the oil and gas industry (including changes in commodity prices, general market prices, or costs of performing services or regulatory changes), (iii) changes in Laws, GAAP or regulatory accounting requirements or interpretations thereof, (iv) acts of war, insurrection, sabotage or terrorism, or the outbreak of hostilities or trade disputes involving the United States, (v) the occurrence of any natural disasters, (vi) execution of this Agreement and the announcement thereof, (vii) any act or omission by Tioga, the Hydrocarbon Gathering Company or the Water Gathering Company (A) expressly prescribed under this Agreement or the Water PSA, as applicable or (B) taken with the prior written consent of Buyer or Water Buyer, as applicable (excluding, in each case, however, any unintended consequences resulting from such acts or omissions) or taken at the prior express written request of Buyer or Water Buyer, as applicable, following the execution of this Agreement, (viii) any failure by Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company to meet any budgets, projections, forecasts or predictions of financial performance for any period (without limiting the underlying event that caused such failure from being a Material Adverse Effect if it satisfies the definition hereof), or (ix) any act of Buyer in connection with the exercise of its rights under Section 10.8 or any breach by Buyer or any of its Affiliates of a Hydrocarbon Gathering Material Contract or a Contract that constitutes a Water Gathering Material Contract under the Water PSA, except to the extent any of the changes, events, circumstances, developments or occurrences referred to in any of clause (iv) or (v) above disproportionately impact Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company as compared to other companies in the industries and geographical area in which Tioga and the Hydrocarbon Gathering Company operate. 

“No Shop Period” has the meaning given to it in Section 6.12.

“Non-Company Affiliate” means any Affiliate of Seller, except for Tioga, the Hydrocarbon Gathering Company and the Water Gathering Company.

“Non-Income Taxes” means any Taxes imposed on Tioga or the Hydrocarbon Gathering Company other than (i) Income Taxes and (ii) Taxes described in Section 6.2(c).

“Non-Reimbursable Damages” has the meaning given to it in Section 10.7(b).

“Operations Services” has the meaning given to it in Section 2.7.

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“Outside Date” has the meaning given to it in Section 9.1(b).

“Parties” means each of Buyer, Tioga and Seller.

“Permits” means all permits, licenses or authorizations from any Governmental Authority. 

“Permitted Lien” means (a) any Lien for Taxes not yet due or delinquent, (b) any Lien arising in the ordinary course of business by operation of Law with respect to a liability that is not yet due or delinquent, (c) any other imperfection or irregularity of title or other Lien that would not reasonably be expected to materially and adversely interfere with the conduct of the Business, (d) zoning, planning and other similar limitations and restrictions (in each case) to the extent the same does not materially and adversely interfere with the conduct of the Business and all rights of any Governmental Authority to regulate a property, (e) the terms and conditions of the Permits or the Contracts of Tioga related to the Hydrocarbon Gathering Business (and, as of Closing, the Hydrocarbon Gathering Company) (in each case) to the extent the same does not materially and adversely interfere with the conduct of the Business, (f) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security Laws, (g) any Lien to be released on or prior to Closing, including any Lien pursuant to the Financing Documents and (h) the other matters identified on Schedule 1.1-PL.  

“Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, unlimited liability corporation, proprietorship, other business organization, trust, union, association or Governmental Authority.

“Plan” means, whether written or oral, each “employee benefit plan” within the meaning of Section 3(3) of ERISA (including “multiemployer plans” within the meaning of Section 3(37) of ERISA) and any and all employment, deferred compensation, change in control, severance, termination, loan, employee benefit, retention, bonus, pension, profit sharing, savings, retirement, welfare, incentive compensation, stock or equity-based compensation, stock purchase, stock appreciation, collective bargaining, fringe benefit, vacation, paid time off, sick leave or other similar agreements, plans, programs, policies, understandings or arrangements.

“Pre-Closing Period” means, with respect to Income Taxes, any Tax period (or portion thereof) ending on or before the Closing Date. 

“Pre-Effective Date Period” means, with respect to Non-Income Taxes, any Tax period (or portion thereof) ending on or before the Effective Date.

“Preliminary Settlement Statement” has the meaning given to it in Section 2.6(a).

“Proceeding” means any complaint, lawsuit, action, suit or other proceeding at Law or in equity or order or ruling, in each case by or before any Governmental Authority or arbitral tribunal.

“Prudent Industry Practices” means generally accepted standards of care and diligence, practices, methods, and acts in the hydrocarbon gathering business for similar facilities located in the United States, which is not intended to be limited to the optimum standard, practice, method or act but rather to a spectrum of possible standards, practices, methods or acts.

9

 

“Purchase Price” has the meaning given to it in Section 2.2.

“Real Property” means real property owned in fee or leased, used or held for use by a Person.

“Records” has the meaning given to it in Section 10.8(a).

“Release” means any release, spill, emission, leaking, pumping, injection, disposal or discharge of any Hazardous Materials into the environment, to the extent prohibited under, or not in compliance with, applicable Environmental Laws.

“Reorganization Documents” means any agreement or other document to be executed and delivered by any Party hereto, the Hydrocarbon Gathering Company and/or the Water Gathering Company in connection with the Reorganization Transactions.

“Reorganization Transactions” has the meaning given to it in Section 6.13.

“Representatives” means, as to any Person, its officers, directors, employees, managers, members, partners, shareholders, owners, counsel, accountants, financial advisers and consultants.

“Rules” has the meaning given to it in Section 10.10(a).

“Schedules” means the disclosure schedules prepared by Seller and attached to this Agreement.

“SEC” has the meaning given to it in Section 6.14.

“Seller” has the meaning given to it in the Preamble.

“Seller Group” means Seller and any of its Affiliates.

“Seller Tax Returns” has the meaning given to it in Section 6.2(a)(ii).

“Seller Taxes” means any and all (a) Income Taxes imposed on Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company or for which Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company may otherwise be liable for any Pre-Closing Period, (b) Non-Income Taxes imposed on Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company or for which Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company may otherwise be liable for any Pre-Effective Date Period, (c) Taxes of any Consolidated Group (or any member thereof, other than Tioga, the Hydrocarbon Gathering Company or the Water Gathering Company) of which Tioga or the Hydrocarbon Gathering Company (or any predecessor thereof) is or was a member prior to the Closing Date, or (d) Taxes (other than Transfer Taxes and the Taxes described in clause (a), (b) or (c)) imposed by any applicable Laws on Seller or its Affiliates (other than Tioga, the Hydrocarbon Gathering Company or the Water Gathering Company) for any Tax period; provided that no such Tax will constitute a Seller Tax to the extent such Tax was included as a current liability in the final determination of Effective Date Net Working Capital.

10

 

“Seller Warranty Breach” has the meaning given to it in Section 10.2(b).

“Side Letter” means that certain letter agreement, dated as of even date herewith, by and among Hess Trading Corporation, Hess Bakken Investments II, LLC, Hess Corporation and Tioga. 

“Special Liabilities” means those matters set forth on Schedule 10.2(e).

“Summit Companies” means Seller, Summit Midstream Partners, LP, Summit Midstream Holdings, LLC, Summit Midstream GP, LLC, Summit Midstream OpCo LLC, Summit Midstream Partners Holdings, LLC and Summit Midstream Partners, LLC.

“Taxes” means (a) all taxes, charges, fees, imposts, levies or other assessments in the nature of a tax, including income, corporate, capital, excise, property, sales, use, turnover, unemployment, social security, disability, withholding, real property, personal property, environmental (including any tax imposed by Section 59A of the Code), transfer, registration, value added and franchise taxes, deductions, withholdings and customs duties, imposed by any Governmental Authority, and including any interest or penalty imposed with respect thereto, whether disputed or not and (b) any liability in respect of any item described in clause (a), above, that arises by reason of a contract, assumption, transferee or successor liability, operation of Law or otherwise.

 “Tax Claim” means any action, suit, arbitration, investigation, inquiry, hearing, request for information or filing, audit, examination, claim, demand, dispute, assessment, proposed adjustment or proceeding (whether administrative, regulatory or otherwise, or whether oral or in writing) with respect to Taxes or any Tax Returns of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company.

“Tax Return” means any return, report, rendition, claim for refund, statement, information return or other document (including any related or supporting information or schedule attached thereto, or amendment thereof) filed or required to be filed with any Governmental Authority in connection with the determination, assessment, collection or administration of any Taxes or the administration of any Laws relating to any Taxes.

“Taxing Authority” means, with respect to any Tax, the Governmental Authority or political subdivision thereof that imposes such Tax, and the agency (if any) charged with collection of such Tax for such entity or subdivision.

“Third Party Acquisition” has the meaning given to it in Section 6.12.

“Tioga” has the meaning given to it in the Preamble.

“Tioga Company Interests” has the meaning given to it in the Recitals.

“Transaction Documents” means this Agreement and any agreement or other document to be delivered pursuant to this Agreement by any Party hereto or any of its Affiliates, but specifically excluding any Reorganization Documents.

“Transfer Taxes” has the meaning given to it in Section 6.2(c).

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“Warranty Breach” means any Buyer Warranty Breach, Company Warranty Breach, or Seller Warranty Breach.

“Water Buyer” has the meaning given to it in the Preamble.

“Water Company Interests” means 100% of the Equity Interests in the Water Gathering Company. 

“Water Gathering Assets” has the meaning given to such term in the Water PSA.

“Water Gathering Business” has the meaning given to such term in the Water PSA.

“Water Gathering Company” has the meaning given to it in the Recitals.

“Water Gathering Real Property” has the meaning given to such term in the Water PSA.

“Water PSA” has the meaning given to it in the Recitals.

“Willful Breach” means, with respect to either Party, (a) such Party’s willful or deliberate act or a willful or deliberate failure to act by such Party, which act or failure to act constitutes in and of itself a material breach of any covenant set forth in this Agreement and which was undertaken with the actual knowledge of such Party that such act or failure to act would be, or would reasonably be expected to cause, a material breach of this Agreement or (b) the failure by such Party to consummate the transactions contemplated by this Agreement after all conditions to such Party’s obligations in Article VII or Article VIII, as applicable, have been satisfied or waived in accordance with the terms of this Agreement (other than those conditions which by their terms can only be satisfied simultaneously with the Closing but which would be capable of being satisfied at Closing if Closing were to occur).

“Willful Misconduct” means (a) an intentional or deliberate act or omission, the results of which are materially detrimental to the interest of another Person and which causes injury or death to such Person or damage to property or the environment, in each case, in any material respect or (b) an intentional act or omission done with knowledge of a situation creating a peril and with a wanton or reckless disregard or indifference to the consequences of such act and with the knowledge that such act is reasonably likely to result in injury or death to a Person or damage to property or the environment, in each case, in any material respect.

“Year End Financial Statements” has the meaning  given to it in Section 3.21(a).

1.2Rules of Construction

.

(a)The exhibits and Schedules attached to this Agreement constitute a part of this Agreement for all purposes.  All article, section, subsection and exhibit references used in this Agreement are to articles, sections, subsections and exhibits to this Agreement unless otherwise specified.  

(b)The headings preceding the text of articles and sections included in this Agreement and the headings to the Schedules attached to this Agreement are for convenience only 

12

 

and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement.  

(c)If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb).  Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral genders and vice versa.  The words “includes” or “including” shall mean “including without limitation,” the words “hereof,” “hereby,” “herein,” “hereunder” and similar terms in this Agreement shall refer to this Agreement as a whole and not any particular section or article in which such words appear.  All currency amounts referenced herein are in United States Dollars unless otherwise specified.  The singular shall include the plural and the plural shall include the singular wherever and as often as may be appropriate.  The words “shall” and “will” are interchangeably used throughout this Agreement and shall accordingly be given the same meaning, regardless of which word is used.

(d)Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.  Whenever any action must be taken hereunder on or by a day that is not a Business Day, then such action may be validly taken on or by the next day that is a Business Day.

(e)All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.

(f)Any reference herein to any Law, statute, rule or regulation shall be construed as referring to such Law, statute, rule or regulation as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time and references to particular provisions of a Law include a reference to the corresponding provisions of any prior or succeeding Law.

(g)Each Party acknowledges that it and its attorneys have been given an equal opportunity to negotiate the terms and conditions of this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party or any similar rule operating against the drafter of an agreement shall not be applicable to the construction or interpretation of this Agreement.

Article II
PURCHASE AND SALE AND CLOSING

2.1Purchase and Sale

.  On the terms and subject to the conditions set forth in this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell and to convey to Buyer, at Closing, the Hydrocarbon Company Interests, free and clear of all Liens other than those under state or federal securities Laws and the Hydrocarbon Gathering Company LLC Agreement.

2.2Purchase Price

.  The purchase price for the purchase and sale of the Hydrocarbon Company Interests is equal to the sum of the following (the “Purchase Price”) (the following 

13

 

adjustments to be made without duplication, both with respect to this Agreement and the Water PSA):

(a)$61,382,000 (the “Base Purchase Price”);

(b)plus the Contingency Payment, if applicable, when and if due;

(c)plus (if positive) or minus (if negative) the amount of Effective Date Net Working Capital; 

(d)minus the product of (i) any amounts paid or distributed by Tioga to or on behalf of Seller or any of its Affiliates (other than an Acquired Company) from and after the Effective Date and prior to Closing (other than the product of (A) payments in respect of Tioga’s allocated share of expenses with respect to (1) the salaries and benefits of field employees of the Summit Companies performing work for Tioga and (2) vehicles utilized by such employees multiplied by (B) 68.2%) multiplied by (ii) 68.2%;

(e)minus any amounts paid or distributed by Hydrocarbon Gathering Company to or on behalf of Seller or any of its Affiliates (other than an Acquired Company) from and after the Effective Date and prior to Closing; and

(f)plus the sum of (i) any amounts paid or contributed (in compliance with the provisions of Section 6.1(d)) to Tioga by or on behalf of Seller or any of its Affiliates (other than an Acquired Company) from and after the Effective Date and prior to Closing that were spent by Tioga prior to Closing for expenses solely attributable to the Hydrocarbon Gathering Business and (ii) the product of (A) any amounts paid or contributed (in compliance with the provisions of Section 6.1(d)) to Tioga by or on behalf of Seller or any of its Affiliates (other than an Acquired Company) from and after the Effective Date and prior to Closing (other than amounts described in clause (i) of this clause (f)) multiplied by (B) 68.2%.  

The Parties acknowledge that there shall be no upward adjustments to the Base Purchase Price hereunder for Cash or other assets of an Acquired Company that are subject to reimbursement to Kraken Oil & Gas II LLC or any of its Affiliates (except to the extent that there is an offsetting downward adjustment to the Base Purchase Price representing the obligation to reimburse such Cash or other Assets).

2.3Closing

.  The consummation of the purchase and sale of the Hydrocarbon Company Interests (the “Closing”) shall take place at the offices of Summit Midstream Partners, LLC, 5910 N. Central Expressway, Suite 350, Dallas, Texas 75206 at 10:00 A.M. local time, on March 22, 2019, or on such other date and at such other time and place as Buyer and Seller mutually agree.  All actions listed in Section 2.4 or Section 2.5 that occur on the Closing Date shall be deemed to occur simultaneously at the Closing.  The consummation of the transactions contemplated by the Water PSA, if they occur, shall be deemed to have occurred immediately following the Closing under this Agreement, if the Closing occurs. If the Closing occurs, there shall be deemed to be, as of the Closing Date, an account payable of Tioga to the Hydrocarbon Gathering Company in an amount equal to the product of (i) 68.2% multiplied by (ii) the remainder of (A) the Cash then held by Tioga less (B) the aggregate current liabilities of Tioga as of the Closing.

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2.4Closing Deliveries by Seller to Buyer

.  At the Closing, Seller shall deliver, or shall cause to be delivered, to Buyer the following:

(a)a counterpart duly executed by Seller of an assignment of the Hydrocarbon Company Interests (the “Company Assignment Agreement”) in the form attached hereto as Exhibit A evidencing the assignment and transfer to Buyer of the Hydrocarbon Company Interests;

(b)an executed certificate of non-foreign status that meets the requirements set forth in Treasury Regulation § 1.1445-2(b)(2);

(c)for each then-current officer, manager or director of the Hydrocarbon Gathering Company, a release and waiver in the form attached hereto as Exhibit C, duly executed by the Hydrocarbon Gathering Company, on the one hand, and each such Person, on the other hand;

(d)for each then-current individual officer, manager or director of the Hydrocarbon Gathering Company, a written letter of resignation of each such Person in his or her capacity as such, duly executed by each such Person and effective immediately following the Closing; and

(e) for all bank accounts and powers of attorney listed on Schedule 3.23, written evidence of the removal of all then-current signatories, in his or her capacity as such and effective immediately following the Closing.

2.5Closing Deliveries by Buyer to Seller

.  At the Closing, Buyer shall deliver the following:

(a)a wire transfer or transfers of immediately available funds (to such account or accounts of Seller as Seller shall have notified Buyer of in writing at least two Business Days prior to the Closing Date) in an amount or amounts in the aggregate equal to the Purchase Price; and

(b)to Seller a counterpart duly executed by Buyer of the Company Assignment Agreement.

2.6Settlement Statements

.

(a)Seller, Tioga and Buyer shall cooperate and provide each other access, including through electronic means, to Seller’s, Tioga’s and the Hydrocarbon Gathering Company’s respective books and records as are reasonably requested in connection with the matters addressed in this Section 2.6.  No later than five (5) Business Days prior to Closing, Seller shall prepare and provide Buyer with Seller’s good faith estimate of the Purchase Price reflecting each proposed adjustment to be made to the Base Purchase Price in accordance with Section 2.2 as of the date of preparation (the “Preliminary Settlement Statement”), together with the designation of Seller’s accounts for the wire transfers of funds.  Seller shall supply to Buyer reasonable documentation in the possession of Seller or any of its Affiliates to support the items for which adjustments are proposed or made in the Preliminary Settlement Statement delivered by Seller, and a brief explanation of any such adjustments and the reasons therefor.  Within two (2) 

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Business Days of receipt of the draft Preliminary Settlement Statement, Buyer will deliver to Seller a written report containing all changes with the explanation thereof that Buyer proposes to be made to such estimated amounts.  Such estimated amounts, as agreed by the Parties, will be used to adjust the Base Purchase Price at Closing; provided that if the Parties do not agree upon either of such estimated amounts, then the amount of such estimated amount used to adjust the Base Purchase Price at Closing shall be that estimated amount set forth in good faith and initially delivered by Seller to Buyer pursuant to this Section 2.6(a).

(b)Within 45 days after Closing, Seller shall provide Buyer with its good faith final calculation of the actual amounts for each of the estimated amounts required by Section 2.6(a) (the “Final Settlement Statement”), based on actual adjustments to the Base Purchase Price (other than adjustments pursuant to Section 2.2(b)) and that takes into account all final adjustments made to the Base Purchase Price in accordance with Section 2.2 and shows the resulting final Purchase Price (excluding adjustments pursuant to Section 2.2(b)).  If Buyer disagrees with any of the calculations provided by Seller pursuant to the Final Settlement Statement, then it shall provide Seller with written notice thereof (a “Dispute Notice”) within 30 days after receiving written notice thereof and shall include reasonable detail regarding such specific objections.  Any changes not specified in the Dispute Notice shall be deemed waived, and Seller’s determinations with respect to all such elements of the Final Settlement Statement that are not addressed specifically in the Dispute Notice shall be deemed agreed to by the Parties. If Buyer fails to timely deliver a Dispute Notice to Seller, the Final Settlement Statement as delivered by Seller will be deemed to be correct and mutually agreed upon by the Parties, and will, without limiting Section 2.6(c), be final and binding on the Parties and not subject to further audit or arbitration.  If the final Purchase Price set forth in the Final Settlement Statement is mutually agreed upon by Seller and Buyer, the Final Settlement Statement and the final Purchase Price (other than adjustments pursuant to Section 2.2(b)) shall, without limiting Section 2.6(c), be final and binding on the Parties hereto.

(c)If Buyer and Seller working in good faith are unable to agree on such disputed items on or prior to the 90th day following the Closing Date, then either Party may refer such dispute to Grant Thornton LLP or, if that firm declines to act as provided in this Section 2.6(c), another firm of independent public accountants, mutually acceptable to Buyer and Seller (the “Accounting Referee”), which firm shall make a final and binding determination as to all matters in dispute on a timely basis and promptly shall notify the Parties in writing of its resolution.  Such Accounting Referee handling the dispute resolution shall not have the power to modify or amend any term or provision of this Agreement. Each of Buyer and Seller shall bear and pay one-half of the fees and other costs charged by such accounting firm. If Buyer does not submit its objection to such disputed items to the Accounting Referee on or prior to the 30th day following the date on which the Accounting Referee is finally selected, then Seller’s calculations as to such disputed items shall become final and binding upon the Parties for all purposes hereunder. 

(d)Once the final Purchase Price (other than adjustments pursuant to Section 2.2(b)) has been agreed (or deemed agreed) upon by the Parties pursuant to this Section 2.6 or determined by the Accounting Referee pursuant to Section 2.6(c), as applicable, then, if such final Purchase Price is (i) more than the Purchase Price set forth in the Preliminary Settlement Statement, Buyer shall pay to a bank account in the United States designated by Seller by notice to Buyer the amount of such difference or (ii) less than the Purchase Price set forth in the 

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Preliminary Settlement Statement, Seller shall pay to a bank account in the United States designated by Buyer by notice to Seller the amount of such difference, in each case, by wire transfer in immediately available funds no later than the fifth Business Day (or if later, the third Business Day after the Party to receive funds notifies the Party to pay funds of the account) after the date such final Purchase Price is agreed, or deemed agreed, pursuant to this Section 2.6. 

2.7Express Exclusion of Operations Services from the Purchase and Sale

.  The Hydrocarbon Gathering Company utilizes, and the Hydrocarbon Gathering Business is currently dependent upon, certain support services regarding scheduling and distribution, accounting, commercial, contract administration, asset management, engineering and project management, information technology, environmental, health and safety, regulatory, land management, human resources, legal, permitting, procurement, tax, technical and administration and related software that are owned and administered by the Summit Companies (including gas and liquids monitoring and leak detection programs, processes and programs for gas and liquids measurement, allocation, settlement and distribution of monthly statements to producers, collection and disbursement of applicable Taxes, supervisory control and data acquisition, the use of vehicles by employees of the Summit Companies performing operating services, and various management systems for maintaining and monitoring compliance with applicable regulatory requirements and contractual obligations (collectively, the “Operations Services”)) that have been implemented in connection with Summit Midstream Partners, LLC’s enterprise-wide management program for midstream operations.  To the extent that the Operations Services use assets and involve personnel that will be retained by Seller or the Summit Companies, such assets and personnel (other than the vehicles) are not physically located on any Hydrocarbon Gathering Real Property, Hydrocarbon Gathering Personal Property, Hydrocarbon Gathering Easement or the Hydrocarbon Gathering System. The Operations Services are proprietary, and non-transferable; therefore, it is expressly agreed and acknowledged that Buyer is not receiving the Operations Services in connection with this Agreement and Buyer will rely solely upon its own enterprise-wide management program for accounting, contract administration, information technology, environmental, health and safety, land management and administration support services and software.  Notwithstanding the foregoing, Buyer shall receive all the tangible hardware, communications, networking and measurement instrumentation and equipment associated with the Hydrocarbon Gathering Business operations conducted in the field.

2.8Withholding

.  Buyer shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to Seller such amounts as Buyer is required to deduct and withhold under the Code, or any Tax law, with respect to the making of such payment; provided, however, Buyer shall provide at least five Business Days’ written notice to Seller if Buyer intends to withhold any amounts under this Section 2.8 and the Parties shall cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such deduction or withholding, including by providing any certificates or forms that are reasonably requested to establish an exemption from (or reduction in) any deduction or withholding.  To the extent that amounts are so withheld and paid to the appropriate Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made.

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Article III
REPRESENTATIONS AND WARRANTIES REGARDING TIOGA AND THE HYDROCARBON GATHERING COMPANY

Seller hereby represents and warrants to Buyer as of the date hereof, and if the Closing occurs, as of the Closing (or, if a representation and warranty speaks as of an earlier date, then made at the Closing as of such earlier date), as follows:

3.1Organization; Good Standing

.

(a)Each of Tioga and the Hydrocarbon Gathering Company is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Delaware, and has all requisite limited liability company power and authority to own its properties and conduct the Hydrocarbon Gathering Business as it is now being conducted.  Each of Tioga and the Hydrocarbon Gathering Company is duly qualified or licensed to do business in each jurisdiction in which the ownership or operation of the Hydrocarbon Gathering Assets makes such qualification or licensing necessary.  

(b)True and complete copies of the Charter Documents of Tioga and the Hydrocarbon Gathering Company and all amendments thereto have been furnished to Buyer.

3.2Authority

.  Each of Tioga and the Hydrocarbon Gathering Company has the requisite power and authority to execute and deliver the Transaction Documents and the Reorganization Documents to which it is a party, to perform its obligations thereunder and to consummate the transactions contemplated thereby.  The execution and delivery by each of Tioga and the Hydrocarbon Gathering Company of the Transaction Documents and the Reorganization Documents to which it is a party, and the performance by each of Tioga and the Hydrocarbon Gathering Company of its obligations thereunder, have been duly and validly authorized by all necessary limited liability company action.  Each of the Transaction Documents and the Reorganization Documents to which Tioga or the Hydrocarbon Gathering Company is a party, when executed by Tioga or the Hydrocarbon Gathering Company as required hereunder, will be duly and validly executed and delivered by Tioga or the Hydrocarbon Gathering Company and each of the Transaction Documents will constitute (when so executed and delivered) the legal, valid and binding obligation of Tioga or the Hydrocarbon Gathering Company, as applicable, enforceable against Tioga or the Hydrocarbon Gathering Company in accordance with its terms and conditions, except that the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, arrangement or other similar Laws relating to or affecting the rights of creditors generally, or by general equitable principles.

3.3Capitalization of the Hydrocarbon Gathering Company

.  

(a)Except for the Hydrocarbon Company Interests, none of the following are issued, reserved for issuance or outstanding:  

(i)Equity Interests of the Hydrocarbon Gathering Company;

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(ii)interests of the Hydrocarbon Gathering Company convertible into, or exchangeable or exercisable for Equity Interests of the Hydrocarbon Gathering Company; or 

(iii)options, warrants, calls, rights, commitments or Contracts to which the Hydrocarbon Gathering Company is a party or by which it is bound, in any case obligating the Hydrocarbon Gathering Company to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed or acquired, Equity Interests of the Hydrocarbon Gathering Company, or obligating the Hydrocarbon Gathering Company to grant, extend or enter into any such option, warrant, call, right, commitment or Contract.  

(b)The Hydrocarbon Company Interests are duly authorized, validly issued, fully paid (to the extent required by the Hydrocarbon Gathering Company LLC Agreement) and, subject to the Laws of the State of Delaware, non-assessable (except as such non-assessability may be affected by Section 18-607 of the Delaware Limited Liability Company Act) and were not issued in violation of any purchase option, call option, right of first refusal, preemptive right or other similar right.  

(c)There are no outstanding bonds, debentures, notes or other instruments or evidence of Indebtedness of the Hydrocarbon Gathering Company having the right to vote (or convertible into, or exercisable or exchangeable for, securities having the right to vote).  

(d)The Hydrocarbon Gathering Company has not had, and currently does not have, any subsidiaries and has never owned Equity Interests in any Person. 

3.4No Conflicts; Consents and Approvals

.  The execution and delivery by each of Tioga and the Hydrocarbon Gathering Company of each of the Transaction Documents to which it is a party, and the performance by such Person of its obligations thereunder, do not:

(a)violate or result in a breach of such Person’s Charter Documents; 

(b)violate or result in a default (in each case) in any material respect under any Hydrocarbon Gathering Material Contract;

(c)violate or result in a breach of any Law applicable to such Person, except for such violations or breaches as would not be material; or

(d)require any consent or approval of any Person, including any Governmental Authority.

3.5Compliance with Applicable Laws

.  Except as set forth on Schedule 3.5, (a) since April 16, 2014, Tioga has been (and Tioga and, as of Closing, the Hydrocarbon Gathering Company are) in compliance in all material respects with all Laws (and neither it or any of its Affiliates has received any written or, to the Knowledge of Seller, oral notice of violation with respect to any Laws) applicable to any of the Hydrocarbon Gathering Business, (b) Tioga (or, as of Closing, the Hydrocarbon Gathering Company) holds all material Permits necessary for the lawful conduct of the Hydrocarbon Gathering Business and, to the Knowledge of Seller, a 

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complete list of all such Permits is set forth on Schedule 3.5-P and (c) Tioga (or, as of Closing, the Hydrocarbon Gathering Company) is in compliance in all material respect with such Permits; provided, however, that this Section 3.5 does not address Environmental Laws, which are exclusively addressed by Section 3.4, Section 3.7, Section 3.8, Section 3.9, Section 3.10, Section 3.12, Section 3.14, Section 3.18, Section 3.19, Section 3.21, Section 3.22, Section 3.26 and Section 3.27, or employee matters, which are exclusively addressed by Section 3.3, Section 3.4, Section 3.6, Section 3.7, Section 3.10, Section 3.14, Section 3.15, Section 3.16, Section 3.23, Section 3.26 and Section 3.27.

3.6Intellectual Property

.  

(a)No material registrations or applications for registration are included in any Intellectual Property Rights held by Tioga (or, as of the Closing, the Hydrocarbon Gathering Company).  To the Knowledge of Seller and subject to Section 2.7, Tioga (or, as of the Closing, the Hydrocarbon Gathering Company) owns, licenses or otherwise has a valid right to use, free and clear of all Liens (other than Permitted Liens), all material Intellectual Property Rights necessary to conduct the Hydrocarbon Gathering Business as currently conducted.

(b)Schedule 3.6(b) sets forth a list of all agreements (excluding licenses for commercially available, “off-the-shelf” software with annual fees of less than $75,000) pursuant to which any Intellectual Property Right is licensed to Tioga relating to the Hydrocarbon Gathering Business.

(c)To the Knowledge of Seller, the conduct of the Hydrocarbon Gathering Business as currently conducted has not infringed or misappropriated any Intellectual Property Right of any non-Affiliate third party in any material respect.

(d)The consummation of the transactions contemplated hereby will not result in the loss or impairment of any material right of Tioga or the Hydrocarbon Gathering Company to own, use, practice or exploit any Intellectual Property Rights held by or licensed to Tioga (or, as of Closing, the Hydrocarbon Gathering Company) with respect to the Hydrocarbon Gathering Business (excluding licenses for commercially available, “off-the-shelf” software).

3.7Absence of Litigation

.  Except as set forth on Schedule 3.7, there is no Claim or Proceeding (1) pending by or against Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company by or before any arbitrator or Governmental Authority, nor are there any investigations relating to Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company or the Hydrocarbon Gathering Business pending by or before any arbitrator or any Governmental Authority, or (2) to the Knowledge of Seller, threatened against Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company or with respect to the Hydrocarbon Gathering Business or any of the Hydrocarbon Gathering Assets by or before any arbitrator or Governmental Authority, nor are there any material investigations relating to Tioga (with respect to the Hydrocarbon Gathering Business), the Hydrocarbon Gathering Company, the Hydrocarbon Gathering Business or any Hydrocarbon Gathering Assets threatened by or before any arbitrator or any Governmental Authority that could be reasonably expected (due to the nature of the claims involved or the scope 

20

 

of their applicability to Tioga’s or the Hydrocarbon Gathering Company’s business or operations) to involve amounts of $100,000 or more in value.

3.8Real Property

.

(a)Set forth on Schedule 3.8(a) is a true and complete list of each parcel of Real Property owned in fee title by Tioga (and, as of Closing, the Hydrocarbon Gathering Company) with respect to the Hydrocarbon Gathering Business.  Tioga has provided Buyer with true and complete copies of the conveyance documents to Tioga and to the Hydrocarbon Gathering Company for each such parcel of Real Property owned in fee, including the legal description for each such parcel of Real Property owned in fee.  Tioga (and, as of Closing and following the proper recordation of the applicable conveyance instruments executed in connection with the Reorganization Transactions, the Hydrocarbon Gathering Company) has good and indefeasible fee title to all Real Property listed on such Schedule, free and clear of all Liens, except for Permitted Liens and those Liens set forth expressly identified as Liens and set forth on such Schedule.

(b)Set forth on Schedule 3.8(b) is a true and complete list of all leases pursuant to which Tioga (and, as of Closing, the Hydrocarbon Gathering Company) is granted a right to use or occupy all or any portion of Real Property relating to the Hydrocarbon Gathering Business.  Tioga has provided Buyer with true and complete copies of such leases and any amendments thereto.  Each lease set forth on such Schedule is a legal, valid and binding obligation of Tioga (or, as of Closing, the Hydrocarbon Gathering Company), and, to the Knowledge of Seller, the other Person(s) a party thereto.  Except as expressly set forth on such Schedule, (i) Tioga (or, as of Closing, the Hydrocarbon Gathering Company) is not in default in any material respect under any lease set forth on such Schedule, (ii) to the Knowledge of Seller, no landlord is in default in any material respect under any lease set forth on such Schedule, (iii) no event has occurred which constitutes a default in any material respect or, with lapse of time or giving of notice or both, would constitute a default in any material respect under any of the leases set forth on such Schedule and (iv) the leasehold interest in each such lease set forth on such Schedule is held by Tioga (or, as of Closing, the Hydrocarbon Gathering Company) free and clear of all Liens except for the Permitted Liens and the terms of such lease. 

(c)Set forth on Schedule 3.8(c), Part 1, Schedule 3.8(c), Part 2 and Schedule 3.8(c), Part 3 is a true and complete list of all Hydrocarbon Gathering Easements that are material or necessary to the operation and conduct of the Hydrocarbon Gathering Business.  Tioga has provided Buyer with true and complete copies of the documents creating such Easements, and any amendments thereto.  Each Easement set forth on such Schedules is a legal, valid and binding obligation of Tioga (or, as of Closing, the Hydrocarbon Gathering Company), and, to the Knowledge of Seller, the other Person(s) a party thereto.  Except as set expressly forth on such Schedules, and excluding any matter that may arise as a result of or in connection with the execution of the Reorganization Documents, (i) Tioga (or, as of Closing, the Hydrocarbon Gathering Company) is not in default in any material respect under any Easement set forth on any of such Schedules, (ii) to the Knowledge of Seller, no owner of the Real Property burdened by any Easement set forth on any of such Schedules is in default in any material respect under any such Easement, (iii) no event has occurred which constitutes a default in any material respect or, with lapse of time or giving of notice or both, would constitute a default in any material respect under any of the Easements set forth on any of such Schedules, and (iv) Tioga’s (or, as of Closing, the 

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Hydrocarbon Gathering Company’s) interest in any such Easement set forth on any of such Schedules is held by Tioga (or, as of Closing, the Hydrocarbon Gathering Company) free and clear of all Liens except for the Permitted Liens and the terms of such Easement.  

(d)Except as set forth on Schedule 3.8(d), neither Tioga nor the Hydrocarbon Gathering Company is obligated under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Real Property relating to the Hydrocarbon Gathering Business, or any interest therein.

(e)Except as set forth on Schedule 3.8(e), the Easements granted to Tioga (or, as of Closing, the Hydrocarbon Gathering Company) that cover the Hydrocarbon Gathering System, together with any Hydrocarbon Gathering Real Property related to the Hydrocarbon Gathering System, establish a continuous right of way for the Hydrocarbon Gathering System, and the Hydrocarbon Gathering System and the buildings and improvements used in connection therewith are located entirely on Real Property held by Tioga (or, as of Closing, the Hydrocarbon Gathering Company) in connection with the Hydrocarbon Gathering Business, in each case, in all material respects.

(f)No member of the Seller Group has received any written notice of any eminent domain Proceeding or taking, nor, to the Knowledge of Seller, is any such Proceeding or taking contemplated with respect to all or any material portion of the Hydrocarbon Gathering Real Property.

(g)Except as set forth on Schedule 3.8(g), no member of the Seller Group other than Tioga or the Hydrocarbon Gathering Company owns or leases any real property or Easements that constitutes part of the Hydrocarbon Gathering Business or that is necessary in connection with the ownership or operation thereof. 

(h)Other than the assets associated with the Operations Services, the Hydrocarbon Gathering Assets constitute all of the assets, rights and properties, tangible or intangible, real or personal, that are used or necessary for use in connection with the operation of the Hydrocarbon Gathering Business as currently operated. 

(i)None of the assets retained by Seller or the Summit Companies as part of the Operations Services (other than the vehicles) are physically located on any Hydrocarbon Gathering Real Property, Hydrocarbon Gathering Personal Property, Hydrocarbon Gathering Easement, or the Hydrocarbon Gathering System. 

3.9Personal Property

.  

(a)Schedule 3.9(a) lists all compressor stations, above-ground facilities and other equipment (other than (x) the individual components of any such compressor stations, above-ground facilities or other equipment, or (y) any installed pipeline) owned or leased by Tioga (or, as of Closing, the Hydrocarbon Gathering Company) or used or held for use by Tioga (or, as of the Closing, the Hydrocarbon Gathering Company) in each case, in the conduct of the Hydrocarbon Gathering Business valued above $100,000.  Tioga (or, as of Closing, the Hydrocarbon Gathering Company) owns the Hydrocarbon Gathering Personal Property, free and clear of all Claims and Liens, except for Permitted Liens.  

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(b)To the Knowledge of Seller, as of the Execution Date, the Hydrocarbon Gathering Personal Property does not require any material maintenance capital expenditures in excess of the amounts set forth on Schedule 3.9(b), ordinary wear and tear excepted, to be put into a condition that would permit normal operations in accordance with Prudent Industry Practices.

3.10Purchase Orders

.  Schedule 3.10 sets forth a true and complete list as of the date hereof of all open orders for the purchase of goods or services by Tioga (or, as of Closing, the Hydrocarbon Gathering Company) in an amount in excess of $100,000 relating to the Hydrocarbon Gathering Business.

3.11Regulatory Status

.

(a)The Hydrocarbon Gathering Company and Tioga (with respect to the Hydrocarbon Gathering Business) are not currently regulated by the Federal Energy Regulatory Commission as a “natural gas company” under the Natural Gas Act or as a “public utility,” “public service company,” or similar designation(s) by any state public service commission or as a “holding company” or similar designation of such regulated entity or by the Department of Transportation under the Pipeline and Hazardous Materials Safety Administration Rules on Pipeline Integrity Management.  Without limiting the foregoing, the rates charged by Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company are not currently regulated by the Federal Energy Regulatory Commission under the Interstate Commerce Act or the Natural Gas Policy Act of 1978.  The transfer of the Equity Interests of the Hydrocarbon Gathering Company as contemplated by this Agreement does not require the approval of the North Dakota Public Service Commission.

(b)No rate refunds, rebates, offsets or like obligations are accrued or owed by Tioga or the Hydrocarbon Gathering Company to the North Dakota Public Service Commission with respect to services related to the Hydrocarbon Gathering Business or the Hydrocarbon Gathering Assets.

3.12Environmental Matters

.  Except as set forth in Schedule 3.12:

(a)Tioga is, and since April 16, 2014, has been, and the Hydrocarbon Gathering Company since its date of formation has been, with respect to the Hydrocarbon Gathering Business, in compliance with all applicable Environmental Laws in all material respects, including timely possessing and complying in all material respects with the terms and conditions of all Environmental Permits;

(b)(i) No member of the Seller Group has (and, to the Knowledge of Seller, no predecessor in the Hydrocarbon Gathering Business has) received from any Governmental Authority any written notice of violation of, alleged violation of, non-compliance with, or liability or potential or alleged liability pursuant to, any Environmental Law involving the operations of the Hydrocarbon Gathering System or any other Hydrocarbon Gathering Assets other than notices with respect to matters that have been resolved to the satisfaction of any relevant Governmental Authority and for which the Hydrocarbon Gathering Company has no further obligations outstanding and (ii) none of Tioga (with respect to the Hydrocarbon Gathering Business), the Hydrocarbon Gathering Company or the Hydrocarbon Gathering System or any other 

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Hydrocarbon Gathering Asset is subject to any outstanding governmental order, “consent order” or other agreement;

(c)Since April 16, 2014, there has been no material Release, discharge or disposal of Hazardous Materials by Tioga, the Hydrocarbon Gathering Company or any member of the Seller Group on or from any Hydrocarbon Gathering Real Property held by Tioga or the Hydrocarbon Gathering Company in violation of any Environmental Laws or in a manner that could reasonably be expected to give rise to a material remedial or corrective action obligation pursuant to Environmental Laws; and

(d)Seller has made available for inspection by Buyer copies of (i) all environmental assessment and audit reports and other material environmental studies and (ii) all Environmental Permits, in each case, relating to the Hydrocarbon Gathering Real Property held by Tioga (or, as of Closing, the Hydrocarbon Gathering Company) or involving the Hydrocarbon Gathering Business and that are in the possession of any member of the Seller Group.

3.13Taxes

.  Except as set forth on Schedule 3.13:

(a)All Tax Returns required to be filed by Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company have been duly and timely filed.  Each such Tax Return is true, correct and complete in all material respects.  All Taxes required to be paid by or with respect to Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company (whether or not shown on any Tax Return) have been paid in full.  Since December 31, 2017, neither Tioga (with respect to the Hydrocarbon Gathering Business) nor the Hydrocarbon Gathering Company has incurred any liability for Taxes outside the ordinary course of business or otherwise inconsistent with past custom and practice.  All withholding Tax requirements imposed on Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company have been satisfied in all material respects.  Since January 1, 2017, no claim has been made by a Taxing Authority in a jurisdiction where Tioga or the Hydrocarbon Gathering Company does not file a Tax Return that such entity is or may be subject to taxation by that jurisdiction.  There are no Liens (other than statutory Liens for Taxes that are not yet due and payable) on any of the Hydrocarbon Gathering Assets of Tioga or the Hydrocarbon Gathering Company that arose in connection with any failure (or alleged failure) to pay any Tax.

(b)There is not in force any extension of time with respect to the due date for the filing of any Tax Return of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company or any waiver or agreement for any extension of time for the assessment or payment of any Tax by Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company.  There is no Tax Claim pending or threatened against, or with respect to, Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company.  No deficiencies for Taxes with respect to Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company have been claimed, proposed or assessed by any Taxing Authority that have not been resolved. 

(c)Neither Tioga nor the Hydrocarbon Gathering Company is a party to or bound by any Tax allocation, sharing or indemnity agreements or arrangements (excluding, for the 

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avoidance of doubt, any customary provisions contained in commercial agreements or contracts that are not primarily related to Taxes).  Neither Tioga nor the Hydrocarbon Gathering Company is liable for the Taxes of any other Person (other than Tioga, the Hydrocarbon Gathering Company or the Water Gathering Company) (i) by virtue of Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign applicable Law, (ii) as a transferee or successor, or (iii) by Contract (excluding, for the avoidance of doubt, any customary provisions contained in commercial agreements or contracts that are not primarily related to Taxes).

(d)Neither Tioga nor the Hydrocarbon Gathering Company has made an election to change its default entity classification under Treasury Regulation Section 301.7701-3.  Each of Tioga and the Hydrocarbon Gathering Company is a disregarded entity for U.S. federal income Tax purposes.

(e)Neither Tioga nor the Hydrocarbon Gathering Company has been a party to a transaction that is or is substantially similar to a “reportable transaction,” as such term is defined in Treasury Regulations Section 1.6011-4(b)(1), or any other transaction requiring disclosure under analogous provisions of state, local or foreign Tax law.

(f)To the Knowledge of Seller, there are no Transfer Taxes due or owing in connection with the transactions contemplated by this Agreement (including the Reorganization Transactions).

Notwithstanding any other provision to the contrary in this Agreement, the representations and warranties in this Section 3.13 and Section 3.15 are the only representations and warranties in this Agreement with respect to the Tax matters of Tioga and the Hydrocarbon Gathering Company.

3.14Contracts

.

(a)Schedule 3.14 contains a true and complete listing of each of the following Contracts to which Tioga (or, as of Closing, the Hydrocarbon Gathering Company) is a party that relate to the Hydrocarbon Gathering Business (the Contracts listed in Schedule 3.14, other than the Financing Documents, being “Hydrocarbon Gathering Material Contracts”):

(i)each hydrocarbon purchase and sale, gathering, transportation, treating, dehydration, processing or similar Contract and any Contract for the provision of services relating to gathering, compression, collection, processing, treating or transportation of crude oil, natural gas or other hydrocarbons involving annual expenditures or revenues in excess of $50,000; 

(ii)each Contract that constitutes a pipeline interconnect or facility operating agreement;

(iii)each Contract involving a remaining commitment to pay capital expenditures in excess of $50,000 in the aggregate; 

(iv)each Contract for lease of personal property or Real Property involving aggregate payments in excess of $50,000 in any future calendar year;

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(v)each Contract between Seller or an Affiliate of Seller (other than Tioga or the Hydrocarbon Gathering Company), on the one hand, and Tioga or the Hydrocarbon Gathering Company, on the other hand, which will survive the Closing;

(vi)each partnership or joint venture agreement;

(vii)each agreement relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of Hydrocarbon Gathering Assets, or otherwise) or granting to any Person a right of first refusal, first offer or right to purchase any of the Hydrocarbon Gathering Assets material to the conduct of the Hydrocarbon Gathering Business;

(viii)each Contract that provides for a limit on the ability of the Hydrocarbon Gathering Company or any of its Affiliates to compete in any line of business or in any geographic area during any period of time after the Closing;

(ix)each Contract evidencing Indebtedness, whether secured or unsecured, including all loan agreements, line of credit agreements, indentures, mortgages, promissory notes, agreements concerning long and short-term debt, together with all security agreements or other lien documents related to or binding on the Hydrocarbon Gathering Assets; and

(x)except for Contracts of the nature described in clauses (i) through (v) above, each Contract involving aggregate payments or receipts in excess of $50,000, in any future calendar year that cannot be terminated by Tioga (or, as of Closing, the Hydrocarbon Gathering Company) upon 30 days’ or less notice without payment of a penalty or other liability.

(b)True and complete copies of all Hydrocarbon Gathering Material Contracts have been made available to Buyer.

(c)Each of the Hydrocarbon Gathering Material Contracts is in full force and effect in all material respects and constitutes a legal, valid and binding obligation of Tioga (or, as of Closing, the Hydrocarbon Gathering Company) and, to the Knowledge of Seller, of the counterparties to such Hydrocarbon Gathering Material Contracts. Neither Tioga (or, as of Closing, the Hydrocarbon Gathering Company) nor, to the Knowledge of Seller, any counterparty thereto, is in (or has received written notice or, to the Knowledge of Seller, oral notice, that it is in) default or breach in any material respect (or has taken or failed to take any action such that with notice, the passage of time or both it would be in default or breach in any material respect) under the terms of any such Hydrocarbon Gathering Material Contract. 

3.15Employees and Plans

.  

(a)Neither Tioga nor the Hydrocarbon Gathering Company has, or has ever had, any employees, independent contractors or consultants.

(b)Neither Tioga nor the Hydrocarbon Gathering Company currently or ever has maintained or contributed to any Plan or been a participating employer in any Plan.

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3.16Transactions with Affiliates

.  Except as set forth on Schedule 3.16, neither Tioga nor the Hydrocarbon Gathering Company is owed any amount from, and does not owe any amount to, guarantee any amount owed by, have any Contracts with (excluding the Reorganization Documents) or have any commitments to (excluding the Reorganization Documents) any Affiliate, officer or director of Seller, Tioga or the Hydrocarbon Gathering Company or any member of a family group of any of the foregoing.

3.17Broker’s Commissions

.  No member of the Seller Group has, directly or indirectly, entered into any Contract with any Person that would obligate Tioga, the Hydrocarbon Gathering Company, Buyer or Buyer’s Affiliates to pay any commission, brokerage fee or “finder’s fee” in connection with the transactions contemplated herein.

3.18Records

.  The Records are located at the premises of the Hydrocarbon Gathering Company, have been maintained in all material respects in accordance with applicable Law and comprise in all material respects all of the books and records relating to the ownership and operation of Tioga (with respect to the Hydrocarbon Gathering Business), the Hydrocarbon Gathering Company, the Hydrocarbon Gathering Business and the Hydrocarbon Gathering Assets.

3.19Surety Bonds and Credit

.  Except as listed on Schedule 3.19, neither Tioga (with respect to the Hydrocarbon Gathering Business), the Hydrocarbon Gathering Company nor any other Person has any obligation to post any surety bond, letter of credit, guarantee or other form of support (credit or otherwise) in respect of Tioga (with respect to the Hydrocarbon Gathering Business), the Hydrocarbon Gathering Company or the Hydrocarbon Gathering Business.  Except as listed on such Schedule, neither Tioga (with respect to the Hydrocarbon Gathering Business), the Hydrocarbon Gathering Company nor any other Person has any obligation to post any surety bond, letter of credit, guarantee or other form of support (credit or otherwise) in respect of Tioga or the Hydrocarbon Gathering Company.

3.20No Bankruptcy

.  There are no bankruptcy Proceedings pending against, being contemplated by or, to the Knowledge of Seller, threatened against Tioga or the Hydrocarbon Gathering Company.

3.21Financial Statements; No Undisclosed Material Liabilities; Indebtedness

.

(a)Seller has delivered to Buyer the following: (i) the unaudited balance sheet and related unaudited income statements, statements of cash flows, and statements of changes in members’ equity of Tioga for the year ended December 31, 2017 (collectively, the “Year End Financial Statements”) and (ii) the unaudited balance sheet and related unaudited income statements, statements of cash flows, and statements of changes in members’ equity of Tioga (for the twelve-month period ended December 31, 2018) (the “Interim Financial Statements”).  The Year End Financial Statements and the Interim Financial Statements are hereinafter referred to, collectively, as the “Financial Statements”.  

(b)The Financial Statements have been prepared in accordance with GAAP (except that the Financial Statements shall not contain any notes) and are consistent with the books and records of Tioga.  Each of the balance sheets included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the financial position of 

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Tioga, as of, and for the periods ended on, the respective dates thereof, and each of the income statements, statements of cash flows and statements of changes in members’ equity included in the Financial Statements (including any related notes and schedules) fairly presents in all material respects the results of operations, cash flows and changes in members’ equity, as the case may be, of Tioga for the periods set forth therein, in each case, in accordance with GAAP, subject, in the case of the Interim Financial Statements, to normal year-end adjustments and accruals and the absence of notes or other textual disclosures required under GAAP none of which are reasonably expected to be material in nature or amount.

(c)Except as listed on Schedule 3.21, there are no liabilities of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company or related to the Hydrocarbon Gathering Assets of any kind (whether accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable or otherwise), other than (i) liabilities that would not be required under GAAP to be disclosed, reflected, reserved against or otherwise provided for in the Financial Statements; and (ii) liabilities, other than Indebtedness under the Financing Documents, incurred in the ordinary course of business consistent with past practice since December 31, 2018. 

(d)Neither Tioga nor the Hydrocarbon Gathering Company has any Indebtedness, except as provided in the Financing Documents which will be terminated at or prior to Closing. 

3.22Insurance

.  Schedule 3.22 sets forth a list of each insurance policy maintained by Tioga or by Seller or any of their Affiliates on behalf of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company.  Except as set forth in Schedule 3.22, there is no claim pending under any such insurance policy with respect to the Hydrocarbon Gathering Business or the Hydrocarbon Gathering Assets, and none of Seller, Tioga or any of their respective Affiliates has received written notice of cancellation of any such insurance policy.  Neither Tioga nor any of its Affiliates has received any written notice from any insurer or reinsurer of any reservation of rights with respect to pending or paid claims.

3.23Bank Accounts

.  Schedule 3.23 contains a list of (a) all banks or other financial institutions with which Tioga or the Hydrocarbon Gathering Company has an account, showing the type and account number of each such account, and the names of the persons authorized as signatories thereon or to act or deal in connection therewith and (b) all valid powers of attorney issued by Tioga or the Hydrocarbon Gathering Company that remain in effect.

3.24Imbalances

.  Except for the hydrocarbon imbalances reflected on Schedule 3.24, and for normal and customary hydrocarbon gathering imbalances occurring after the dates set forth on such Schedule, as of the date of this Agreement, there do not exist any material hydrocarbon imbalances (i) under any Hydrocarbon Gathering Material Contract or (ii) for which Tioga, the Hydrocarbon Gathering Company or any of their Affiliates has received a quantity of hydrocarbons prior to the date of this Agreement for which Tioga, the Hydrocarbon Gathering 

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Company or any of its Affiliates will have a duty to deliver an equivalent amount of hydrocarbons after the Closing.

3.25Preferential Purchase Rights

.  Except as set forth on Schedule 3.25, no Person has a preferential right to purchase any of the Hydrocarbon Gathering Assets that would be triggered by the consummation of the transactions contemplated by this Agreement and the other Transaction Documents.

3.26Unrelated Activities and Liabilities

.  

(a)Neither Tioga nor the Hydrocarbon Gathering Company has engaged in any business other than the ownership, development, operation, maintenance, expansion, construction, commissioning and decommissioning of, and acquisition of, the Hydrocarbon Gathering Assets (and, with respect to Tioga, the Water Gathering Assets) and the provision of services in connection therewith.

(b)The Hydrocarbon Gathering Company (i) does not own any assets that are not Hydrocarbon Gathering Assets and (ii) has not assumed any liabilities unrelated to the Hydrocarbon Gathering Assets.

(c)Neither Tioga nor the Hydrocarbon Gathering Company own any Fiberspar inventory.

3.27Absence of Changes

.  Except as reflected in the Interim Financial Statements, as set forth on Schedule 3.27 or for the Reorganization Transactions, since September 30, 2018, (a) the business of Tioga (with respect to the Hydrocarbon Gathering Business) and the Hydrocarbon Gathering Company has been conducted in the ordinary course in all material respects and in a manner materially consistent with past practices to preserve substantially intact Tioga’s (with respect to the Hydrocarbon Gathering Business) and the Hydrocarbon Gathering Company’s present business organization, (b) Tioga (with respect to the Hydrocarbon Gathering Business) and the Hydrocarbon Gathering Company have not acted or failed to act in a manner that would be in violation of Section 6.11 (other than Sections 6.11(a)(iv), (v) and (vi)) (if the terms of Section 6.11 had been in effect as of and after such dates), and (c) there has not been any event, occurrence or development which has had a Material Adverse Effect.

3.28Use of Proceeds

.  Other than with respect to the payment of out-of-pocket expenses related to this Agreement or the Water PSA, Seller shall use all of the proceeds received hereunder for the payment of the Purchase Price for paying pre-existing Indebtedness guaranteed by the Acquired Companies pursuant to the Financing Documents.

Article IV
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as of the date hereof, and if the Closing occurs, as of the Closing (or, if a representation and warranty speaks as of an earlier date, then made at the Closing as of such earlier date), as follows: 

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4.1Organization; Good Standing

.  Seller is duly formed, validly existing and in good standing under the Laws of its jurisdiction of formation.

4.2Authority

.  Seller has the requisite power and authority to execute and deliver this Agreement and all Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by Seller of this Agreement and the Transaction Documents to which it is a party, and the performance by Seller of its obligations hereunder and thereunder have been duly and validly authorized by all necessary limited liability company action.  This Agreement and each of the Transaction Documents to which it is a party has been duly and validly executed and delivered (or will be duly and validly executed and delivered when required hereunder) by Seller and constitutes (or will constitute when so executed and delivered) the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms and conditions, except that the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, arrangement or other similar Laws relating to or affecting the rights of creditors generally, or by general equitable principles.

4.3Ownership of Equity Interests

.  The Hydrocarbon Company Interests are owned beneficially and of record by Seller, free and clear of all Liens other than Liens to be released at Closing and those arising under state or federal securities Laws and the Hydrocarbon Gathering Company LLC Agreement.  The Hydrocarbon Company Interests are duly authorized, validly issued, fully paid (to the extent required by the Hydrocarbon Gathering Company LLC Agreement) and, subject to the Laws of the State of Delaware, non-assessable (except as such non-assessability may be affected by Section 18-607 of the Delaware Limited Liability Company Act) and were not issued in violation of any purchase option, call option, right of first refusal, preemptive right or other similar right.

4.4No Conflicts; Consents and Approvals

.  The execution and delivery by Seller of this Agreement and each of the Transaction Documents to which it is a party, and the performance by Seller of its obligations under this Agreement and each such Transaction Document, do not:

(a)violate or result in a breach of the Charter Documents of Seller, Tioga or the Hydrocarbon Gathering Company; 

(b)violate or result in a default (in each case) in any material respect under any Hydrocarbon Gathering Material Contract; 

(c)violate or result in a breach of any Law applicable to Seller, Tioga or the Hydrocarbon Gathering Company, except for such violations or breaches as would not be material; or

(d)require any consent or approval of any Person, including any Governmental Authority.

4.5Broker’s Commissions

.  Seller has not, directly or indirectly, entered into any Contract with any Person that would obligate Tioga, the Hydrocarbon Gathering Company, Buyer or Buyer’s Affiliates to pay any commission, brokerage fee or “finder’s fee” in connection with the transactions contemplated herein.

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4.6No Bankruptcy

.  There are no bankruptcy Proceedings pending against, being contemplated by or, to the Knowledge of Seller, threatened against Seller.

4.7Legal Proceedings

.  As of the date of this Agreement, there is no Proceeding pending or, to the Knowledge of Seller, threatened, against Seller before or by any Governmental Authority, which seeks a writ, judgment, order or decree restraining, enjoining or otherwise prohibiting or making illegal any of the transactions contemplated by this Agreement or which would adversely affect Seller’s ability to consummate the transactions contemplated hereby.

Article V
REPRESENTATIONS AND WARRANTIES REGARDING BUYER

Buyer hereby represents and warrants to Seller as of the date hereof, and if the Closing occurs, as of the Closing (or, if a representation and warranty speaks as of an earlier date, then made at the Closing as of such earlier date), as follows:

5.1Organization; Good Standing

.  Buyer is a limited liability company duly formed, validly existing and in good standing under the Laws of its jurisdiction of formation.

5.2Authority

.  Buyer has all requisite organizational power and authority to enter into this Agreement and the Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by Buyer of this Agreement and the Transaction Documents to which it is a party, and the performance by Buyer of its obligations hereunder and thereunder, have been duly and validly authorized by all necessary limited liability company action on behalf of Buyer.  This Agreement and each of the Transaction Documents to which it is a party has been duly and validly executed and delivered (or will be duly and validly executed and delivered when required hereunder) by Buyer and constitutes (or will constitute when so executed and delivered) the legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms and conditions except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors generally or by general equitable principles.

5.3No Conflicts; Consents and Approvals

.  The execution and delivery by Buyer of this Agreement and each of the Transaction Documents to which it is a party, and the performance by Buyer of its obligations under this Agreement and each such Transaction Document, do not:

(a)violate or result in a breach of Buyer’s Charter Documents;

(b)violate or result in a default (in each case) in any material respect under any material Contract to which Buyer is a party;

(c)violate or result in a breach of any Law applicable to Buyer, except for such violations or breaches as would not be material; or

(d)require any consent or approval of any Person, including any Governmental Authority.

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5.4Legal Proceedings

.  As of the date of this Agreement, there is no Proceeding pending or, to the knowledge of Buyer, threatened, against Buyer before or by any Governmental Authority, which seeks a writ, judgment, order or decree restraining, enjoining or otherwise prohibiting or making illegal any of the transactions contemplated by this Agreement or adversely affect Buyer’s ability to consummate the transactions contemplated hereby.

5.5Acquisition as Investment

.  Buyer is acquiring the Hydrocarbon Company Interests for its own account as an investment without the present intent to sell, transfer or otherwise distribute the same to any other Person in violation of any state or federal securities Laws.  Buyer has made, independently and without reliance on Seller (except to the extent that Buyer has relied on the representations, warranties and covenants in this Agreement and the Transaction Documents), its own analysis of the Hydrocarbon Company Interests, the Hydrocarbon Gathering Company and the Hydrocarbon Gathering Assets for the purpose of acquiring the Hydrocarbon Company Interests, and Buyer has had, or subject to Seller’s compliance with the access rights granted to Buyer under this Agreement, will have reasonable and sufficient access to documents, other information and materials as it considers appropriate to make its evaluations.  Buyer acknowledges that the Hydrocarbon Company Interests are not registered pursuant to the 1933 Act and that none of the Hydrocarbon Company Interests may be transferred, except pursuant to an effective registration statement or an applicable exemption from registration under the 1933 Act.  Buyer is an “accredited investor” as defined under Rule 501 promulgated under the 1933 Act.

5.6Financial Resources

.  Buyer has, or will have on the Closing Date, sufficient cash on hand, available lines of credit or other sources of immediately available funds to enable it (a) to pay the Purchase Price and (b) to otherwise perform its obligations under this Agreement.

5.7Opportunity for Independent Investigation

.  Buyer is an experienced and knowledgeable investor in the United States.  In connection with its decision to enter into this Agreement, Buyer has conducted its own independent review and analysis of the Hydrocarbon Gathering Business and of the Hydrocarbon Gathering Assets, liabilities, results of operations, financial condition, technology and prospects of Tioga and the Hydrocarbon Gathering Company, and acknowledges that Buyer has been provided access to personnel, properties, premises and records of Seller, Tioga and the Hydrocarbon Gathering Company for such purpose.  In entering into this Agreement, Buyer has relied solely upon the representations, warranties and covenants contained herein and in the Transaction Documents and upon its own investigation and analysis of Tioga, the Hydrocarbon Gathering Company and the Hydrocarbon Gathering Business (such investigation and analysis having been performed by Buyer), and Buyer:

(a)absent actual (but not constructive) fraud, acknowledges and agrees that it has not been induced by and has not relied upon any Due Diligence Information, representations, warranties or statements, whether oral or written, express or implied, made by Seller, Tioga or the Hydrocarbon Gathering Company or any of their respective Representatives, Affiliates or agents except for the representations, warranties and covenants expressly set forth in this Agreement or in the Transaction Documents;

(b)absent actual (but not constructive) fraud, acknowledges and agrees that, except for the representations, warranties and covenants expressly set forth in this Agreement or in the Transaction Documents, none of Seller, Tioga or the Hydrocarbon Gathering Company or 

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any of their respective Representatives, Affiliates or agents makes or has made any representation or warranty, either express or implied, as to the accuracy or completeness of any of the information provided or made available to Buyer or its Representatives, Affiliates or agents, including any information, document or material provided or made available, or statements made, to Buyer (including its Representatives, Affiliates and agents) during site or office visits, in any “data rooms,” management presentations or supplemental due diligence information provided to Buyer (including its Representatives, Affiliates and agents), in connection with discussions with management or in any other form in expectation of the transactions contemplated by this Agreement (collectively, the “Due Diligence Information”);

(c)acknowledges and agrees that, except for the representations, warranties and covenants expressly set forth in this Agreement or in the Transaction Documents, (i) the Due Diligence Information includes certain projections, estimates and other forecasts and certain business plan information, (ii) there are uncertainties inherent in attempting to make such projections, estimates and other forecasts and plans and Buyer is aware of such uncertainties and (iii)  Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections, estimates and other forecasts and plans so furnished to it and any use of or reliance by Buyer on such projections, estimates and other forecasts and plans shall be at its sole risk; and

(d)agrees, to the fullest extent permitted by Law, and absent actual (but not constructive) fraud, that none of Seller, Tioga or the Hydrocarbon Gathering Company (except as expressly provided herein) or any of their respective Representatives, Affiliates or agents shall have any liability or responsibility whatsoever to Buyer or its Representatives, Affiliates or agents on any basis (including in contract or tort, under federal or state securities Laws or otherwise) resulting from the furnishing to Buyer, or from Buyer’s use of, any Due Diligence Information, except for liability or responsibility for the representations, warranties and covenants expressly set forth in this Agreement or in the Transaction Documents.

5.8Broker’s Commissions

.  Buyer has not, directly or indirectly, entered into any Contract with any Person that would obligate Seller or any of its Affiliates to pay any commission, brokerage fee or “finder’s fee” in connection with the transactions contemplated herein.

5.9No Knowledge of Breach

.  Except as set forth on Schedule 5.9, as of the Execution Date, Buyer has no Knowledge of a breach of any of the representations and warranties of Seller in each of: Section 3.5, Section 3.8 and Section 3.12, and, only to the extent relating to Contracts to which Buyer or any of its Affiliates is a party, Section 3.14 and Section 3.24.

Article VI
COVENANTS

6.1Indebtedness; Distributions; Contributions

.  Notwithstanding anything in this Agreement to the contrary, at or prior to Closing:

(a)Seller shall (or shall cause Tioga and the Hydrocarbon Gathering Company to) deliver reasonable and customary evidence demonstrating the termination of any guarantees and other agreements comprising the Financing Documents and the release of all Liens on the 

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Hydrocarbon Gathering Assets and/or on the Hydrocarbon Company Interests under the Financing Documents;

(b)Seller may cause Tioga or the Hydrocarbon Gathering Company to cause any accounts payable and/or accounts receivable between Tioga or the Hydrocarbon Gathering Company, on the one hand, and a Non-Company Affiliate, on the other hand, to be paid in full;

(c)Seller shall not cause Tioga or the Hydrocarbon Gathering Company to (and shall cause Tioga and the Hydrocarbon Gathering Company to not) pay cash dividends and/or make distributions or other payments of cash (other than the asset distributions contemplated by the Reorganization Transactions), to Seller or its Affiliates, except for cash payments by Tioga in respect of 68.2% of Tioga’s allocated share of expenses with respect to (i) the salaries and benefits of field employees of the Summit Companies performing work for Tioga and (ii) vehicles utilized by such employees (which expenses shall not exceed $135,000 per calendar month on a 100% basis); and

(d)Seller shall not make cash or other contributions to Tioga or the Hydrocarbon Gathering Company, except for cash contributions required to pay expenses of Tioga solely with respect to the Hydrocarbon Gathering Business or the Hydrocarbon Gathering Company or, prior to the Reorganization Transactions, the Water Gathering Business or the Water Gathering Company, in each case, that are incurred in the ordinary course operation (consistent with past practices) of the Hydrocarbon Gathering Business or the Water Gathering Business, as applicable, prior to Closing.

6.2Tax Matters

.  

(a)Tax Returns.

(i)Seller shall cause to be prepared and filed the 2019 Texas franchise tax report of the combined group of which Summit Midstream Partners, LP is the reporting entity, which report shall include all items and activities of Tioga and the Hydrocarbon Gathering Company through and including the day immediately preceding the Closing Date.

(ii)With respect to any Tax Return that is required to be filed by Tioga or the Hydrocarbon Gathering Company after the Closing Date with respect to a Pre-Effective Date Period, Seller shall prepare or cause to be prepared such Tax Return.  With respect to any Tax Return that is required to be filed by Tioga or the Hydrocarbon Gathering Company prior to the Closing Date with respect to a Tax period that begins after the Effective Date, Seller shall prepare or cause to be prepared such Tax Return.  With respect to any Tax Return that is required to be filed by Tioga or the Hydrocarbon Gathering Company after the Closing Date (other than the Tax Return set forth in Section 6.2(a)(i)) with respect to a Tax period that begins after the Effective Date and before the Closing Date, Buyer shall prepare or cause to be prepared such Tax Return.  Tax Returns prepared by Seller pursuant to this Section 6.2(a)(ii) (“Seller Tax Returns”) shall be prepared on a basis consistent with past practice except to the extent otherwise provided in this Agreement or otherwise required by applicable Laws.  Reasonably in advance of (and, 

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to the extent practicable, not less than 30 days prior to) the due date (including extensions) of each such Seller Tax Return, Seller shall deliver a copy of such Tax Return to Buyer for its review and reasonable comment, provided that Buyer’s comments hereunder with respect to a Tax Return of Tioga shall be limited to the Hydrocarbon Gathering Business.  Seller shall consider in good faith any such comments received from Buyer reasonably in advance of (and, to the extent practicable, not less than ten days prior to) the due date (including extensions) for filing such Tax Return and shall deliver a final copy of such Tax Return, as filed, to Buyer not later than such due date. Seller shall cause each such Tax Return required to be filed prior to the Closing Date to be timely filed and shall timely pay or cause to be paid the Taxes shown due thereon.  Buyer shall cause each such Tax Return required to be filed by it pursuant to this Section 6.2(a)(ii) to be timely filed and shall timely pay or cause to be paid the Taxes shown due thereon; provided that not later than five days prior to the due date for the payment of Taxes with respect to any such Tax Return, Seller shall pay to Buyer the amount of any Seller Taxes owed with respect to such Tax Return.  

(b)[Reserved.]

(c)Seller and Buyer shall each be liable for and shall bear and pay, and pursuant to Article X shall indemnify and hold the other Party harmless from and against, 50% of any and all sales, use, stamp, transfer, conveyance, registration or other similar Taxes imposed on the Reorganization Transactions or the purchase and sale of the Hydrocarbon Company Interests pursuant to this Agreement (the “Transfer Taxes”). 

(d)After Closing, each of Seller and Buyer shall (and shall cause their respective Affiliates to):

(i)timely sign and deliver such certificates or forms as may be necessary or appropriate to establish an exemption from (or otherwise reduce), or file Tax Returns or other reports with respect to, Taxes described in Section 6.2(c);

(ii)assist the other party in preparing any Tax Returns which such other party is responsible for preparing and filing in accordance with Section 6.2(a), and in connection therewith, provide the other party with any necessary powers of attorney;

(iii)cooperate fully in preparing for and defending any Tax Claims;

(iv)make available to the other and to any Taxing Authority as reasonably requested all information, records, and documents relating to Taxes of Tioga and the Hydrocarbon Gathering Company; and

(v)furnish the other with copies of all correspondence received from any Taxing Authority in connection with any Tax Claim. 

(e)No amended Tax Return with respect to a Pre-Effective Date Period or a Pre-Closing Period shall be filed by or on behalf of Tioga or the Hydrocarbon Gathering Company without the prior written consent of Seller (which consent shall not be unreasonably withheld, conditioned or delayed).

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(f)Seller and Buyer shall use commercially reasonable efforts to agree to an allocation schedule of the Purchase Price (plus any other items that are properly treated as consideration for U.S. federal income Tax purposes) among the Hydrocarbon Gathering Company’s assets based on the relative fair market values of the Hydrocarbon Gathering Company’s assets, in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder within thirty (30) days after the date that the Final Settlement Statement is finally determined pursuant to Section 2.6 (the “Allocation Schedule”). If Buyer and Seller are unable to agree on an Allocation Schedule, each of Buyer and Seller shall use its own allocation of the Purchase Price.  If Seller and Buyer reach an agreement with respect to the Allocation Schedule, the Parties (x) shall use commercially reasonable efforts to update the Allocation Schedule in a manner consistent with Section 1060 of the Code following any adjustment to the Purchase Price pursuant to this Agreement, (y) shall, and shall cause their Affiliates to, report consistently with the Allocation Schedule, as adjusted, on all Tax Returns, including Internal Revenue Service Form 8594, and neither Seller nor Buyer shall take any position on any Tax Return that is inconsistent with the Allocation Schedule, as adjusted, unless otherwise required by applicable Laws, and (z) agree to promptly advise each other regarding the existence of any Tax audit, controversy or litigation related to the Allocation Schedule.  Notwithstanding anything in this Section 6.2(f) to the contrary, neither Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise and/or settle any Tax audit, claim or similar proceedings in connection with any such allocation.

(g)The amount of any refunds of (i) Income Taxes of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company for any Pre-Closing Period (other than any refund resulting from the carryback of a net operating loss or other Tax attribute from a period beginning after the Closing Date to a period ending on or prior to the Closing Date, which refund shall be for the account of Buyer) and (ii) Non-Income Taxes of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company for any Pre-Effective Date Period shall be for the account of Seller.  The amount of any refunds of (x) Income Taxes of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company for any Tax period beginning after the Closing Date and (y) Non-Income Taxes of Tioga (with respect to the Hydrocarbon Gathering Business) or the Hydrocarbon Gathering Company for any Tax period beginning after the Effective Date shall be for the account of Buyer.  Each party shall forward, and shall cause its Affiliates to forward, to the party entitled to receive a refund of Tax pursuant to this Section 6.2(g) the amount of such refund within 30 days after such refund is received, net of any reasonable third-party costs or expenses incurred by such party or its Affiliates in procuring such refund. 

6.3Public Announcements

.  The Parties will maintain the confidentiality of this Agreement and its terms except that any Party may disclose this Agreement or any of its terms to any of the following if such Persons are advised of the confidentiality obligations of such information and agree to maintain confidentiality with respect thereto: (a) any Affiliate or Representative of such Party and (b) any potential lender to such Party. Subject to the foregoing, the Parties will consult with each other prior to issuing any press release or announcement to the general public of any nature with respect to this Agreement or the transactions contemplated hereby and shall not make or issue, or cause to be made or issued, any such press release or announcement to the general public prior to such consultation and without the prior written consent of the other Party (which consent will not be unreasonably withheld or delayed) except to the 

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extent, but only to such extent, that, in the reasonable opinion of the Party issuing such press release or announcement to the general public, such announcement or statement is required by Law, any listing agreement with any securities exchange or any securities exchange regulation, in which case the Party proposing to issue such press release or announcement to the general public shall use its reasonable efforts to consult in good faith with the other Party before issuing any such press release or announcement to the general public and shall reasonably cooperate with the other Party in good faith with respect to the timing, manner and content of disclosure.

6.4Regulatory and Other Approvals

.  From the date of this Agreement until Closing:

(a)Each of Seller and Buyer shall cooperate in good faith and use commercially reasonable efforts to obtain as promptly as practicable all consents and approvals that Seller or Buyer is required to obtain in order to consummate the transactions contemplated hereby (excluding, for the avoidance of doubt, the Reorganization Transactions) prior to the Closing Date; provided that for purposes of clarification, the obtaining of such consents and approvals shall not be a condition to Closing; provided further, that Seller will send to the holder of any preferential purchase right applicable to the Hydrocarbon Gathering Assets that would be triggered by the transactions contemplated hereby, a written notice in material compliance with the contractual provisions applicable to such preferential purchase right, seeking such holder’s waiver, consent or approval to or in connection with the transactions contemplated hereby within two Business Days of the date hereof. 

(b)In connection with any filings with Governmental Authorities that are applicable to the transactions contemplated hereby, Seller and Buyer shall undertake promptly any and all actions required to complete lawfully the transactions contemplated by this Agreement prior to the Closing Date. 

(c)Each of Seller and Buyer shall provide prompt notification to the other when it becomes aware that any consent or approval referred to in this Section 6.4 is obtained, taken, made, given or denied, as applicable.

6.5Resignation and Removal

.  Notwithstanding anything in this Agreement to the contrary, effective immediately following the Closing, Seller shall cause and accept the resignation or removal of all managers, officers and/or directors on any board or operating, management or other committee of the Hydrocarbon Gathering Company.

6.6Removal of Name

.  As promptly as practicable, but in any case within 60 days after the Closing Date, Buyer shall eliminate the name “Summit” and any variants thereof from the Hydrocarbon Gathering Assets, and, except with respect to such grace period for eliminating existing usage, shall have no right to use any logos, trademarks or trade names belonging to Seller or any of its Affiliates.

6.7Termination of Agreements with Seller and Non-Company Affiliates

.  As of the date hereof, each of Tioga and the Hydrocarbon Gathering Company has entered into a termination and release with Seller and each Non-Company Affiliate with whom Tioga or the Hydrocarbon Gathering Company has an agreement or to whom Tioga or the Hydrocarbon Gathering Company owes any obligation. 

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6.8Replacement of Insurance

.  Buyer acknowledges and agrees that, effective upon the Closing, all insurance policies carried by or for the benefit of Seller or its Affiliates with respect to Tioga, the Hydrocarbon Gathering Company, the Hydrocarbon Gathering Business or the Hydrocarbon Gathering Assets shall be terminated or modified by Seller or its Affiliates to exclude coverage of the Hydrocarbon Gathering Business and the Hydrocarbon Gathering Assets, and, without limiting Buyer’s rights under Section 10.2, Buyer shall have no rights thereunder or with respect thereto, including any rights to make claims thereunder or with respect thereto.

6.9Further Assurances

.  Subject to the terms and conditions of this Agreement, at any time or from time to time after the Closing, at any Party’s request and without further consideration, the other Party shall (and in the case of Buyer, Buyer shall and shall cause the Hydrocarbon Gathering Company to) execute and deliver to such Party such other instruments of sale, transfer, conveyance, assignment and confirmation, provide such materials and information and take such other actions as such Party may reasonably request in order to consummate the transactions contemplated by this Agreement.

6.10Casualty Loss

.  If, after the date hereof but prior to or on the Closing Date, any portion of the Hydrocarbon Gathering Assets are destroyed by fire, explosion, hurricane, storm, weather events, earthquake, act of God, civil unrest, or similar disorder, terrorist acts, war, or any other hostilities or other casualty or is expropriated or taken in condemnation or under right of eminent domain, whether or not fixed or repaired or in any way remediated (each a “Casualty Loss”), Buyer and Seller shall, subject to the satisfaction (or waiver) of the conditions to Closing set forth in Article VII and Article VIII, nevertheless be required to proceed with Closing.  To the extent Tioga, the Hydrocarbon Gathering Company, Seller or any of its or their Affiliates are entitled to recovery under any insurance policy on account of any Casualty Loss, Seller shall use its reasonable efforts to seek (or cause any of its Affiliates to seek) recovery under such insurance policy and shall pay to Buyer (if such recovery occurs prior to Closing) at Closing or the Hydrocarbon Gathering Company (if such recovery occurs following Closing) promptly following receipt of such recovery, any amounts recovered under such policy.

6.11Conduct of Business

.

(a)Seller covenants and agrees that, from and after the date hereof until the earlier of the Closing or the termination of this Agreement, except (I) as otherwise set forth in Schedule 6.11 or (II) with the prior written consent of Buyer, Seller shall (and shall cause Tioga and the Hydrocarbon Gathering Company, as applicable, to) with respect to the Hydrocarbon Gathering Business: 

(i)operate in the usual and ordinary course of business consistent with past practice;

(ii)use commercially reasonable efforts to maintain the Hydrocarbon Gathering Assets in accordance with Prudent Industry Practices;

(iii)subject to Section 6.8, keep in full force and effect insurance applicable to the Hydrocarbon Gathering Assets, Tioga, the Hydrocarbon Gathering 

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Company and the Hydrocarbon Gathering Business comparable in amount and scope of coverage to that currently maintained; 

(iv)keep and maintain accurate books, Records, and accounts in the usual and ordinary course of business consistent with past practice;

(v)provide prompt written notice following receipt by Seller, Tioga, the Hydrocarbon Gathering Company or any of their respective Affiliates of any written notice of violation or alleged default or breach of any Law, Hydrocarbon Gathering Material Contract or Permit by Tioga or the Hydrocarbon Gathering Company or related to the Hydrocarbon Gathering Assets;

(vi)provide prompt written notice following receipt by Seller, Tioga, the Hydrocarbon Gathering Company or any of their respective Affiliates of any Proceeding or written Claim from any non-Affiliate third party relating to Tioga, the Hydrocarbon Gathering Company or the Hydrocarbon Gathering Assets, seeking to restrain the transactions contemplated by this Agreement or seeking substantial damages with respect to the transactions contemplated by this Agreement; and

(vii)provide prompt written notice upon the occurrence of any Casualty Loss to any of the Hydrocarbon Gathering Assets.

(b)Except (I) as otherwise set forth in Schedule 6.11, (II) with the prior written consent of Buyer or (III) for the Reorganization Transactions, from and after the date hereof until the earlier of the Closing or the termination of this Agreement:

(i)Seller shall not sell, transfer or otherwise dispose of, or grant any Lien with respect to, the Hydrocarbon Company Interests or the Hydrocarbon Gathering Assets (other than Permitted Liens); and

(ii) Seller shall cause Tioga and the Hydrocarbon Gathering Company not to:

(A)enter into or adopt any Plan, any other equity based, incentive or deferred compensation plan or arrangement or other fringe benefit plan, or any consulting, employment, severance, bonus, termination or similar Contract with any Person;

(B)hire any employees or consultants or become liable for any obligation with respect to Seller’s or any of its Affiliates’ employees or consultants;

(C)make any loan to, or enter into any other transaction with, any manager, director or officer of Tioga or the Hydrocarbon Gathering Company or any of their respective Affiliates;

(D)(1) redeem, purchase or acquire, or offer to purchase or acquire any of the Hydrocarbon Company Interests, (2) effect any 

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reorganization or recapitalization of the Hydrocarbon Gathering Company, (3) split, combine or reclassify any of the Hydrocarbon Company Interests or (4) declare, set aside or pay any dividend or other distribution, other than wholly in cash payable prior to Closing, in respect of the Hydrocarbon Company Interests;

(E)(1) offer, sell, transfer, issue, dispose of or grant, or authorize the offering, sale, transfer, issuance, disposition or grant of, any Hydrocarbon Company Interest or (2) grant, or authorize the grant of, any Lien with respect to any Hydrocarbon Company Interest;

(F)acquire, directly or indirectly, (1) (whether by merger, consolidation, or otherwise) an Equity Interest in any business or division of any Person or (2) any material assets or properties (other than assets or properties relating to the Water Gathering Business) other than the acquisition of assets from suppliers or vendors in the ordinary course of business and consistent with past practice;

(G)sell, lease, exchange, abandon or otherwise dispose of any of the Hydrocarbon Gathering Assets, or grant any Lien, preferential purchase right or consent (other than Permitted Liens) with respect to any of the Hydrocarbon Gathering Assets;

(H)adopt any amendments to the Hydrocarbon Gathering Company LLC Agreement or other organizational documents (whether by merger, consolidation or otherwise);

(I)make any change in its method of accounting in effect on the date hereof, except as may be required to comply with GAAP or under applicable Law;

(J)except as required in connection with an emergency to the extent such a capital expenditure is required as a reasonable response thereto (and, in Seller’s good faith judgment, the delay in seeking Buyer’s consent as required by this Section 6.11 would adversely impact the effectiveness of any such response), incur or commit to incur any capital expenditures (other than capital expenditures in respect of the Water Gathering Business); 

(K)adopt a plan of complete or partial liquidation or resolutions providing for or authorizing a liquidation, dissolution, restructuring, recapitalization or other reorganization;

(L)amend, modify, cancel, waive or assign any rights or obligations under, any Hydrocarbon Gathering Material Contract, except as contemplated in the Side Letter;

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(M)other than the Water PSA, enter into or assume (1) any Contract that would constitute a Hydrocarbon Gathering Material Contract or (2) any other Contract with any Person (other than Contracts that would constitute a Water Gathering Material Contract under the Water PSA), other than arms’-length Contracts entered into in the ordinary course of business with a non-Affiliate third party consistent with past practice;

(N)borrow money other than under the Financing Documents which will be paid off, terminated or released at or prior to Closing, or guarantee any debt or obligations or any Person;

(O)make any regulatory filing with respect to the Hydrocarbon Gathering Business other than in the ordinary course of business;

(P)settle any Proceedings or Claims or otherwise waive any material right with respect to the Hydrocarbon Gathering Assets or the Hydrocarbon Gathering Business; 

(Q)make or change any material Tax election; settle or compromise any claim, notice, audit report or assessment in respect of material Taxes; change any annual Tax accounting period; adopt or change any material method of Tax accounting; file any material Tax Return except in accordance with Section 6.2(a)(ii); amend any material Tax Return; enter into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement relating to any material Tax; surrender any right to claim a material Tax refund; or consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment, in each case, with respect to the Hydrocarbon Gathering Business; or

(R)agree to do any of the foregoing.

6.12No Shop

.  From and after the date hereof until the earlier of Closing or the termination of this Agreement (the “No Shop Period”), Seller shall (and shall cause its Affiliates, Tioga and the Hydrocarbon Gathering Company to) immediately cease and cause to be terminated any ongoing discussions or negotiations with respect to the occurrence of any acquisition, directly or indirectly, from Seller, Tioga or any of their Affiliates in one or a series of related transactions, of Tioga, the Hydrocarbon Gathering Company or substantially all of the Hydrocarbon Gathering Assets by purchase, merger, exchange, business combination or otherwise by, or on behalf of, any Person other than Buyer (collectively, a “Third Party Acquisition”) or any proposal reasonably likely to lead to a Third Party Acquisition.  Further, during the No Shop Period, Seller shall not, and shall not authorize or permit any of its Affiliates, Tioga, the Hydrocarbon Gathering Company or any of its or their respective Representatives to directly or indirectly solicit, participate in or initiate discussions (other than to respond negatively), negotiations, inquiries, proposals or offers with or from or provide any non-public information to any Person or group of Persons concerning any Third Party Acquisition or any inquiry, proposal or offer which may reasonably lead to a Third Party Acquisition.  During the No Shop Period, Seller shall not (and shall cause its Affiliates, 

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Tioga and the Hydrocarbon Gathering Company not to) enter into any agreement, letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, exchange agreement, option agreement, joint venture agreement, partnership agreement or other agreement constituting or related to lead to, a Third Party Acquisition or any proposal for a Third Party Acquisition.  Notwithstanding anything in this Agreement to the contrary, nothing in this Section 6.12 shall in any way restrict any of the Summit Companies or any of their respective Representatives from consummating, or engaging in discussions or negotiations with any third party with respect to, a Change of Control Transaction provided that such Change of Control Transaction would not in any way relieve Seller or Tioga of its obligations under this Agreement and the Transaction Documents.

6.13Reorganization Transactions

.  Prior to the Closing, Seller or Tioga, as applicable, shall cause the following transactions in subsections (a) through (c) (the “Reorganization Transactions”) to be consummated:

(a)the conveyance of the Hydrocarbon Gathering Assets from Tioga to the Hydrocarbon Gathering Company pursuant to assignments, bill of sales and conveyances in the forms attached hereto as Exhibits D-1, D-2 and D-3;

(b)the grant of an Easement on the Hydrocarbon Gathering Real Property by the Hydrocarbon Gathering Company to the Water Gathering Company pursuant to an easement agreement in the form attached hereto as Exhibit E; and

(c)the filing of the foregoing documents in subsections (a) through (b) in the applicable county records.

Seller shall provide to Buyer drafts of the Reorganization Documents prior to the execution of the same for Buyer’s review and confirmation (which will not be unreasonably withheld or delayed).  Thereafter, prior to Closing, Seller shall provide to Buyer executed copies of the executed Reorganization Documents and reasonable evidence of the filing thereof, as applicable, in the applicable county records. 

6.14Financial Statements

.  If financial statements of the Hydrocarbon Gathering Company or the business relating thereto are or would be required under Regulation S-X to be filed with the U.S. Securities and Exchange Commission (the “SEC”) or furnished to third parties in connection with any public filing or private or public offering of securities by Buyer or any of its Affiliates, Seller agrees that it shall, and shall cause each of its Affiliates to, use its respective commercially reasonable efforts to cooperate with Buyer’s efforts to prepare such financial statements, including by (a) assisting Buyer and Buyer’s auditors in preparing such financial statements, (b) if requested by Buyer, using commercially reasonable efforts to cause Seller’s and its Affiliates’ independent auditors to deliver customary “comfort letters” in connection with such public offering, which comfort letters shall comply with the requirements of Public Company Accounting Oversight Board AU Section 634 (or any successor thereto) and cover such periods as are addressed by the applicable financial statements and (c) if requested by Buyer, providing such other information as is reasonably requested by Buyer or its applicable Affiliates, provided that such cooperation (i) will be provided at reasonable times and without unreasonable disruption to Seller’s and its Affiliates’ normal day-to-day activities, (ii) will not require Seller or any of its 

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Affiliates to waive any attorney-client privilege or to violate any contractual obligation or any applicable Law and (iii) will not require any financial statements or other financial information to be prepared other than to the extent required by the rules and regulations of the SEC.  Buyer shall promptly, upon request by Seller from time to time, reimburse Seller for all reasonable, documented out-of-pocket costs incurred by Seller and its Affiliates in connection with such cooperation.

Article VII
BUYER’S CONDITIONS TO CLOSING

The obligation of Buyer to consummate the Closing is subject to the fulfillment of each of the following conditions (except to the extent waived in writing by Buyer in its sole discretion):

7.1Representations and Warranties

.  The representations and warranties made by Seller in Article III and in Article IV (disregarding all materiality and Material Adverse Effect qualifications contained therein) (a) shall be true and correct on and as of the Closing Date as though made on and as of the Closing Date (other than those representations and warranties that speak to an earlier date) and (b) in the case of representations and warranties that speak as to an earlier date, such representations and warranties (disregarding all materiality and Material Adverse Effect qualifications contained therein) shall be true and correct as of such earlier date, except in the case of the foregoing clause (a) and clause (b), for any representations and warranties other than Fundamental Representations (which must be true and correct in all material respects), where the failure to be true and correct would not have or reasonably be expected to have a Material Adverse Effect and would not have or reasonably be expected to have a material adverse effect on the ability of Seller to consummate the transactions contemplated hereby.

7.2Performance

.  Seller and Tioga shall have performed and complied, in all material respects, with the agreements, covenants and obligations required by this Agreement to be performed or complied with by Seller or Tioga at or before the Closing.

7.3Officer’s Certificate

.  Seller shall have delivered to Buyer at the Closing an officer’s certificate, dated as of the Closing Date, certifying as to the matters set forth in Section 7.1 and Section 7.2.

7.4Orders and Laws

.  There shall not be (a) any Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by this Agreement or (b) any Proceeding by a Person that is not an Affiliate of any of the Parties seeking monetary damages in excess of $1,000,000 in connection with the transactions contemplated hereby.

7.5Closing Deliverables

.  Seller shall have delivered, or be ready, willing and able to deliver, the items required to be delivered by Seller pursuant to Section 2.4.

7.6Indebtedness; Distributions

.  Seller shall have fully complied (or be ready, willing and able to fully comply) with its obligations under Section 6.1(a).

7.7Water PSA Closing

.  Each of the conditions precedent to the consummation of the closing under the Water PSA has been satisfied by the parties thereto, and the parties thereto are 

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ready, willing and able to (and do) close the transactions contemplated under the Water PSA immediately following the Closing of the transactions contemplated hereby.

7.8Side Letter

.  The Side Letter shall remain in full force as to Tioga and shall not have been revoked by Tioga.

Article VIII
SELLER’S CONDITIONS TO CLOSING

The obligation of Seller to consummate the Closing is subject to the fulfillment of each of the following conditions (except to the extent waived in writing by Seller in its sole discretion):

8.1Representations and Warranties

.  The representations and warranties made by Buyer in Article V (disregarding all materiality qualifications contained therein) (a) shall be true and correct on and as of the Closing Date as though made on and as of the Closing Date (other than those representations and warranties that speak to an earlier date) and (b) in the case of representations and warranties that speak as to an earlier date, such representations and warranties (disregarding all materiality qualifications contained therein) shall be true and correct as of such earlier date, except in the case of the foregoing clause (a) and clause (b), for any representations and warranties other than Fundamental Representations (which must be true and correct in all material respects), where the failure to be true and correct would not have or reasonably be expected to have a material adverse effect on the ability of Buyer to consummate the transactions contemplated hereby.

8.2Performance

.  Buyer shall have performed and complied, in all material respects, with the agreements, covenants and obligations required by this Agreement to be so performed or complied with by Buyer at or before the Closing.

8.3Officer’s Certificate

.  Buyer shall have delivered to Seller at the Closing a certificate of an officer of Buyer, dated as of the Closing Date, certifying as to the matters set forth in Section 8.1 and Section 8.2.

8.4Orders and Laws

.  There shall not be (a) any Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by this Agreement or (b) any Proceeding by a Person that is not an Affiliate of any of the Parties seeking monetary damages in excess of $1,000,000 in connection with the transactions contemplated hereby.

8.5Closing Deliverables

.  Buyer shall have delivered, or be ready, willing and able to deliver, the items required to be delivered by Buyer pursuant to Section 2.5.

8.6Water PSA Closing

.  Each of the conditions precedent to the consummation of the closing under the Water PSA has been satisfied by the parties thereto, and the parties thereto are ready, willing and able to (and do) close the transactions contemplated under the Water PSA immediately following the Closing of the transactions contemplated hereby.

8.7Side Letter

.  The Side Letter shall remain in full force as to Tioga and shall not have been revoked by Tioga.

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Article IX
TERMINATION

9.1Right of Termination

.  Prior to Closing, this Agreement may be terminated:

(a)By written consent of Seller and Buyer;

(b)By Seller or Buyer if the Closing has not occurred before 90 days after the date hereof (the “Outside Date”);

(c)By Seller or Buyer if consummation of the transactions contemplated by this Agreement is enjoined, prohibited or otherwise restrained by the terms of any Law;

(d)By Seller if satisfaction of any of the conditions in Article VIII on or prior to the Outside Date is or becomes impossible (other than through failure of Seller to comply with its obligations under this Agreement); or  

(e)By Buyer if satisfaction of any of the conditions in Article VII on or prior to the Outside Date is or becomes impossible (other than through failure of Buyer to comply with its obligations under this Agreement).

A Party shall not have the right to terminate this Agreement under Section 9.1(b), Section 9.1(d) or Section 9.1(e) if it is then in Willful Breach of this Agreement.

9.2Effect of Termination

.

(a)If any Party terminates this Agreement pursuant to Section 9.1, all obligations and liabilities of the Parties under this Agreement shall terminate and become void and no Party shall have any further rights against the other Parties by virtue of this Agreement for breach of any representation, warranty, covenant or agreement, except as provided in Sections 9.2(b) and 9.2(c); provided, however, that the terms of (and rights and obligations under) this Section 9.2, Section 9.3, Article I, Article X and Article XI (other than Section 11.3 and Section 11.12) shall remain in full force and effect and survive any termination of this Agreement.  Upon the termination of this Agreement, Seller shall be free immediately to enjoy all rights of ownership of Tioga, the Hydrocarbon Gathering Company, the Tioga Company Interests, the Hydrocarbon Company Interests and the Hydrocarbon Gathering Assets and to sell, transfer, encumber or otherwise dispose of the same to any Person without any restriction under this Agreement.

(b)If at the time this Agreement is terminated pursuant to Section 9.1(b) or Section 9.1(d) or Seller has the right to terminate this Agreement pursuant to Section 9.1(b) or Section 9.1(d) and (in either case) Buyer is in Willful Breach (or Water Buyer is in “Willful Breach” under the Water PSA and Seller has elected to terminate the Water PSA), then Seller shall be entitled to, at its option:

(i)terminate this Agreement and seek recovery of its damages up to an amount equal to 10% of the Base Purchase Price; or

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(ii)other than if Seller has the right to terminate this Agreement under Section 9.1(b) and Water Buyer is in Willful Breach under the Water PSA and Seller has elected to terminate the Water PSA, seek specific performance of this Agreement; provided that if Seller’s suit for specific performance fails, with no further opportunity for appeal or Seller makes an irrevocable election not to appeal, then at such time Seller shall have the right to elect the recovery set forth in Section 9.2(b)(i).

(c)If at the time this Agreement is terminated pursuant to Section 9.1(b) or Section 9.1(e) or Buyer has the right to terminate this Agreement pursuant to Section 9.1(b) or Section 9.1(e) and (in either case) Seller is in Willful Breach or is in “Willful Breach” under the Water PSA and Water Buyer has elected to terminate the Water PSA, then Buyer shall be entitled to, at its option:

(i)terminate this Agreement and seek recovery of its damages up to an amount equal to 10% of the Base Purchase Price; or

(ii)other than if Buyer has the right to terminate this Agreement under Section 9.1(b) and Seller is in Willful Breach under the Water PSA and Water Buyer has elected to terminate the Water PSA, seek specific performance of this Agreement; provided that if Buyer’s suit for specific performance fails, with no further opportunity for appeal or Buyer makes an irrevocable election not to appeal, then at such time Buyer shall have the right to elect the recovery set forth in Section 9.2(c)(i).

9.3Return of Documentation

.  Upon termination of this Agreement, Buyer shall return to Seller all original (and destroy all copies of) title, engineering, geological and geophysical data, environmental assessments and reports, maps and other information furnished by or on behalf of Seller to Buyer or prepared by or on behalf of Buyer in connection with its due diligence investigation of Tioga, the Hydrocarbon Gathering Company, the Hydrocarbon Company Interests and the Hydrocarbon Gathering Assets, and an officer of Buyer shall certify same to Seller in writing.

9.4Confidentiality

.  The Confidentiality Agreement between Summit Midstream Partners, LP and Hess Infrastructure Partners LP dated November 12, 2018 (the “Confidentiality Agreement”) shall terminate on the Closing Date unless this Agreement is terminated pursuant to Article IX, in which case the Confidentiality Agreement shall remain in full force and effect.

Article X
LIMITATIONS ON LIABILITY, WAIVERS AND ARBITRATION

10.1Survival of Representations, Warranties and Agreements

.  The representations and warranties of Seller and Buyer set forth in this Agreement and the right of an indemnified Person to assert any Claim for indemnification related thereto or for any other Loss pursuant to this Article X shall survive Closing for 12 months, after which applicable date and time no Claims for indemnification may be asserted, regardless of when such right arose; provided that, notwithstanding the foregoing, the representations and warranties set forth in (a) Sections 3.1, 3.2, 3.3, 3.4(a), 3.16, 4.1, 4.2, 4.3, 4.4(a), 5.1, 5.2, 5.6 and 5.7 (the “Fundamental Representations”) shall survive the Closing indefinitely, (b) the representations and warranties in Section 3.12 shall 

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survive the Closing for two years, (c) the representations and warranties in Sections 3.13, 3.17, 4.5 and 5.8 shall survive the Closing until 60 days following the expiration of the applicable statute of limitations, including any extension thereof, with respect to the particular matter that is the subject matter thereof, and (d) each of the representations and warranties in Section 5.9 shall survive the Closing until the expiration of the survival period of the applicable representation and warranty of Seller that is the subject thereof.  The covenants and agreements (other than the covenants and agreements contained in Section 6.2) of the Parties contained in this Agreement shall survive the Closing in accordance with their terms; provided, that the covenants and agreements contained in Section 6.2 shall survive the Closing until 60 days following the expiration of the applicable statute of limitations, including any extension thereof; provided further, that the right of any Party to make a claim for breach of any covenant of a Party that is to be performed or satisfied on or prior to the Closing shall survive until the first anniversary of the Closing Date.  Seller’s indemnification obligations with respect to (i) Section 10.2(d) shall survive the Closing until 60 days following the expiration of the applicable statute of limitations, including any extension thereof, with respect to the particular matter that is the subject matter thereof, (ii) Sections 10.2(f), 10.2(g), 10.2(h) and 10.2(i) shall survive the Closing for two years and (iii) Section 10.2(e) shall survive Closing indefinitely.

10.2Indemnification of Buyer and the Hydrocarbon Gathering Company by Seller

.  Subject to the limitations on recourse and recovery set forth in this Article X, from and after the Closing, Seller will indemnify, defend and hold harmless Buyer, Tioga, the Hydrocarbon Gathering Company and their respective Affiliates from and against any and all Losses imposed upon or incurred after the Closing in connection with, arising out of or resulting from:

(a)the inaccuracy or breach of any representation or warranty made by Seller in Article III or in the certificate delivered by Seller pursuant to Section 7.3 (each such inaccuracy or breach, a “Company Warranty Breach”);

(b)the inaccuracy or breach of any representation or warranty made by Seller in Article IV or in the certificate delivered by Seller pursuant to Section 7.3 (each such inaccuracy or breach, a “Seller Warranty Breach”); 

(c)any nonfulfillment or breach by Seller, Tioga or the Hydrocarbon Gathering Company of any covenant or agreement made by Seller, Tioga or the Hydrocarbon Gathering Company under this Agreement;

(d)any and all Seller Taxes; 

(e)the Special Liabilities;

(f)all Claims asserted by any employee of Seller or its Affiliates or any other Person for illness, personal injury or death relating or attributable to the ownership or operation of the Hydrocarbon Gathering Assets prior to the Closing;

(g)any offsite waste disposal (including the disposal of any Hazardous Materials) to properties other than the Hydrocarbon Gathering Assets occurring prior to the Closing; 

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(h)any criminal (but not civil) liabilities, including criminal (but not civil) fines, sanctions or penalties, imposed or assessed as a result of the ownership, operation or use of the Hydrocarbon Gathering Assets prior to the Closing; and

(i)the Willful Misconduct of Tioga, the Hydrocarbon Gathering Company or any of their Affiliates with respect to operation of the Hydrocarbon Gathering Assets prior to Closing; 

provided that solely for purposes of determining the amount of any Losses under subsections (a) and (b) above, any qualification or exception contained therein relating to materiality (including Material Adverse Effect) shall be disregarded.

10.3Indemnification of Seller by Buyer

.  Subject to the limitations on recourse and recovery set forth in this Article X, from and after the Closing, Buyer shall indemnify, defend and hold harmless Seller and its Affiliates from and against any and all Losses imposed upon or incurred after the Closing in connection with, arising out of or resulting from:

(a)the inaccuracy or breach of any representation or warranty made by Buyer in Article V or in the certificate delivered by Buyer pursuant to Section 8.3 (each such inaccuracy or breach, a “Buyer Warranty Breach”); 

(b)any nonfulfillment or breach by Buyer of any covenant or agreement made by Buyer under this Agreement; and 

(c)any and all liabilities associated with the Hydrocarbon Gathering Business (except to the extent Seller as of such time has an indemnity obligation to Buyer with respect thereto); 

provided that solely for purposes of determining the amount of any Losses under subsection (a) above, any qualification or exception contained therein relating to materiality (including Material Adverse Effect) shall be disregarded.

10.4Limitations

.

(a)Except for a Warranty Breach with respect to a Fundamental Representation or Sections 3.13, 3.17, 4.5 or 5.8, if any Claim for indemnification by Buyer, Tioga, the Hydrocarbon Gathering Company and their respective Affiliates or Seller relating to any Warranty Breach that is subject to indemnification under Sections 10.2(a), 10.2(b) or 10.3(a) results in aggregate Losses that do not exceed $25,000 then such Losses shall not be deemed to be Losses under this Agreement and shall not be eligible for indemnification under this Article X.

(b)Except for a Company Warranty Breach or Seller Warranty Breach with respect to a Fundamental Representation or Sections 3.13, 3.17 or 4.5, Buyer, Tioga, the Hydrocarbon Gathering Company and their respective Affiliates shall be entitled to be indemnified pursuant to Sections 10.2(a) or 10.2(b) for Losses incurred for any Company Warranty Breach or Seller Warranty Breach (excluding any item or Loss below the threshold listed in Section 10.4(a)) only if and to the extent that the aggregate amount of all such Losses exceeds 1% of the Base 

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Purchase Price, subject to the other limitations on recovery and recourse set forth in this Agreement.

(c)Except for a Company Warranty Breach or Seller Warranty Breach with respect to a Fundamental Representation or Sections 3.13, 3.17 or 4.5, Seller’s liability under Sections 10.2(a) and 10.2(b) will be limited, in the aggregate, to 15% of the sum of (i) the Base Purchase Price plus (ii) the difference between (A) the “Base Purchase Price” under the Water PSA minus (B) the aggregate amounts paid by Seller under Sections 10.2(a) and 10.2(b) of the Water PSA.  Under no circumstance will Seller’s liability for any Losses under Section 10.2 (other than liability for Losses under Section 10.2(a) for breach of the representations and warranties in Section 3.13, Section 10.2(c) for breach of the covenants and agreements in Section 6.2 or under Section 10.2(d) or Section 10.2(e)), including Losses with respect to a Fundamental Representation or Sections 3.12, 3.17 or 4.5, exceed the value of the proceeds received by Seller in the transactions contemplated by this Agreement.  Except for a Company Warranty Breach or Seller Warranty Breach with respect to a Fundamental Representation or Sections 3.13, 3.17 or 4.5, in no event shall Seller’s aggregate liability under Sections 10.2(a) and 10.2(b) and Sections 10.2(a) and 10.2(b) of the Water PSA exceed, in the aggregate, 15% of the sum of (x) the Base Purchase Price plus (y) the “Base Purchase Price” under the Water PSA.

(d)No indemnifying Person shall be liable for any Losses that are subject to indemnification under Sections 10.2 or 10.3 unless a written demand for indemnification under this Agreement is delivered by the indemnified Person to the indemnifying Person with respect thereto prior to 5:00 P.M. Central Time on the final date pursuant to Section 10.1, to assert a Claim for indemnification on the basis asserted in such written demand.  Notwithstanding the foregoing, any Claim for indemnification under this Agreement that is brought prior to such time will survive until such matter is resolved.

(e)Notwithstanding anything to the contrary contained in this Agreement, under no circumstances shall any Party be entitled to double recovery under this Agreement, and to the extent a Party is compensated for a matter through any adjustment to the Base Purchase Price or any third party recovery or insurance recovery actually received, such Party shall not have a separate right to indemnification for such matter.

10.5Claims Procedures

.

(a)Promptly after receipt by any indemnified Person of notice of the commencement or assertion of any Claim or Proceeding by a non-Affiliate third party or circumstances which, with the lapse of time, such indemnified Person believes is likely to give rise to a Claim or Proceeding by a non-Affiliate third party or of facts causing any indemnified Person to believe it has a Claim for indemnification hereunder (an “Asserted Liability”), such indemnified Person shall give written notice thereof (the “Claims Notice”) to the relevant indemnifying Person as promptly as reasonably practicable under the circumstances, provided that in any event, such indemnified Person shall give the Claims Notice to the indemnifying Person no later than 20 days after becoming aware of such Asserted Liability.  So long as the Claims Notice is given within the applicable survival period set forth in Section 10.1, the failure to so notify the indemnifying Person shall not relieve the indemnifying Person of its obligations or liability hereunder, except to the extent such failure shall have actually prejudiced the indemnifying Person.  The Claims Notice 

49

 

shall describe the Asserted Liability in reasonable detail, shall indicate the amount (estimated, if necessary) of the Loss that has been or may be suffered, shall include a copy of all papers (if any) served with respect to the Claim or Proceeding and shall identify the specific basis under this Agreement for the Asserted Liability.  The indemnified Person and the indemnifying Person agree to keep each other reasonably appraised of any additional information obtained by such Person concerning any Asserted Liability. 

(b)As to an Asserted Liability arising from a non-Affiliate third party action, the indemnifying Person shall be, subject to the limitations set forth in this Section 10.5, entitled to assume control of and appoint lead counsel for such defense only for so long as it conducts such defense with reasonable diligence.  The indemnifying Person shall keep the indemnified Persons advised of the status of such non-Affiliate third party action and the defense thereof on a reasonably current basis and shall consider in good faith the recommendations made by the indemnified Persons with respect thereto.  If the indemnifying Person assumes the control of the defense of any non-Affiliate third party action in accordance with the provisions of this Section 10.5, the indemnified Person shall be entitled to participate in the defense of any such non-Affiliate third party action and any applicable settlement thereof and to employ, at its expense, separate counsel of its choice for such purpose, it being understood, however, that the indemnifying Person shall continue to control such defense or such settlement; provided that notwithstanding the foregoing, the indemnifying Person shall pay the reasonable costs and expenses of such defense (including reasonable attorneys’ fees and expenses) of the indemnified Persons if (x) the indemnified Person’s outside counsel shall have reasonably concluded and advised in writing (with a copy to the indemnifying Person) that there are defenses available to such indemnified Person that are different from or additional to those available to the indemnifying Person, or (y) the indemnified Person’s outside counsel shall have advised in writing (with a copy to the indemnifying Person) the indemnified Person that there is a conflict of interest that would make it inappropriate under applicable standards of professional conduct to have common counsel for the indemnifying Person and the indemnified Person.  Notwithstanding the foregoing, the indemnifying Person shall obtain the prior written consent of the indemnified Person before entering into any settlement, compromise, admission or acknowledgement of the validity of such Asserted Liability if the settlement requires an admission of guilt or wrongdoing on the party of the indemnified Person, subjects the indemnified Person to criminal liability or does not unconditionally release the indemnified Person from all liabilities and obligations with respect to such Asserted Liability or the settlement imposes injunctive or other equitable relief against, or any continuing obligation or payment requirement on, the indemnified Person.  If the indemnifying Person does not elect to assume control of the defense of such non-Affiliate third party action, then the indemnified Person shall have the right to defend against such non-Affiliate third party action at the sole cost and expense of the indemnifying Person, with counsel of the indemnifying Person’s choosing (subject to the right of the indemnifying Person to elect to control the defense of such non-Affiliate third party action at any time prior to settlement or final determination thereof).  Any settlement of such non-Affiliate third party action by the indemnified Person shall require the consent of the indemnifying Person (which shall not be unreasonably withheld, conditioned or delayed), unless the settlement is solely for money damages and results in a final resolution.

(c)Each Party shall cooperate in the defense or prosecution of any Asserted Liability arising from a non-Affiliate third party action and shall furnish or cause to be furnished such records, information and testimony (subject to any applicable confidentiality agreement), and 

50

 

attend such conferences, discovery proceedings, hearings, trials or appeals as may be reasonably requested in connection therewith.

10.6Waiver of Other Representations

.

(a)NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, ABSENT ACTUAL (BUT NOT CONSTRUCTIVE) FRAUD, IT IS THE EXPLICIT INTENT OF EACH PARTY, AND THE PARTIES HEREBY AGREE, THAT NEITHER SELLER, TIOGA NOR ANY OF THEIR AFFILIATES OR THEIR RESPECTIVE REPRESENTATIVES HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING ANY IMPLIED REPRESENTATION OR WARRANTY AS TO THE CONDITION, MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE HYDROCARBON COMPANY INTERESTS, THE HYDROCARBON GATHERING ASSETS, TIOGA OR THE HYDROCARBON GATHERING COMPANY, OR ANY PART THEREOF, EXCEPT THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN ARTICLE III AND ARTICLE IV.  

(b)EXCEPT THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN ARTICLE III AND ARTICLE IV, ABSENT ACTUAL (BUT NOT CONSTRUCTIVE) FRAUD, SELLER’S HYDROCARBON COMPANY INTERESTS ARE BEING TRANSFERRED THROUGH THE SALE OF THE HYDROCARBON COMPANY INTERESTS “AS IS, WHERE IS, WITH ALL FAULTS,” AND SELLER, TIOGA AND THEIR AFFILIATES AND THEIR RESPECTIVE REPRESENTATIVES EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF TIOGA, THE HYDROCARBON GATHERING COMPANY AND THE HYDROCARBON GATHERING ASSETS OR THE PROSPECTS (FINANCIAL OR OTHERWISE), RISKS AND OTHER INCIDENTS OF TIOGA, THE HYDROCARBON GATHERING COMPANY AND THE HYDROCARBON GATHERING ASSETS.

10.7Waiver of Remedies

. 

(a)Other than for instances of actual fraud or under the other Transaction Documents and, without limiting the generality of the following with respect to the liability of Seller, excluding any Claims between Tioga and the Hydrocarbon Gathering Company, the Parties hereby agree that from and after Closing no Party shall have any liability, and no Party nor any of their respective Affiliates shall make any Claim, for any Loss or any other matter, under, relating to or arising out of this Agreement (including breach of representation, warranty, covenant or agreement) or any other Contract or other matter delivered pursuant hereto, or the transactions contemplated hereby, whether based on contract, tort, strict liability, other Laws or otherwise, except for a claim for indemnification pursuant to Article X, and, in the case of Section 6.14, the exercise of the right to enforce specific performance specified in Section 11.12.

(b)NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, EXCEPT IN THE CASE OF ACTUAL FRAUD, NO PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE FOR THE FOLLOWING (“NON-REIMBURSABLE 

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DAMAGES”): SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES (INCLUDING ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES, OR LOST OR DELAYED BUSINESS BASED ON VALUATION METHODOLOGIES ASCRIBING A DECREASE IN VALUE TO TIOGA OR THE HYDROCARBON GATHERING COMPANY, ON THE BASIS OF A MULTIPLE OF A REDUCTION IN A MULTIPLE-BASED OR YIELD-BASED MEASURE OF FINANCIAL PERFORMANCE), WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND WHETHER OR NOT ARISING FROM THE OTHER PARTY’S OR ANY OF ITS AFFILIATES’ SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT; PROVIDED, HOWEVER, ANY AMOUNTS PAYABLE TO NON-AFFILIATE THIRD PARTIES PURSUANT TO A CLAIM BY A NON-AFFILIATE THIRD PARTY SHALL NOT BE DEEMED NON-REIMBURSABLE DAMAGES.

10.8Access to Information and Assets; Transition of Operations

.  

(a)Until the earlier of the Closing or the termination of this Agreement, at all reasonable times, Seller will (and will cause Tioga and the Hydrocarbon Gathering Company to), to the fullest extent permissible under applicable Laws and Contracts of Tioga and the Hydrocarbon Gathering Company, make available to Buyer and Buyer’s authorized Representatives (i) for examination as Buyer may reasonably request, the Hydrocarbon Gathering Assets, including all of the books, records, documents, instruments, accounts, correspondence, writings, evidences of title and other papers and electronic files relating to the Hydrocarbon Gathering Business or the Hydrocarbon Gathering Assets (other than any income Tax records of Seller) in Seller’s or Seller’s Affiliates’ possession or the possession of Tioga or the Hydrocarbon Gathering Company (the “Records”) and the Assets and (ii) access to the relevant employees of and data held by the Summit Companies as is necessary for Buyer to fully transition operation of the Hydrocarbon Gathering Business (including its operation independent of the services and assets covered by the Operations Services) from Seller to Buyer by the Closing Date; provided, that Buyer shall not unreasonably interfere with the day‐to‐day operations of the business of Tioga or the Hydrocarbon Gathering Company and shall provide written notice to Seller at least two Business Days prior to any site visit on the Hydrocarbon Gathering Assets by Buyer or Buyer’s authorized Representatives.  Buyer’s examination shall not include any invasive sampling or testing or analysis without the prior written consent of Seller, which consent can be withheld in Seller’s sole discretion.  All such examinations conducted by Buyer or any Representative of Buyer shall be conducted at Buyer’s sole cost, risk and expense.  Upon completion of Buyer’s examination, Buyer shall at its sole cost and expense and without any cost or expense to Seller or its Affiliates (i) repair all damage done to the Hydrocarbon Gathering Assets in connection with Buyer’s and/or any of Buyer’s Representatives’ examinations, (ii) restore the Hydrocarbon Gathering Assets to the approximate same condition as, or better condition than, they were prior to commencement of any such examinations and (iii) remove all equipment, tools and other property brought onto the Hydrocarbon Gathering Assets in connection with such examinations. Any disturbance to the Hydrocarbon Gathering Assets resulting from such examinations will be promptly corrected by Buyer at Buyer’s sole cost and expense.

(b)After the Closing Date, Tioga, the Hydrocarbon Gathering Company, Seller and Buyer shall grant each other (or their respective designees), and Buyer shall cause the 

52

 

Hydrocarbon Gathering Company to grant to Seller (or its designee), access at all reasonable times to the Records, and shall afford such party the right (at such party’s expense) to take extracts therefrom and to make copies thereof, to the extent reasonably necessary to implement the provisions of, or to investigate or defend any Claims regarding Taxes with respect to Tioga and the Hydrocarbon Gathering Company.  Buyer shall maintain, and shall cause the Hydrocarbon Gathering Company to maintain, the Records until the fifth anniversary of the Closing Date.

(c)Buyer and its Representatives shall abide by Seller’s, Tioga’s, the Hydrocarbon Gathering Company’s and any non-Party operator’s safety rules provided to Buyer while conducting its evaluation of the Hydrocarbon Gathering Assets in accordance with this Section 10.8, including any environmental or other inspection of the Hydrocarbon Gathering Assets.  Except for any matters discovered by Buyer or its Representatives which, if known or discovered prior to the date hereof would have been required to have been listed on Schedule 3.12 or another Schedule to this Agreement, Buyer hereby defends, indemnifies and holds harmless the Seller Group from and against any and all Claims arising out of, resulting from or relating to any field visit, environmental assessment or other activity conducted by Buyer or any of its Representatives with respect to the Hydrocarbon Gathering Assets.  Such indemnity obligation shall apply even if such Claims arise out of, result from or relate to the sole, joint or concurrent negligence, strict liability or other fault of any member of the Seller Group or its Representatives, but excluding in each case, Claims arising out of, resulting from or relating to the gross negligence or willful misconduct of any member of the Seller Group or its Representatives.  

10.9Dispute Resolution and Arbitration

.

(a)Except with respect to the establishment of the Purchase Price as set forth in Section 2.6, in the event of any dispute, controversy or Claim among the Parties, or any of them, arising out of or relating to this Agreement, or the breach or invalidity thereof (including the enforcement of the process required by Section 2.6) (collectively, a “Dispute”), the Parties shall attempt in the first instance to resolve such Dispute through consultations between senior management of the Parties.  The Parties agree to attempt to resolve all Disputes arising hereunder promptly, equitably and in a good faith manner.  The Parties further agree to provide each other with reasonable access during normal business hours to any and all non-privileged records, information and data pertaining to such Dispute, upon reasonable advance notice.

(b)If such consultations do not result in a resolution of the Dispute within 30 Business Days after written notice by a Party to the other Parties describing the Dispute and requesting resolution, then the Dispute may be submitted by any Party to binding arbitration pursuant to the terms of Section 10.10, irrespective of the magnitude thereof, the amount in dispute or whether such Dispute would otherwise be considered justifiable or ripe for resolution by any court or arbitral tribunal, by giving written notice thereof to the other Parties; provided, however, that in no event shall a Party have the right to submit the Dispute to arbitration if the institution of legal or equitable proceedings based on such Dispute would be barred by any applicable statute of limitations or Section 10.1.

(c)Any Dispute shall be resolved exclusively and finally by binding arbitration in accordance with the provisions of Section 10.10.

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10.10Arbitration Procedures

.

(a)Any Party electing to initiate arbitration of a Dispute shall designate its nomination for an arbitrator in its notice to the other Party electing to submit the Dispute to arbitration.  Each Party receiving such notice shall, within ten Business Days thereafter, by return written notice to all Parties, state whether it will accept such nomination, or decline to accept it and designate its nomination for an arbitrator.  One arbitrator shall control the proceedings if such nomination of an arbitrator is accepted by all Parties or if the receiving Party fails to nominate an arbitrator within the required ten Business Day period.  If the receiving Party timely nominates an arbitrator, the arbitral tribunal shall consist of three arbitrators, with one arbitrator being selected by Seller and one arbitrator being selected by Buyer, within five Business Days after the expiration of the ten-Business Day period reference above, and the two selected arbitrators choosing a third arbitrator, which third arbitrator must be a Person with the requisite knowledge and experience to make a fair and informed determination with respect to the matter in dispute, which Person shall not be an Affiliate of any Party, nor an employee, director, officer, shareholder, owner, partner, agent or a contractor of any Party or of any Affiliate of any Party, either presently or at any time during the previous two years.  In the event the arbitrators fail to appoint the third arbitrator within 30 days (or such longer time period as agreed to by the Parties) after they have accepted their appointment, the third arbitrator (meeting the qualifications specified in the preceding sentence) shall be appointed by the Houston office of the American Arbitration Association within ten Business Days after the expiration of such 30-day period.  The arbitration shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United Stated Code).  If there is an inconsistency between Section 10.10 and the Commercial Arbitration Rules (the “Rules”) or the Federal Arbitration Act, the provisions of this Section 10.10 shall prevail.

(b)Within ten Business Days after the selection of the arbitrator(s), each Party shall submit to the arbitrator(s) such Party’s position with respect to the Dispute, which such position statement shall not conflict with the terms and conditions of this Agreement, together with supporting data, if any.  Within 30 days after the position statements are submitted, the arbitrator(s) shall hold a hearing during which the Parties may present evidence in support of their respective proposals.  The arbitrator(s) may also order discovery pursuant to the Rules.  The arbitrator(s) (by majority rule if there are three arbitrators) will determine the outcome of the Dispute.  The cost of the arbitration shall be split between the Parties equally and each Party shall pay for one‐half of the costs. 

(c)The place of arbitration shall be Houston, Texas, unless in any particular case the Parties agree upon a different venue.

(d)The arbitrator(s) shall have no right or authority to grant or award Non-Reimbursable Damages, except as permitted by Section 10.7(b). 

(e)Any decision of the arbitrator(s) pursuant to this Section 10.10 shall be final and binding upon the Parties and shall be reached within 90 days after proposals for resolution of the Dispute have been submitted (or such longer time period as agreed to by the Parties).  The Parties agree that the arbitral award may be enforced against the Parties to the arbitration 

54

 

proceeding or their assets wherever they may be found and that a judgment upon the arbitral award may be entered in any court having competent jurisdiction thereof.  The Parties expressly submit to the jurisdiction of any such court.  The Parties hereby waive, to the extent permitted by Law, any rights to appeal or to review of such award by any court or tribunal.

(f)When any Dispute occurs and is the subject of consultations or arbitration, the Parties shall continue to make payments of undisputed amounts in accordance with this Agreement, and the Parties shall otherwise continue to exercise their rights and fulfill their respective obligations under this Agreement.

(g)Consolidation of Arbitration.  To the extent that any arbitration is commenced pursuant to this Agreement and the Dispute alleged in such arbitration proceeding relates to any matters that would be covered by the guarantee delivered by Summit Midstream Partners, LP in favor of Buyer as of the Execution Date, the Parties agree that any arbitration proceeding commenced pursuant to such guarantee shall be consolidated with such arbitration proceeding commenced pursuant to this Agreement into a single proceeding before the arbitrator(s) appointed in accordance with this Section 10.10. This Section 10.10(g) is expressly intended to afford the arbitrator(s) under such guarantee and/or this Agreement greater flexibility and discretion to consolidate related arbitration claims and proceedings as it deems appropriate, so that related claims and proceedings may be combined within a single proceeding, than is otherwise afforded under the Rules.

10.11Losses

.  The Losses giving rise to any indemnification obligation hereunder shall be limited to the Losses suffered by the indemnified Persons.  The amount of any Losses for which any of Buyer, Tioga, the Hydrocarbon Gathering Company or any of their respective Affiliates is entitled to indemnification under this Agreement or in connection with or with respect to the transactions contemplated by this Agreement shall be reduced by any corresponding insurance proceeds actually received by such indemnified Person from any of the insurance policies listed on Schedule 3.22.

10.12Tax Treatment

.  To the extent permitted by applicable Law, Buyer and Seller agree to report each indemnification payment made under this Article X in respect of a Loss as an adjustment to the Purchase Price for U.S. federal and applicable state income Tax purposes. 

10.13Express Negligence

.  THE PARTIES INTEND THAT THE INDEMNITIES SET FORTH IN THIS ARTICLE X (AND ELSEWHERE IN THIS AGREEMENT) BE CONSTRUED AND APPLIED AS WRITTEN IN THIS AGREEMENT, NOTWITHSTANDING ANY RULE OF CONSTRUCTION TO THE CONTRARY.  WITHOUT LIMITING THE FOREGOING, SUCH INDEMNITIES WILL APPLY NOTWITHSTANDING ANY STATE’S “EXPRESS NEGLIGENCE” OR SIMILAR RULE THAT WOULD DENY COVERAGE BASED ON AN INDEMNIFIED PARTY’S SOLE OR CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE, EXCLUDING ANY PARTY’S OR ANY OF ITS AFFILIATES’ GROSS NEGLIGENCE.  IT IS THE INTENT OF THE PARTIES THAT, TO THE EXTENT PROVIDED ABOVE, THE INDEMNITIES SET FORTH IN THIS ARTICLE X (AND ELSEWHERE IN THIS AGREEMENT) WILL APPLY TO AN INDEMNIFIED PARTY’S SOLE OR CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE, BUT EXCLUDING ANY 

55

 

PARTY’S OR ANY OF ITS AFFILIATES’ GROSS NEGLIGENCE.  THE PARTIES AGREE THAT THIS PROVISION IS “CONSPICUOUS” FOR PURPOSES OF ALL STATE LAWS.

Article XI
MISCELLANEOUS

11.1Notices

.

(a)Unless this Agreement specifically requires otherwise, any notice, demand or request provided for in this Agreement, or served, given or made in connection with it, shall be in writing and shall be deemed properly served, given or made if delivered in person or sent by electronic e-mail delivery (including delivery of a document in Portable Document Format) (provided that for notices sent by e-mail that confirmation of receipt of such e-mail is requested and received, excluding automatic-read receipts, and which confirmation shall be provided reasonably promptly following receipt), by registered or certified mail, postage prepaid or by a nationally recognized overnight courier service that provides a receipt of delivery, in each case, to the Parties at the addresses specified below:

If to Seller, to:

Meadowlark Midstream Company, LLC
5910 N. Central Expressway, Suite 350
Dallas, TX 75206
Attn: Brock Degeyter
E-mail:  bdegeyter@summitmidstream.com

If to Tioga or to the Hydrocarbon Gathering Company prior to Closing, to:

Tioga Midstream, LLC
5910 N. Central Expressway, Suite 350
Dallas, TX 75206
Attn: Brock Degeyter
E-mail:  bdegeyter@summitmidstream.com

If to Buyer (or to the Hydrocarbon Gathering Company from and after the Closing), to:

Hess North Dakota Pipelines LLC
1501 McKinney Street
Houston, TX 77010 
Attn: Michael Frailey
E-mail: michael.frailey@hess.com

with a copy (which shall not constitute notice) to:

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Hess North Dakota Pipelines LLC
1501 McKinney Street
Houston, TX 77010 
Attn: J. Chad Newton
E-mail: cnewton@hess.com

or at such other address as a Party may designate by written notice to the other Parties in the manner provided in this Section 11.1.

(b)Notice given by personal delivery, mail or overnight courier pursuant to this Section 11.1 shall be effective upon physical receipt if such date is a Business Day and if received before 5:00 P.M. Central Time, or the next succeeding Business Day if received after 5:00 P.M. Central Time on any Business Day or during a non-Business Day.  Notice given by electronic transmission pursuant to this Section 11.1 shall be effective as of the date of confirmed delivery if delivered before 5:00 P.M. Central Time on any Business Day or the next succeeding Business Day if confirmed delivery is after 5:00 P.M. Central Time on any Business Day or during any non-Business Day.

11.2Entire Agreement

.  This Agreement, the Exhibits and Schedules hereto, together with the Water PSA, the Confidentiality Agreement and the Transaction Documents, supersede all prior discussions, understanding, negotiations and agreements, whether oral or written, between the Parties and/or their respective Affiliates with respect to the subject matter hereof and thereof and collectively contain the sole and entire agreement between the Parties and their respective Affiliates hereto with respect to the subject matter hereof and thereof.

11.3Expenses

.  Except as otherwise expressly provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each Party shall pay all costs and expenses it has incurred or will incur in anticipation of, relating to and in connection with the negotiation and execution of this Agreement and consummation of the transactions contemplated hereby (including any legal fees and other costs incurred in connection with a dispute conducted under Section 2.6(b)); provided, however, that each of Seller, on the one hand, and Buyer and Water Buyer, on the other hand, shall pay one-half of any out-of-pocket costs or expenses incurred by Seller or its Affiliates to unaffiliated third parties (other than employees of Seller or its Affiliates) in connection with the Reorganization Transactions; provided, further, that notwithstanding the foregoing Buyer, Water Buyer and/or their Affiliates shall not be required to pay more than $50,000 (in the aggregate under this Agreement and the Water PSA) with respect to the legal fees of Seller and/or its Affiliates related to the Reorganization Transactions contemplated under this Agreement or the Water PSA.

11.4Disclosure

.  Tioga and Seller may, at their option, include in the Schedules items that are not material, and any such inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgment or representation that such items are material, to establish any standard of materiality or to define further the meaning of such terms for purposes of this Agreement.

11.5Waiver

.  Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth 

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in a written instrument duly executed by or on behalf of the Party waiving such term or condition.  No waiver by either Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.

11.6Amendment

.  This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of the Parties.

11.7No Third Party Beneficiary

.  Except for the provisions of Article X, the terms and provisions of this Agreement are intended solely for the benefit of the Parties and their respective successors or permitted assigns, and it is not the intention of the Parties to confer third party beneficiary rights upon any other Person. Only a Party and its successors and permitted assigns will have the right to enforce the provisions of this Agreement on its own behalf or on behalf of any of its related indemnified parties under this Agreement (but shall not be obligated to do so).

11.8Assignment; Binding Effect

.  Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any Party without the prior written consent of the other Party, and any attempt to do so will be void, except for assignments and transfers by operation of Law.  Subject to this Section 11.8, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties and their respective successors and permitted assigns.  

11.9Invalid Provisions

.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any of Seller or Buyer.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

11.10Counterparts

.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any PDF copies hereof or signature hereon shall, for all purposes, be deemed originals.

11.11Governing Law; Enforcement, Jury Trial Waiver

.  THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT OR CHOICE OF LAW PROVISION THAT WOULD RESULT IN THE IMPOSITION OF ANOTHER JURISDICTION’S LAW.  THE LAWS OF THE STATE OF TEXAS SHALL GOVERN ANY DISPUTE, CONTROVERSY, REMEDY OR CLAIM BETWEEN THE PARTIES ARISING OUT OF, RELATING TO, OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, INCLUDING THE EXISTENCE, VALIDITY, PERFORMANCE, OR BREACH THEREOF.  WITH RESPECT TO ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING THE ENFORCEMENT OF THE AGREEMENT TO ARBITRATE IN SECTIONS 10.9 AND 10.10 

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AND ANY ARBITRATION AWARD, BUT WITHOUT PREJUDICE TO THE TERMS OF SECTIONS 10.9 AND 10.10, EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY.

11.12Specific Performance

.  Each Party hereby acknowledges and agrees that the rights of each Party to consummate the transactions contemplated hereby are special, unique and of extraordinary character and that, if any Party violates or fails or refuses to perform any covenant or agreement made by it herein, the non-breaching Party may be without an adequate remedy at law.  If any Party violates or fails or refuses to perform any covenant or agreement made by such Party herein, the non-breaching Party, in addition to any remedy at law for damages or other relief, may (at any time prior to the earlier of valid termination of this Agreement pursuant to Article IX and Closing or with respect to Section 6.14, after Closing) institute and prosecute an action in any court of competent jurisdiction to enforce specific performance of such covenant or agreement or seek any other equitable relief, and the breaching Party hereby waives any requirements for the posting of any bond or other security or the proof of actual damages in connection with such action.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party as of the date first above written.

Meadowlark Midstream Company, LLC

 

/s/ Leonard Mallett

 
 
By:
Name:Leonard Mallett

	
 
	
Title:
	
President, Chief Executive Officer and Chief Operations Officer

 

 

Tioga Midstream, LLC

 

/s/ Leonard Mallett

 
 
By:
Name:Leonard Mallett

	
 
	
Title:
	
President, Chief Executive Officer and Chief Operations Officer

 

SIGNATURE PAGE
PURCHASE AND SALE AGREEMENT

 

Hess North Dakota Pipelines LLC

 

/s/ John Gatling

 
 
By:
Name:John Gatling
Title:Vice President

 

SIGNATURE PAGE
PURCHASE AND SALE AGREEMENT

 

 

Solely for purposes of Section 10.4(c):

 

Hess Infrastructure Partners LP

By: Hess Infrastructure Partners GP LLC,

its general partner

/s/ John Gatling

 
 
By:
Name:John Gatling
Title:Chief Operating Officer

 

 

SIGNATURE PAGE
PURCHASE AND SALE AGREEMENT

 

EXHIBIT A
COMPANY ASSIGNMENT AGREEMENT

Attached.

 

 

 

EXHIBIT B
HYDROCARBON GATHERING SYSTEM

Attached.

 

 

 

SCHEDULE 1.1-CP

DETERMINATION OF CONTINGENCY PAYMENTS FOR HYDROCARBON GATHERING ASSETS

1.Definitions.  Capitalized terms used but not defined in this Schedule 1.1-CP shall have the meanings given to them in the Purchase and Sale Agreement to which this Schedule is attached (the “Purchase Agreement”).  In addition, the following terms as used herein shall have the following meanings:

“Barrel” means forty-two (42) Gallons.

“Future Well” means any new wells drilled, completed and turned in line for sales within lands described and depicted on Attachment I to this Schedule 1.1-CP by Hess Corporation or any of its Affiliates, during the period beginning January 1, 2019 and ending on December 31, 2023. 

“Gallon” means a United States gallon of 231 cubic inches of liquid at sixty degrees (60o) Fahrenheit and at the equilibrium pressure of the liquid.

“Hydrocarbon Contingency Payment Amount” means, with respect to each Hydrocarbon Contingency Payment Period:

(a)subject to clause (b) of this definition, the sum of the following:

(i) the product of (A) the volume of crude oil (in Barrels) produced by each Future Well (as measured by the meter at the applicable well pad) during the applicable Hydrocarbon Contingency Payment Period multiplied by (B) a gathering rate equal to $0.45 per Barrel; plus 

(ii) the product of (A) the aggregate natural gas volume (in Mcf) produced by each Future Well (as measured by the meter at the applicable well pad) during the applicable Hydrocarbon Contingency Payment Period multiplied by (B) a gathering rate equal to $0.50 per Mcf. 

 (b)Notwithstanding clause (a) above, the aggregate Hydrocarbon Contingency Payment Amounts payable pursuant to this Schedule shall not exceed the Hydrocarbon Maximum Contingency Payment, and if the aggregate Hydrocarbon Contingency Payment Amounts paid hereunder equals the Hydrocarbon Maximum Contingency Payment, no further Hydrocarbon Contingency Payment Amount shall be payable hereunder.

“Hydrocarbon Contingency Payment Period” means each of the following: (a) the 12-month period beginning January 1, 2019 and ending on December 31, 2019; (b) the 12-month period beginning January 1, 2020 and ending on December 31, 2020; (c) the 12-month period beginning January 1, 2021 and ending on December 31, 2021; (d) the 12-month period beginning January 1, 2022 and ending on December 31, 2022; and (e) the 12-month period beginning January 1, 2023 and ending on December 31, 2023.

“Hydrocarbon Maximum Contingency Payment” means $6,820,000.

 

 

“Mcf” means one thousand (1,000) cubic feet of gas as a base temperature of sixty degrees (60o) Fahrenheit, and at a pressure base of fourteen and sixty-five one hundredths (14.65) pounds per square inch absolute.

“Sale of the Hydrocarbon Gathering Company Transaction” means (a) a sale of all or substantially all of the assets of the Hydrocarbon Gathering Company to a Person that is not an Affiliate of Hess Corp. or (b) any other transaction (including a stock sale, merger, consolidation, recapitalization or other transaction) after which the Hydrocarbon Gathering Company is no longer an Affiliate of Hess Corp.

2.Payment of Hydrocarbon Contingency Payment Amounts.  Except to the extent that a Dispute relating to any Hydrocarbon Contingency Payment Amount has not been resolved prior thereto, on or before April 1 of the calendar year immediately succeeding each Hydrocarbon Contingency Payment Period, Buyer shall deliver to Seller, by wire transfer of immediately available funds to an account designated in writing by Seller prior to such date, the Hydrocarbon Contingency Payment Amount attributable to such Hydrocarbon Contingency Payment Period (not to exceed an aggregate amount payable hereunder equal to the Hydrocarbon Maximum Contingency Payment).

3.Hydrocarbon Contingency Payment Notice. As promptly as practicable after the end of each Hydrocarbon Contingency Payment Period (until Buyer has paid the Hydrocarbon Maximum Contingency Payment hereunder), Buyer shall issue to Seller a certificate setting forth in reasonable detail Buyer’s calculations of the Hydrocarbon Contingency Payment Amount for such Hydrocarbon Contingency Payment Period, together with reasonable supporting documentation (a “Hydrocarbon Contingency Payment Notice”).

4.Hydrocarbon Contingency Payment Objection Notice.  During the period beginning on Seller’s receipt of the Hydrocarbon Contingency Payment Notice and ending 60 days after Seller’s receipt of the Hydrocarbon Contingency Payment Notice, Buyer shall provide Seller and its representatives reasonable access to information reasonably requested by Seller in connection with Buyer’s preparation of the Hydrocarbon Contingency Payment Notice.  If Seller disagrees with Buyer’s calculation of the Hydrocarbon Contingency Payment Amount as set forth in any Hydrocarbon Contingency Payment Notice, Seller may, within 60 days after its receipt of the Hydrocarbon Contingency Payment Notice, issue to Buyer a certificate setting forth in reasonable detail its calculations of the Hydrocarbon Contingency Payment Amount for such Hydrocarbon Contingency Payment Period, together with reasonable supporting documentation (an “Hydrocarbon Contingency Payment Objection Notice”).  The Hydrocarbon Contingency Payment Objection Notice shall specify those items or amounts with respect to Buyer’s calculations of the Hydrocarbon Contingency Payment Amount as to which Seller disagrees and shall describe in reasonable detail the basis for its disagreement with Buyer’s calculations of such items or amounts.  Seller shall be deemed to have agreed to all items and amounts contained in the Hydrocarbon Contingency Payment Notice that Seller does not address in its Hydrocarbon Contingency Payment Objection Notice.  If Seller fails to deliver a Hydrocarbon Contingency Payment Objection Notice within such 60-day period, Buyer’s calculations in the Hydrocarbon Contingency Payment Notice shall be final and binding.  If a Hydrocarbon Contingency Payment Objection Notice is timely delivered by Seller, such dispute shall be a Dispute governed by Section 10.9 of the Purchase Agreement.  Promptly following the resolution of the Dispute relating to such 

 

 

Hydrocarbon Contingency Payment Notice pursuant to agreement or arbitration under Section 10.9 of the Purchase Agreement, Buyer shall promptly deliver to Seller, by wire transfer of immediately available funds to an account designated in writing by Seller prior to such date, any Hydrocarbon Contingency Payment Amount determined to be owing for such Hydrocarbon Contingency Payment Period.

5.Sale of the Hydrocarbon Gathering Company Transaction.  The Parties agree that no Sale of the Hydrocarbon Gathering Company Transaction shall relieve Buyer of any of its obligations under this Schedule 1.1-CP.  

 

 

ATTACHMENT I

[See attached.]

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