Document:

Exhibit 10.1

SPECIFIC TERMS IN THIS EXHIBIT HAVE
BEEN REDACTED BECAUSE CONFIDENTIAL

TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL

HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,

AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH

TWO ASTERISKS (**).

 

 

 

 

CONSTRUCTION,
OPERATION AND

GAS GATHERING AGREEMENT

 

Entered into by and between

Newfield
Exploration Mid-Continent Inc.,

as
Producer

and

MarkWest Western
Oklahoma Gas Company, L.L.C.,

as
Gatherer

 

 

Effective
as of the 21st day of September, 2006.

 

 5

 

 

TABLE
OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  Definitions

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  Scope of Agreement

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  Services Provided by
  Gatherer

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  Construction of the
  System and Acquisition and Sale of Producer’s System

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Receipt and Delivery of
  Gas

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  Operational Imbalance
  and Cash Balancing

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
   

  	
  Receipt Pressures and
  Remedies

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
   

  	
  Measurement

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
   

  	
  Gas Quality and
  Specifications

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
   

  	
  Gathering, Compression,
  Treating Fees, Line Loss and Fuel Charge

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
   

  	
  Billing, Payment and
  Reporting

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
   

  	
  Taxes

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
   

  	
  Control, Possession,
  Title and Additional Indemnification

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
   

  	
  Acquisitions

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XV.

  	
   

  	
  Representations and
  Warranties

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 i
 

 

 

	
  XVI.

  	
   

  	
  Force Majeure

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVII.

  	
   

  	
  Term

  	
   

  	
  30

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVIII.

  	
   

  	
  Assignments and Sale of
  Gatherer’s System

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIX.

  	
   

  	
  Notices

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XX.

  	
   

  	
  Guaranty by Gatherer’s
  Parent Entity

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXI.

  	
   

  	
  Miscellaneous

  	
   

  	
  34

  	
   

  

 

 ii

 

 

CONSTRUCTION,
OPERATION AND GAS GATHERING AGREEMENT

THIS CONSTRUCTION, OPERATION AND GAS GATHERING AGREEMENT (this “Agreement”) is made and
entered into as of this 21st day of September 2006 (the “Effective Date”), by
and between Newfield Exploration Mid-Continent Inc., hereinafter referred to as
“Producer”, and MarkWest Western Oklahoma Gas Company, L.L.C.  hereinafter referred to as “Gatherer.” (Producer and Gatherer may at times be referred to herein as a “Party”
or, collectively, as “Parties”).

W I T N E S S E T H

WHEREAS,
Producer owns or controls certain Gas to be produced and saved from the wells,
lands, leaseholds and other sources within the Woodford Shale Project Area (as
defined below);

WHEREAS,
Producer owns, operates, and maintains certain gas gathering facilities in the Woodford Shale Project
Area;

WHEREAS,
Producer desires Gatherer to acquire and take over the expansion,
operation, maintenance, and control of Producer’s System;

WHEREAS,
Producer desires that Gatherer construct, and Gatherer intends to cause to be constructed, gas gathering facilities to receive and gather Producer’s Gas at the Receipt Points and
deliver Producer’s Gas to Producer or for Producer’s account at the Delivery
Points under the terms and conditions herein.

WHEREAS, Gatherer intends to acquire Producer’s System and to further
construct and install additional gas gathering, compression, Treating,
dehydration and related facilities, in Woodford Shale Project Area ; and

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, Gatherer and Producer hereby agree as follows:

 

Article I.

DEFINITIONS

Except as otherwise provided, the following terms, when capitalized,
whether in the singular, plural or possessive, shall have the meaning set forth
below:

1.1           “Actual Costs” shall
mean the costs and expenses recorded in a Party’s records, in accordance with
GAAP as defined below.

1.2           “BTU” shall mean
British Thermal Unit, which is the quantity of heat required to raise the
temperature of one (1) pound avoirdupois of pure water from fifty-eight and
five tenths degrees Fahrenheit (58.5°F) to fifty-nine and five tenths degrees
Fahrenheit (59.5°F) at 

 2
 

 

a
pressure of fourteen and six hundred and ninety-six thousandths pounds per
square inch absolute (14.696 psia).

1.3           “Business Day”
shall mean the days of a week excluding weekends, federal holidays and any
additional days on which federal banks are not open for business.

1.4           “Cash Flow” shall mean the sum of the
monthly revenues from the System less all Operating Expenses attributable to
the System recorded in accordance with GAAP.

1.5           “Commitment Area” shall mean the Woodford
Shale Project Area (as defined below).

1.6           “Day” shall mean a period of
twenty-four (24) consecutive hours which shall commence for operational issues
at 9:00 o’clock a.m. Central Standard Time on one calendar day and end at 9:00
o’clock a.m. Central Standard Time on the following calendar day; and, for any
other issues (including, but not limited to, non-operational contract issues),
such twenty-four (24) consecutive hour period shall commence at 12:01 a.m.
Central Standard Time on one calendar day and end at 12:01 a.m. Central
Standard Time on the following calendar day.

1.7           “Deemed Fuel,” “Deemed System Loss,”
and “Measured Treating Fuel and Loss” shall have the meanings set forth in
Article X and/or in Exhibit G herein.

1.8            “Delivery Points” shall mean the outlet
flange of the measurement facilities at the points of interconnection between
(A) Producer’s System and/or Gatherer’s System (some components of which are presently Producer’s System but
will ultimately  become part of Gatherer’s System) and (B) the existing interstate and
intrastate pipelines within the Commitment Area of the following entities and
any of their related or affiliated persons or entities: **. The term “Delivery
Points” shall have the same meaning with respect to any additional Pipeline
Carriers, and shall apply to any other future delivery points on the System
that Producer may designate within the Commitment Area.

1.9           “Fees” refers collectively to the “Gathering Fee,” “Compression Fee,” and “Treating Fee.”
The terms “Gathering Fee,” “Compression
Fee,” and “Treating Fee” shall have the meanings set forth in Article X and in Exhibit G.

1.10         “GAAP” shall mean U.S. generally
accepted accounting principles.

1.11         “Gas” includes gas well gas produced
from wells classified as gas wells by any governmental authority having
jurisdiction, casinghead gas produced from oil wells so classified, and flash
gas vaporized from crude oil and condensate therefrom after production.

1.12         “BTUs”, “Heating Content” or “Heating
Value” shall mean the gross ideal heating value of and the number of BTUs
measured in the Gas in accordance with GPA Standards 2145 & 2172 at Standard
Base Conditions.

1.13          “Inferior
Liquids” shall mean mixed crude oil, slop oil, salt water, nuisance
liquids, and other liquids that condense in the System and are recovered by Gatherer from its System.

 3
 

 

1.14         Monthly Average Pressure (“MAP”) shall have
the meaning set forth in Section 7.1 of this Agreement.

1.15         “MSCF” or “mscf” shall mean one thousand
(1,000) Standard Cubic Feet of Gas at Standard Base Conditions.

1.16         “MMBTU” or “mmbtu” shall mean one
million BTU (1,000,000 BTUs).

1.17         “Month” shall mean a calendar month.

1.18         “Net Book Value”
shall mean the depreciated book value of the assets comprising the System as
reflected in the books and records of the company that owns the System in
accordance with GAAP.  The depreciation
method used for calculating Net Book Value shall be twenty (20) years straight
line with zero percent salvage value.

1.19         “Operating Expenses”
shall mean normal direct operating expenses of the System, which term expressly
excludes any payments imposed on Gatherer as a result of non-performance or
delayed performance under this Agreement.

1.20         “Pipeline Carriers” means the following
pipelines receiving Producer’s Gas at the Delivery Points: the interstate and
intrastate pipelines of **, and any other interstate or intrastate pipeline
receiving Producer’s Gas at any Delivery Point.

1.21         “Processing” shall mean the conversion
of gaseous hydrocarbons from a natural gas stream into liquefied form (“Natural
Gas Liquids” or “NGLs”), and/or the removal of NGLs from the gas, through refrigeration,
absorption, adsorption, chemical means or other industry accepted
processes.  Processing may be invoked for
the purposes of reducing Heating Value of the natural gas stream for purposes
of meeting pipeline specifications, or for economic benefit.  Processing does not include the recovery of
NGLs through mechanical separation, filtering or coalescing.

1.22         “Producer’s Gas” shall include all Gas
owned or controlled by Producer, or its wholly-owned or controlled
subsidiaries, which is produced from Well(s) in which Producer is the
Operator.  “Producer’s Gas” shall not
include gas that is subject to pre-existing commitments as listed on Exhibit E
or addressed herein.

1.23           “Producer’s
System” shall mean those certain existing or later constructed facilities
located within the Woodford Shale Project Area (as defined below) for the
delivery, compression, gathering,
measurement, Treating, and dehydration of Producer’s Gas during the term of
this Agreement, and other related facilities, all as may be further expanded,
constructed or added during the transitional period before Gatherer fully acquires and operates the entire
System, as provided for in the subsequent provisions of this Agreement.

1.24         “Receipt Points”
shall be the points located within the Commitment Area where Producer elects in
its sole and reasonable discretion to deliver Producer’s Gas to Gatherer and where Gatherer may receive Producer’s Gas in accordance
with the terms of this Agreement.  At
Producer’s election, a Receipt Point for particular volumes of Producer’s Gas
may be the 

 4
 

 

interconnection
of Producer’s central production facilities with the System or may be at the
interconnection with the System of Producer’s individual well separation
equipment located downstream of Producer’s Wells.

1.25         “Section of Land”
shall mean, and be comprised of, the lands within the geographical area
designated by state governmental authority as being a “section” for purposes of
describing real property.

1.26         “Standard Base Conditions” shall mean a
pressure of fourteen and sixty five hundredths pounds per square inch absolute
(14.65 psia) at a temperature of sixty degrees Fahrenheit (60°F).

1.27         “Standard Cubic Foot”
shall mean the volume of gas contained in one cubic foot of space at Standard
Base Conditions.

1.28         “System” shall mean all delivery,
compression, gathering,
measurement, Treating, Processing and dehydration facilities, and other related
facilities constructed, acquired or used by Gatherer to fulfill its obligations under this
Agreement with respect to Producer’s Gas. 
“System” shall also be construed to include all of Gatherer’s delivery,
compression, gathering, measurement, Treating, Processing, dehydration
facilities, and other related facilities constructed by or used by Gatherer in
connection with Gas received by Gatherer from other parties on pipelines
contiguously connected to pipelines used by Gatherer in connection with
Producer’s Gas.   Also for the purposes
of Article XIV, “System” shall also be construed to include all of Gatherer’s
associated and related gas gathering, gas purchase, gathering, compressor
lease, equipment lease, gas sales, rights-of-way, easements, surface use lease,
and real property agreements and/or contracts as well as all permits, imbalance
positions, and working capital adjustments used in connection with the
operation of the physical assets of the System.

1.29         “Treating” or “Treat” shall mean the
removal of unwanted components
from a natural gas stream, including, but not limited to, water,
Hydrogen Sulfide (“H2S”),
Carbon Dioxide (“CO2”),
and/or Nitrogen (“N2”) by utilizing industry accepted processes
including, but not limited to, mechanical separation, chemical reaction,
adsorption and absorption.

1.30         “Well” shall mean any well productive
of Gas, from any formations, which is now or hereafter completed within the
Commitment Area and in which Producer owns an interest.  The commitments
and obligations of Gatherer
under this Agreement shall extend to and include all of Producer’s Gas from
such a Well.

1.31         “Woodford Shale
Project Area” means all of that area of Atoka, Coal, Hughes and Pittsburg
Counties, Oklahoma, shown on Exhibit A. 
The Woodford Shale Project Area, as such term is used in this Agreement,
includes all lands shown in Exhibit A, whether inside or outside the bold-lined
or bracketed areas shown on such Exhibit A. 
The segments shown on Exhibit A relate to the development requirements
set forth on Exhibit B and any other provisions of this Agreement which reference
those segments.

 5
 

 

Article II.

SCOPE OF AGREEMENT

2.1           Gatherer
hereby agrees, at its sole cost and expense, to design, construct and acquire
(to the extent not acquired as part of Producer’s System), and to maintain and
operate (or cause others to construct, maintain and operate) all gathering
pipelines, compression, dehydration and Treating equipment and related
facilities required to enable Gatherer
to fulfill and perform its obligations under this Agreement including, but not
limited to, (a) Gatherer’s
receipt of Producer’s Gas at the Receipt Points within the Commitment Area, (b)
the delivery of a thermally equivalent quantity of Producer’s Gas less only
Deemed Fuel, Deemed System Loss and Measured Treating Fuel and Loss in
accordance with the terms of this Agreement and in accordance with the
requirements of the Pipeline Carriers, and (c) the Treating of Producer’s Gas,
if such Gas is treated in connection with this Agreement.

2.2           Gatherer
shall have the sole responsibility for the construction, maintenance, and
operation of the System consistent with performing its obligations under this
Agreement.  Gatherer
will extend the System, and may add to or remove components from the System,
and operate the System in the manner Gatherer
determines to be best, so long as such operations are consistent with both Gatherer’s
performance of its obligations under this Agreement and all applicable laws,
rules and regulations of governmental entities. 
Gatherer shall operate
the System or cause it to be operated, as the System may exist from time to time,
in a manner consistent with general industry practice, but shall not be
prevented thereby from being innovative or achieving cost efficiencies as it
may deem necessary or desirable, so long as such actions are consistent with
both Gatherer’s
performance of its obligations under this Agreement and all applicable laws,
rules and regulations of governmental entities.

2.3           Prior to the completion of all or
portions of the System by Gatherer
such that, following the purchase of Producer’s System, Gatherer
can gather,
compress, dehydrate, and if required, Treat Producer’s Gas delivered into such
completed portion(s) of the System and connect such completed portions of the
System to portions of Producer’s System, Producer may at its option construct,
maintain, and operate (or may cause others to construct, maintain, and operate)
pipelines and related facilities on Producer’s System to enable Producer’s Gas
from the Wells to be delivered to pipelines owned and controlled by the
Pipeline Carriers.  It is expressly understood
and agreed that Producer has no obligation to construct any additional
facilities for the enlargement of Producer’s System, nor does Producer have any
obligation to drill any Wells and/or connect any future Wells to Producer’s
System prior to incorporation into Completed Segments (as defined in 4.2
below), of Gatherer’s System;
rather, all of those actions shall be left to the sole discretion of
Producer.  However, prior to the
completion of Gatherer’s
System, Producer shall continue Producer’s operation and maintenance of
Producer’s System, including Producer’s existing Treating facilities.

2.4           Producer and Gatherer
understand and agree that the design and operation of Producer’s System by
Producer, and the design and operation of Gatherer’s
System by Gatherer shall be
performed in such a manner as to allow Producer to meet its delivery and other
commitments to Gatherer
in accordance with the terms of this Agreement.

2.5          Subject to those existing dedications
and contractual obligations owing to third parties as described in Exhibit E,
which shall take priority over the provisions of this Section 2.5, and subject
to the subsequent provisions of this Agreement which provide for the future
termination of, or release of Wells from, this Agreement, Producer hereby
commits all of 

 6
 

 

Producer’s Gas
to this Agreement.  Producer’s oil and
gas leases within the Commitment Area, whether now or hereafter acquired, shall
be subject to the terms and obligations of this Agreement which terms shall run
with the land, subject to Section 14.4.  Gatherer
may record a recording memorandum of this Agreement in the real property
records in the offices of the County Clerks for the applicable Counties where
Producer’s Gas leasehold interests or Wells within the Commitment Area and any
parts of the System are located, provided that such recording memorandum
shall only disclose information that Producer has previously approved for
inclusion in the recording memorandum.  Upon written request from Gatherer, but no
more often than once each calendar year, Producer shall
advise Gatherer of
after-acquired leases and consent to further supplements to the recording
memorandum be filed against those leases. 
Notwithstanding the preceding provisions of this Section 2.5 and any
other terms and provisions of this Agreement that might appear to be to the
contrary, it is expressly understood and agreed that, as to additional leases,
Wells and other assets that may be acquired by Producer after the effective
date of this Agreement, such assets shall not be subject to this Agreement to
the extent that  Producer acquires such
assets subject to any then-existing contractual or other obligations or
encumbrances that are inconsistent with the obligations of this Agreement.

 

Article III.

SERVICES PROVIDED BY GATHERER

3.1           Gatherer shall,
at Gatherer’s
sole cost and expense, acquire and/or
install all facilities that are needed or required to perform Gatherer’s obligations
under this Agreement, including, but not limited to, Gatherer’s
receipt of all of Producer’s Gas delivered by Producer at the Receipt Points in
accordance with the terms of this Agreement and the gathering
and compression of all of Producer’s Gas to a pressure such that Producer’s Gas
can be delivered at the Delivery Points into the pipelines owned and/or
controlled by the Pipeline Carriers.  In order
to maximize
the value
of Producer’s
Gas, Gatherer and Producer shall continue
to explore opportunities to participate in or otherwise support pipeline
expansions by Pipeline Carriers and
other pipeline
companies. Producer and Gatherer will discuss
the options to mutually determine which and to what extent, if any, pipeline
expansions Producer and Gatherer
may participate in.  It is expressly
agreed that Gatherer is obligated under this Agreement to provide at Gatherer’s
sole cost ** Delivery Points, with one (1) such Delivery Point being
established for each of the ** Pipeline Carriers which are specifically named
in the above definition of “Pipeline Carriers,” at locations to be reasonably designated
by Producer on each of those pipelines. 
At such time as Gatherer acquires Producer’s System or segments thereof,
Gatherer shall maintain all then existing Delivery Points on such acquired
portions of the System, and such existing Delivery Points and the **, shall
satisfy the foregoing obligation of Gatherer to provide Delivery Points to the
Pipeline Carriers.  The Parties agree
that Gatherer
shall provide up to ** Delivery Points on currently
existing and/or future pipelines within the
Commitment Area, at locations within the Commitment Area to be reasonably
designated by Producer on such pipelines, at Gatherer’s
sole cost and expense, but that any additional Delivery Points beyond **
referred to above will be at Producer’s cost and expense.  The Parties understand that if any additional
Delivery Points beyond ** referred to above require that Producer’s Gas be
compressed to in excess of a Monthly average of 1,100 psig to meet the Pipeline
Carrier’s pressure requirements at the Delivery Points, then Producer’s Gas
actually delivered to those Delivery Points will be subject to Compression Fees
and Deemed Fuel during such Month for one additional stage of compression.

 7
 

 

3.2           Gatherer
shall install all facilities needed or required to dehydrate Producer’s Gas as
necessary to cause Producer’s Gas to meet the water content specifications of
the pipelines owned and/or controlled by the Pipeline Carriers.

3.3           Gatherer
shall install all CO2 Treating facilities needed or required to
remove CO2 such that the CO2 content in Producer’s Gas at the Delivery
Points shall meet the specifications of the pipelines owned and/or controlled
by the Pipeline Carriers, provided that the CO2
content in Producer’s Gas delivered to
the Receipt Point(s) shall not exceed 10%. 
Gatherer shall endeavor
to maintain the average CO2 content
in Producer’s Gas delivered to each Pipeline Carrier at levels below the
specifications required by the Pipeline Carriers by blending Producer’s Gas
with a high CO2 content
with Gas with a low CO2 content
per the provisions of Section 9.3.

3.4           It is expressly agreed that Gatherer
will have no duty under this Agreement to Treat Producer’s Gas for the purpose
of removing H2S or N2.

 

Article IV.

CONSTRUCTION OF THE SYSTEM AND ACQUISITION

AND SALE OF PRODUCER’S SYSTEM

4.1           Recognizing that time is of the
essence with regard to the performance required under this Agreement, Gatherer
shall construct, or cause to be constructed, in accordance with the timing,
prioritization and performance schedule that is included as a part of Exhibit B, at its sole risk, cost,
and expense, such additions and/or extensions of the System (including all
associated Receipt Points) as are necessary and adequate to receive Producer’s
Gas for the services provided for under this Agreement.  **  Exhibit A shows the four (4)
segments into which the System project has been divided for purposes of
constructing the System in phases.  **  Additionally, Producer may at its option
construct, or cause to be constructed at its sole risk, cost and expense,
certain additional facilities that are useful for the delivery of Producer’s
Gas into the System at certain Receipt Points.  Producer and Gatherer
agree that Gatherer shall
construct and complete the System in segments and that Producer may at its
option expand, operate and maintain Producer’s System for the gathering,
compression and treatment of Producer’s Gas prior to the completion of the
System by Gatherer.

4.2           When Gatherer
has (i) completed a segment of the System (“Completed Segment”), and (ii)
connected the Completed Segment to Producer’s System, with the result that Gatherer
can gather,
compress, dehydrate and, if required, Treat Producer’s Gas delivered into such
Completed Segment, then Gatherer
shall immediately acquire and assume the operation, maintenance and control of
the applicable portion of Producer’s System that Gatherer
has connected to the Completed Segment, and such portion of Producer’s System
shall thereafter be included in the definition of Completed Segment and all of
the terms of this Agreement shall be applicable for such Completed
Segment.  For all Wells connected at the
time of acquisition to the section of Producer’s System being acquired pursuant
to the foregoing 

 8
 

 

provisions, the Receipt Points for such
Wells shall be considered to be located in accordance with the provisions of
Section 1.24, above, which define “Receipt Points.”

4.3           The parties
expressly agree that the categories of assets, rights and interests referred to
on Exhibit B-1 to this Agreement, whether now owned by Producer or hereafter
acquired by Producer after the execution of this Agreement, are excluded from
the meaning of the term “Producer’s System,” and Gatherer shall have no right
under this Agreement, under any circumstances, to acquire any portion of those
assets, rights and interests.  The
parties expressly understand and agree that, notwithstanding any other
provision of this Agreement that may appear to be to the contrary in any
respect, any rights Gatherer
has under this Agreement to acquire all or portions of Producer’s System are
expressly limited to facilities and assets of Producer that are physically
connected to the System between the Receipt Points and the Delivery
Points.  Gatherer
shall have no right to acquire any facilities or other assets of Producer
located upstream of the Receipt Points.

4.4           The
sale by Producer and the acquisition by Gatherer
of all or any part of Producer’s System under this Article IV shall occur on an
“as-is, where-is” basis with no express or implied representations or
warranties provided by Producer to Gatherer,
except that Producer agrees to transfer Producer’s System, or applicable
portions thereof, free and clear of any mortgages,
mechanics’ liens, tax liens and other forms of security interests or financial
encumbrances or past due payments of any kind created by, through and under
Producer but not otherwise (and Gatherer
shall not pay Producer any purchase price until being reasonably assured that
there are no such encumbrances), and shall be deemed to represent and warrant
to Gatherer
that Producer has good and clear title to the personal property associated with
the acquired portion of Producer’s System. 
The acquisition shall be consummated by special warranty assignment or
transfer of necessary or relevant equipment leases or other facility leases,
permits, rights of way, easements, surface use leases and real property
interests, to the extent that both (a) such items are assignable by Producer to
Gatherer
without unreasonable expense, and with a representation that to the best
of Producer’s knowledge, such leases,
permits, rights of way and easements are valid and in full force and effect,
and Producer’s operations are in material compliance with the same and (b)
Producer does not need to retain such items for the continued operations or
business activities of Producer. 
Producer will make reasonable efforts to obtain all governmental and
third party consents and approvals necessary to complete the transactions
contemplated by this Section.  If
Producer is unable to obtain any required consents, or the interests are not
assignable or transferable, or if Producer determines that such items are
required by Producer for the continued operations or business activities of
Producer, Producer shall, to the extent Producer may lawfully and validly do
so, “partially” grant to Gatherer
a non-exclusive right and license to use any such equipment leases and other
facility leases, permits, easements, surface use leases, rights of way and/or
real property interests associated with the acquired portion of Producer’s
System, the intent of the Parties being to provide Gatherer, to
the extent the same can be reasonably done,
with the same access and ability to utilize such items as if Producer had assigned
such items to Gatherer.
Producer shall further sign and deliver to Gatherer
a bill of sale conveying the equipment and personal property that comprise the
acquired portion of Producer’s System. 
The acquisition price for the acquired segment of Producer’s System
shall be **.  The Parties shall have a
period of 180 days after the acquisition of any portion of Producer’s System
within which to conduct post-closing accountings, in order to account for any
remaining sums to be paid by Gatherer to Producer as a result of such
acquisition.

 

 9

 

4.5           Producer
shall bring all facility leases or other related contracts that are acquired in
whole or in part by Gatherer
from Producer current in all payments and obligations due and owing as of the
date of assignment, and Gatherer
shall assume sole liability for all ongoing payments and obligations due and
owing after the date of Producer’s assignment and shall indemnify and hold
Producer harmless with respect to any future payments and obligations under
such assigned facility leases or other related contracts with respect to the
period after the date of transfer to Gatherer. 
Producer shall not be required to assign easements, rights-of-way,
leases or other related contracts to Gatherer, either whole or in part, if doing
so would incur liabilities unless Gatherer bears all costs and burdens
associated with such liabilities. Producer shall indemnify and hold Gatherer
harmless from and against any payments, liabilities and obligations arising or
accruing under such assigned facility leases or other related contracts with
respect to the period prior to the date of transfer to Gatherer,
or any obligations, liabilities, duties or damages related to the operations of
Producer’s System, prior to the date of transfer to Gatherer,
including any environmental liabilities. 
Gatherer shall indemnify and hold Producer harmless from and against any
payments, liabilities and obligations arising or accruing under such assigned
facility leases or other related contracts with respect to the period after the
date of transfer by Producer, or any obligations, liabilities, duties or
damages related to the operations of Producer’s System, after the date of
transfer to Gatherer, including any environmental liabilities.

4.6           The Parties agree that Producer has
entered into, or intends to enter into, 
contracts with certain manufacturers
of compression packages, as listed in Exhibit
F,
(“Compressor Contract”), under which Producer shall be obligated to receive and
lease certain compression packages. The Parties also agree and understand that
when Gatherer
purchases segments of Producer’s System as set forth in this Agreement, that
Producer may have received and installed one or more of the subject compression
packages associated with such Compressor Contract. At the time that Gatherer
purchases a segment of Producer’s system, Producer will assign, and Gatherer
will assume, the duties of the lessee under the leases and any other
obligations associated with such compression packages that are associated with
the segment of Producer’s System.  At the
time that Gatherer purchases the
final segment of Producer’s System, Producer shall assign to Gatherer and
Gatherer shall assume the Compressor Contract and
the rights and obligations associated with the Compressor Contract.  All compressors then being used and/or
remaining to be delivered under the terms of the Compressor Contract assigned
by Producer to Gatherer shall be used as part of the System to fulfill Gatherer’s
obligations under this Agreement.

4.7           Immediately following the receipt of
Producer’s Gas at the Receipt Points associated with the Completed Segment
(and, if applicable, after the acquisition of the associated portion of
Producer’s System by Gatherer),
all of the terms of this Agreement shall apply to the Completed Segment, except
that, in order for Gatherer
to evaluate the new System hydraulics and modify such hydraulics as necessary,
and in acknowledgement that Producer’s System may exceed the Receipt Point
pressure requirements under this Agreement, each Receipt Point which was part
of Producer’s System prior to connection to Gatherer’s
System, shall be allowed a period of one hundred twenty 

 10
 

 

(120)
days after such connection, before it shall be subject to the Receipt Point
pressure requirements of this Agreement, provided, however, that the Receipt
Point pressures shall not, even during such one hundred twenty (120) day
period, exceed the MAP that existed with respect to that Receipt Point during
the Month prior to connection to Gatherer’s
System.

 

Article V.

RECEIPT AND DELIVERY OF GAS

5.1           All of Producer’s Gas delivered under
this Agreement shall be delivered to Gatherer
at the Receipt Points and redelivered to Producer (or on behalf of Producer) at
the Delivery Points as closely as is practicable to uniform hourly and daily
rates of flow.

5.2           Producer shall deliver Producer’s Gas
to Gatherer
at the Receipt Points at a pressure sufficient to effect delivery into Gatherer’s
System, against the pressure prevailing therein from time to time; provided,
however, that subject to those items set forth in Section 7.8 referencing this
Agreement’s provisions allowing higher Receipt Point pressures for a temporary
period, Producer shall not be required to deliver Producer’s Gas at a pressure
greater than **.  Producer shall be
responsible for making timely arrangements for the further disposition of
Producer’s Gas at and from the Delivery Points.

5.3           The Heating Content of the gas
measured at the Receipt Points shall be determined on a water-saturated MMBTU
basis at Standard Base Conditions.

5.4           Gatherer shall redeliver on behalf of
Producer, to the Pipeline Carrier(s) designated by Producer at the Delivery
Point(s), a thermally equivalent quantity of Producer’s Gas equal to the
quantity received from Producer at the Receipt Points, less the Deemed Fuel,
Deemed System Loss, and Measured Treating Fuel and Loss, and if Producer’s Gas
is processed prior to delivery, less the actual fuel and shrinkage resulting
from the Processing of Producer’s Gas.   Gatherer
shall redeliver Producer’s Gas at each Delivery Point on a dry MMBTU basis at
Standard Base Conditions.

5.5           Producer’s Gas shall be given a
higher priority by Gatherer
than any other Gas delivered into the System. 
As such, and subject to applicable laws and regulations, Gatherer
shall gather
Gas owned by persons other than Producer only to the extent that excess gathering
and compression capacity exists within the System.  Gatherer
further agrees that, except to the extent it can do so without adversely
affecting the Fees and costs to be borne by Producer and/or the ability of Gatherer
to receive and/or deliver Producer’s Gas, it will not accept from any third
parties Gas that does not meet the quality specifications of the Pipeline
Carriers to which Producer’s Gas is to be redelivered by Gatherer,
it being the intention that Gatherer
retain to the maximum extent as is reasonable, its ability to blend with other
conforming Gas in its lines any of Producer’s Gas that does not meet the
quality specifications of the Pipeline Carriers to which Producer’s Gas is
redelivered.

5.6           Gatherer
shall, on no less frequently than a monthly basis, measure the quantity and
Heating Value of Producer’s Gas received at each Receipt Point and shall
redeliver a thermally equivalent quantity of Gas, less the Deemed Fuel, Deemed
System Loss and Measured Treating Fuel and Loss as set forth in Article X and
Exhibit G.  If Producer’s Gas is
processed prior to delivery, an adjustment shall be made based on the
Processing arrangements such that any additional actual volume and heating
value (MMBTU) reductions 

 11
 

 

that result from such Processing shall
further reduce the MMBTUs that Gatherer
is obligated to redeliver for Producer’s account at the Delivery Points.

5.7           Producer shall provide estimates to Gatherer
as to the expected maximum flow and timing of such flow at each Receipt Point
to assist Gatherer in selecting
the proper pipeline size required for the connection of the Receipt Point;
provided, however, that each set of such information provided by Producer is
only an estimate, and Producer shall have no liability to Gatherer
for any differences between the estimates provided by Producer in good faith,
and the actual maximum flow and timing of such flow at the Receipt Points.

5.8           Gatherer
shall construct such pipelines, measurement equipment and other facilities as
may be reasonably needed in order for Gatherer
to promptly receive all of Producer’s Gas from Well(s) within the Commitment
Area at the Receipt Points after such Wells have been completed and are ready
to flow Gas to a Completed Segment.    With
respect to any Completed Segment
of the System, Producer shall provide Gatherer
with prior written notice, as set forth in Exhibit D, advising Gatherer
of the location of the Well and the location of the Receipt Point designated by
Producer (a “Well Notice”).]  It is
expressly understood and agreed that all risks and expenses associated with all
aspects of the timely construction of the pipelines and other facilities,
including but not limited to the procurement of the rights-of-way needed or
useful in connection therewith, shall be the sole risk and expense of Gatherer.

5.9           If Gatherer
has not completed the installation of the pipelines and other facilities
required or useful in order for Gatherer
to be prepared to fulfill its obligations under this Agreement with regard to
Producer’s Gas from any Well or central production facility within the period
of time set forth in Exhibit D, Producer shall have the option to do any of the
following:

5.9.1        Install,
or cause to be installed, such pipelines and/or other facilities.  Upon the completion of such pipeline and/or
other facilities, Gatherer
shall be obligated to immediately commence receiving into its System Producer’s
Gas delivered by Producer through the newly-constructed facilities.  Additionally, Gatherer
shall be obligated to promptly acquire such pipeline and/or other facilities
from Producer ** Costs incurred by Producer in connection with the installation
of such pipeline and/or other facilities. 
Payment shall be due from Gatherer
as to each invoice within thirty (30) days of Gatherer’s
receipt of such invoice from Producer. 
In order to invoke this option, Producer shall send to Gatherer
one or more invoices (i.e., Producer may invoice Gatherer
multiple times, as the costs are being incurred) showing Actual Costs incurred
by Producer in connection with such pipelines and/or other facilities, with
copies of supporting materials showing that the costs have actually been
incurred, **.  In the event Producer
chooses to install such pipelines and/or other facilities, Producer shall not
be obligated to pay Gatherer
any Fees for Producer’s Gas delivered to the applicable and related Receipt
Point(s) for a period of ** by Gatherer,
which time period shall be deemed to commence to run from the date of first
delivery of Producer’s Gas into the facilities in question; or

5.9.2        Elect
to have such Well or central production facility released from the terms of
this Agreement at the sole option of Producer by providing Gatherer
with three (3) days written notice of such election, at the end of which period
Producer shall be free to enter into any arrangements it may choose for the
provision of alternative 

 12
 

 

services by any third party of Producer’s
choosing, and Producer shall have no further obligations to Gatherer
under this Agreement with regard to the Well(s), central production facilities
and Receipt Point(s) in question; or

5.9.3        As
an alternative to 5.9.1 and 5.9.2, above, Producer may instead elect to take no
action and await Gatherer’s
delayed performance of the particular obligations that have not been timely
performed.  In the event Producer elects
this third option, then for every one (1) day of delay in Gatherer’s
ultimate completion of the installation of the applicable pipelines and/or
other facilities, then Gatherer
shall pay to Producer the following compensation per well for Gatherer’s
delay in such performance under this Agreement:

(A) 
For each day up through the ** of delay beyond the date on which
performance was due by Gatherer,
Gatherer
shall pay to Producer the sum of **

(B) 
For each day beginning with ** continuing through the ** beyond the date
on which performance was due by Gatherer, Gatherer
shall pay to Producer the sum of **

(C) 
For each day beginning with ** beyond the date on which performance was
due by Gatherer, Gatherer shall pay
Producer the sum of **;

provided, however, that Producer may elect at
any time that is governed by this Section 5.9.3 to instead proceed reasonably
and in good faith under the alternative procedures set forth in either 5.9.1 or
5.9.2, above, subject to the condition that such election not result in an
unreasonable or disproportionate incurrence of liability. For example, Producer
cannot install only the final 100 feet of pipe under 5.9.3 to avoid paying Gatherer
any Fees for Producer’s Gas delivered to the applicable and related Receipt
Point for a period of one hundred eighty (180) days following the acquisition
of such facilities by Gatherer.

5.9.4        Should
Gatherer determine that it will be unable to be fulfill its obligations under
this Agreement with regard to Producer’s Gas from any Well or central
production facility within the period of time indicated on Exhibit D due to the
inability to obtain necessary rights of way, easements, surface use or other
real property agreements for consideration of less than 2 times the prevailing
market rate, Gatherer shall notify Producer and Producer agrees to meet to
discuss in good faith a mutually agreeable remedy to such situation. However,
such discussion shall not alter or suspend any of the requirements and
provisions under 5.9 through 5.9.3 unless agreed to in writing by the Parties.

5.10         Producer shall have
the following additional remedies in the event that Gatherer engages in repetitive (applying the standard
set forth in this Section) failures to perform under this Agreement.  The remedies set forth in this Section shall
become applicable at such point in time when Producer has drilled, during the
term of this Agreement, at least ** are capable of flowing Gas to Gatherer in Completed Segments of the System, and as to which Producer sent
Well Notices to Gatherer.  At each subsequent point in time that the
cumulative number of new Wells in which Gatherer has failed to have the facilities completed and commence receipt of 

 13
 

 

Producer’s
Gas on a timely basis in accordance with the times set forth in Section 5.8 and
Exhibit D, exceeds ** in the Commitment Area after the date of this Agreement,
and as to which Producer sent Well Notices to Gatherer, then Producer may elect, on each such
occurrence, to terminate this Agreement in its entirety and acquire the System
pursuant to Article XIV.

5.11         Should Producer choose to install
pipelines and/or other facilities under Section 5.9.1 in order for Gatherer
to fulfill its obligations under this Agreement, Producer shall use
substantially the same standards of design as Gatherer
has used to construct the System.

5.12         If Gatherer
has been provided with a Well Notice, but Producer fails to complete the Well
referred to in the Well Notice (or a Well that is the functional substitute for
such Well) within ** of the necessary System facilities to be prepared to
receive Producer’s Gas from such Well, then Producer shall at the Gatherer’s
request, reimburse Gatherer
for all of Gatherer’s reasonable and
Actual Costs that are directly and solely related to the installation of such
facilities, and Gatherer shall at the same time assign and convey to
Producer, through appropriate and valid documentation, all of the rights,
interests and assets, the cost of which have been reimbursed by Producer.

 

Article VI.

OPERATIONAL IMBALANCE AND CASH BALANCING

6.1           The parties recognize that following
the completion of the System and the purchase by Gatherer of Producer’s system,
Gatherer shall be designated by the Pipeline Carriers as the point operator and
shall be considered by the Pipeline Carriers to be responsible for the
operation of the System’s pipeline interconnections to the Pipeline Carriers.
As such, with respect to operational balancing agreements or similar agreements
with all Pipeline Carriers (“OBA(s)”) related to the existing pipeline
interconnects, Gatherer shall either be appointed and act as agent of Producer,
accept assignment of Producer’s agreements, or enter into independent OBA’s.
Furthermore, with respect to any subsequent pipeline interconnects to the
System as set forth in the Agreement, Gatherer shall likewise either be
appointed and act as agent of Producer under its OBA’s or enter into
independent OBA’s for such interconnections. Upon entering into all such
arrangements for the OBA’s, Gatherer shall be responsible for the
administration of all such OBA’s and for all terms and conditions of any such
OBA subject to the terms of this Article VI.

6.2           The parties recognize that certain
Gas imbalances may occur between the quantity of Producer’s Gas received by
Gatherer less Deemed Fuel, Deemed System Loss, and Measured Treating Fuel and
Loss (and if the Gas is required to be processed prior to delivery, the volume
adjustment provided for in this Agreement) (“Net Receipt”) and the quantity of
Producer’s Gas nominated by Producer for delivery by Gatherer to Producer or
for Producer’s account at the Delivery Point(s) (“Net Nomination”).  Throughout each Month the parties agree to
actively communicate and cooperate with each other, and with any
interconnecting pipeline, to review appropriate data to identify any imbalance,
and to eliminate or remedy any imbalance as soon as either party becomes aware
of an imbalance.  The parties further
agree to manage daily receipts and deliveries so that the imbalances shall be
kept as near to zero as practicable.  At
the end of each Month, any imbalance in MMBTUs between the Net Receipt and the
Net Nominations (with such difference being referred to as the “Imbalance”)
shall be balanced by 

 14
 

 

means of a payment to Producer from
Gatherer or a payment to Gatherer from Producer, as applicable, valued at the “Cash-Out
Price.”  To the extent that the Monthly
Net Receipt amounts are greater than the Monthly Net Nomination amounts, a
payment shall be due Producer, and Gatherer will make such payment to Producer
for the imbalance based on the difference between the Monthly Net Receipt
amounts and the Monthly Net Nomination amounts, multiplied by the Cash-Out
Price.  To the extent the Monthly Net
Receipt amounts are less than the Monthly Net Nomination amounts, a payment
shall be due Gatherer, and Gatherer will invoice Producer for the imbalance
based on the difference between the Monthly Net Receipt amounts and the Monthly
Net Nomination amounts, multiplied by the Cash-Out Price during the applicable
Month in which the volume imbalance was generated.  As used in this Agreement, the “Cash-Out
Price” shall be determined as to each applicable Month and shall mean  a price per MMBTU equal to either (1) if the
receiving pipeline’s applicable cash-out price is not imposed for the
applicable Month(s), the price will be the daily index price averaged for such
Month for the applicable receiving pipeline as published in the Daily Price
Survey section of Platt’s Gas Daily, or (2) if the receiving pipeline’s
applicable cash-out price is imposed is imposed for the applicable Month(s),
that price will be the “Cash-Out Price” . 
Should the information necessary to calculate the “Cash-Out Price” not
exist for the receiving pipeline or cease to be available, Gatherer and
Producer shall work in good faith to determine a comparable substitute
publication and/or daily posting(s) or other indexes providing equivalent data.

6.3           Producer shall be solely responsible
for submitting appropriate nominations to Gatherer for the redelivery of
Producer’s Gas, less the applicable fuel and loss, at the Delivery Point and
shall be responsible for any and all delivery imbalances occurring with respect
to Producer’s Gas which is moving under applicable OBA’s or Producer’s Pipeline
Carrier transportation agreement(s) or other agreement(s) to the extent that
such imbalances are caused by Producer’s failure to make proper and timely
nominations. Producer shall indemnify and hold Gatherer harmless from any and
all costs, expense, liabilities, or damages (including without limitation,
pipeline imbalances, penalties, court costs, and attorney fees) arising due to
any such pipeline imbalances on under applicable OBA’s or Producer’s Pipeline
Carrier transportation agreement(s) or other agreement(s) caused by Producer’s
failure to make proper and timely nominations, provided such indemnification
shall apply without duplication of the Cash-Out payments to Gatherer provided
for in Section 6.2 above.  Gatherer shall
indemnify and hold Producer harmless from and against any and all costs,
expense, liabilities, or damages (including without limitation, pipeline
imbalances, penalties, court costs, and attorney fees) arising due to any such
pipeline imbalances under applicable OBA’s or Producer’s Pipeline Carrier
transportation agreement(s) or other agreement(s) caused by Gatherer’s failure
to properly and timely give effect to Producer’s nominations, however, Gatherer
shall not be responsible for eliminating any imbalances between Producer and
any third party. Furthermore, Gatherer shall not be obligated to materially
deviate from its normal operating and accounting procedures to reduce or eliminate
any such imbalances.

 15
 

 

Article VII.

RECEIPT PRESSURES AND REMEDIES

7.1           Gatherer agrees to maintain the monthly average
pressure (“MAP”) at each Receipt Point at **. The MAP shall be determined
individually as to each Receipt Point, and the MAP at each Receipt Point shall
be determined by dividing the sum of daily average Receipt Point pressures as
continuously measured using EFM’s (as defined in Section 8.1, below) during any
Month by the number of days in the subject Month.   Gatherer shall maintain for at least seven (7) years, the records that demonstrate the appropriate MAP for each
Receipt Point as to any given month. 
Producer shall have the right to have access at all reasonable times to Gatherer’s SCADA system information related to the
pressure and flows at each Receipt Point. 
It is expressly agreed by Gatherer that Gatherer will not destroy any of
the foregoing categories of records without first providing Producer with sixty
(60) days prior written notice of both its intention to do so and its offer to
send and relinquish such materials to Producer in lieu of destroying them.

7.2           Producer and Gatherer understand that the pressure at each Receipt
Point may be affected by the initial production from Wells recently connected
to the System. As a result, all the Receipt Points within a single Section of Land in which the  combined volume from all the wells within that Section of Land ** be excluded from the determination of the
MAP during the period of time that is the lesser of (A) the period that the
combined volume of all wells within that Section of Land are delivering ** and such production is causing
the MAP at any Receipt Point in such Section ** (B) ** provided, however,
that in no event may the MAP at any Receipt Point within such Section of
Land **.

7.3           In
the event the MAP at any Receipt Point **, then the following shall apply:

7.3.1        In the event the MAP at any Receipt
Point **, then Gatherer
shall pay to Producer, within fifteen (15) days from and after the end of the
applicable Month, **.

7.3.2        In the event the MAP at any Receipt
Point **, then, in lieu of the payments outlined in paragraph 7.3.1 above, Gatherer shall pay to Producer, within fifteen (15)
days from and after the end of the applicable Month, **.

7.3.3        In the event the MAP at any Receipt
Point exceeds **, in addition to the payments outlined in paragraph
7.3.2 above, Gatherer
shall pay to Producer monthly, within fifteen (15) days from and after the end
of the applicable Month, for each Well attached to the Receipt Point, **.

By
way of illustration of the manner in which the sums under Sections 7.3.1 and
7.3.2 are to be calculated:  **.

7.4           Should the MAP at any specific
Receipt Point **, or should the MAP at such Receipt Point **, Producer may at
its option (to be exercised at any point in time prior to the Gatherer’s
restoration of the MAP **:

7.4.1        Elect
to have such Receipt Point released from the terms of this Agreement by
providing Gatherer with three (3)
days written notice of such election, at the end of which period Producer shall
be free to enter into any arrangements it may choose for the provision of
alternative services by any third party of Producer’s choosing, and Producer
shall have no further obligations to Gatherer
under this Agreement with regard to the Receipt Point(s) in question. In the
event that Producer elects to invoke the provisions of this Section 7.4.1 with
respect to a Receipt Point(s), Producer shall not connect more than 16
wells to each affected Receipt Point.;
or

 16
 

 

7.4.2        Producer
may elect to receive the same compensation as is provided for in Section 7.3
above except that the dollar amounts applicable to the stated fact situations
shall be doubled.

7.5           Should the MAP at any Receipt Point
**, Producer may at its option (to be exercised at any point in time prior to
the Gatherer’s
restoration of the MAP for the Receipt Point to 45 psig), do the following:

7.5.1        Elect
either of the options set forth in Sections 7.4.1 and 7.4.2, above; or

7.5.2        Install,
or cause to be installed, such facilities as are reasonably needed in order to
eliminate the pressure problems.  Upon
the completion of such facilities, Gatherer
shall be obligated to immediately commence receiving into its System Producer’s
Gas delivered by Producer.  Additionally,
Gatherer
shall be obligated to promptly acquire such facilities from Producer **
incurred by Producer in connection with the installation of such
facilities.  Payment shall be due from
Gatherer as to each invoice within thirty (30) days of Gatherer’s receipt of
such invoice from Producer.  In order to
invoke this option, Producer shall send to Gatherer one or more invoices (i.e.,
Producer may invoice Gatherer multiple times, as the costs are being incurred)
showing Actual Costs incurred by Producer in connection with such pipelines
and/or other facilities, with copies of supporting materials showing that the
costs and expenses have actually been incurred, **.

7.6           Gatherer
shall provide to Producer, on or before the 15th day of each Month, a written statement
indicating the MAP for each Receipt Point during the preceding Month, together
with a statement advising Producer of the percentage of Receipt Points during
such Month as to which the MAP **.

7.7           Beginning in June, 2007,  whenever either of the following occur:

(a) more than **

(b) more than **

with such occurrence extending for a
period of ** provisions of this Article VII, Gatherer
shall provide Producer with written notice of such occurrence no later than **,
as applicable, together with a description of Gatherer’s
proposed plan and timetable for correcting the excessive System pressure
problems.  Producer may thereafter elect
to terminate this Agreement **.  The
provisions of this Section shall apply each time the above conditions are
present.

7.8           Any Receipt Point where the increase
in pressure is a result of (i) the delivery of gas in excess of the volume set forth
in Section 7.2 above, (ii) the delivery of gas from wells that were connected
to Producer’s System prior to the connection to Gatherer’s
System for a period of one hundred twenty (120) days following the purchase of
any portion of Producer’s System as set forth in Article IV,
above, (iii) the operations of any third party providing Processing or
additional treating for Producer’s Gas, or (iv)
the delivery of free liquids or Inferior 

 17
 

 

Liquids by Producer, such Receipt Point
shall be excluded from the determination of Receipt Point MAP’s as set forth
above.

 18

 

Article VIII.

MEASUREMENT

8.1           Gatherer
shall measure the Producer’s Gas delivered by Producer hereunder using
electronic flow meters (“EFM”), which Gatherer
shall install, or caused to be installed, at the Receipt Points and Delivery
Points. Measurement shall be made by Gatherer
in accordance with the requirements of applicable provisions in ANSI/API 2530, “Orifice Metering of Natural Gas” (American Gas Association
Gas Measurement Committee Report No. 3) of the Natural Gas Department of
the American Gas Association, as amended from time to time, or by any other
method commonly used in the industry and mutually acceptable to the
parties.  EFM equipment shall be designed
and installed in accordance with the procedures set forth in the Manual of
Petroleum Standards, Chapter 21.1 (Latest Revision).  Producer shall have access to Gatherer’s
metering equipment and information received from such metering equipment at
reasonable hours.  In addition, Producer
shall have the right to install check measurement / monitoring equipment at the
Receipt Points and Delivery Points - including the right to install Producer’s
check measurement equipment on the Gatherer’s
meter tube(s) and/or orifice unions.  All
such check measurement equipment shall be installed so such equipment shall not
interfere with the operations of Gatherer’s
equipment.

8.2           The accuracy of Gatherer’s
measuring equipment shall be verified by meter calibrations and orifice
inspections, and a chromatographic analysis shall be conducted, using means and
methods generally acceptable in the gas industry once every six (6) Months for
Receipt Points which average less than 500 MSCF per day, every three (3) Months
for Receipt Points which average between 501 — 1000 MSCF per day, and every one
(1) Month for Receipt Points that average 1001 MSCF per day or more. Measuring
equipment found to be measuring and/or reading inaccurately shall be adjusted
to measure and read accurately. Gatherer
shall give Producer two (2) days notice of upcoming tests. If Producer fails to
have a representative present, the results of the test shall nevertheless be
considered accurate until the next test. Gatherer
shall, upon written request of Producer, conduct a test of Gatherer’s
measuring equipment and/or a chromatographic analysis, provided that in no
event shall Gatherer be required to
test its equipment more frequently than once a Month. All tests of such
measuring equipment shall be made at Gatherer’s
expense, except that Producer shall bear the expense of any additional tests
made at Producer’s request.

8.3           If for any reason, any measuring
equipment is inoperative or inaccurate by more than two percent (2%) in the
measurement of Gas, then the volume of Producer’s Gas delivered by Producer to Gatherer
during the period of such inaccuracy shall be determined on the basis of the
best data available using the first of the following methods which is feasible:

(a)                                  By
using the registration of any check measuring equipment installed and
accurately registering; or

(b)                                 By
using a percentage factor to correct the error, if the percentage of error is
ascertainable by calibration, test, or mathematical calculations; or

(c)                                  By
comparing deliveries made during preceding periods under similar delivery
conditions when the meter was registering accurately.

 19
 

 

8.4           Any adjustment based on such
determination shall be made for such period of inaccuracy as may be definitely
known or, if not known, then for one half (1/2) the period since the date of
the last meter test. In no event, however, shall any adjustment based on
measurement of quantities, pressure or quality, extend back to transactions
beyond six (6)  months  from the date the error was first made known
by one party hereunder to the other.

8.5           Each party shall have the right to
inspect the other party’s equipment, and other measurement or test data during
business hours; but the reading, calibration, and adjustment of such equipment
shall be done by the party installing and furnishing same. Unless the parties
agree otherwise, each party shall preserve for seven (7) years, all of its
original test data, accounting materials and other records pertinent to the
actions taken, and the performance delivered, under this Agreement. It is
expressly agreed by Gatherer that Gatherer will not destroy any of the foregoing
categories of records without first providing Producer with sixty (60) days
prior written notice of both its intention to do so and its offer to send and
relinquish such materials to Producer in lieu of destroying them.

 

Article IX.

GAS QUALITY AND SPECIFICATIONS

9.1           Producer shall deliver to Gatherer
at the Receipt Points Gas which is commercially free of dust, rust, gum and gum
forming constituents, dirt, paraffin, impurities, and other solid or liquid
matter which might cause injury to or interference with the proper operation of
the lines, meters, regulators and other appliances through which it flows.
Subject to the other provisions of this Article IX, Producer’s Gas as delivered
to the Receipt Points, shall also conform to the following specifications (the “Specifications”):

	
  

  	
  (i)

  	
   

  	
  Oxygen

  	
   

  	
  No oxygen

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
   

  	
  Free Water

  	
   

  	
  No free water

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
   

  	
  H2S

  	
   

  	
  No more than one quarter (1/4) grain per one hundred
  (100) Standard Cubic Feet of Gas

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
   

  	
  Total Sulfur

  	
   

  	
  Including mercaptan and hydrogen sulfide, not to
  exceed one half (1/2) grain per one hundred (100) Standard Cubic Feet of Gas

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
   

  	
  Temperature

  	
   

  	
  No more than one hundred twenty degrees Fahrenheit
  (120°F) and no less
  than sixty degrees Fahrenheit (60°F)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
   

  	
  Carbon Dioxide

  	
   

  	
  **

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
   

  	
  Nitrogen

  	
   

  	
  No more than two percent (2%) by volume

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
   

  	
  Other

  	
   

  	
  Any additional or more stringent specification
  imposed by the Pipeline Carriers (other than the specification for Carbon
  Dioxide)

  

 20
 

 

9.2           If, at any time during the term of
this Agreement, either party ascertains that Producer’s Gas fails to meet the
Specifications, notwithstanding efforts to blend the Gas as provided for below
in Section 9.3 below, such party shall immediately notify the other of the
extent of the deviation from the Specifications. Producer shall determine the
expected duration of such failure and notify the Gatherer
of the efforts Producer is undertaking to remedy such deficiency. In the event
Producer cannot (or elects not to) remedy such deficiency, Gatherer
may refuse to accept delivery of Producer’s Gas, or accept delivery of Producer’s
Gas pursuant to mutually agreed upon increased Fees or other adjustments to revenues
by Gatherer
to compensate Gatherer
for addressing such deficiencies. In such case, Gatherer
and Producer shall work in good faith to determine a solution to the
Specification deficiencies.

9.3           If Gatherer
can blend any of Producer’s Gas that either fails to meet the Specifications
set forth in Section 9.1, above, or fails to meet any other required
specifications, with other Gas in the System, and such blending will cause the
composite Gas composition to meet such Specifications, Gatherer
will accept such non-conforming Producer’s Gas, without any additional payment
from or detriment to the Producer as long as such blending does not cause undue
operational problems or impacts.

9.4           In the event Gatherer
cannot accept, after application of Section 9.3, any of Producer’s Gas that
fails to meet the Specifications set forth in Section 9.1, above, then
Producer, or an affiliate of Producer, Gatherer,
or a third party contracted by Producer for such purpose, shall have the right
to tie-in to the System at no cost to Gatherer
for the purpose of providing such additional Treating as
may be required for Producer’s Gas, provided that the additional Treating
will not cause or result in a decrease in pressure of the Gas.  The additional Treating
of Producer’s Gas by Producer, its affiliates, or any third party, will not
include the **.  In the event Producer,
or an affiliate of Producer, Gatherer
or a third party contracted by Producer installs such additional Treating
facilities, Gatherer shall install
all required measurement and other equipment on the gas streams entering and
exiting the additional Treating
facilities, and all associated fuel gas pipelines to accurately measure the
actual fuel and loss associated with the additional Treating.  Producer shall reimburse Gatherer
for the reasonable and Actual Costs
of installing such additional equipment and the actual fuel and loss associated
with the additional Treating
shall be included in the calculation of the Measured Treating Fuel and Loss.

9.5           If Producer determines that there is
a need or a desire to perform any activity with respect to Producer’s Gas for
any purpose deemed reasonably necessary by Producer, other than for services
already to be provided by Gatherer hereunder and for additional Treating for
non-conforming gas, as per Section 9.4, then Producer, an affiliate of
Producer, and/or a third party contracted by Producer shall have the right to
tie-in to the System to remove Producer’s Gas from and redeliver Producer’s Gas
to the System.  Any removal and redelivery
pursuant to this Section shall be subject to the requirement that the Gas be
delivered back into the System at a pressure not less than that existing prior
to its removal from the System.  Gatherer
shall install all required measurement and other equipment to measure the
quantity of Producer’s Gas removed from and redelivered to the System.  Producer shall reimburse Gather for the
reasonable and Actual Costs of installing such additional equipment.  The difference between the quantity of gas
removed and the quantity of gas redelivered shall be included in the
calculation of the Measured Treating Fuel and Loss. All Treating to remove 

 21
 

 

CO2 from Producer’s Gas, other than additional
treating as set forth in Section 9.4 above, shall be provided by Gatherer.

9.6           Producer shall reimburse Gatherer
the reasonable and Actual Costs to dispose of any water from Producer’s Wells
that is inadvertently flowed into the System. 
Any such costs shall be invoiced to Producer on a Monthly basis.

 

Article X.

GATHERING, COMPRESSION, TREATING FEES, LINE LOSS, AND FUEL CHARGE

10.1         For the gathering services provided by
Gatherer hereunder, Producer shall pay Gatherer a gathering fee (“Gathering Fee”)
for each MSCF of Producer’s Gas delivered to Gatherer by Producer at the
Receipt Points equal to the per MSCF rate set forth in Exhibit G.

10.2         For the compression services provided
by Gatherer hereunder, Producer shall pay Gatherer a compression fee (“Compression
Fee”) equal to the per MSCF rate set forth in Exhibit G.

10.3         Subject to Section 9.3, if the average
CO2 content in the Producer’s Gas delivered by Producer at any Treating
facility installed or acquired by Gatherer exceeds the CO2 content permitted by
the applicable Pipeline Carriers, then Producer shall pay a Treating fee (“Treating
Fee”) with respect to that Gas. The Treating Fee shall be the per MSCF rate set
forth in Exhibit G.  Because it will be
difficult to anticipate how much of Producer’s Gas will be consumed as fuel and
loss, how much of Producer’s Gas will need to be treated, and what the CO2
content of Producer’s Gas will be, Gatherer will install all required
measurement and other equipment on the gas streams entering and exiting the
treating facilities, and all fuel gas pipelines to accurately measure the
actual Treating fuel and loss at each Treating plant location (“Measured
Treating Fuel and Loss” which term may include fuel and loss associated with
Processing or additional treating of Producer’s Gas).

10.4         Producer and Gatherer agree that
**.  However, **, and annually
thereafter, the Gathering Fee, total applicable Compression Fee and Treating
Fee  specified above, shall be subject to
being increased on an annual basis, **, in the Consumer Price Index as published
by the Department of Labor, in the subsection titled “Not Seasonally Adjusted
U.S. City Average All Items” (“CPI”); provided, however, that no such increase
in Fees **

10.5         As to time periods prior to **, the
parties specifically agree as follows: 
If during any month the “Last Three-Day price” for natural gas, as
published in the above-referenced section of Platts, exceeds the price set
forth on Exhibit H, then Producer agrees to pay Gatherer an additional fee for
services provided by Gatherer during such applicable month.  ** that such published “last three-day”
average closing prices exceed the natural gas prices set forth in Exhibit
H.  This increase in Fees shall not
change the base Fees; rather, the increase is an additional payment obligation
that may be effective, or not, from month-to-month if and when the
circumstances that give rise to such additional payment (as described in the
preceding sentence of this paragraph) occur.

10.6         Gatherer shall assess, as set forth in
Exhibit G, a charge for deemed compression fuel (“Deemed Fuel”) and for lost
and unaccounted for Gas (“Deemed System Loss”).

 22
 

 

10.7         The dehydration services shall be
provided without additional compensation from Producer to Gatherer, and fuel
utilized in dehydration shall be considered as part of the Deemed Fuel set
forth above.

 

Article XI.

BILLING, PAYMENT, AND REPORTING

11.1         On or before the fifteenth (15th) day of each Month, Gatherer
shall render an invoice to Producer for the preceding Month’s services by Gatherer.  Gatherer
shall provide Producer with information to support Gatherer’s
invoice identified on a “Receipt Point by Receipt Point” basis, and shall also
show the cumulative information indicating the total quantity of Producer’s Gas
delivered hereunder, the amount due therefore, and information sufficient to
explain and support any adjustments made by Gatherer
in determining the amount billed. Except where other provisions of this
Agreement provide shorter deadlines for the payment of certain sums and/or
invoices under the terms of this Agreement, Producer shall pay Gatherer
or Gatherer
shall pay Producer, as the case may be, at the address shown hereunder within
thirty (30) days of receipt of invoice. 
If the correct amount is not paid when due,
interest on any unpaid and undisputed portion shall accrue at an annual
effective interest rate  equal to the
prime rate, as quoted by the Wall Street Journal, plus two percent (2%) or at
the highest rate permitted by applicable law, whichever is lower, from due date
until date paid, with such interest to be compounded monthly.  If Producer does not pay Gatherer all undisputed amounts within the later of (i) ninety (90) days following receipt of invoice or (ii) thirty
(30) days following notice from Gatherer that undisputed amounts are due, then Gatherer may suspend receipt of Gas hereunder without
prejudice to any other available remedies at law or in equity.  Whenever
Producer is entitled to be paid any sums by Gatherer
under the terms of this Agreement, then unless specifically provided otherwise
with regard to specific situations under the terms of this Agreement, payment
shall be due from Gatherer
and interest shall be owing under the same time frames and procedures set forth
above in this paragraph 11.1 in relation to sums owing by Producer to Gatherer.

11.2         Either party may, at its option, recoup
any sums (or portions thereof) owing by the other party by netting out of such
party’s payments to the other party all or part of the sums owed by the other
Party under this Agreement.  When a party
elects to net out certain indebtedness of the other party, such party shall
promptly send to the other party a description of (a) the source or nature of
the indebtedness of the other party that has been recouped in whole or in part
by such party in the above-referenced manner, including the dollar amount of
such recoupment, and (b) the indebtedness of the party that has been reduced
through such recoupment.

11.3         When Gatherer
owes to Producer any additional sums under this Agreement by virtue of Gatherer’s
delay in performance, or non-performance, of any of Gatherer’s
obligations under this Agreement, Gatherer
shall, at the same time as Gatherer
sends Producer its invoices for sums owing by Producer as to a given Month,
both (a) calculate any such sums that Gatherer
owes to Producer for the same month, and (b) reflect a credit thereon or remit
such sums to Producer by the due date of the invoice.

 23
 

 

11.4         If any overcharge or undercharge due to
clerical or arithmetic error shall at any time be found relative to any invoice
or other statement delivered by Gatherer
in connection with this Agreement, whether outstanding or paid, Gatherer
shall refund any amount of overcharge, or Producer shall pay any amount of
undercharge, as the case may be, within thirty (30) days after final
determination thereof; provided, however, that all statements that have not
been challenged in writing or corrected in writing, within twenty-four (24)
Months from the end of the Month in which the statement was received by the
party for whom it was intended, shall be conclusively deemed to be correct and
accurate, and no retroactive adjustment shall be made beyond such twenty-four
(24) Month period with regard to any such statements.

11.5         Both parties hereto shall have the
right at any and all reasonable times to examine the books and records of, and
to audit, the other party to the extent necessary to verify the accuracy of any
statement, charge, computation, or demand made pursuant to this Agreement.
Prior to such examination, the party requesting confidential information of the
other party shall, if requested by the other party, execute a confidentiality
agreement of reasonable form and scope after giving the other party 15 days
written notice.

 

Article XII.

TAXES

12.1         Gatherer
shall have no duties or liabilities under this Agreement with regard to the
reporting of production taxes imposed with respect to the Producer’s Gas
delivered and gathered
hereunder, except to the extent that any such reporting obligations are
specifically imposed by statutes, rules and regulations and/or other laws on Gatherer.

12.2         Gatherer
shall file all reports and pay all ad valorem or other similar taxes, fees, or
assessments imposed by any governmental authority with respect to the System
and ownership thereof.  Producer shall
pay or bear all severance or other similar taxes, fees, or assessments imposed
by any governmental authority on Producer’s Gas delivered hereunder, except to
the extent that any portion of such taxes is to be borne by other persons or
entities under the terms of applicable statutes, rules and regulations and/or
other laws.  Further, Producer represents
that it has timely filed, or shall in the future timely file, any and all
reports which it was, or may be, required to file with respect to production or
severance taxes to be paid on Producer’s Gas. 
Producer shall indemnify and hold Gatherer
harmless with respect to any claims that may be made against Gatherer
by virtue of any failure on the part of Producer to file any and all of such
reports, or with respect to Producer’s failure to pay or bear any and all taxes
which Producer is obligated to pay, under the above provisions of this Section
12.2.  Gatherer
likewise shall indemnify and hold Producer harmless with respect to any claims
that may be made against Producer by virtue of either (a) any failure on the
part of Gatherer to file any
and all of the reports provided for above in this Section 12.2, and/or (b) any
failure on the part of Gatherer
to pay any and all taxes which Gatherer
is obligated to pay pursuant to the above provisions of this Section 12.2.

 24
 

 

Article XIII.

CONTROL, POSSESSION, TITLE AND ADDITIONAL INDEMNIFICATION

13.1         Producer shall indemnify and hold Gatherer
harmless from liability with respect to Producer’s Gas or
Producer’s operations for the delivery of such Gas prior to the Gas being
delivered into Gatherer’s
System and with respect to the operations of any third party providing
Processing or additional treating of Producer’s Gas on Gatherer’s
System.  Gatherer
shall indemnify and hold Producer harmless from liability with respect to
Producer’s Gas delivered into the System and prior to delivery thereof at the
Delivery Point, except for any such liability relating to the title to Producer’s
Gas, which liability shall remain with Producer.

13.2         Producer warrants that it possesses
either title to, or the right to deliver to Gatherer,
all of Producer’s Gas delivered or caused to be delivered hereunder.  Producer warrants that Producer’s Gas is free
from all liens and adverse claims of every kind and agrees to indemnify Gatherer
from all suits, actions, debts, accounts, damages, costs, losses, and expenses
arising from or out of adverse claims of any or all persons, including
governmental entities, as to title to Producer’s Gas or as to royalties or
charges thereof.  Notwithstanding the
indemnification of Producer by Gatherer
for all of Producer’s Gas delivered into the System after receipt thereof by Gatherer
and prior to delivery thereof at the Delivery Point, title to the Producer’s
Gas delivered or caused to be delivered by Producer to Gatherer
hereunder at the Receipt Points shall remain with Producer and shall not pass
to nor vest in Gatherer
at any point under this Agreement.

13.3         Gatherer
shall be entitled to and shall own all condensate and pipeline drip collected
in the System at locations beyond the Receipt Point.

13.4         Producer agrees to
defend, indemnify and hold Gatherer, its parent, subsidiary and affiliate companies, their agents,
employees, directors, officers, servants, invitees and insurers (together, the “Gatherer Group”), harmless from and against any and
all losses, claims, demands, liabilities or causes of action of every kind and
character, in favor of any person or party, for loss or damage to property of
Producer Group (as defined below) or injury to or illness or death of any
employee of Producer Group, which loss, damage, injury, illness or death
relates to, arises out of or is incident to the work or services performed by
Producer under this Agreement, and regardless of the cause of such loss,
damage, injury, illness or death, except to the extent that any such losses,
claims, demands, liabilities or damages, are the result of the negligence or
willful misconduct of Gatherer,
or its officers, employees, contractor, agents or representatives. Producer
shall fully defend any such claim, demand or suit at its sole expense, even if
the same is groundless.  This indemnity
shall be limited to the extent necessary for compliance with applicable State
and Federal laws.

13.5         Gatherer agrees to defend,
indemnify and hold Producer, its joint interest owners, and their respective
parent, subsidiary and affiliate companies, and the agents, employees,
directors, officers, servants, invitees and insurers of each such entity
(together, the “Producer Group”), harmless from and against any and all losses,
claims, demands, liabilities or causes of action of every kind and character,
in favor of any person or party, for loss or damage to property of Gatherer
Group or injury to or illness or death of any employee of Gatherer Group or any
employee of subcontractors of Gatherer, which loss, damage, injury, illness or
death relates to, arises out of or is incident to the work or services
performed by Gatherer under this Agreement, and regardless of the cause of such
damage, injury, illness or death, except to the extent that any such losses,
claims, demands, liabilities or damages, are the result of the negligence or
willful misconduct of Producer, or its officers, employees, contractor, agents
or representatives. Gatherer shall fully defend any such claim demand or suit
at its sole 

 25
 

 

expense,
even if the same is groundless.  This
indemnity shall be limited to the extent necessary for compliance with
applicable State and Federal laws.

 

Article XIV

ACQUISITIONS

**

 26
 

 

 27
 

 

Article XV

REPRESENTATIONS AND WARRANTIES

15.1         Gatherer
represents and warrants that:

15.1.1      Gatherer is a limited liability company validly
existing and in good standing under the laws of the State of Oklahoma, with the
requisite power and authority to own its properties and assets and to carry on
its business as now being conducted.

15.1.2      Gatherer has the power and requisite authority to
execute and deliver this Agreement and to consummate and perform the
transactions contemplated hereby.  The
execution and delivery of this Agreement by Gatherer and the consummation and performance of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Gatherer.  This Agreement constitutes the valid and
binding obligation of Gatherer,
enforceable against it in accordance with the terms hereof, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar laws
in effect from time to time, and no other act, approval or proceeding on the
part of Gatherer or any other
party is required to authorize the execution and delivery of this Agreement by Gatherer or the consummation of the transactions
contemplated hereby.

15.1.3      Gatherer has not incurred any liability, contingent
or otherwise, for brokers’ or finders’ fees relating to the transactions
contemplated by this Agreement for which Producer shall have any responsibility
whatsoever.

15.1.4      Except as set forth on Exhibit C attached hereto, to the
best of Gatherer’s
knowledge and belief, there are no actions, suits or proceedings pending
against Gatherer which might
materially delay, prevent or hinder the consummation of the transactions
contemplated hereby.

15.1.5      To the best of Gatherer’s knowledge and belief, there is no
bankruptcy, reorganization or arrangement proceedings pending, being
contemplated by or threatened against Gatherer.

 28
 

 

15.2                           Producer
represents and warrants that:

15.2.1      Producer is a  corporation validly existing and in good
standing under the laws of the State of Delaware, with the requisite power and
authority to own its properties and assets and to carry on its business as now
being conducted.

15.2.2      Producer has the power and requisite
authority to execute and deliver this Agreement and to consummate and perform
the transactions contemplated hereby. 
The execution and delivery of this Agreement by Producer and the
consummation and performance of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of Producer.  This Agreement constitutes the valid and
binding obligation of Producer, enforceable against it in accordance with the
terms hereof, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium and similar laws in effect from time to time, and no other act,
approval or proceeding on the part of Producer or any other party is required
to authorize the execution and delivery of this Agreement by Producer or the
consummation of the transactions contemplated hereby.

15.2.3      Producer has not incurred any liability,
contingent or otherwise, for brokers’ or finders’ fees relating to the
transactions contemplated by this Agreement for which Producer shall have any
responsibility whatsoever.

15.2.4      Except as set forth on Exhibit C attached hereto, to the
best of Producer’s knowledge and belief, there are no actions, suits or
proceedings pending against Producer which might materially delay, prevent or
hinder the consummation of the transactions contemplated hereby.

15.2.5      To
the best of Producer’s knowledge and belief, there is no bankruptcy,
reorganization or arrangement proceedings pending, being contemplated by or
threatened against Producer.

 

Article XVI.

FORCE MAJEURE

16.1         If either party is rendered unable,
wholly or in part by Force Majeure, to carry out its obligations under this
Agreement, then the obligations of the affected party, except for any payments
due in accordance with this Agreement, so far as the performance of such
obligations is prevented or delayed by such Force Majeure, shall be suspended
during the continuance of any inability so caused, but for no longer period.
Such cause as well as its impacts shall, to the extent possible, be remedied
and/or mitigated with all reasonable dispatch. The affected party shall give
notice and full particulars of such Force Majeure in writing by mail or
telecopy or other electronic facility to the other party as soon as practicable
after the occurrence of the cause relied on.

16.2         The term Force Majeure as employed
herein shall mean acts of God; strikes, lockouts, or other industrial
disturbances; acts of the public enemy, wars, sabotage, blockades, military
action, earthquakes, fires, storms or storm warnings, floods; arrests and
restraints of governments and people; civil disturbances; explosions; the
physical damage of essential parts 

 29
 

 

of Gatherer’s System, which materially
interferes with the performance of Gatherer’s obligations hereunder, and which
is caused by the acts of third parties who, with respect to the incident
causing such damage, have no relation as an officer, director, employee, agent,
affiliated entity, contractor, subcontractor or the like, with Gatherer; the
inability of any party hereto to obtain necessary materials, supplies, or
permits, only where such inability is due to, existing or future rules, regulations,
orders, laws, or proclamations of governmental authorities (Federal State or
local) including both civil and military; or changes in environmental laws, or
the application thereof, which prevent Gatherer from complying with it’s duties
hereunder.

16.3         It is understood and agreed that the
settlement of strikes or lockouts shall be entirely within the discretion of
the party having the difficulty, and that the above requirement that any Force
Majeure shall be remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands of the opposing
party when such course is inadvisable in the discretion of the party having the
difficulty.

16.4         Should an event of Force Majeure render
Gatherer unable to take delivery of any of Producer’s Gas at any Receipt Point
for a period exceeding five (5) consecutive calendar days, then Producer may,
upon not less than three (3) days prior written notice to Gatherer, temporarily
deliver Producer’s Gas from such Receipt Point to a third party for gathering
and/or Processing; provided, however, that Producer’s Gas shall be delivered to
Gatherer upon the earlier of the end of the temporary sale or on the first Day
of the Month following the Month that the Force Majeure event is rectified to
allow delivery to Gatherer.

16.5         Should an event of Force Majeure render
Gatherer
unable to take delivery of any of Producer’s Gas at any Receipt Points for a
period exceeding thirty (30) consecutive calendar days, then unless Gatherer
reimburses Producer, within 5 days of receipt of an invoice from Producer, for
all out of pocket third party costs incurred by Producer to acquire and
construct the required facilities to move Producer’s Gas to an alternate market
during the Force Majeure event, Producer may, upon not less than three (3) days
prior written notice to Gatherer,
permanently deliver Producer’s Gas from those Receipt Points impacted by the
Force Majeure event  to an alternate
party for gathering, compression
and Treating, and will be released from further obligation with respect to
those impacted Receipt Points under this Agreement.

 

Article XVII.

TERM

17.1         This Agreement shall continue in full
force and effect for a period of 15 years from the Effective Date (“Primary
Term”).  If Producer does not provide Gatherer
with written notice, at least ninety (90) days prior to the end of the Primary
Term, advising of Producer’s election to terminate this Agreement, this
Agreement shall be deemed to be renewed for ** from and after the end of the
Primary Term.  **.

 30

 

Article XVIII.

ASSIGNMENTS AND SALE OF GATHERER’S SYSTEM

18.1         This Agreement shall extend to and be
binding upon the parties hereto, their successors, and assigns. Subject to the
provisions of paragraph 18.2, this Agreement and the rights, duties or obligations
of the parties hereunder may be assigned or conveyed in whole; provided,
however, neither party shall assign or transfer this Agreement and any rights,
duties or obligations hereunder, without the prior written consent of the other
party, which consent shall not be unreasonably withheld.  A reasonable basis for withholding consent
may include the financial condition of the assignee raising reasonable concern
relating to its ability to perform under this Agreement.  All assignments and conveyances of either all
the wells and leaseholds that are ultimately covered by this Agreement or the
System shall be subject to this Agreement and shall not relieve the assignor of
its duties hereunder.  No transfer of, or
succession to, the interest of any party hereto, either in whole or partially,
shall affect or bind the other party until the first Day of the Month following
the Month in which the other party shall have received written notification
thereof. The acquisition provisions of Article XIV shall not transfer to an
assignee or transferee of this Agreement except to the extent provided in
Article XIV.

18.2         If Gatherer
determines to sell Gatherer’s
System to a party other than an affiliate of Gatherer,
Gatherer and Producer shall first meet to
negotiate in good faith in an effort to arrive at a definitive purchase and
sale agreement. If Gatherer
and Producer are not able to agree on a definitive purchase and sale agreement
after negotiating in good faith for at least sixty (60) days, Gatherer
shall have the right to seek offers from other third parties in accordance with
the following procedures:

**

 31
 

 

**

18.2.8       If only
a portion of the System is addressed in the Third-Party Offer, this right of
first refusal shall continue to be applicable to and continue in effect for
those portions or elements not part of the Third-Party Offer.

18.2.9       Gatherer will notify all third parties that any proposal,
bid or offer for the purchase
and sale of any part of Gatherer’s System is subject to Producer’s right of first
refusal and will inform such third parties of any applicable requirements of
this Agreement related to the purchase and sale of the System.

18.2.10     In no
event will the right of first refusal granted to Producer above entitle
Producer to match any terms of a sale of all or a portion of Gatherer’s System to an affiliate of Gatherer; rather, the right of first refusal shall apply
only to Third Party Offers.

 

Article XIX.

NOTICES

19.1         Except as herein otherwise provided,
any notice, request, demand, payment, invoice, statement, or bill provided for
in this Agreement or any notice which either party may desire to give to the
other shall be in writing and shall be sent by United States Mail (by regular mail,
express mail, certified mail, registered mail or any other available form of
United States Mail delivery or other express delivery service that delivers
with a speed the same or more rapid than United States Mail, at the election of
the sending party) to the below-indicated address of the party intended to
receive the same, as the case may be, or to such other address as either party
shall designate by future written notice to the other party.  Notice shall be considered to have been given
as of the date it is received at the applicable and approved address for the
recipient thereof.

If to PRODUCER:

For Notices and Requests:

 

NEWFIELD EXPLORATION
MID-CONTINENT INC.

110 West 7th, Suite 1300

Tulsa, Oklahoma 74119

 32
 

 

Attn:  Operations Manager

 

Statements, Bills, or
Invoices:

 

NEWFIELD EXPLORATION
MID-CONTINENT INC.

110 West 7th, Suite 1300

Tulsa, Oklahoma 74119

Attn: Accounts Payable

 

Wire Transfer Payments:

**

 

If to GATHERER:

For Notices and Requests:

 

MARKWEST WESTERN OKLAHOMA GAS
COMPANY, L.L.C.

2500 City West, Ste.
740

Houston, Texas 77042

Attn: Operations Manager

With a copy to:

 

MARKWEST ENERGY PARTNERS, L.P.

1515 Arapahoe Street, Suite 700

Denver, CO 
80202

Attn: Sr. Vice President of Southwest Business
Unit

 

For Statements, Bills, or Invoices

 

MARKWEST WESTERN OKLAHOMA GAS
COMPANY, L.L.C.

6655 S. Lewis, Ste. 350

Tulsa OK 74136

Attn: Accounts Payable

 33
 

 

For Payments

 

Wire:

**

 

Article XX.

GUARANTY BY GATHERER’S PARENT ENTITY

20.1         MarkWest Energy Partners, L.P., (“MEPLP”)
the parent entity of Gatherer  hereby
guarantees to Producer, absolutely, unconditionally and irrevocably, the prompt
performance and payment of all the liabilities, obligations and indebtedness
owing by Gatherer under this Agreement, and MEPLP is executing and delivering
to Producer simultaneously with this Agreement a Guaranty Agreement in the form
attached hereto as Exhibit I.

 

Article XXI.

MISCELLANEOUS

21.1         The interpretation and performance of
this Agreement shall be governed by and construed in accordance with the laws
of the State of Oklahoma.

21.2         This Agreement contains the entire
understanding of the parties superseding all other agreements, whether oral or
written, express or implied, except that the confidentiality agreement dated
April 7, 2006, previously entered into by the Parties shall not be superseded,
but rather shall remain in force and effect. 
As a result of the Parties entering into this Agreement, all prior
agreements between the Parties hereto that relate to the subject matter of this
Agreement have (except as qualified in the preceding sentence) been terminated
and replaced by this Agreement.  This
Agreement may not be changed orally, but only by an agreement in writing signed
by the Party against whom enforcement of any waiver, change, modification, extension,
or discharge is sought.  Every covenant,
term, and provision of the Agreement shall be construed simply according to its
fair meaning and not strictly for or against any Party.  Any waiver of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by Producer or Gatherer.

21. 3        Gatherer and Producer intend for this
Agreement to be enforceable and valid to the fullest extent permitted by
applicable law.  If any part or any
provision of this Agreement is invalid or unenforceable under applicable law,
the invalidity or the unenforceability of that part or that provision shall not
affect the validity or the unenforceability of the other parts or the other
provisions of this Agreement, and the part or the provision that would
otherwise be invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be enforceable and valid under applicable law.

 34
 

 

21.4         Producer, to the
extent it may legally and validly do so (and with no representation or
warranty  being made by Producer that it
has such ability), hereby quitclaims to Gatherer the non-exclusive and concurrent right to
use (including the right to ingress and egress) Producer’s leaseholds,
properties, and premises underlying the System in order to carry out the
provisions of this Agreement with the right to remove same before or after the
expiration of this Agreement and the right to free access at all reasonable
times to any part of said leaseholds, properties, and premises.

21.5         The circumstances of
this Agreement are such that Producer will be exposed to substantial injury if Gatherer does not timely perform under this
Agreement, and the injuries that may occur to Producer could take a variety of
forms. Where this Agreement imposes on Gatherer an obligation to pay Producer certain monetary sums, or provide other
value to Producer, as a result of certain non-performance or delayed
performance under this Agreement, such sums or other value are intended to
serve as liquidated damages for certain of the injuries to Producer.  The parties stipulate and agree that (a) the
injury that would be caused to Producer as a result of Gatherer’s non-performance or delayed performance would
be difficult to estimate accurately, (b) the sums or other value to be provided
to Producer under this Agreement in such circumstances are intended to serve as
a liquidated damages and not as a penalty, and (c) such sums or other value
represent the parties’ reasonable estimate at this time of the probable loss
that would be suffered by Producer in the various scenarios addressed in this
Agreement.

21.6         The application or
the consent by either Gatherer or Producer for or to the appointment of a
receiver, a trustee, a custodian or a liquidator for such party or any assets
of such party, the admission by Gatherer or Producer of the inability of such
party to pay the debts of such entity as such debts become due, the making by
Gatherer or Producer of a general assignment for the benefit of creditors, the
commencement by Gatherer or Producer of any proceeding relating to bankruptcy,
reorganization, liquidation, receivership, conservatorship, insolvency or
readjustment of debt or the sufferance by Gatherer or Producer of any such
appointment or commencement of any such proceeding not terminated or discharged
within     days shall be an event of default under,
and a material breach of, this Agreement.

Gatherer and Producer acknowledge and agree that, in any bankruptcy
case commenced against or by Gatherer or Producer as debtor, (a) the debtor
shall not contest or in any way take any action to oppose the lifting of the
automatic stay under Section 362 of the United States Bankruptcy Code to permit
the other party to enforce its rights hereunder; (b) the debtor waives all
rights that it may have under Section 362 of the United States Bankruptcy Code;
(c) the debtor consents to entry of an ex parte order lifting the automatic
stay pursuant to Section 362(f) of the United States Bankruptcy Code; and (d)
the debtor shall execute, at the option of the other party and upon 48 hours’
written notice, an agreed order lifting the automatic stay.

In addition, in any bankruptcy case commenced against or by Gatherer or
Producer as debtor, the debtor shall, at the option of the other party and upon
48 hours’ prior written notice, file a motion to assume this Agreement pursuant
to Section 365 of the United States Bankruptcy Code and shall diligently
prosecute such motion, using its best efforts to obtain the approval by the
relevant bankruptcy court of such motion as soon as practicable.

 35
 

 

21.7         Any dispute, claim or
controversy arising out of or relating to this Agreement, or any of the
transactions contemplated hereby or thereby, or the breach, termination,
enforcement, interpretation or validity thereof, including the determination of
the scope or applicability of this Section of the Agreement, shall be
adjudicated in, at the election of the party filing the action, either the
state district courts or the federal district court in Houston, Texas.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state district courts of Harris County, Texas,
located in the City of Houston, for purposes of any litigation that may be
brought concerning the subject matters referred to above in this Section;
provided, however, that such consent to jurisdiction is solely for the purpose
referred to in this Section and shall not be deemed to be a general submission
to the jurisdiction of said courts or in the State of Texas other than for such
purpose.  Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.

21.8         During any time that
Producer has delivered an average of greater than 200,000 MSCF per day of gas
to Gatherer during the immediately prior three (3) month period, then, subject
to applicable laws and regulations, Gatherer agrees not to enter into a
contract with a third party for similar services and similar terms and
conditions as provided under this Agreement, at Fees and rates that are less
than those Fees and rates in effect at such time under this Agreement. In addition,
subject to applicable laws and regulations, in no event shall Gatherer enter
into a contract with a third party prior to January 2009 for similar services
and similar terms and conditions as provided under this Agreement, at Fees and
rates that are less than those Fees and rates in effect at such time under this
Agreement.

21.9         The captions, titles or headings in
this Agreement are for the convenience of the parties in identification of the
provisions hereof and shall not constitute a part of this Agreement nor be
considered in the interpretation of this Agreement, and the following shall
apply:  This Agreement was prepared
jointly by the parties hereto and not by any party to the exclusion of the
other.

21.10       The failure either Party to exercise any
right or rights hereunder shall not be considered a waiver of such right or
rights in the future.

21.11       Except for the right of each Party to, at
its option, record a recording memorandum of this Agreement in the real
property records of the offices of the County Clerks for the applicable
Counties where Producer’s Gas leasehold interests or Wells within the
Commitment Area and any parts of the System are located in order to impart
constructive notice of the existence of this Agreement to third parties, each
Party agrees that it shall maintain this Agreement and the contents thereof in
strict confidence, and that it shall not cause or permit disclosure thereof to
any third party without the express written consent of the other party;
provided, however, that disclosure is permitted in the event and to the extent
such party is required by a court or agency exercising jurisdiction over the
subject matter thereof, by order or by regulation.

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

 36
 

 

21.13       The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto 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 or entity other than any person or entity entitled to indemnity
under this Agreement.

IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed in several counterparts, each of
which is an original, as of the date first written above.

PRODUCER:

	
  

  	
   

  	
  NEWFIELD EXPLORATION MID-CONTINENT INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Lee Boothby

  	
   

  
	
  Title:

  	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

GATHERER:

 

	
  

  	
   

  	
  MARKWEST WESTERN OKLAHOMA GAS COMPANY, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Frank Semple

  	
   

  
	
   

  	
   

  	
  Frank Semple

  	
   

  
	
  Title:

  	
   

  	
  President and CEO

  	
   

  

 

GUARANTOR:

The undersigned hereby joins in this Agreeement to further
evidence its guaranty commitments under Section XX, above, and under the
Guaranty Agreement referenced therein.

	
  

  	
   

  	
  MARKWEST ENERGY PARTNERS L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Frank Semple

  	
   

  
	
  Title:

  	
   

  	
  President and CEO

  	
   

  

 

 37

 

ATTACHMENTS:

	
  Exhibit A:

  	
   

  	
  Map showing
  geographical scope of the Commitment Area

  	
   

  
	
  Exhibit
  B:

  	
   

  	
  System Schematic,
  Priorities and Construction Schedule for Construction of Pipeline and Other
  Facilities

  	
   

  
	
  Exhibit
  B-1:

  	
   

  	
  Categories of Assets,
  Rights and Interests Excluded from the term Producer’s System

  	
   

  
	
  Exhibit
  C:

  	
   

  	
  Exhibit of Certain Actions,
  Suits or Proceedings of Producer and Gatherer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  D:

  	
   

  	
  List of Certain of the
  Reporting and Notification Obligations

  	
   

  
	
  Exhibit
  E:

  	
   

  	
  NFX System Commitments

  	
   

  
	
  Exhibit
  F:

  	
   

  	
  NFX Compressor
  Agreements

  	
   

  
	
  Exhibit
  G:

  	
   

  	
  Fee Schedule

  	
   

  
	
  Exhibit
  H:

  	
   

  	
  Limits referred to in
  Section 10.4

  	
   

  
	
  Exhibit I:

  	
   

  	
  Guaranty Agreement (from parent company)

  	
   

  

 

 38

 

 

Exhibit “A”

 

 

**

 

 39
 

 

 

GAS GATHERING AGREEMENT

 

Exhibit “B”

 

 

**

 

 40
 

 

 

EXHIBIT “B-I”

 

 

**

 

 41
 

 

 

EXHIBIT “C”

 

 

MarkWest Eastern Oklahoma Gas
Company, LLC Lawsuits

 

None

 

 

 

 

Newfield Exploration
Mid-Continent, Inc. Lawsuits

 

None

 

 42
 

 

 

EXHIBIT “D”

 

 

**

 

 43
 

 

 

 

 44
 

 

 

EXHIBIT “E”

 

 

**

 

 45
 

 

 

EXHIBIT F

 

 

**

 

 46
 

 

 

EXHIBIT G

 

 

**

 

 47
 

 

 

EXHIBIT H

 

 

**

 

 48

 

EXHIBIT I

GUARANTY

THIS GUARANTY dated as of September 21, 2006, is
made by MarkWest Energy Partners, L.P., a Delaware limited partnership whose
address is 1515 Arapahoe Sheet, Suite 700 Denver, Colorado 80202 (“Guarantor”),
in favor of Newfield Exploration Mid-Continent Lnc., a Delaware corporation (“Newfield”),
whose address is 110 West 7th Street, Suite 1300 Tulsa, Oklahoma 74119.

WITNESSETH:

WHEREAS, Guarantor owns directly, or indirectly
through one or more subsidiaries, all of the outstanding shares of stock in
MarkWest Western Oklahoma Gas Company, L.L.C, an Oklahoma limited liability
company whose address is 2500 City West, Ste. 740 Houston, Texas 77042 (the “Company”);
and

WHEREAS, the Company has entered into one or
more agreements with Newfield described on Schedule I hereto (such agreements
described on Schedule I, as they may be &om time to time amended, including
all other mutual agreements entered into in substitution, renewal or extension
therefore or thereof, in whole or in part, being herein collectively called the
“Agreements”);

WHEREAS, it is a condition precedent to Newfield’s
execution of transactions with the Company pursuant to the Agreements that
Guarantor execute and deliver to Newiield a satisfactory guaranty of the
Company’s obligations under the Agreements;

WHEREAS, Guarantor and the Company are mutually
dependent on each other in the conduct of their respective businesses as an
integrated operation; and

WHEREAS, Guarantor’s general partner or general
partners have determined that Guarantor’s execution, delivery and performance
of this Guaranty may reasonably be expected to benefit Guarantor, directly or
indirectly, and are in the best interest of Guarantor;

NOW, TIIEREFORE, in consideration of the
premises and of the benefits to be received by Guarantor by virtue of Newfield’s
entering into the Agreements, and in consideration of the payment to Guarantor
of Ten Dollars and other good and valuable consideration, the receipt and
sufficiency of which consideration is hereby acknowledged, and in order to
induce Newfield to enter into the Agreements, Guarantor hereby agrees with
Newfield as follows:

Section 1.              Definitions. As used herein the following terms
shall have the following meanings:

“Obligations”
means collectively all of the obligations and undertakings which are guaranteed
by Guarantor and described in subsections (a) and (b) of Section 2 hereof.

 49
 

 

“Obligors”
means the Company, Guarantor and any other endorsers, guarantors or obligors,
primary or secondary, of any or all of the Obligations.

“Person”
means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, governmental entity or other entity.

Section 2.               Guaranty.

(a)           Guarantor hereby irrevocably,
absolutely, and unconditionally guarantees to Newfield the prompt, complete,
and full payment when due, and no matter how the same shall become due, of:

(i)                                     all
amounts due Newfield by the Company under the Agreements; and

(ii)                                  any
and all other indebtedness or liabilities which the Company may at any time owe
to Newfield on account of or relating to the Agreements or any of them, whether
incurred heretofore or hereafter or concurrently herewith, voluntarily, whether
owed alone or with others, and whether fixed, contingent, absolute, inchoate, liquidated
or unliquidated.

(b)           Guarantor hereby irrevocably,
absolutely and unconditionally guarantees to Newfield the prompt, complete and
full performance, when due, and no matter how the same shall become due, of aU
obligations and undertakings of the Company to Newfield under, by reason of, or
pursuant to any of the Agreements.

(c)           If the Company shall for any reason
fail to pay any Obligation, as and when such Obligation shall become due and
payable, Guarantor will, forthwith upon demand by Newfield, pay such
Obligations in full to Newfield. If the Company shall for any reason fail to
promptly perform any Obligations, Guarantor will, foahwith upon demand by
Newfield, as applicable (to be determined by the action demanded of Guarantor
by Newfield), perform the Obligations or pay the amount of damages recoverable
under the Agreements, if any, on account of such non-performance.

(d)           Guarantor shall be primarily liable
hereunder for the payment and performance of the Obligations.

Section 3.               Unconditional
Guaranty.

(a)           No action which Newfield may take or
omit to take in connection with any of the Agreements or any of the
Obligations, and no course of dealing of Newfield with any Obligor or any other
Person, shall release or diminish Guarantor’s Obligations, liabilities,
agreements, or duties hereunder, nor shall the same affect this Guaranty in any
way or afford Guarantor any recourse against Newfield, regardless of whether
any such action or inaction may increase the risks to or liabilities of
Newfield or any Obligor. Without limiting the foregoing, Guarantor hereby
expressly agrees that Newfield may, from time to time, without notice to or the
consent of Guarantor:

 50
 

 

(i)            amend, change or modify, in whole or
in part, any one or more of the Agreements (with the agreement of the Company),
and give or refuse to give any waivers or other indulgences with respect
thereto;

(ii)           neglect, delay,
fail, or refuse: to take or prosecute any action for the enforcement of any of
the Obligations, to bring suit against any Obligor or any other Person, or to
take any other action concerning the Obligations or the Agreements

(iii)          change, rearrange,
extend, or renew the time, terms, or manner for payment or performance of any
one or more of the Obligations (with the agreement of the Company);

(iv)          compromise or settle
any unpaid or unperformed Obligation or any other Obligation or amount due or
owing, or claimed to be due or owing, under any one or more of the Agreements
(with the agreement of the Company);

(v)           apply all monies
received from any Obligor in any manner permitted under the Agreements as
Newfield may determine to be in Newfield’s best interest, without in any way
being required on account of this Guaranty to inarshall security or assets or
to apply all or any part of such monies upon any particular Obligations.

(b)           No action or inaction of any Obligor
or any other Person, and no change of law or circumstances, shall release or
diminish Guarantor’s obligations, liabilities, agreements or duties hereunder,
affect this Guaranty in any way, or afford Guarantor any recourse against
Newfield. Without limiting the foregoing, the obligations, liabilities,
agreements, and duties of Guarantor under this Guaranty shall not he released,
diminished, impaired, reduced, or affected by the occurrence of any of the
following, from time to time, even if occurring without notice to or without
the consent of Guarantor:

(i)            any voluntary or involuntary
liquidation, dissolution or sales of all or substantially all assets,
marshalling of assets or liabilities, receivership, conservatorship, assignment
for the benefit of creditors, insolvency, bankruptcy, reorganization,
arrangement, or composition of any Obligor or any of the assets of any Obligor
under laws for the protection of debtors, or any discharge, impairment,
modification, release, or limitation of the liability of, or stay of actions or
lien enforcement proceedings against, any Obligor, any properties of any
Obligor, or the estate in bankruptcy or any Obligor in the course of or
resulting from any such proceedings;

(ii)           the failure by Newfield to file or
enforce a claim in any proceeding described in the immediately preceding
subsection (i) or to take any other action in any proceeding to which any
Obligor is a party;

 51
 

 

(iii)          the release by operation of law of the
Company in any proceeding described in subsection (i) or any similar
proceeding, or the release of any other Obligor from any of the Obligations or
any other obligations to Newfield; or

(iv)          the fact that Guarantor may have
incurred directly part of the Obligations or is otherwise primarily liable
therefor.

(c)           Newfield may invoke the benefits of
this Guaranty before pursuing any remedies against any Obligor or any other
Person for the payment or performance of any of the Obligations. Newfield may
maintain an action against Guarantor on this Guaranty without joining any other
Obligor therein and without bringing separate action against any other Obligor.

(d)           If payment to Newfield of any
Obligation is held to constitute a preference or a voidable transfer under
applicable state or federal laws, or if for any other reason Newfield is
required to refund such payment to the payor thereof or to pay the amount
thereof to any other Person, such payment to Newfield shall not constitute a release
of Guarantor from any liability hereunder, and Guarantor agrees to pay such
amount to Newfield on demand and agrees and acknowledges that this Guaranty
shall continue to be effective or shall be reinstated, as the case may be, to
the extent of any such payment or payments.

(e)           This is a continuing guaranty and
shall apply to and cover all Obligations and renewals and extensions thereof
and substitutions therefor from time to time.

Section 4.               Waiver. Guarantor hereby
waives, with respect to the Obligations and this Guaranty:

(a)          notice of the incurrence
of any Obligation by the Company;

(b)         notice that Newfield, any Obligor, or any other Person has
taken

relating thereto or that any Obligor is in
default under any of the Agreements;

(c)   demand, presentment for payment, and notice
of demand, dishonor, nonpayment, or nonperformance; and

(d)         all
other notices whatsoever.

Section 5.              Exercise
of Remedies. Newfield shall have the right to enforce, from time to time,
in any order and at Newfield’s sole discretion, any rights, powers and remedies
which Newfield may have under the Agreements or otherwise, including, but not
limited to, issues and profits, the exercise of remedies against personal
property, or the enforcement of any assignment of leases, rentals, oil or gas
production, or other properties or rights, whether real or personal, tangible
or intangible; and Guarantor shall be liable to Newfield hereunder for any
deficiency 

 52
 

 

resulting
from the exercise by Newfield of any such right or remedy even though the
rights which Guarantor may have against the Company or other Person may be
destroyed or diminislied by the exercise of any such right or remedy. No
failure on the part of Newfield to exercise, and no delay in exercising, any
right hereunder or under any other Agreements shall operate as a waiver hereof
or thereof, nor shall any single or partial exercise of any right preclude any
other or further exercise thereof or the exercise of any other right. The
rights, powers and remedies of Newfield provided herein and in the other are
cumulative and are in addition to, and not exclusive of, any other rights,
powers or remedies provided by law or in equity. The rights of Newfield
hereunder ace not conditional or contingent on any attempt by Newfield to
exercise any of its rights under any other Agreements against any Obligor or
any other Person.

Section 6.              No
Subrogation. Insofar as Guarantor and the Company are concerned, any
payment hereunder by Guarantor shall be deemed a contribution to the capital of
the Company, and Guarantor shall have no right of subrogation, contribution,
reimbursement, indemnification exoneration and any other remedy which Guarantor
may have against Company or any other Person with respect to this Guaranty or
the duties of Guarantor under the other Agreements or applicable law. Guarantor
hereby irrevocably agrees, to the fullest extent permitted by law, that it will
not exercise (and herein waives) any rights against any Company or any other
Person which it may acquire by way of subrogation, contribution, reimbursement,
indemnification or exoneration under or with respect to this Guaranty, the
other Agreements or applicable law, by any payment made hereunder or otherwise.
If the foregoing waivers are adjudicated unenforceable by a court of competent
jurisdiction, then Guarantor agrees that no liability or obligation of the
Company that shall accrue by virtue of any right to subrogation, contribution,
indemnity, reimbursement or exoneration shall be paid, nor shall any such
liability or transaction be deemed owed, until all of the Obligations shall
have been paid in full.

Section 7.              Successors
and Assigns. Guarantor’s rights or obligations hereunder may not be
assigned or delegated, but this Guaranty and such obligations shall pass to and
be fully binding upon the successors of the Guarantor, as well as Guarantor.
This Guaranty shall apply to and inure to the benefit of Newfield and its
successors or assigns. Without limiting the generality of the immediately
preceding sentence, Newfield may assign, grant a participation in, or otherwise
transfer any Obligation held by it or any portion thereof under any Agreements,
to any other Person, and such other Person shall thereupon become vested with
all of the benefits in respect thereof granted to Newfield hereunder with
respect to the Obligation or portion thereof assigned by Newfield to such other
Person.

Section 8.              Representations
and Warranties. Guarantor hereby represents and warrants as follows:

(a)      the “WHEREAS” recitals at the beginning of
this Guaranty are true and correct in all respects;

(b)     the
execution, delivery and performance of this Guaranty by the Guarantor has been
duly authorized in all material respects by all necessary limited partnership
action on the part of Guarantor pursuant to the Guarantor’s certificate of
limited partnership, limited partnership agreement, other constituent documents
and/or applicable law, the execution and delivery of this Guaranty by the
general partner executing this Guaranty oil behalf of the General Partner below
has been duly authorized in all material 

 53
 

 

respects by all necessary corporate or
similar action on the part of the general partner or general partners of the
Guarantor, and written documentation (in the form of certified resolutions,
other certificates or other documentation reasonably satisfactory to Newfield)
shall be provided to Newfield upon its request;

(c)      the value of the consideration received and to be received by
Guarantor in connection herewith is reasonably worth at least as much as the
liability and Obligations of Guarantor hereunder, and the incurrence of such
liability and obligations in return for such consideration may reasonably be
expected to benefit Guarantor, directly or indirectly; and

(d)     Guarantor is not “insolvent” on the date hereof (that is, the
sum of Guarantor’s absolute and contingent liabilities, including the
Obligations, does not exceed the fair market value of Guarantor’s assets).
Guarantor’s capital is adequate for the business in which Guarantor is engaged
and intends to be engaged. Guarantor has not hereby incurred, nor does
Guarantor intend to incur or believe that it will incur, debts which will be
beyond its ability to pay as such debts mature.

Section 9.              Governing
Law. This Guaranty is to be performed in the state of Texas and shall be
governed by and construed and enforced in accordance with the laws of such
state applicable to contracts made to be performed entirely within such state.
Guarantor hereby irrevocably submits itself to the non-exclusive jurisdiction
of the state and federal courts of the State of Texas, County of Harris, and
agrees and consents that service of process may be made upon it in any legal
proceeding related hereto by serving the Secretary of State of the State of
Texas (or by other service) in accordance with applicable provisions of the
Texas revised civil statutes, as amended, governing service of process upon
foreign limited partnerships.

Section 10.            Invalidity
of Particular Provisions. If any term or provision of this Guaranty shall be
determined to be illegal or unenforceable, all other terms and provisions
hereof shall nevertheless remain effective and shall be enforced to the fullest
extent permitted by applicable law.

Section 11.            Headings
and References. The headings used herein are for purposes of convenience
only and shall not be used in construing the provisions hereof. The words “hereof”,
“herein” and similar words refer to this Guaranty as a whole and not to any
particular subdivision unless expressly so limited. The word “or” is not
exclusive. Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.

Section 12.            Term.
This Guaranty shall be irrevocable until all of the Obligations have been
completely and finally paid and performed.

Section 13.            Limitation
on Interest. Newfield and Guarantor intend to contract in strict compliance
with applicable usury law from time to time in effect, and provisions of the
Agreement limiting the interest for which Guarantor is obligated are expressly
incorporated herein by reference.

Section 14.            Counterparts. This Guaranty may be executed in any
number of counterparts, each of which when so executed shall he deemed to
constitute one and the same 

 54
 

 

Guaranty.

 55
 

 

IN WITNESS WHEREOF, Guarantor has executed and
delivered this Guaranty as of the date first written above.

	
  

  	
  MARKWEST ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By: MarkWest Energy GP, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Frank Semple

  
	
   

  	
   

  	
  Name: 

  	
  Frank Semple

  
	
   

  	
   

  	
  Title: 

  	
  President & CEO

  

 56
 

 

 

SCHEDULE 1

TO

Guaranty dated of

MarkWest Energy Partners, L.P. in favor
of Newfield Exploration Mid-Continent Inc.

 

AGREEMENTS

 

CONSTRUCTION, OPERATION AND GAS GATHERING AGREEMENT dated
entered into by and between Newfield Exploration Mid-Continent Inc., as
Producer, and MarkWest Western Oklahoma Gas Company, L.L.C., as Gatherer.

 

 57Exhibit 10.1

 

CONFIDENTIAL TREATMENT REQUESTED UNDER 17
C.F.R. §§ 200.80(b)4, AND 240.24b-2

 

MANUFACTURING, COMMERCIALIZATION AND

DEVELOPMENT AGREEMENT

 

THIS MANUFACTURING, COMMERCIALIZATION AND DEVELOPMENT
AGREEMENT (this “Agreement”) is entered into as of July 31,
2006 (the “Effective Date”) between ISIS PHARMACEUTICALS, INC., a Delaware
corporation, through its IBIS BIOSCIENCES division (“Ibis”), and BRUKER
DALTONICS INC., a Delaware corporation (“Bruker”).

 

BACKGROUND

 

Bruker
has expertise in manufacturing, promoting, supplying, installing and servicing
analytical instruments (including mass spectrometers). Ibis has invented and
created a system to identify infectious agents, a component of which is a mass
spectrometer, and wishes to commercialize this system, referred to herein as
the T5000 System. Bruker and Ibis wish to establish a strategic alliance under
which Ibis will commit to deploying T5000 Systems incorporating Bruker’s mass
spectrometer, Bruker will manufacture, promote, supply, install and service
T5000 Systems and the parties will use Bruker’s contacts with government and
non-government entities in Europe and the Middle East, as well as its global
infrastructure and expertise in processing systems and consumables orders and
supporting customers.

 

Accordingly,
during the Term, Bruker will be the exclusive supplier of mass spectrometers
for use in T5000 Systems and the exclusive manufacturer of T5000 Systems. In
addition, Bruker will be the exclusive promoter and supplier of T5000 Systems
(and consumables used to operate T5000 Systems) to government entities in
Europe and the Middle East. Bruker will also be a non-exclusive promoter and
supplier of T5000 Systems and consumables to non-government entities in Europe
and the Middle East and will support Ibis’ promotion efforts in North America. Bruker
will be entitled to buy consumables for T5000 Systems from Ibis at a discount
and resell such consumables to its customers.

 

Bruker
will be responsible for processing and fulfilling orders for T5000 Systems
originating from, and delivering T5000 Systems to, customers in North America,
Europe and the Middle East. Bruker will be responsible for hardware-related
issues (as described herein) originating in North America, Europe and the
Middle East, and will be the point-of-contact for consumables- and
software-related issues (as described herein) originating in Europe and the
Middle East. Ibis will be responsible for consumables- and software-related
issues originating in North America. The parties will also have certain
training and other responsibilities as set forth herein.

 

In
consideration of the foregoing premises, the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:

 

 

ARTICLE 1

DEFINITIONS

 

1.1                               Definitions.
For purposes of this Agreement (including its exhibits and schedules),
capitalized terms used herein not otherwise defined herein will have the
meanings set forth on Exhibit A.

 

ARTICLE 2

TECHNOLOGY TRANSFER PERIOD

 

2.1                               Overview.
To fulfill the commercialization objectives of this Agreement, Ibis will
need to train Bruker on the Ibis Technology, including manufacture of the Ibis
Amplicon Desalting Module and operation of the Ibis Analytical Systems. In
addition, prior to the Technology Transfer Date, Ibis may receive indications
of interest to purchase or may negotiate the sale of T5000 Systems. Ibis will
have sole discretion whether to supply any such T5000 Systems. If Ibis decides
to supply any such T5000 Systems, it will be on the terms set forth in this
Article 2.

 

2.2                               Technology
Transfer Plan. The parties will establish a Technology Transfer Management
Committee that will manage and ensure the successful transfer of the Ibis
Technology to Bruker. The TMC will make decisions by unanimous vote and will be
comprised of an equal number of individuals from each party with the background
necessary to transfer the Ibis Technology as quickly as possible. In
particular, the TMC will: (a) prepare and approve a plan setting forth the
parties’ respective rights and responsibilities with respect to transferring
the Ibis Technology to Bruker (the “Technology Transfer Plan”) and (b) set a
date by which Bruker will assume full responsibility for the manufacture of
T5000 Systems (including the Ibis Amplicon Desalting Module) and its other
responsibilities as set forth herein, which date will be within 6 months of the
Effective Date (the “Technology Transfer Date”).

 

2.3                               Technology
Transfer Purchase Order Plan. The TMC will prepare and approve a plan
setting forth the parties’ respective rights and responsibilities with respect
to orders for T5000 Systems and Ibis Consumables received prior to the Technology
Transfer Date (the “Technology Transfer Purchase Order Plan”). The Technology
Transfer Purchase Order Plan will address, among other things: (a) processing
of orders (which will be by Bruker and in a similar manner as it processes
orders for its own comparable products), (b) terms and conditions related to
Bruker’s delivery of MicrOTOFs and Ibis delivery of Ibis Amplicon Desalting
Modules to the customer site and (c) responsibility for assembly and
Installation of, training on, and service and support for, T5000 Systems
(including transition of responsibility, if any).

 

2.4                               Responsibilities.
Each party will use commercially reasonable efforts in performing its
obligations under the Technology Transfer Plan and the Technology Transfer Purchase
Order Plan. Without limiting the foregoing, (a) the parties will cooperate and
provide the data and assistance reasonably necessary to enable Bruker to assume
full responsibility for the manufacture of T5000 Systems by the Technology
Transfer Date,
(b) Ibis will provide Bruker with access to a full technical data package for
T5000 Systems, including drawings

 

2

 

prepared by Omnica Corporation related to T5000 Systems, and (c) Ibis
will authorize the Omnica Corporation to sell the equipment related to the
T5000 to Bruker under the same terms and pricing provided to Ibis.

 

2.5                               Costs
and Expenses; Revenue Sharing. Each party will bear its own costs
(including those related to labor, materials and other expenses) associated
with performing under the Technology Transfer Plan and the Technology Transfer Purchase
Order Plan. System Revenues generated from the sale of any such T5000 Systems
will be subject to the revenue sharing provisions set forth in Section 5.2.

 

2.6                               Term.
The TMC will complete all of its tasks under this Article 2 prior to the Technology
Transfer Date.

 

ARTICLE 3

RIGHTS AND RESPONSIBILITIES;
COMMERCIALIZATION PLAN

 

3.1                               Rights.
Subject to the terms and conditions of this Agreement (including Section 3.3,
3.4, 3.5, 11.2 and 11.3), for the Term Ibis hereby appoints Bruker as, and
Bruker hereby accepts appointment as:

 

3.1.1                     As of the
Effective Date, exclusive supplier of mass spectrometers for use in T5000
Systems.

 

3.1.2                     As of the
Technology Transfer Date, exclusive manufacturer of T5000 Systems for all uses,
except IVD Use, throughout the world.

 

3.1.3                     As of the
Effective Date, exclusive promoter, seller/reseller and supplier of T5000
Systems and Ibis Consumables for Government Use in the countries comprising the
European/Middle East Territory.

 

3.1.4                     As of the Effective Date,
non-exclusive promoter, seller/reseller and supplier of T5000 Systems and Ibis
Consumables for Other Use by End Users located in the European/Middle East
Territory.

 

For clarification, Bruker will not have any rights to manufacture,
promote, sell/resell or supply T5000 Systems or Ibis Consumables nor any
responsibility to install and service any T5000 Systems, for any IVD Use.

 

3.2                               Commercialization
Plan.

 

3.2.1                     Overview. To
implement the general framework set forth in this Agreement, the parties must
define the specifics of each party’s rights and responsibilities with respect
to the various tasks contemplated herein. Exhibit B sets forth the scope
of each party’s responsibilities, specific responsibilities of each party and
topics that need to be addressed by the parties.

 

3.2.2                     Commercialization
Plan. Subject to the provisions described under

 

3

 

“Scope of Responsibilities” and “Specific Responsibilities” in Exhibit
B, the parties will, prior to the Technology Transfer Date, mutually agree on a
more detailed commercialization plan (the “Commercialization Plan”) that is
consistent with the overall intent of this Agreement and the scope and specific
responsibilities set forth under “Scope of Responsibilities” and “Specific
Responsibilities” in Exhibit B and that addresses the items described under “Topics
to Address” in Exhibit B and such other items that are consistent with the
foregoing.

 

3.2.3                     Responsibilities.
Each party will use commercially reasonable efforts in performing its
obligations under the Commercialization Plan.

 

3.2.4                     Costs and
Expenses. Each party will bear its own costs (including those related to
labor, materials and other expenses) associated with performing under the
Commercialization Plan.

 

3.2.5                     Conflicts. For
clarification, in the event of any inconsistency between this Agreement and the
Commercialization Plan, the terms and conditions of this Agreement will govern
and control.

 

3.3                               Existing
Agreements; U.S. Government; Internal Use. Section 3.1 and anything in the
Commercialization Plan to the contrary notwithstanding, Ibis retains the right
to manufacture, promote, sell and supply, as well as process and fulfill orders
for and deliver and Install, T5000 Systems (with or without additional
components) (a) pursuant to any agreement initially entered into prior to the
Effective Date, (b) to the U.S. Government (or any contractor or subcontractor
thereof) pursuant to any agreement (including grants and subcontracts) (i)
initially entered into prior to the Effective Date, (ii) that result from
proposals or similar submissions submitted by Ibis prior to the Effective Date
or (iii) that do not permit Ibis to subcontract with Bruker or (c) for the
internal use of Ibis and its Affiliates; provided, however, that Ibis
has the option to require Bruker to manufacture, promote and sell, process and
fulfill orders for, supply, deliver, Install, provide training on, service and
support and provide Updates for such T5000 Systems on the terms and conditions
set forth herein. In the event Ibis exercises such option, Ibis will direct the
relevant party to submit an order directly to Bruker.

 

3.4                               Territorial
Limitation. Section 3.1 notwithstanding, Bruker will not promote, sell,
supply, deliver or Install (or cause to be promoted, sold, supplied, delivered
or Installed) any T5000 System or Ibis Consumables outside the North American
Territory and the European/Middle East Territory except in compliance with
Section 3.5. If Bruker receives an indication of interest or order from a
prospective purchaser for T5000 Systems or Ibis Consumables that would require
supplying, delivering or Installing T5000 Systems or Ibis Consumables, as
applicable, in a location outside the North American Territory or the
European/Middle East Territory, Bruker will immediately inform Ibis and,
subject to Section 3.5, the Ibis President and a vice president- or
president-level officer of Bruker will consider the potential transaction.

 

3.5                               Expansion
of Rights and Responsibilities. In the event either party wishes to expand
the scope of Bruker’s rights set forth in Section 3.1 (and correlative
obligations) or alter, expand or reduce the scope and specific responsibilities
set forth under “Scope of Responsibilities” or “Specific Responsibilities” in
Exhibit B, the Ibis President and a vice

 

4

 

president- or president-level officer of Bruker will discuss such
expansion in good faith and any agreed upon expansion will be mutually agreed
to in writing.

 

ARTICLE 4

MICROTOFS AND MICROTOF PARTS

 

4.1                               Supply.

 

4.1.1                     In the event Ibis exercises its
right under Section 3.3 to manufacture, promote, sell and supply T5000 Systems,
Bruker will supply, deliver and sell to Ibis such quantities of MicrOTOFs for
integration into such T5000 Systems as set forth in Ibis’ purchase orders,
pursuant to the pricing in Section 5.6. Such purchase orders will set forth the
quantity and the desired delivery date and will otherwise be governed by
Exhibit D (other than with respect to the warranty relating to such MicrOTOFs,
which will be governed by Section 4.2).

 

4.1.2                     During the Term, the Transition
Term and for [***] years following the end of the Transition Term, in the event
Ibis desires to service and support T5000 Systems (including any predecessor or
similar systems that incorporate a MicrOTOF) supplied, delivered and/or
installed by Ibis prior to the Effective Date or supplied, delivered and/or
installed by Ibis after the Effective Date pursuant to its exercise of its
rights under Section 3.3 and requires parts that Bruker commonly sells (“Part(s)”),
Bruker will supply, deliver and sell to Ibis or its customers such kind and
quantity of Parts for use in servicing and supporting such T5000 Systems or
systems as set forth in Ibis’ purchase orders, pursuant to the pricing in
Section 5.6. Such purchase orders will set forth the quantity and the desired
delivery date and will otherwise be governed by Exhibit D (other than with
respect to the warranty relating to such Parts, which will be governed by
Section 4.2).

 

4.2                               Warranty.

 

4.2.1                     Bruker
will service and support the MicrOTOF integrated into each T5000 System
described in Section 4.1.1 pursuant to the warranty accompanying such MicrOTOF.
Anything in such warranty to the contrary notwithstanding, such warranty will (a)
inure to the benefit of and be valid and enforceable by Ibis and/or the end
user of each T5000 System described in Section 4.1.1 and (b) the warranty
period will be for a period of [***] year beginning upon demonstration by
Bruker that the MicrOTOF complies with its specification, but in any event not
more than (i) [***] months after delivery to such end user or (ii) [***] months
after delivery to Ibis.

 

4.2.2                     Bruker
will service and support the Parts supplied pursuant to Section 4.1.2 pursuant
to the warranty accompanying such Parts (the “Parts Warranty”). Anything in the
Parts Warranty to the contrary notwithstanding, the Parts Warranty will (a)
inure to the benefit of and be valid and enforceable by Ibis and/or the end
user of each T5000 System described in Section 4.1.2and (b) the warranty period
will be for a period of [***] year beginning upon demonstration by Bruker that
the applicable Part complies with its specification, but in any event not more
than (i) [***] months after delivery to such end user or (ii) [***] months
after delivery to Ibis.

 

5

 

4.3                               Terms
of Purchase and Sale. The parties will prepare and approve a plan setting
forth the parties’ respective rights and responsibilities with respect to
supplying and delivering MicrOTOFs and Parts (the “MicrOTOF Delivery Plan”). The
MicrOTOF Delivery Plan will address, among other things: (a) lead-time required
by Bruker for timely delivery of MicrOTOFs and Parts, (b) terms of delivery of
MicrOTOFs and Parts (including packing, transportation and insurance requirements
as set forth in Exhibit D) and (c) other specific obligations and undertakings
of each party related to the foregoing.

 

ARTICLE 5

REVENUE SHARING; PRICING; PAYMENT

 

5.1                               Bruker
Negotiated Sales of T5000 Systems. With respect to each sale of a T5000
System the price of which is negotiated by Bruker and for which (a) Bruker
sells, delivers and Installs, trains End Users on, services and supports and
provides Updates for such T5000 System (all as contemplated by the
Commercialization Plan) and (b) Ibis fulfills its obligations as contemplated
by the Commercialization Plan with respect to such T5000 System, Bruker will
pay Ibis amounts based on the following percentages of System Revenues (subject
to the following minimums), which amounts will be cumulative and in addition to
any other payments to be made to Ibis under this Agreement:

 

5.1.1                     [***]% of
System Revenues for such T5000 System, but in no event less than $[***] per
such T5000 System (unless specifically authorized in writing by the Ibis President
for any particular End User); plus

 

5.1.2                     [***]% of
System Revenues for such T5000 System, but in no event less than $[***] per
such T5000 System, if Ibis supplies and delivers the Ibis Amplicon Desalting
Module; plus

 

5.1.3                     [***]% of
System Revenues for such T5000 System, but in no event less than $[***] per
such T5000 System, if Ibis services and supports the Ibis Amplicon Desalting
Module.

 

For
clarification, for purposes of Section 5.1(b), Ibis’ obligations under the
Commercialization Plan are not specific to particular sales or deployments of
T5000 Systems, but rather require Ibis to provide Bruker generally with the Ibis
Analytical Systems that will be integrated with each particular sale and
deployment of a T5000 System.

 

5.2                               Ibis
Negotiated Sales of T5000 Systems. With respect to each sale of a T5000
System (a) the price of which is negotiated by Ibis or an Ibis Partner and for
which (i) Bruker sells, delivers and Installs, trains End Users on, services
and supports and provides Updates for such T5000 System (all as contemplated by
the Commercialization Plan) and (ii) Ibis fulfills its obligations under the
Commercialization Plan with respect to such T5000 System or (b) under the
Technology Transfer Purchase Order Plan, Bruker is entitled to retain the
applicable percentage of System Revenues set forth below (subject to the applicable
minimum set forth below) and Bruker will pay Ibis any remaining amount
resulting from such sale, which amounts will be in addition to any other
payments to be made to Ibis under this Agreement:

 

6

 

5.2.1                     If Ibis
did not supply and deliver the Ibis Amplicon Desalting Module and is not
servicing and supporting the Ibis Amplicon Desalting Module, [***]% of System
Revenues for such T5000 System, but in no event less than $[***] per such T5000
System (unless specifically authorized in writing by Bruker by an authorized
officer for any particular End User); or

 

5.2.2                     If Ibis
did supply and deliver the Ibis Amplicon Desalting Module but is not servicing
and supporting the Ibis Amplicon Desalting Module, [***]% of System Revenues
for such T5000 System, but in no event less than $[***] per such T5000 System
(unless specifically authorized in writing by Bruker by an authorized officer for
any particular End User); or

 

5.2.3                     If Ibis did supply and deliver the
Ibis Amplicon Desalting Module and is servicing and supporting the Ibis
Amplicon Desalting Module, [***]% of System Revenues for such T5000 System, but
in no event less than $[***] per such T5000 System (unless specifically
authorized in writing by Bruker by an authorized officer for any particular End
User).

 

For
clarification, for purposes of Section 5.2(a)(ii), Ibis’ obligations under the
Commercialization Plan are not specific to particular sales or deployments of
T5000 Systems, but rather require Ibis to provide Bruker generally with the Ibis
Analytical Systems that will be integrated with each particular sale and
deployment of a T5000 System.

 

5.3                               Ibis
Sales of T5000 Systems (Other than Full Bruker Participation). For each
sale of a T5000 System the price of which is negotiated by Ibis or an Ibis
Partner but not covered by Section 5.2 (that is, Bruker does not perform all of
the tasks assumable by Bruker as set forth in the Commercialization Plan), Ibis
and Bruker, in accordance with Section 15.10, will determine an equitable
allocation of System Revenues based on obligations assumed by Ibis (either
directly or through a Third Party, including an Ibis Partner).

 

5.4                               Bruker
Purchase of Ibis Consumables. Solely in connection with satisfying its
obligations under the Commercialization Plan, beginning on the Effective Date
Bruker may purchase, and Ibis will sell, Ibis Consumables at [***]% of Ibis’
then current list price for such Ibis Consumables in the United States.
However, if Ibis discounts particular Ibis Consumables by more than [***]% from
its current list price in the United States for purchases of the same or
similar Ibis Consumables in the same or similar volume, then Bruker may
purchase, and Ibis will sell, Ibis Consumables at [***]% of Ibis average selling
price in the United States for purchases of the same or similar Ibis
Consumables in the same or similar volume. Notwithstanding the foregoing, the
parties understand and agree that Ibis may, from time to time, provide
discounted Ibis Consumables to customers who will be supplying data to Ibis for
marketing, regulatory or other valuable purposes or in connection with a
significant relationship. Such discounted Ibis Consumables will not be included
in calculating such average price; provided, however, that in any case
not more than [***]% of Ibis Consumables sales will be excluded from the
calculation of such average price.

 

5.5                               Extended
Warranty. (a) For each Extended Warranty sold to an End User located in the
North American Territory, Bruker will pay Ibis [***]% of Extended Warranty
Revenues (provided Ibis fulfills its obligations under the Commercialization
Plan with respect to

 

7

 

providing Bruker with Renewal Updates), but in no event less than
$[***] for each year of coverage under such Extended Warranty (unless
specifically authorized in writing by the Ibis President for any particular End
User or any particular defined business incentive) and (b) for each Extended
Warranty sold to an End User located outside the North American Territory,
Bruker will pay Ibis [***]% of Extended Warranty Revenues (provided Ibis
fulfills its obligations under the Commercialization Plan with respect to
providing Bruker with Renewal Updates), but in no event less than $[***] for
each year of coverage under such Extended Warranty (unless specifically
authorized in writing by the Ibis President for any particular End User or any
particular defined business incentive). Bruker acknowledges and agrees that
these payments are tied to each Extended Warranty sold to an End User for each
T5000 System purchased by such End User for each year of coverage under such
Extended Warranty. For clarification, (c) for purposes of Section 5.5(a), Ibis’
obligations under the Commercialization Plan with respect to providing Bruker
with Renewal Updates are not specific to particular sales of Extended
Warranties, but rather require Ibis to provide Bruker generally with Renewal
Updates that will be integrated with each particular sale of an Extended Warranty
and (d) Bruker has no obligation to compensate Ibis for providing Renewal
Updates other than as set forth in Section 5.5(a) and (b).

 

5.6                               MicrOTOFs;
Parts. Bruker will sell MicrOTOFs to Ibis pursuant to Section 4.1.1 at a
fixed price of $[***] per MicrOTOF and, during the Term, the Transition Term
and for [***] years following the end of the Transition Term, will sell Parts
to Ibis pursuant to Section 4.1.2 at [***]% of Bruker’s then-current list price
for such Parts in the United States.

 

5.7                               Payment
Terms.

 

5.7.1                     All
payments by Bruker under Section 5.1, 5.2, 5.3 and 5.5 will be calculated based
on System Revenues and Extended Warranty Revenues, as applicable. Ibis’ share
of System Revenues  are due and payable
within 30 days of the end of the calendar month in which the initial
Installation is complete. Ibis’ share of Extended Warranty Revenues are due and
payable within 30 days of the end of the each calendar month in which Bruker
receives payment.

 

5.7.2                     All
payments by Bruker under Section 5.4 (for Ibis Consumables) and all payments by
Ibis under Section 5.6 (for MicrOTOFs and Parts) are due and payable within [***]
days of the invoice date.

 

5.7.3                     All
payments hereunder will be by check or wire transfer to a bank account
designated by the party to whom such payment is due pursuant to instructions
provided by such party.

 

5.7.4                     All
payments hereunder and System Revenues calculations and Extended Warranty
Revenues calculations will be reflected in United States dollars. If any
currency conversion is required to reflect System Revenues or Extended Warranty
Revenues in United States dollars, such conversion will be made by using the
average of the exchange rates for the purchase and sale of United States
dollars as published in The Wall Street
Journal, Eastern Edition, on the last business day of the calendar
month to which a payment relates.

 

8

 

5.7.5                     Any
payments under this Agreement that are not paid when due will bear interest to
the extent permitted by applicable law at the prime rate as reported by the
Bank of America, New York, New York, on the date such payment is due, plus an
additional 12% simple interest per annum, calculated on the number of days such
payment is delinquent and a 365 day year; provided, however, that in no
event will such rate exceed the maximum legal interest rate allowed by law. The
party from whom the payment is due will pay all costs and expenses incurred by
the party to whom payment is due in collecting delinquent amounts (including
late charges), including attorneys’ fees and costs. The party to whom the
payment is due may accept partial payment by the party from whom the payment is
due, which will not constitute a waiver of the right of the party to whom the
payment is due to collect the balance. This Section 5.7.5 will in no way limit
any other remedies available to any party.

 

5.8                               Reports.
Each payment under Section 5.1, 5.2 and 5.5 will be accompanied by a report
of System Revenues and Extended Warranty Revenues during the calendar month
related to such payment. Such report will be in sufficient detail so as to
permit confirmation of the accuracy of payments made, including (as applicable)
amounts invoiced/purchase orders received, initial Installations completed, gross
receipts, applicable deductions, the applicable percentage applied and the
aggregate payment due to Ibis for such calendar month.

 

5.9                               Taxes.
The party making payment hereunder will pay any and all taxes levied on
account of such payment. If laws or regulations require that taxes be withheld,
the party making such payment will (a) timely pay the taxes to the proper
taxing authority, and (b) send proof of payment to the party receiving such
payment and certify its receipt by the tax authorities within 60 days following
that payment.

 

5.10                        Records;
Audits.

 

5.10.1              Records. Bruker
will keep, and will require its Affiliates to keep, complete, true and accurate
books and records (a) pertaining to the sale or other disposition of T5000
Systems, Ibis Consumables and Extended Warranties in sufficient detail to
permit confirmation of the accuracy of all payments due hereunder and (b) of
Systems Revenues and Extended Warranty Revenues in accordance with United
States generally accepted accounting principles in sufficient detail to permit
confirmation of the accuracy of all payments due hereunder. Bruker will keep
such books and records for at least three years following the end of the
calendar year to which they pertain.

 

5.10.2              Audit. Upon the
written request of Ibis and not more than once in any 12-month period, Bruker
will, and will require its Affiliates to, permit an independent certified
public accounting firm of nationally recognized standing selected by Ibis to
have access during normal business hours to such books and records of Bruker
and its Affiliates as may be reasonably necessary to verify the accuracy of the
reports under Section 5.8. The accounting firm will disclose to Ibis only
whether the royalty reports are correct or incorrect and the specific details
concerning any discrepancies. No other information will be provided to Ibis. If
such accounting firm identifies a discrepancy made during such period, Bruker
will pay Ibis the amount of the discrepancy within 30 days of the date that the
Ibis delivers to Bruker such accounting firm’s written report so concluding, or
as otherwise agreed upon by the parties. The fees charged by such accounting
firm will be paid by Ibis; provided, however, that if an audit

 

9

 

uncovers an underpayment of amounts due by Bruker under this Article 5
by more than 5% then (a) the fees of such accounting firm will be paid by
Bruker and (b) such audit will not count as an audit for purposes of the
frequency by which Ibis may audit Bruker’s records under this Section 5.10.2.

 

5.10.3              Confidential
Information. All financial information subject to review under this Section
5.10 will be treated as Confidential Information of Bruker and Ibis will cause
its accounting firm to enter into an acceptable confidentiality agreement with
Bruker obligating it to retain all such information in confidence (subject to
reasonable exceptions).

 

ARTICLE 6

TRADEMARKS

 

6.1                               Trademark
Use.

 

6.1.1                     Ibis’ Marks. Subject
to the terms and conditions of this Agreement and during the Term and the
Transition Term, Ibis hereby grants Bruker a non-exclusive, non-transferable,
royalty-free limited license to use Ibis’ Marks in the North American Territory
and the European/Middle East Territory solely in connection with the performance
of its obligations under the Commercialization Plan. Ibis grants no rights
other than those expressly granted hereunder, and Bruker hereby agrees to and
recognizes Ibis’ exclusive ownership of Ibis’ Marks. Any use of Ibis’ Marks
will be in conformity with the trademark policy and other written instructions
of Ibis.

 

6.1.2                     Bruker Marks.
Subject to the terms and conditions of this Agreement, during the Term and
the Transition Term, Bruker hereby grants Ibis a non-exclusive,
non-transferable, royalty-free limited license to use Bruker’s Marks solely in
connection with the performance of its obligations under the Commercialization
Plan. Bruker grants no rights other than those expressly granted hereunder, and
Ibis hereby agrees to and recognizes Bruker’s exclusive ownership of Bruker’s
Marks. Any use of Bruker’s Marks will be in conformity with the trademark
policy and other written instructions of Bruker.

 

6.2                               Maintenance
of Marks. Each party will use the other party’s Marks in compliance with
all applicable laws, rules and regulations and in a manner that reflects
favorably upon and preserves the integrity of such other party’s Marks. Each
party agrees not to (a) adopt or use any trademarks, brand names, words, logos,
symbols, letters, designs or marks that would be confusingly similar to the
other party’s Marks, (b) modify any of the other party’s Marks in any way, (c)
use any of the other party’s Marks on or in connection with any goods or
services other than the T5000 Systems or (d) take any other action that could
diminish the value of the other party’s Marks or damage the goodwill and/or
reputation for quality associated with such other party’s Marks. Any goodwill
arising out of the use by a party of the other party’s Marks hereunder will
inure to the benefit of the owner thereof. Each party agrees to provide the
other party with a sample of all proposed marketing materials and any other
materials utilizing the other party’s Marks at least 30 days prior to use
thereof.

 

10

 

ARTICLE 7

CONFIDENTIALITY

 

7.1                               Confidentiality.
Each party agrees during the Term, the Transition Term and for a period of four
years after the end of the Transition Term that it will protect and hold the
other party’s Confidential Information in trust and confidence, that it will
not use such Confidential Information in any manner or for any purpose not
expressly set forth in this Agreement, and will not disclose any such
Confidential Information to any Third Party without first obtaining the other
party’s express written consent on a case-by-case basis. A party may disclose
Confidential Information of the other party to its own employees, consultants,
agents and contractors (and only such employees, consultants, agents and
contractors) having a “need to know” in connection with such party’s proper
performance hereunder.

 

7.2                               Exceptions.
Confidential Information of a disclosing party will not include information
which the receiving party can demonstrate by competent written proof: (a) is now,
or hereafter becomes, through no act or failure to act on the part of the
receiving party, generally known or available, (b) is known by the receiving
party at the time of receiving such information, as evidenced by its written
records, (c) is hereafter furnished to the receiving party by a Third Party, as
a matter of right and without restriction on disclosure or (d) is independently
developed by the receiving party without the use of or reference to the
disclosing party’s Confidential Information.

 

7.3                               Authorized
Disclosure. Each party may disclose Confidential Information belonging to
the other party to the extent such disclosure is reasonably necessary in the
following instances: (a) complying with applicable court orders or governmental
regulations and (b) disclosure to Affiliates, consultants, agents or other
Third Parties in connection with due diligence or similar investigations by
such parties, provided that any such person or entity agrees in writing to be
bound by terms of confidentiality and non-use comparable in scope to those set
forth in this Article 7. Notwithstanding the foregoing, in the event a party is
required to make a disclosure of the other party’s Confidential Information
pursuant to Section 7.3(a), it will, except where impracticable, give
reasonable advance notice to the other party of such disclosure and cooperate
with the other party’s efforts to secure confidential treatment of such
information.

 

7.4                               Return
of Confidential Information. After termination or expiration of this Agreement,
upon request, each party will return to the other party, or destroy, within 30
days of such request all Confidential Information received from the other
party.

 

7.5                               Remedies.
In the event of any breach of this Article 7 by the receiving party, including,
without limitation, the actual or threatened disclosure or unauthorized use of
the disclosing party’s Confidential Information without the prior express
written consent of the disclosing party, the parties agree that the disclosing
party would suffer an irreparable injury such that no remedy at law would
adequately protect or appropriately compensate the disclosing party for such
injury. Accordingly, the receiving party agrees that the disclosing party will
have the right to enforce this Article 7 and any of its provisions by
injunction, specific performance or other equitable relief, without bond and
without prejudice to any other rights and remedies that the disclosing party
may have for a breach of this Agreement.

 

11

 

7.6                               Public
Announcements. All publicity, press releases and other announcements
relating to this Agreement will be reviewed in advance by, and subject to the
approval of, both parties (which approval will not be unreasonably withheld); provided,
however, that upon full execution of this Agreement either party may issue the
press release set forth in Exhibit C; provided, further, that
either party may disclose the terms of this Agreement insofar as required to
comply with applicable securities laws.

 

ARTICLE 8

INTELLECTUAL PROPERTY

 

8.1                               Ownership
of Inventions. Except as otherwise set forth herein, ownership of any
Invention will track inventorship, and the inventorship of any Invention will
be determined in accordance with United States laws of inventorship. If any
Invention is not patentable, inventorship will be determined as if it were
patentable.

 

8.2                               License
to Ibis Technology Improvements. To the extent that any Improvements to the
Ibis Technology are made by employees or agents of Bruker or its Affiliates
that Bruker controls, Bruker hereby grants to Ibis a non-exclusive, fully-paid,
royalty-free, worldwide, sublicensable and transferable, irrevocable and
perpetual license under all right title and interest to exploit such Improvements
for any purpose whatsoever (including commercial activities). For purposes of
clarification, the foregoing license includes the right to (directly or through
a third party) make, use, offer to sell, sell, import, reproduce, prepare
derivative works, distribute copies, perform and/or display.

 

8.3                               License
to MicrOTOF Technology Improvements. To the extent that any Improvements to
the MicrOTOF Technology are made by employees or agents of Ibis or its
Affiliates that Ibis controls, Ibis hereby grants to Bruker a non-exclusive,
fully-paid, royalty-free, worldwide, sublicensable and transferable,
irrevocable and perpetual license under all right title and interest to exploit
such Improvements for any purpose whatsoever (including commercial activities).
For purposes of clarification, the foregoing license includes the right to
(directly or through a third party) make, use, offer to sell, sell, import,
reproduce, prepare derivative works, distribute copies, perform and/or display.

 

8.4                               Pursuit
of Joint Intellectual Property Rights. With respect to Inventions jointly
conceived as a result of performing under this Agreement (“Joint Inventions”),
the parties will negotiate in good faith regarding which party will be
responsible for preparing, filing and prosecuting any patent applications or
other appropriate filings and maintaining, enforcing and defending any patents,
copyrights or other similar rights issued thereon (including the allocation of
costs and awards related thereto).

 

8.5                               Infringement
by Third Parties. Each party will promptly notify the other in writing of
any alleged or threatened infringement of any MicrOTOF Technology or Ibis
Technology of which such party becomes aware. Both parties will use
commercially reasonable efforts in cooperating with each other to terminate
such infringement without litigation, if appropriate. Other than any action or
proceeding with respect to infringement of solely MicrOTOF Technology (which
Bruker will have the sole right to bring and control at its own

 

12

 

expense and by counsel of its own choice; provided, however, that with respect to infringement of any
MicrOTOF Technology that is likely to have a material and adverse effect on any
T5000 System being developed or commercialized pursuant to this Agreement, Ibis
will have the right to receive appropriate information relating to such action
and to provide input to Bruker), Ibis will have the sole right to bring and
control any action or proceeding with respect to infringement of T5000 Systems
or Ibis Consumables at its own expense and by counsel of its own choice.

 

8.6                               Infringement
of Third Party Rights. Each party will promptly notify the other in writing
of any allegation by a Third Party that the MicrOTOF Technology, the Ibis
Technology, T5000 Systems, Ibis Consumables or the activity of either of the
parties pursuant to this Agreement infringes or may infringe the intellectual
property rights of such Third Party. Other than any such claim involving
alleged infringement of Third Party rights solely by MicrOTOF Technology (which
Bruker will have the sole right to control any defense of at its own expense
and by counsel of its own choice; provided, however, that with respect to infringement of any
MicrOTOF Technology that is likely to have a material and adverse effect on any
T5000 System being developed or commercialized pursuant to this Agreement, Ibis
will have the right to receive appropriate information relating to such action
and to provide input to Bruker), Ibis will have the sole right to control the
defense of any such claim involving alleged infringement of Third Party rights
by T5000 Systems, Ibis Consumables or the activity of either of the parties
pursuant to this Agreement.

 

8.7                               Limited
Rights; No Challenge. Neither party will have the right to acquire any
rights in or is entitled to use, sell, copy, license or otherwise exploit the
other party’s Intellectual Property Rights other than as expressly set forth
herein. Under no circumstances will either party challenge or assist a Third
Party to challenge the other party’s rights in MicrOTOF Technology or Ibis
Technology.

 

ARTICLE 9

REPRESENTATIONS AND WARRANTIES; DISCLAIMER

 

9.1                               Mutual
Representations and Warranties. Each party represents and warrants to the
other party that (a) such party is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its establishment or
incorporation, (b) such party has taken all action necessary to authorize it to
enter into this Agreement and perform its obligations under this Agreement, (c)
this Agreement will constitute the legal, valid and binding obligation of such
party, (d) neither the execution of this Agreement nor the performance of such
party’s obligations hereunder will conflict with, result in a breach of, or
constitute a default under any provision of the organizational documents of
such party, or of any law, rule, regulation, authorization or approval of any
government entity, or of any agreement to which it is a party or by which it is
bound and (e) it has and will maintain all government permits, including
without limitation health, safety and environmental permits, necessary for the
conduct of the actions and procedures that it undertakes pursuant to this
Agreement.

 

9.2                               Disclaimer.
Except as expressly set forth herein, EACH PARTY EXPRESSLY DISCLAIMS ANY
AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,

 

13

 

INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE
PRACTICES.

 

9.3                               Limitation
of Liability. EXCEPT FOR LIABILITY FOR BREACH OF ARTICLE 7, NEITHER PARTY
SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY INDIRECT, SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS
AGREEMENT; PROVIDED, HOWEVER, THAT THIS SECTION 9.3 SHALL NOT BE
CONSTRUED TO LIMIT EITHER PARTY’S INDEMNIFICATION RIGHTS OR OBLIGATIONS UNDER
ARTICLE 12. THE PARTIES AGREE THAT PAYMENTS ACCRUED AND PAYABLE UNDER ARTICLE
5, TO THE EXTENT NOT PAID AS AND WHEN REQUIRED PURSUANT TO THIS AGREEMENT, ARE
DIRECT DAMAGES (NOT INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE).

 

ARTICLE 10

CERTAIN COVENANTS

 

10.1                        Non-Solicitation.
During the Term, the Transition Term and for [***] following the end of the
Transition Term, neither party nor any of its Affiliates will solicit or seek
to employ any person who is an employee of the other party or its Affiliates as
of the Effective Date or becomes an employee of the other party or its
Affiliates during the Term or the Transition Term; provided, however,
that the foregoing provision will not prevent either party or its Affiliates from
hiring employees of the other party or its Affiliates who respond to general
employment advertising or similar public solicitations or employing any such
person who contacts such party or its Affiliates on his or her own initiative
without any direct or indirect solicitation by or encouragement from such party
or its Affiliates.

 

10.2                        Non-Compete.
During the Term and the Transition Term, neither Bruker nor any of its
Affiliates will (whether internally or in active collaboration with any Third
Party(ies)), develop, manufacture, promote, sell or supply any complete system
that is designed to perform electrospray ionization orthogonal-TOF analysis of
PCR products substantially as a T5000 System without the express written
consent of Ibis; provided, however, that Bruker has no restriction
whatsoever in developing, selling and servicing its general purpose
electrospray orthogonal-TOF mass spectrometer to any customer.

 

10.3                        Exclusive
Source. During the Term, the Transition Term and for two years following
the end of the Transition Term, neither Bruker nor any of its Affiliates will
directly or indirectly sell any (a) primers and related reagent solutions or
(b) analysis software or databases for use with the T5000 System other than
those purchased from Ibis.

 

10.4                        Treatment
of End Users. In terms of priority in internal processes and/or in terms of
customer support and service, each party will treat all End Users equally and
will not favor any particular End User over another. For clarification, this
Section 10.4 will not prevent

 

14

 

either party from providing quantity discounts, preferred T5000 Systems
pricing or other similar arrangements to End Users.

 

10.5                        Assurances.
Neither party will structure transactions with Third Parties in an attempt
to avoid payment obligations to the other party. For clarification, neither
party will offer Third Parties terms that encourage such Third Party to
purchase T5000 Systems or Ibis Consumables at reduced prices in exchange for
consideration that does not ratably benefit both parties as set forth herein. Such
terms include financial and non-financial terms, including incentives,
discounts, rebates, perquisites, extended warranties (whether in scope,
duration or otherwise), enhanced service, more favorable return policies and
most favored pricing.

 

ARTICLE 11

TERM AND TERMINATION

 

11.1                        Term.
Unless earlier terminated pursuant to this Article 11 and subject to Sections
11.2 and 11.3, the term of this Agreement will commence on the Effective Date
and continue until the fourth anniversary of the Effective Date (the “Initial
Term”). After the Initial Term, this Agreement will automatically renew for
additional [***] year periods (the “Extension Terms”) unless either party gives
written notice of termination at least [***] months prior to the expiration of
the Initial Term or of one of the Extension Terms. The foregoing
notwithstanding, Bruker and Ibis each will continue to satisfy its obligations
under each Extended Warranty (as set forth in the Commercialization Plan) until
the expiration or termination of such Extended Warranty pursuant to its terms.

 

11.2                        Transition
Term. Subject to Section 11.3, following the end of the Term, Bruker may,
until the [***] anniversary of the end of the Term (the “Transition Term”) and
on the same terms and conditions as applied during the Term, continue to (a)
purchase, resell and deliver Ibis Consumables (as set forth in the
Commercialization Plan) to parties in both the Government Use market and the
Non-Exclusive Market with whom it consummated the sale of a T5000 System prior
to the end of the Term and (ii) sell Extended Warranties and service and
support for T5000 Systems (as set forth in the Commercialization Plan) to
parties in both the Government Use market and the Non-Exclusive Market with
whom it consummated the sale of a T5000 System prior to the end of the Term,
and, during the Transition Term, Ibis will continue to fulfill its correlative
obligations under the Commercialization Plan.

 

11.3                        Partnering
Transaction. Section 11.2 notwithstanding, in the event Ibis consummates a
Partnering Transaction, Bruker may, at its election, transition its on-going
rights and obligations in the Non-Exclusive Market to Ibis (or its designee)
pursuant to a timeline and plan approved by the parties in accordance with
Section 15.10; provided, however, that Bruker may not transition its
obligations under Section 3.1.1 and 3.1.2 and correlative obligations under the
Commercialization Plan or its obligations under any Extended Warranty without
the prior written consent of Ibis (or its successor). If Bruker does not elect
to transition such obligations, Isis may, at its election, terminate Bruker’s
rights under Section 11.2 in the Non-Exclusive Market after the later of (a)
the [***] anniversary of the effective date of the Partnering Transaction and
(b) the [***] anniversary of the Effective Date. For clarification, during the
Term, even if Ibis consummates a Partnering Transaction, Bruker will remain the
exclusive

 

15

 

supplier of mass spectrometers for use in T5000 Systems, the exclusive
manufacturer of T5000 Systems for all uses, except IVD Use, throughout the
world and the exclusive marketer of T5000 Systems, Ibis Consumables for
Government Use.

 

11.4                        Termination
for Cause. A party will have the right to terminate this Agreement by
providing written notice to the other party upon the occurrence of any of the
following:

 

11.4.1              the other party
(i) admits its inability to pay its debts as they come due, (ii) has a receiver
appointed for all or of any part of its property, (iii) makes any assignment
for the benefit of creditors or (iv) files a petition under any bankruptcy,
insolvency or similar law, or any such petition is filed against such party and
is not dismissed within 75 days; or

 

11.4.2              upon or after
the breach of any material provision of this Agreement by the other party if
the breaching party has not cured such breach within the 60 day (10 day with
regard to any payment breach) period following written notice of breach by the
non-breaching party.

 

11.5                        Effect of
Expiration or Termination.

 

11.5.1              Except as expressly set forth in this
Section 11, upon the effectiveness of the expiration or termination of this
Agreement for any reason, all rights and licenses granted under this Agreement
will immediately terminate and any purchase orders not yet completely fulfilled
may be canceled at the option of the party that received such order.

 

11.5.2              After the Term and/or the Transition
Term, as applicable, Bruker will not represent or hold itself out as being an
authorized distributor or otherwise having any rights to commercialize the
T5000 Systems or Ibis Consumables or engage in any practices that might make it
appear that Bruker has any such rights. After the Term and/or the Transition
Term, as applicable, Ibis will not represent or hold itself out as being an
authorized distributor or otherwise having any rights to commercialize the
MicrOTOF or MicrOTOF II or engage in any practices that might make it appear
that Ibis has any such rights.

 

11.5.3              In the event this Agreement is terminated
pursuant to Section 11.4.2 due to Bruker’s breach of its obligations hereunder
to perform service and support for End Users of T5000 Systems, Bruker will, if
requested by Ibis, assign to Ibis Bruker’s rights to perform service and
support with respect to T5000 Systems for such End Users and will transfer to
Ibis any prepayment Bruker has received therefor. The rights of Ibis and
obligations of Bruker in this Section 11.5.3 will apply only to the extent the
applicable service and support agreement between Bruker and the End User
pertains solely to T5000 Systems and not other products distributed by Bruker.

 

11.6                        Survival.
Notwithstanding anything to the contrary herein, the following provisions will
survive the expiration or termination of this Agreement for any reason: Article
4, Sections 5.4, 5.6, 5.7, 5.8, 5.9 and 5.10, Article 7, Sections 8.1, 8.2,
8.3, 8.7, 9.2, 9.3, 10.1, 10.3, 11.1, 11.5 and 11.6 and Articles 12, 13 and 15.
In addition, Sections 10.2 and 11.2 will survive until the end of the
Transition Term and Section 11.3 will survive until the later of (a) the second
anniversary of the effective date of the Partnering Transaction or (b) the
fourth anniversary of the Effective Date. It is expressly understood and agreed
that, notwithstanding anything to the

 

16

 

contrary herein, any payment rights and obligations accruing under
Article 5 prior to expiration or termination will continue unaffected and
survive expiration or termination of this Agreement for any reason.

 

ARTICLE 12

INDEMNIFICATION

 

12.1                        Indemnification
by Bruker. Bruker hereby agrees to save, defend and hold Ibis and its Affiliates
and their respective directors, officers, employees and agents (each, an “Ibis
Indemnitee”) harmless from and against any and all claims, suits, actions,
demands, liabilities, expenses and/or loss, including reasonable legal expense
and attorneys’ fees, with respect to subparts (a) and (b) below solely with
respect to personal injury and property damage (collectively, “Losses”), to
which any Ibis Indemnitee may become subject as a result of any claim, demand,
action or other proceeding by any Third Party to the extent such Losses arise
directly out of (a) the breach by Bruker of any warranty, representation,
covenant or agreement made by Bruker in this Agreement, (b) any act or omission
pursuant to this Agreement by Bruker; except, in each case, to the extent such
Losses result from the gross negligence or willful misconduct of any Ibis
Indemnitee or the breach by Ibis of any warranty, representation, covenant or
agreement made by Ibis in this Agreement or (c) a claim that any product or
service provided by Bruker (including the MicrOTOF) infringes the intellectual
property of a Third Party (unless such claim is based on use of a product
provided by Bruker in combination with other hardware, software, firmware or
materials not provided by Bruker where, without such combination, there would
be no infringing activity).

 

12.2                        Indemnification
by Ibis. Ibis hereby agrees to save, defend and hold Bruker and its
Affiliates and their respective directors, officers, employees and agents
(each, a “Bruker Indemnitee”) harmless from and against any and all Losses to
which any Bruker Indemnitee may become subject as a result of any claim,
demand, action or other proceeding by any Third Party to the extent such Losses
arise directly out of (a) the breach by Ibis of any warranty, representation,
covenant or agreement made by Ibis in this Agreement, (b) any act or omission
pursuant to this Agreement by Ibis; except, in each case, to the extent such
Losses result from the gross negligence or willful misconduct of any Bruker
Indemnitee or the breach by Bruker of any warranty, representation, covenant or
agreement made by Bruker in this Agreement or (c) a claim that any product or
service provided by Ibis (including the Ibis Amplicon Desalting Module)
infringes the intellectual property of a Third Party (unless such claim is
based on use of a product provided by Ibis in combination with other hardware,
software, firmware or materials not provided by Ibis where, without such
combination, there would be no infringing activity).

 

12.3                        Control of
Defense. Any entity entitled to indemnification under this Article 12 will
give notice to the indemnifying party of any Losses that may be subject to
indemnification, promptly after learning of such Losses, and the indemnifying
party may assume the defense of such Losses with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed by the
indemnifying party with counsel so selected, the indemnifying party will not be
subject to any liability for any settlement of such Losses made by the
indemnified party without the indemnifying party’s consent (but such consent
will not be unreasonably withheld,

 

17

 

conditioned or delayed), and will not be obligated to pay the fees and
expenses of any separate counsel retained by the indemnified party with respect
to such Losses.

 

12.4                        Insurance.
Each party, at its own expense, will maintain product liability insurance
in an amount consistent with industry standards during the Term, the Transition
Term and for 2 years following the end of the Transition Term with respect to
T5000 Systems and Ibis Consumables it delivers to End Users. Each party will
provide a certificate of insurance evidencing such coverage to the other party
upon request and will provide the other party with written notice at least 15
days prior to the cancellation, non-renewal or material change in such
insurance. The amounts of any insurance coverage obtained pursuant to this
Section 12.4 will not be construed to create a limit on any party’s liability
with respect to its indemnification obligations hereunder.

 

ARTICLE 13

DISPUTE RESOLUTION

 

13.1                        Dispute
Resolution. The parties recognize that disputes as to certain matters may
arise from time-to-time. It is the objective of the parties to seek to resolve
any disputes arising under this Agreement in an expedient manner and, if at all
possible, without resort to litigation, and to that end the parties agree to
abide by the following procedures set forth in this Article 13 to resolve any
such disputes. The parties initially will attempt to settle any such dispute
through good faith negotiations in the spirit of mutual cooperation between
business executives with authority to resolve the dispute.

 

13.2                        Escalation.
Prior to taking action as provided in Section 13.3 or 13.4 of this Agreement,
if the parties cannot resolve a dispute within 20 days of written request by
either party to the other, the parties will first submit such dispute to the
Executive Vice President of Isis Pharmaceuticals, Inc. or the Ibis President
and a vice-president- or president-level officer of Bruker with authority to
settle the applicable dispute, for resolution. Such officers will meet promptly
thereafter and will negotiate in good faith to resolve such dispute. If they
cannot resolve such dispute within 30 days of commencing such negotiations,
then the matter will be submitted to mediation in accordance with Section 13.3.
All negotiations pursuant to this Section 13.2 will be confidential and will be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.

 

13.3                        Mediation.
If the parties cannot resolve the dispute pursuant to Section 13.2, then
upon the expiration of the 30 day period for negotiation between the officers
of the parties pursuant to Section 13.2, the parties will jointly commence
mediation by providing to the American Arbitration Association (“AAA”) a joint
written request for mediation, setting forth the subject matter of the dispute
and the relief requested by each party. The parties will cooperate with the AAA
and with one another in selecting a mediator from AAA’s panel of neutral
mediators and in scheduling the mediation proceedings which must, in any event,
occur within 30 days after the submission of the parties’ joint written request
for mediation. The parties covenant that they will participate in at least one
full day of mediation in good faith and that they will share equally in its
costs. If mediation fails to resolve such dispute, either party may submit such
dispute to a court having competent jurisdiction.

 

18

 

13.4                        Court
Actions. Notwithstanding the above, to the full extent allowed by law,
either party may bring an action in any court of competent jurisdiction for
injunctive relief (or any other provisional remedy) to protect the parties’
rights or enforce the parties’ obligations under this Agreement pending final
resolution of any claims related thereto in a mediation as provided above. In
addition, either party may bring an action in any court of competent
jurisdiction to resolve disputes pertaining to the validity, construction,
scope, enforceability, infringement or other violations of patents or other
proprietary or intellectual property rights. The parties will use their
reasonable efforts to conduct all dispute resolution procedures under this
Agreement as expeditiously, efficiently and cost-effectively as possible.

 

ARTICLE 14

EXPORT COMPLIANCE

 

14.1                        Export
Regulations. The parties acknowledge and agree that all Ibis deliveries
under this Agreement will be to a location within the United States. Bruker
will be solely responsible for complying with and will ensure compliance with
any and all export laws, rules and regulations; provided, however, that
Ibis will be solely responsible for classifying the T5000 System (including the
Ibis Analytical Systems and whether as an assembled instrument or in its
component parts), including whether the T5000 Systems is a “defense article” (under
the Arms Export Contract Act, its implementing regulations and regulations
promulgated thereunder) and the appropriate export control classification
number(s) (under the Export Administration Act, its implementing regulations
and regulations promulgated thereunder), and Bruker will reasonably assist Ibis
in determining such classification. Bruker understands that Ibis is subject to
regulation by agencies of the Government, including the United States
Department of Commerce, Office of Foreign Assets Control of the United States
Treasury and the United States Department of Defense, which prohibit export or
diversion of certain technical products and services to certain countries, even
if such products or services were not manufactured or assembled in the United
States. Bruker warrants that it will comply in all respects with the Export
Administration Regulations, International Traffic in Arms Regulation and all
other export and re-export restrictions applicable hereto.

 

ARTICLE 15

GENERAL PROVISIONS

 

15.1                        Assignment.
Neither party may assign this Agreement or any rights or obligations
hereunder, by operation of law or otherwise, without the prior written approval
of the other party; provided, however that a party may make such an
assignment without consent to Affiliates or to a successor to all of or
substantially all of the business or assets of such party to which this
Agreement relates, whether in a merger, sale of stock, sale of assets or other
transaction. The rights and obligations of the parties under this Agreement
will be binding upon and inure to the benefit of the successors and permitted
assigns of the parties. Any assignment not in accordance with this Agreement
will be void.

 

15.2                        Notices. Any
notices required or permitted hereunder will be given to the appropriate party
at the address specified below or at such other address as such party will

 

19

 

specify in writing. Such notice will be deemed given upon personal
delivery, one day after the date such notice is provided by overnight delivery
service, three days after the date of mailing when sent by certified or
registered mail, postage prepaid, or upon the date such notice is transmitted
by facsimile. All notices will be addressed as follows:

 

	
  If to Bruker:

  	
   

  	
  Bruker Daltonics Inc.

  
	
   

  	
   

  	
  40 Manning Road

  
	
   

  	
   

  	
  Billerica, MA 01821

  
	
   

  	
   

  	
  Attention:  Vice President of
  Finance

  
	
   

  	
   

  	
  Facsimile:  (978) 667-5993

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Bruker Daltonics Inc.

  
	
   

  	
   

  	
  40 Manning Road

  
	
   

  	
   

  	
  Billerica, MA 01821

  
	
   

  	
   

  	
  Attention:  John Wronka, Ph.D.

  
	
   

  	
   

  	
  Facsimile:  (978) 667-5993

  
	
   

  	
   

  	
   

  
	
  If to Ibis:

  	
   

  	
  Isis Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  1896 Rutherford Road

  
	
   

  	
   

  	
  Carlsbad, CA 92008-7208

  
	
   

  	
   

  	
  Attention:  Executive Vice
  President

  
	
   

  	
   

  	
  Fax:  (760) 268-4989

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Isis Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  1896 Rutherford Road

  
	
   

  	
   

  	
  Carlsbad, CA 92008-7208

  
	
   

  	
   

  	
  Attention:  General Counsel

  
	
   

  	
   

  	
  Fax:  (760) 268-4922

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Isis Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  1896 Rutherford Road

  
	
   

  	
   

  	
  Carlsbad, CA 92008-7208

  
	
   

  	
   

  	
  Attention:    President, Ibis Biosciences
  division of Isis Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  Fax:  (760) 603-4653

  

 

Either
party may by like notice specify or change an address to which notices and
communications will thereafter be sent.

 

15.3                        Governing
Law. This Agreement will be governed by and construed in accordance with
the laws of the State of Delaware, without regard to conflicts of laws
principles.

 

15.4                        Relationship
of the Parties. Nothing in this Agreement will constitute, nor will any
party represent that there is any relationship of employer and employee,
principal and agent, partnership, joint venture or agency of any kind between
the parties as a result of this Agreement. Neither party will have the
authority to make any statements, representations or commitments of any kind,
or to take any action, which will be binding on the other party, without the
prior written consent of the other party.

 

20

 

15.5                        Compliance
with Laws. Ibis and Bruker each agree that it will comply with all
applicable laws, rules and regulations in performing its obligations hereunder.

 

15.6                        Severability.
Any term or provision of this Agreement held to be illegal or unenforceable
will, if possible, be interpreted so as to be construed as valid, but in any
event the validity or enforceability of the remainder hereof will not be
affected.

 

15.7                        Waiver. Except
as specifically provided for herein, the waiver from time to time by either
party of any right or failure to exercise any remedy will not operate or be
construed as a continuing waiver of the same right or remedy or of any other of
such party’s rights or remedies provided under this Agreement.

 

15.8                        Headings. The
section headings appearing in this Agreement are inserted only as a matter of
convenience and in no way define, limit, construe or describe the scope or
extent of such section.

 

15.9                        Mutually
Drafted Agreement. This Agreement has been negotiated by both parties and
their counsel, and no presumption will be drawn against either party based on
its drafting of any particular provision hereof.

 

15.10                 Entire Agreement;
Amendment. This Agreement (including its exhibits and schedules, which are
incorporated by reference herein) sets forth all of the agreements and
understandings between the parties hereto with respect to the subject matter
hereof, and supersedes and terminates all prior agreements and understandings
between the parties with respect to the subject matter hereof. There are no
agreements or understandings with respect to the subject matter hereof, either
oral or written, between the parties other than as set forth herein. Except as
expressly set forth in this Agreement, no subsequent amendment, modification or
addition to this Agreement will be binding upon the parties hereto unless
reduced to writing and signed by the respective authorized officers of the
parties.

 

15.11                 Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, each of
which will be considered an original, but all of which together will constitute
one and the same instrument. A party may evidence its execution and delivery of
this Agreement by signing and faxing this Agreement to the other party and
promptly thereafter mailing the signed original copy of this Agreement to the
other party.

 

15.12                 Force Majeure. No
party will be liable for any delay or failure of performance (other than
payment obligations) to the extent such delay or failure is caused by
circumstances beyond its reasonable control (including without limitation,
fire, floods, earthquakes, natural disasters, embargoes, war, acts of war
(whether war be declared or not), acts of terrorism, insurrections, riots,
civil commotions, strikes, lockouts or other labor disturbances, acts of God or
acts, omissions or delays in acting by any governmental authority or the other
party) and that by the exercise of due diligence it is unable to prevent,
provided that the party claiming
excuse uses its commercially reasonable efforts to overcome the same.

 

15.13                 U.S. Government
Rights. Bruker acknowledges and agrees that certain Ibis Technology was
developed in part with funds furnished by the U.S. Government and that the U.S.
Government has certain rights relative thereto. This Agreement is explicitly
made subject

 

21

 

to the U.S. Government’s rights under any applicable law or regulation.
To the extent that there is a conflict between any such applicable law or
regulation and this Agreement, the terms of such applicable law or regulation
will prevail.

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

22

 

IN WITNESS WHEREOF, the parties have caused
this Manufacturing, Commercialization and Development Agreement to be executed
by their duly authorized representatives as of the Effective Date.

 

	
  ISIS PHARMACEUTICALS, INC.

  	
  BRUKER DALTONICS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ B. Lynne Parshall

  	
   

  	
  By:

  	
  /s/ Frank H. Lavuien

  
	
  Name:

  	
  B. Lynne Parshall

  	
   

  	
  Name:

  	
  Frank H. Lavuien

  
	
  Title:

  	
  EVP & CFO

  	
   

  	
  Title:

  	
  President

  
									

 

 

[COUNTERPART SIGNATURE PAGE TO MANUFACTURING,
COMMERCIALIZATION AND DEVELOPMENT AGREEMENT]

 

 

Exhibit A

 

DEFINITIONS

 

“Affiliate” means a Person that, directly or
indirectly, is controlled by Bruker or Ibis, as applicable; provided,
however that, for Bruker, an Affiliate will include only entities that are
controlled by Bruker BioSciences Corporation. For the purposes of this
definition, the term “control” means the possession, directly or indirectly, of
the power to govern the financial and the operating policies or to appoint the
management of Bruker or Isis, as applicable.

 

“Calendar Quarter”
means each respective period of three consecutive calendar months ending on
March 31, June 30, September 30 and December 31.

 

“Confidential Information”
means any confidential or proprietary information of a party, including,
without limitation, any information relating to any research project, work in
process, future development, scientific, engineering, manufacturing, marketing,
business plan, financial or personnel matter relating to either party, its
present or future products, sales, suppliers, customers, employees, investors
or business, whether in oral, written, graphic or electronic form; provided,
however, that such information is in writing and marked “confidential” (or with
another similar designation) or, if disclosed orally, visually or through other
non-written communication, such information is reduced to writing and so marked.
Without limiting the generality of the foregoing, the parties agree that the
Ibis Technology is Confidential Information of Ibis, the financial terms of
this Agreement are Confidential Information of both parties and the MicrOTOF
Technology is Confidential Information of Bruker.

 

“Effective Date” has the meaning provided in
the opening clause.

 

“End User” means,
with respect to Ibis Consumables or T5000 Systems, a Person who obtains such
Ibis Consumables or T5000 System for its own use.

 

“European/Middle East Territory”
means the following countries: 
Afghanistan, Albania, Andorra, Austria, Bahrain, Belarus, Belgium,
Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus (including the Republic of Cyprus
and the Republic of Northern Cyprus), Czech Republic, Denmark, Egypt, Estonia,
Finland, Former Yugoslav Republic of Macedonia, France, Germany, Greece,
Hungary, Iceland, Iran (presently not sold to), Iraq, Ireland, Israel, Italy,
Jordan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Liechtenstein, Lithuania,
Luxembourg, Malta, Moldova, Monaco, Norway, Oman, Pakistan, Poland, Portugal,
Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia and Montenegro,
Slovakia, Slovenia, Spain, Sweden, Switzerland, Syria (presently not sold to),
Tajikistan, The Netherlands, Turkey, Turkmenistan, Ukraine, United Arab
Emirates, United Kingdom, Uzbekistan and Vatican City.

 

“Extended Warranty(ies)” has the meaning set
forth in Exhibit B.

 

“Extended Warranty Revenues”
means the gross receipts received by Bruker and its Affiliates for sales of
Extended Warranties to End Users.

 

“Extension Term” has the meaning
provided in Section 11.1.

 

 

“Government Use” means use primarily in
connection with (a) defense, including homeland security, (b) food testing, (c)
human forensics and (d) veterinary care and treatment by departments and
agencies of national, state or local governments (or their respective
contractors acting in their capacity as contractors to such entities) of
countries comprising the European/Middle East Territory, but not including any
IVD Use.

 

“Ibis” has the
meaning provided in the opening clause.

 

“Ibis Amplicon Desalting Module”
means an automated instrument for performing sample injection and clean-up
procedures.

 

“Ibis Analytical Systems” means Ibis’
proprietary analysis software and databases, as more fully described in
Schedule 2, as updated from time to time by written agreement of the parties,
as well as third-party software that is a part of the T5000 System.

 

“Ibis Consumables” means primers, reagent
solutions and other consumables for use with the T5000 System, as more fully
described in Schedule 1, as such may be amended from time to time by the
parties.

 

“Ibis Partner” means
any Third Party with whom Ibis has entered into an agreement for the sale and
delivery of T5000 Systems.

 

“Ibis President” means the President of the Ibis Biosciences
division of Isis Pharmaceuticals, Inc.

 

“Ibis Technology”
means the Intellectual Property Rights owned or licensed by Ibis that are
reasonably related to the T5000 System (including, without limitation, the
patents and patent applications set forth on Schedule 4).

 

“Improvement” means
any enhancement or modification (whether or not patentable) to the Ibis Technology
or the Bruker Technology, as applicable, that is conceived or reduced to
practice by either party or by the parties jointly during the Term or the
Transition Term in the course of performing under this Agreement.

 

“Initial Period” means,
with respect to a particular T5000 System, the 365 day period immediately
following Installation of such T5000 System.

 

“Initial Term” has the meaning provided in
Section 11.1.

 

“Installation” means unpacking and physically
placing and securing a T5000 System at an End User’s facility, making all
necessary electrical and fluidic connections, installing the Ibis Analytical
Systems on the T5000 System (to the extent not already installed), running
diagnostic routines (to the extent not already performed at Bruker’s facilities),
making necessary adjustments and demonstrating to appropriate personnel of the
End User that, upon completion of the foregoing activities, the T5000 System
functions in accordance with the customer acceptance specifications found in
Schedule 3. “Install,” “Installed” and related terms will have correlative
meanings.

 

 

“Intellectual Property Rights”
means any and all Patent Rights, business processes, data rights, copyrights,
moral rights, trade names, trademarks, mask works, trade secrets, know-how,
knowledge, techniques, technology, practices, methods, test data and results,
analytical and quality control data, results or descriptions, software and
algorithms and other intellectual property rights, whether registered or
unregistered, arising or enforceable under United States law or the law of any
other jurisdiction or international treaty regime.

 

“Invention” means
any invention or discovery, whether or not patentable, that is conceived or
reduced to practice by either party or by the parties jointly in the course of
performing under this Agreement.

 

“IVD Use” means use primarily in connection
with (a) human in vitro diagnostics and (b)
“homebrew” applications, including “analyte specific reagent” (ASR) use under
the Clinical Laboratory Improvement Act of 1988 (CLIA) and comparable
legislation and regulations in other jurisdictions.

 

“Marks” means, as to
each party, those trademarks, trade names and logos set forth under such party’s
name on Schedule 5, as such may be amended from time to time by the parties.

 

“MicrOTOF” means
Bruker’s mass spectrometer (not including the FOCUSTM option), as more fully
described in Schedule 6, as updated from time to time by written agreement of
the parties.

 

“MicrOTOF II” means
a second-generalation MicrOTOF that incorporates Bruker’s Apollo II Dual Ion
Funnel Source and is designed to be compatible for use with T5000 Systems
developed for Regulated Uses (including uses in connection with the diagnosis
or treatment of humans or animals).

 

MicrOTOF Technology”
means the Intellectual Property Rights owned or licensed by Bruker or any of
its Affiliates that are reasonably related to the MicrOTOF (including, without
limitation, the patents and patent applications set forth on Schedule 7).

 

“Non-Exclusive Market” means that market
consisting of End Users located in the European/Middle East Territory using
Ibis Systems for Other Use.

 

“North American Territory”
means Canada, Mexico and the United States and its territories and possessions.

 

“Other Use” means any use other than
Government Use and IVD Use.

 

“Partnering Transaction” means an agreement
providing a Third Party with the right, among other things, to promote, sell
and supply T5000 Systems and/or Ibis Consumables in the European/Middle East
Territory other than an agreement relating solely to IVD Use.

 

“Patent Rights” means
all rights associated with United States and foreign patents (including all
reissues, extensions, confirmations, registrations, re-examinations, and
inventor’s

 

 

certificates) and patent
applications (including, without limitation, all substitutions, continuations,
continuations-in-part, provisionals and divisionals thereof).

 

“Person” means any
corporation, natural person, firm, joint venture, partnership, trust,
unincorporated organization, government or any department or agency of such
government.

 

“Renewal Update(s)”
means Updates that Ibis may, from time to time, develop and make generally
available to the public after the Initial Period.

 

“Specifications” means the specifications to
be prepared and approved by the parties prior to the Technology Transfer Date.

 

“System Revenues”
means the amounts invoiced, or reflected in purchase orders received, by Bruker
and its Affiliates for sales of T5000 Systems to End Users, less (a)
transportation, customs, duties, delivery and similar charges, including
insurance premiums, actually incurred by Bruker or its Affiliates or paid by an
End User and reimbursed by Bruker and (b) taxes (other than franchise or income
taxes on the income of Bruker or its Affiliates) actually paid by or withheld from
Bruker or its Affiliates or paid by an End User and reimbursed by Bruker,
provided that upon the refund of any such tax or reimbursement to Bruker, such
refund or reimbursement will be included in the amount invoiced or the purchase
order received.

 

“T5000 Systems” means the fully integrated
system comprising a MicrOTOF, an Ibis Amplicon Desalting Module, the Ibis
Analytical Systems and other computers and hardware, as more fully described in
Schedule 3, as updated from time to time by written agreement of the parties.
“T5000 Systems” does not include Ibis Consumables. “T5000 Systems” includes new
versions of the T5000 System as it exists as of the Effective Date, as well as
successor products designed to perform mass spectrometry analysis of PCR products,
but excluding any systems exclusively used for IVD Use.

 

“Technology Transfer Date”
has the meaning provided in Section 2.2.

 

“Technology Transfer Management Committee”
or “TMC” means the committee
described in Article 2.

 

“Term” means the Initial Term and the
Extension Terms, if any.

 

“Third Party” means
an entity other than Ibis, Bruker and their respective Affiliates.

 

“Transition Term” has the meaning provided in
Section 11.2.

 

“Updates” means
modifications, corrections, fixes, patches, enhancements, updates, upgrades or
extensions to the Ibis Analytical Systems that Ibis may, from time to time,
develop and make generally available to the public during the Initial Period.

 

“U.S. Government” means
the federal, state and local governments of the U.S. or any regulatory
authority or department, agency, branch, arm or similar division (including
procurement arms) of such governments.

 

 

Exhibits and Schedules

 

	
  Exhibit
  A

  	
   

  	
  Definitions

  
	
   

  	
   

  	
   

  
	
  Exhibit
  B

  	
   

  	
  Commercialization
  Plan

  
	
   

  	
   

  	
   

  
	
  Exhibit
  C

  	
   

  	
  Press
  Release

  
	
   

  	
   

  	
   

  
	
  Exhibit
  D

  	
   

  	
  Bruker
  Terms and Conditions

  
	
   

  	
   

  	
   

  
	
  Schedule
  1

  	
   

  	
  Ibis
  Consumables

  
	
   

  	
   

  	
   

  
	
  Schedule
  2

  	
   

  	
  Ibis
  Analytical Systems (including Ibis databases)

  
	
   

  	
   

  	
   

  
	
  Schedule
  3

  	
   

  	
  T5000
  System

  
	
   

  	
   

  	
   

  
	
  Schedule
  4

  	
   

  	
  Ibis
  Technology

  
	
   

  	
   

  	
   

  
	
  Schedule
  5

  	
   

  	
  Marks

  
	
   

  	
   

  	
   

  
	
  Schedule
  6

  	
   

  	
  MicrOTOF

  
	
   

  	
   

  	
   

  
	
  Schedule
  7

  	
   

  	
  MicrOTOF
  Technology

  

 

 

Exhibit B

 

Commercialization Plan

 

[***]

 

 

Exhibit C

 

Press Release

 

[***]

 

 

Exhibit D

 

Bruker Terms and Conditions

 

[***]

 

 

Schedule  1

 

Ibis Consumables

 

[***]

 

 

Schedule  2

 

Ibis Analytical Systems (including Ibis databases)

 

[***]

 

 

Schedule  3

 

T5000 System

 

[***]

 

 

Schedule  4

 

Ibis Technology

 

[***]

 

 

Schedule  5

 

Marks

 

[***]

 

 

Schedule  6

 

MicrOTOF

 

[***]

 

 

Schedule  7

 

MicrOTOF Technology

 

[***]

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