Document:

Exhibit 4.1

 

 

MARKWEST ENERGY PARTNERS, L.P.,

 

MARKWEST ENERGY FINANCE CORPORATION, as Issuers,

 

THE SUBSIDIARIES NAMED HEREIN, as Subsidiary Guarantors

 

AND

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 

 

6.25% Senior Notes due 2022

 

 

FIFTH SUPPLEMENTAL INDENTURE

 

Dated as of November 3, 2011

 

 

 

CROSS-REFERENCE TABLE*

 

	
Trust Indenture
   Act Section
    	
 
    	
Supplemental
   Indenture
   Section(s)
    
	
 
    	
 
    	
 
    	
 
    
	
310
    	
(a)(1)
    	
 
    	
8.10
    
	
 
    	
(a)(2)
    	
 
    	
8.10
    
	
 
    	
(a)(3)
    	
 
    	
N.A.
    
	
 
    	
(a)(4)
    	
 
    	
N.A.
    
	
 
    	
(a)(5)
    	
 
    	
8.10
    
	
 
    	
(b)
    	
 
    	
8.10
    
	
 
    	
(c)
    	
 
    	
N.A.
    
	
311
    	
(a)
    	
 
    	
8.11
    
	
 
    	
(b)
    	
 
    	
8.11
    
	
 
    	
(c)
    	
 
    	
N.A.
    
	
312
    	
(a)
    	
 
    	
3.08
    
	
 
    	
(b)
    	
 
    	
13.02
    
	
 
    	
(c)
    	
 
    	
13.02
    
	
313
    	
(a)
    	
 
    	
8.06
    
	
 
    	
(b)(1)
    	
 
    	
N.A.
    
	
 
    	
(b)(2)
    	
 
    	
8.06
    
	
 
    	
(c)
    	
 
    	
8.06; 13.02
    
	
 
    	
(d)
    	
 
    	
8.06
    
	
314
    	
(a)
    	
 
    	
5.03; 5.17; 13.02
    
	
 
    	
(b)
    	
 
    	
N.A.
    
	
 
    	
(c)(1)
    	
 
    	
13.04
    
	
 
    	
(c)(2)
    	
 
    	
13.04
    
	
 
    	
(c)(3)
    	
 
    	
N.A.
    
	
 
    	
(d)
    	
 
    	
N.A.
    
	
 
    	
(e)
    	
 
    	
12.05
    
	
 
    	
(f)
    	
 
    	
N.A.
    
	
315
    	
(a)
    	
 
    	
7.01
    
	
 
    	
(b)
    	
 
    	
8.05; 13.02
    
	
 
    	
(c)
    	
 
    	
8.01
    
	
 
    	
(d)
    	
 
    	
8.01; 7.05
    
	
 
    	
(e)
    	
 
    	
7.11
    
	
316
    	
(a)(last   sentence)
    	
 
    	
3.11
    
	
 
    	
(a)(1)(A)
    	
 
    	
7.05
    
	
 
    	
(a)(1)(B)
    	
 
    	
7.04
    
	
 
    	
(a)(2)
    	
 
    	
N.A.
    
	
 
    	
(b)
    	
 
    	
7.07
    
	
 
    	
(c)
    	
 
    	
10.04
    
	
317
    	
(a)(1)
    	
 
    	
7.08
    
	
 
    	
(a)(2)
    	
 
    	
7.09
    
	
 
    	
(b)
    	
 
    	
3.07
    
	
318
    	
(a)
    	
 
    	
13.01
    
	
 
    	
(b)
    	
 
    	
N.A.
    
	
 
    	
(c)
    	
 
    	
13.01
    

 

N.A. means not applicable.

*This Cross-Reference Table is not part of this Supplemental Indenture.

 

i

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I APPLICATION OF   SUPPLEMENTAL INDENTURE
    	
2
    
	
 
    	
 
    
	
Section 1.01
    	
Application of this Supplemental Indenture
    	
2
    
	
Section 1.02
    	
Effect of Supplemental Indenture
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE II DEFINITIONS AND   INCORPORATION BY REFERENCE
    	
3
    
	
 
    	
 
    
	
Section 2.01
    	
Definitions
    	
3
    
	
Section 2.02
    	
Other Definitions
    	
27
    
	
Section 2.03
    	
Incorporation by Reference of Trust Indenture Act
    	
28
    
	
Section 2.04
    	
Rules of Construction
    	
28
    
	
 
    	
 
    	
 
    
	
ARTICLE III THE NOTES
    	
29
    
	
 
    	
 
    
	
Section 3.01
    	
Forms Generally
    	
29
    
	
Section 3.02
    	
Form of Legend for Global Notes
    	
30
    
	
Section 3.03
    	
Title and Terms
    	
30
    
	
Section 3.04
    	
Denominations
    	
31
    
	
Section 3.05
    	
Execution and Authentication
    	
31
    
	
Section 3.06
    	
Registration, Registration of Transfer and Exchange
    	
32
    
	
Section 3.07
    	
Paying Agent to Hold Money in Trust
    	
33
    
	
Section 3.08
    	
Holder Lists
    	
34
    
	
Section 3.09
    	
Mutilated, Destroyed, Lost and Stolen Notes
    	
34
    
	
Section 3.10
    	
Outstanding Notes
    	
34
    
	
Section 3.11
    	
Treasury Notes
    	
35
    
	
Section 3.12
    	
Payment of Interest; Interest Rights Preserved
    	
35
    
	
Section 3.13
    	
Persons Deemed Owners
    	
36
    
	
Section 3.14
    	
Temporary Notes
    	
36
    
	
Section 3.15
    	
Cancellation
    	
36
    
	
Section 3.16
    	
Computation of Interest
    	
37
    
	
Section 3.17
    	
Global Securities
    	
37
    
	
Section 3.18
    	
CUSIP Numbers
    	
37
    
	
 
    	
 
    	
 
    
	
ARTICLE IV REDEMPTION AND   PREPAYMENT OF NOTES
    	
37
    
	
 
    	
 
    
	
Section 4.01
    	
Notices to Trustee
    	
37
    
	
Section 4.02
    	
Selection of Notes to Be Redeemed
    	
37
    
	
Section 4.03
    	
Notice of Redemption
    	
38
    
	
Section 4.04
    	
Effect of Notice of Redemption
    	
39
    
	
Section 4.05
    	
Deposit of Redemption Price
    	
39
    
	
Section 4.06
    	
Notes Redeemed in Part
    	
40
    
	
Section 4.07
    	
Optional Redemption
    	
40
    
	
Section 4.08
    	
Mandatory Redemption
    	
41
    
	
Section 4.09
    	
Offer to Purchase by Application of Net Proceeds
    	
41
    
	
 
    	
 
    	
 
    
	
ARTICLE V COVENANTS
    	
43
    
	
 
    	
 
    
	
Section 5.01
    	
Payment of Notes
    	
43
    

 

ii

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 5.02
    	
Maintenance of Office or Agency
    	
43
    
	
Section 5.03
    	
Compliance Certificate
    	
44
    
	
Section 5.04
    	
Taxes
    	
44
    
	
Section 5.05
    	
Stay, Extension and Usury Laws
    	
44
    
	
Section 5.06
    	
Change of Control
    	
45
    
	
Section 5.07
    	
Asset Sales
    	
47
    
	
Section 5.08
    	
Restricted Payments
    	
49
    
	
Section 5.09
    	
Incurrence of Indebtedness and Issuance of Disqualified Equity
    	
52
    
	
Section 5.10
    	
Liens
    	
55
    
	
Section 5.11
    	
Dividend and Other Payment Restrictions Affecting   Subsidiaries
    	
56
    
	
Section 5.12
    	
Transactions With Affiliates
    	
58
    
	
Section 5.13
    	
Additional Subsidiary Guarantees
    	
59
    
	
Section 5.14
    	
Designation of Restricted and Unrestricted Subsidiaries
    	
59
    
	
Section 5.15
    	
Business Activities
    	
60
    
	
Section 5.16
    	
Sale and Leaseback Transactions
    	
60
    
	
Section 5.17
    	
Reports
    	
61
    
	
Section 5.18
    	
Termination of Covenants
    	
61
    
	
 
    	
 
    	
 
    
	
ARTICLE VI SUCCESSORS
    	
62
    
	
 
    	
 
    
	
Section 6.01
    	
Merger, Consolidation, or Sale of Assets
    	
62
    
	
Section 6.02
    	
Successor Entity Substituted
    	
64
    
	
 
    	
 
    	
 
    
	
ARTICLE VII DEFAULTS AND   REMEDIES
    	
65
    
	
 
    	
 
    
	
Section 7.01
    	
Events of Default
    	
65
    
	
Section 7.02
    	
Acceleration
    	
67
    
	
Section 7.03
    	
Other Remedies
    	
68
    
	
Section 7.04
    	
Waiver of Past Defaults
    	
68
    
	
Section 7.05
    	
Control by Majority
    	
68
    
	
Section 7.06
    	
Limitation on Suits
    	
68
    
	
Section 7.07
    	
Rights of Holders of Notes to Receive Payment
    	
69
    
	
Section 7.08
    	
Collection Suit by Trustee
    	
69
    
	
Section 7.09
    	
Trustee May File Proofs of Claim
    	
69
    
	
Section 7.10
    	
Priorities
    	
70
    
	
Section 7.11
    	
Undertaking for Costs
    	
70
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII TRUSTEE
    	
71
    
	
 
    	
 
    
	
Section 8.01
    	
Duties of Trustee
    	
71
    
	
Section 8.02
    	
Rights of Trustee
    	
72
    
	
Section 8.03
    	
Individual Rights of Trustee
    	
74
    
	
Section 8.04
    	
Trustee’s Disclaimer
    	
74
    
	
Section 8.05
    	
Notice of Defaults
    	
74
    
	
Section 8.06
    	
Reports by Trustee to Holders of the Notes
    	
75
    
	
Section 8.07
    	
Compensation and Indemnity
    	
75
    
	
Section 8.08
    	
Replacement of Trustee
    	
76
    
	
Section 8.09
    	
Successor Trustee by Merger, Etc.
    	
77
    

 

iii

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 8.10
    	
Eligibility; Disqualification
    	
77
    
	
Section 8.11
    	
Preferential Collection of Claims Against Issuers
    	
78
    
	
Section 8.12
    	
U.S.A. Patriot Act
    	
78
    
	
Section 8.13
    	
Force Majeure
    	
78
    
	
 
    	
 
    	
 
    
	
ARTICLE IX LEGAL DEFEASANCE   AND COVENANT DEFEASANCE
    	
78
    
	
 
    	
 
    
	
Section 9.01
    	
Option to Effect Legal Defeasance or Covenant Defeasance
    	
78
    
	
Section 9.02
    	
Legal Defeasance and Discharge
    	
78
    
	
Section 9.03
    	
Covenant Defeasance
    	
79
    
	
Section 9.04
    	
Conditions to Legal Defeasance or Covenant Defeasance
    	
79
    
	
Section 9.05
    	
Deposited Money and Government Securities to be Held in   Trust, Other Miscellaneous Provisions
    	
81
    
	
Section 9.06
    	
Reinstatement
    	
81
    
	
 
    	
 
    	
 
    
	
ARTICLE X AMENDMENT,   SUPPLEMENT AND WAIVER
    	
82
    
	
 
    	
 
    
	
Section 10.01
    	
Without Consent of Holders of Notes
    	
82
    
	
Section 10.02
    	
With Consent of Holders of Notes
    	
83
    
	
Section 10.03
    	
Compliance with Trust Indenture Act
    	
84
    
	
Section 10.04
    	
Revocation and Effect of Consents
    	
84
    
	
Section 10.05
    	
Notation or Exchange of Notes
    	
85
    
	
Section 10.06
    	
Trustee to Sign Amendments, Etc.
    	
85
    
	
Section 10.07
    	
Effect of Supplemental Indentures
    	
85
    
	
 
    	
 
    	
 
    
	
ARTICLE XI GUARANTEES
    	
86
    
	
 
    	
 
    
	
Section 11.01
    	
Guarantees
    	
86
    
	
Section 11.02
    	
Limitation of Guarantor’s Liability
    	
87
    
	
Section 11.03
    	
Execution and Delivery of Notations of Guarantees
    	
87
    
	
Section 11.04
    	
Releases
    	
88
    
	
Section 11.05
    	
“Trustee” to Include Paying Agent
    	
89
    
	
 
    	
 
    	
 
    
	
ARTICLE XII SATISFACTION AND   DISCHARGE
    	
89
    
	
 
    	
 
    
	
Section 12.01
    	
Satisfaction and Discharge
    	
89
    
	
Section 12.02
    	
Application of Trust
    	
90
    
	
Section 12.03
    	
Repayment of the Issuers
    	
91
    
	
Section 12.04
    	
Reinstatement
    	
91
    
	
 
    	
 
    	
 
    
	
ARTICLE XIII MISCELLANEOUS
    	
91
    
	
 
    	
 
    
	
Section 13.01
    	
Notices
    	
91
    
	
Section 13.02
    	
Communication by Holders of Notes with Other Holders of   Notes
    	
93
    
	
Section 13.03
    	
Certificate and Opinion as to Conditions Precedent
    	
93
    
	
Section 13.04
    	
Statements Required in Certificate or Opinion
    	
94
    
	
Section 13.05
    	
No Personal Liability of Directors, Officers, Employees and   Unitholders and No Recourse Against General Partner
    	
94
    
	
Section 13.06
    	
No Adverse Interpretation of Other Agreements
    	
94
    
	
Section 13.07
    	
Successors
    	
94
    

 

iv

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 13.08
    	
Counterpart Originals
    	
95
    
	
Section 13.09
    	
Indenture and Notes to Be Construed in Accordance with the   Laws of the State of New York
    	
95
    
	
Section 13.10
    	
Provisions Required by TIA to Control
    	
95
    
	
Section 13.11
    	
Rules by Trustee, Paying Agent and Registrar
    	
95
    
	
Section 13.12
    	
Severability
    	
95
    
	
Section 13.13
    	
Table of Contents, Headings, Etc.
    	
95
    

 

	
Subsidiary Guarantors
    	
Schedule A
    
	
Form of Note
    	
Exhibit A
    
	
Form of Guarantee
    	
Exhibit B
    
	
Form of Supplemental Indenture
    	
Exhibit C
    

 

v

 

 

 

THIS FIFTH SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”) dated as of November  3, 2011 is among MarkWest Energy Partners, L.P., a Delaware limited partnership (the “Partnership”), MarkWest Energy Finance Corporation, a Delaware corporation (“MarkWest Finance” and, together with the Partnership, the “Issuers”), the Subsidiary Guarantors (as defined herein) listed on Schedule A hereto, and Wells Fargo Bank, National Association, a national banking association, as Trustee under the Indenture, dated as of November  2, 2010, among the Issuers, the Subsidiary Guarantors named therein and the Trustee (the “Base Indenture” and, as amended and supplemented by this Supplemental Indenture, in respect of the 6.25% Senior Notes due 2022, the “Indenture”).

 

RECITALS

 

The Issuers, certain of the Subsidiary Guarantors and the Trustee have duly authorized, executed and delivered the Base Indenture to provide for the issuance from time to time of the Issuers’ debentures, notes, bonds or other evidences of indebtedness, to be issued in one or more series unlimited as to principal amount (herein called “Debt Securities”), which Debt Securities may be guaranteed by each of the Subsidiary Guarantors, as the Base Indenture provides.

 

Section  9.01 of the Base Indenture provides, among other things, that the Issuers, the Subsidiary Guarantors and the Trustee may enter into indentures supplemental to the Base Indenture, without the consent of any Holders of Debt Securities, to establish the form or terms of any Debt Security as permitted by Sections 2.01 and 2.03 of the Base Indenture.

 

Pursuant to Sections 2.01 and 2.03 of the Base Indenture, the Issuers desire to execute this Supplemental Indenture to establish the form and terms, and to provide for the issuance, of a second series of senior notes designated as 6.25% Senior Notes due 2022 in an aggregate principal amount of $700,000,000 (the “Initial Notes”).

 

From time to time subsequent to the Issue Date, the Issuers may, if permitted to do so pursuant to the terms of the Indenture, the Initial Notes and the terms of their other indebtedness existing on such future date, issue additional senior notes of the same series as the Initial Notes in accordance with this Supplemental Indenture (the “Additional Notes” and, together with the Initial Notes, the “Notes”), pursuant to this Supplemental Indenture.

 

The Issuers and the Subsidiary Guarantors are members of the same consolidated group of companies. The Subsidiary Guarantors will derive direct and indirect economic benefit from the issuance of the Notes. Accordingly, each Subsidiary Guarantor has duly authorized the execution and delivery of this Supplemental Indenture to provide for its full, unconditional and joint and several Guarantee of the Notes to the extent provided in or pursuant to the Indenture.

 

This Supplemental Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be a part of this Supplemental Indenture and shall, to the extent applicable, be governed by such provisions.

 

All things necessary have been done to make the Notes, when executed by the Issuers and authenticated and delivered hereunder and duly issued by the Issuers, the valid obligations of the

 

1

 

Issuers, and all things necessary have been done to make the Guarantees thereof, when the Notes have been executed by the Issuers and authenticated and delivered hereunder and duly issued by the Issuers, the valid obligations of the Subsidiary Guarantors.

 

All things necessary to make this Supplemental Indenture a valid agreement of each of the Issuers and the Subsidiary Guarantors, in accordance with its terms, have been done.

 

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

 

For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows:

 

ARTICLE  I
 APPLICATION OF SUPPLEMENTAL INDENTURE

 

Section  1.01           Application of this Supplemental Indenture.

 

Notwithstanding any other provision of this Supplemental Indenture, the provisions of this Supplemental Indenture, including as provided in Section  1.02 below, are expressly and solely for the benefit of the Holders of the Notes and the Guarantees and shall not apply to any other series of Debt Securities that have been issued or that may be issued hereafter under the Base Indenture. The Notes constitute a series of Debt Securities as provided in the Base Indenture. Unless otherwise expressly specified, references in this Supplemental Indenture to specific Article  numbers or Section  numbers refer to Articles and Sections contained in this Supplemental Indenture, and not the Base Indenture or any other document.

 

Section  1.02           Effect of Supplemental Indenture.

 

With respect to the Notes (and any notation of Guarantee endorsed thereon) only, the Base Indenture shall be supplemented and amended pursuant to Section  9.01 thereof to establish the form and terms of the Notes (and any notation of Guarantee endorsed thereon) as set forth in this Supplemental Indenture, including as follows:

 

(a)           Definitions. Article  I of the Base Indenture is deleted and replaced in its entirety by the provisions of Article  II of this Supplemental Indenture;

 

(b)           Security Forms. Article  II of the Base Indenture is deleted and replaced in its entirety by the provisions of Article  III of this Supplemental Indenture;

 

(c)           Redemption. The provisions of Article  III of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  IV of this Supplemental Indenture;

 

(d)           Covenants. The provisions of Article  IV of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  V of this Supplemental Indenture;

 

2

 

(e)           Holders’ Lists and Reports by Trustee. The provisions of Article  V of the Base Indenture are deleted in their entirety;

 

(f)            Remedies of the Trustee and Holders in Event of Default. The provisions of Article  VI of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  VII of this Supplemental Indenture;

 

(g)           The Trustee. The provisions of Article  VII of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  VIII of this Supplemental Indenture;

 

(h)           The Holders. The provisions of Article  VIII of the Base Indenture are deleted in their entirety;

 

(i)            Supplemental Indentures. The provisions of Article  IX of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  X of this Supplemental Indenture;

 

(j)            Consolidation, Merger, Sale of Assets. The provisions of Article  X of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  VI of this Supplemental Indenture;

 

(k)           Satisfaction and Discharge; Defeasance. The provisions of Article  XI of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  IX and Article  XII of this Supplemental Indenture;

 

(l)            Guarantees. The provisions of Article  XIV of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  XI of this Supplemental Indenture; and

 

(m)          Miscellaneous.  The provisions of Article  XIII of the Base Indenture are deleted and replaced in their entirety by the provisions of Article  XIII of this Supplemental Indenture:

 

To the extent that the provisions of this Supplemental Indenture (including those referred to in clauses (a)  through (m)  above) conflict with any provision of the Base Indenture, the provisions of this Supplemental Indenture shall govern and be controlling, solely with respect to the Notes (and any notation of Guarantee endorsed thereon).

 

ARTICLE  II
 DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section  2.01           Definitions.

 

“Acquired Debt” means, with respect to any specified Person:

 

3

 

(a)           Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person, but excluding Indebtedness that is extinguished, retired or repaid in connection with such Person merging with or becoming a Subsidiary of such specified Person; and

 

(b)           Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a specified Person shall be deemed to be control by the other Person; provided, further, that any third Person which also beneficially owns 10% or more of the Voting Stock of a specified Person shall not be deemed to be an Affiliate of either the specified Person or the other Person merely because of such common ownership in such specified Person. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings. Notwithstanding the preceding, the term “Affiliate” shall not include a Restricted Subsidiary of any specified Person.

 

“Agent” means any Registrar or Paying Agent.

 

“Asset Sale” means:

 

(a)           the sale, lease, conveyance or other disposition of any assets, other than dispositions of any products, equipment or services in the ordinary course of business; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Partnership and its Restricted Subsidiaries taken as a whole will be governed by the provisions of Section  5.06 and/or the provisions of Article  VI hereof and not by the provisions of Section  5.07; and

 

(b)           the issuance of Equity Interests by any of the Partnership’s Restricted Subsidiaries or the sale by the Partnership or any of its Restricted Subsidiaries of Equity Interests in any of its Restricted Subsidiaries.

 

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

 

(a)           any single transaction or series of related transactions that: (i)  involves assets having a fair market value of less than $15.0 million; or (ii)  results in net proceeds to the Partnership and its Restricted Subsidiaries of less than $15.0 million;

 

4

 

(b)           a transfer of assets between or among the Partnership and its Restricted Subsidiaries;

 

(c)           an issuance or sale of Equity Interests by a Restricted Subsidiary to the Partnership or to another Restricted Subsidiary of the Partnership;

 

(d)           a Restricted Payment that is permitted under Section  5.08 hereof or a Permitted Investment;

 

(e)           the sale or other disposition of cash or Cash Equivalents, Hedging Obligations or other financial instruments in the ordinary course of business;

 

(f)            any trade or exchange by the Partnership or any of its Restricted Subsidiaries of assets for properties or assets owned or held by another Person, provided that the fair market value of the assets traded or exchanged by the Partnership or such Restricted Subsidiary (together with any cash) is reasonably equivalent to the fair market value of the assets (together with any cash) to be received by the Partnership or such Restricted Subsidiary, and provided further that any cash received must be applied in accordance with the provisions of Section  5.07 hereof;

 

(g)           surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind;

 

(h)           the creation or perfection of a Lien that is not prohibited by Section  5.07;

 

(i)            dispositions in connection with Permitted Liens; and

 

(j)            the grant in the ordinary course of business of any non-exclusive license of patents, trademarks, registrations therefor and other similar intellectual property.

 

“Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.

 

“Available Cash” has the meaning assigned to such term in the Partnership Agreement, as in effect on the Issue Date.

 

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.

 

“Beneficial Owner” has the meaning assigned to such term in Rule  13d-3 and Rule  13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section  13(d)(3)  of the Exchange Act), such “person” will be

 

5

 

deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” have correlative meanings.

 

“Board of Directors” means, with respect to the Partnership, the Board of Directors of the General Partner, or any authorized committee of such Board of Directors, and with respect to MarkWest Finance or any other Subsidiary of the Partnership, the Board of Directors or managing members of such Person.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the applicable Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

 

“Business Day” means any day other than a Legal Holiday.

 

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.

 

“Cash Equivalents” means:

 

(a)           United States dollars or, in an amount up to the amount necessary or appropriate to fund local operating expenses, other currencies;

 

(b)           securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition;

 

(c)           certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding 365 days, demand and overnight bank deposits and other similar types of investments routinely offered by commercial banks, in each case, with any domestic commercial bank having a combined capital and surplus in excess of $500.0 million and a Thomson BankWatch Rating of “B” or better or any commercial bank of any other country that is a member of the Organization for Economic Cooperation and Development (“OECD”) and has total assets in excess of $500.0 million;

 

(d)           repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b)  and (c)  above entered into with any financial institution meeting the qualifications specified in clause (c)  above;

 

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(e)           commercial paper having one of the two highest ratings obtainable from Moody’s or Standard  & Poor’s and in each case maturing within six months after the date of acquisition; and

 

(f)            money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a)  through (e)  of this definition.

 

“Certificated Note” means a Note in certificated form registered in the name of the Holder thereof and issued in accordance with Article  III hereof, in substantially the form of Exhibit  A hereto, except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

 

“Change of Control” means the occurrence of any of the following:

 

(a)           the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets (including Equity Interests of the Restricted Subsidiaries) of the Partnership and its Restricted Subsidiaries taken as a whole, to any “person” (as that term is used in Section  13(d)(3)  of the Exchange Act), which disposition is followed by a Rating Decline within 90 days thereafter;

 

(b)           the adoption of a plan relating to the liquidation or dissolution of the Partnership or the removal of the General Partner by the limited partners of the Partnership;

 

(c)           the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section  13(d)(3)  of the Exchange Act), excluding the MarkWest Group, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the General Partner, measured by voting power rather than number of shares, units or the like, which occurrence is followed by a Rating Decline within 90 days thereafter;

 

(d)           the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section  13(d)(3)  of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Partnership, measured by voting power rather than number of shares, units or the like, at a time when the Partnership still Beneficially Owns more than 50% of the Voting Stock of the General Partner, measured by voting power rather than number of shares, units or the like, which occurrence is followed by a Rating Decline within 90 days thereafter; or

 

(e)           the first day on which a majority of the members of the Board of Directors of the General Partner are not Continuing Directors, which occurrence is followed by a Rating Decline within 90 days thereafter.

 

Notwithstanding the preceding, a conversion of the Partnership from a limited partnership to a corporation, limited liability company or other form of entity or an exchange of all of the

 

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outstanding limited partnership interests for capital stock in a corporation, for member interests in a limited liability company or for Equity Interests in such other form of entity shall not constitute a Change of Control, so long as following such conversion or exchange the MarkWest Group Beneficially Owns, directly or indirectly, in the aggregate more than 50% of the Voting Stock of such entity, or continues to Beneficially Own a sufficient percentage of Voting Stock of such entity to elect a majority of its directors, managers, trustees or other persons serving in a similar capacity for such entity.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules  and regulations thereunder, and any successor thereto.

 

“Consolidated Cash Flow” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus:

 

(a)           an amount equal to any net loss realized by such Person and its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus

 

(b)           provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

 

(c)           the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings), and net of the effect of all payments, made or received pursuant to interest-rate Hedging Obligations, to the extent that any such expense was deducted in computing such Consolidated Net Income; plus

 

(d)           depreciation, depletion and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization, impairment and other non-cash expenses were deducted in computing such Consolidated Net Income; plus

 

(e)           unrealized non-cash losses resulting from foreign currency balance sheet adjustments required by GAAP to the extent such losses are deducted in computing such Consolidated Net Income; plus

 

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(f)            all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense; minus

 

(g)           non-cash items increasing such Consolidated Net Income for such period, other than items that were accrued in the ordinary course of business;

 

in each case, on a consolidated basis and determined in accordance with GAAP.

 

Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation, depletion and amortization and other non-cash charges of, a Restricted Subsidiary of the Partnership shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the Partnership only to the extent that a corresponding amount would be permitted at the date of determination to be dividended or distributed to the Partnership by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements (other than the Indenture, the Notes or its Guarantee), instruments, judgments, decrees, orders, statutes, rules  and governmental regulations applicable to that Restricted Subsidiary or its stockholders, partners or members.

 

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

 

(a)           Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included, but only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;

 

(b)           the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement (other than the Indenture, the Notes or its Guarantee), instrument, judgment, decree, order, statute, rule  or governmental regulation applicable to that Restricted Subsidiary or its stockholders, partners or members;

 

(c)           the cumulative effect of a change in accounting principles shall be excluded;

 

(d)           unrealized losses and gains under derivative instruments included in the determination of Consolidated Net Income, including, without limitation, those resulting from the application of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 815, shall be excluded; and

 

(e)           any charges relating to any premium or penalty paid, write off of deferred finance costs or other charges in connection with redeeming or retiring any Indebtedness prior to its Stated Maturity shall be excluded.

 

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“Consolidated Net Tangible Assets” means, with respect to any Person at any date of determination, the aggregate amount of total assets included in such Person’s most recent quarterly or annual consolidated balance sheet prepared in accordance with GAAP less applicable reserves reflected in such balance sheet, after deducting the following amounts: (1)  all current liabilities reflected in such balance sheet, and (2)  all goodwill, trademarks, patents, unamortized debt discounts and expenses and other like intangibles reflected in such balance sheet.

 

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the General Partner who (1)  was a member of such Board of Directors on the Issue Date or (2)  was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

 

“Corporate Trust Office” shall be at the address of the Trustee specified in Section  13.01 hereof or such other address as to which the Trustee may give notice to the Issuers.

 

“Credit Agreement” means that certain Amended and Restated Credit Agreement, dated July  1, 2010, among the Partnership, the banks parties thereto and Wells Fargo Bank, National Association, as administrative agent, consisting of a revolver loan, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.

 

“Credit Facilities” means, with respect to the Partnership, MarkWest Finance or any Restricted Subsidiary, one or more credit facilities, indentures or commercial paper facilities, including the Credit Agreement, providing for revolving credit loans, term loans, capital market financings, private placements, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.

 

“Debt Security” or “Debt Securities” has the meaning stated in the first recital of this Supplemental Indenture.

 

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

 

“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section  3.06 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of the Indenture.

 

“Disqualified Equity” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable,

 

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pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Equity Interest that would constitute Disqualified Equity solely because the holders thereof have the right to require the Partnership or any of its Restricted Subsidiaries to repurchase such Equity Interest upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Equity if the terms of such Equity Interest provide that the Partnership or Restricted Subsidiary may not repurchase or redeem any such Equity Interest pursuant to such provisions unless such repurchase or redemption complies with Section  5.08 hereof.

 

“Domestic Subsidiary” means any Restricted Subsidiary of the Partnership that was formed under the laws of the United States or any state of the United States or the District of Columbia.

 

“Equity Interests” means:

 

(a)           in the case of a corporation, corporate stock;

 

(b)           in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

 

(c)           in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited);

 

(d)           any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person; and

 

(e)           all warrants, options or other rights to acquire any of the interests described in clauses (a)  through (d)  above (but excluding any debt security that is convertible into, or exchangeable for, any of the interests described in clauses (a)  through (d)  above).

 

“Equity Offering” means any public or private sale for cash of Equity Interests of the Partnership (excluding sales made to any Restricted Subsidiary and excluding sales of Disqualified Equity) after the Issue Date; provided that a private placement of Equity Interests will not be deemed an Equity Offering unless net cash proceeds of at least $10.0 million are received.

 

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

 

“Existing Indebtedness” means the aggregate principal amount of Indebtedness of the Partnership and its Restricted Subsidiaries in existence on the Issue Date.

 

The term “fair market value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the General Partner in the case of amounts of $30.0 million or more and otherwise by an Officer of the General Partner.

 

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“Fixed Charge Coverage Ratio” means, with respect to any specified Person for any four-quarter reference period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, redeems, defeases or otherwise retires any Indebtedness (other than revolving credit borrowings not constituting a permanent commitment reduction) or issues, repurchases or redeems Disqualified Equity subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, redemption, defeasance or other retirement of Indebtedness, or such issuance, repurchase or redemption of Disqualified Equity, and the application of the net proceeds thereof as if the same had occurred at the beginning of the applicable four-quarter reference period.

 

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

 

(a)                                  acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers, consolidations or otherwise (including acquisitions of assets used in a Permitted Business), and including in each case any related financing transactions (including repayment of Indebtedness) during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period, including any Consolidated Cash Flow and any pro forma expense and cost reductions that have occurred or are reasonably expected to occur, in the reasonable judgment of the chief financial or accounting officer of the Partnership (regardless of whether those cost savings or operating improvements could then be reflected in pro forma financial statements in accordance with Regulation S-X promulgated under the Securities Act or any other regulation or policy of the SEC related thereto);

 

(b)                                 the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded;

 

(c)                                  the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

 

(d)                                 interest on outstanding Indebtedness of the specified Person or any of its Restricted Subsidiaries as of the last day of the four-quarter reference period shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on such last day after giving effect to any Hedging Obligation then in effect; and

 

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(e)                                  if interest on any Indebtedness incurred by the specified Person or any of its Restricted Subsidiaries on such date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate or other rates, then the interest rate in effect on the last day of the four-quarter reference period will be deemed to have been in effect during such period.

 

“Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:

 

(a)                                  the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts, and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to interest-rate Hedging Obligations; plus

 

(b)                                 the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

 

(c)                                  any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon; plus

 

(d)                                 all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Equity of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Partnership (other than Disqualified Equity) or to the Partnership or a Restricted Subsidiary of the Partnership;

 

in each case, on a consolidated basis and in accordance with GAAP.

 

“Foreign Subsidiary” means any Restricted Subsidiary of the Partnership that (a) is not a Domestic Subsidiary and (b) has 50% or more of its assets located outside the United States or any territory thereof.

 

“GAAP” means generally accepted accounting principles in the United States, which are in effect from time to time.

 

“General Partner” means MarkWest Energy GP, L.L.C., a Delaware limited liability company, and its successors and permitted assigns as general partner of the Partnership.

 

“Global Note Legend” means the legend set forth in Section 3.02, which is required to be placed on all Global Notes issued under the Indenture.

 

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“Global Note” means a Note in global form registered in the name of the Depositary or its nominee and issued in accordance with Article III hereof, in substantially the form of Exhibit A hereto, bearing the Global Note Legend and having the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

 

The term “guarantee” means a guarantee, other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets, or through letters of credit or reimbursement, “claw-back,” “make-well,” or “keep-well” agreements in respect thereof, of all or any part of any Indebtedness. The term “guarantee” used as a verb has a corresponding meaning.  The term “guarantor” shall mean any Person providing a guarantee of any obligation.

 

“Guarantee” means, individually and collectively, the guarantees given by the Subsidiary Guarantors pursuant to Article XI hereof, including a notation in the Notes substantially in the form attached hereto as Exhibit B.

 

“Guarantor Subordinated Obligation” means, with respect to a Subsidiary Guarantor, any Indebtedness or other Obligations of such Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter incurred) which are expressly subordinate in right of payment to the Obligations of such Subsidiary Guarantor under its Guarantee pursuant to a written agreement.

 

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under interest rate and commodity price swap agreements, interest rate and commodity price cap agreements, interest rate and commodity price collar agreements and foreign currency and commodity price exchange agreements, options or futures contracts or other similar agreements or arrangements or Hydrocarbon hedge contracts or Hydrocarbon forward sales contracts, in each case designed to protect such Person against fluctuations in interest rates, foreign exchange rates, or commodities prices.

 

“Holder,” “Holder of Notes” or other similar terms means the Person in whose name a Note is registered in the Register (as defined in Section 3.06).

 

“Hydrocarbons” means crude oil, natural gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents, elements or compounds thereof and products refined or processed therefrom.

 

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:

 

(a)                                  in respect of borrowed money;

 

(b)                                 evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

 

(c)                                  in respect of bankers’ acceptances;

 

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(d)                                 representing Capital Lease Obligations;

 

(e)                                  representing all Attributable Debt of such Person in respect of any sale and leaseback transactions not involving a Capital Lease Obligation;

 

(f)                                    representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable incurred in the ordinary course of business;

 

(g)                                 representing Disqualified Equity; or

 

(h)                                 representing any Hedging Obligations;

 

if and to the extent any of the preceding items (other than the item referred to in clause (e), letters of credit, Disqualified Equity and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by such Person of any Indebtedness of any other Person, provided that a guarantee otherwise permitted by the Indenture to be incurred by the Partnership or any of its Restricted Subsidiaries of Indebtedness incurred by the Partnership or a Restricted Subsidiary in compliance with the terms of the Indenture shall not constitute a separate incurrence of Indebtedness.

 

The amount of any Indebtedness outstanding as of any date shall be:

 

(a)                                  the accreted value thereof, in the case of any Indebtedness issued with original issue discount;

 

(b)                                 in the case of any Hedging Obligation, the termination value of the agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such date;

 

(c)                                  in the case of any letter of credit, the maximum potential liability thereunder; and

 

(d)                                 the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

 

For purposes of clause (g) of the first paragraph of this definition, Disqualified Equity shall be valued at the maximum fixed redemption, repayment or repurchase price, which shall be calculated in accordance with the terms of such Disqualified Equity as if such Disqualified Equity were repurchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture; provided, however, that if such Disqualified Equity is not then permitted by its terms to be redeemed, repaid or repurchased, the redemption, repayment or repurchase price shall be the book value of such Disqualified Equity. The amount of

 

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Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional Obligations as described above and the maximum liability of any guarantees at such date; provided that for purposes of calculating the amount of any non-interest bearing or other discount security, such Indebtedness shall be deemed to be the principal amount thereof that would be shown on the balance sheet of the issuer thereof dated such date prepared in accordance with GAAP, but that such security shall be deemed to have been incurred only on the date of the original issuance thereof.

 

“Interest Payment Date” means Stated Maturity of an installment of interest on the Notes.

 

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s or BBB- (or the equivalent) by Standard & Poor’s.

 

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other Obligations), advances (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender and commission, moving, travel and similar advances to officers and employees made in the ordinary course of business) or capital contributions, purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.  For purposes of the definition of “Unrestricted Subsidiary,” the definition of “Restricted Payment” and the covenant in Section 5.08 hereof, (1) the term “Investment” shall include the portion (proportionate to the Partnership’s Equity Interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Partnership or any of its Restricted Subsidiaries at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Partnership or such Restricted Subsidiary shall be deemed to continue to have a permanent “Investment” in such Subsidiary at the time immediately before the effectiveness of such redesignation less the portion (proportionate to the Partnership’s or such Restricted Subsidiary’s Equity Interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation, and (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the General Partner. If the Partnership or any Restricted Subsidiary of the Partnership sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Partnership such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Partnership, the Partnership shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of.

 

“Issue Date” means November 3, 2011.

 

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“Issuer Order” means a written request or order signed on behalf of each Issuer by an Officer thereof and delivered to the Trustee.

 

“Joint Venture” means any Person that is not a direct or indirect Subsidiary of the Partnership in which the Partnership or any of its Restricted Subsidiaries makes any Investment.

 

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the City of Denver, Colorado, Dallas, Texas or New York, New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

 

“Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, charge, security interest, hypothecation, assignment for security, claim, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement or any lease in the nature thereof, any option or other agreement to grant a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statute) of any jurisdiction other than a precautionary financing statement respecting a lease not intended as a security agreement.

 

“Make Whole Amount” means, with respect to any Note at any redemption date, the excess, if any, of (1) an amount equal to the present value of (a) the redemption price of such Note at December 15, 2016 plus (b) the remaining scheduled interest payments on the Notes to be redeemed to December 15, 2016 (other than interest accrued to the redemption date), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the aggregate principal amount of the Notes to be redeemed.

 

“MarkWest Group” means, collectively, the Partnership and each Person which is a direct or indirect Subsidiary of the Partnership.

 

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

 

“Net Income” means, with respect to any Person, the consolidated net income (loss) of such Person and its Restricted Subsidiaries, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

 

(a)                                  the aggregate gain (but not loss in excess of such aggregate gain), together with any related provision for taxes on such gain, realized in connection with:

 

(i)                                     any Asset Sale; or

 

(ii)                                  the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

 

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(b)                                 any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss).

 

“Net Proceeds” means, with respect to any Asset Sale or sale of Equity Interests, the aggregate proceeds received by the Partnership or any of its Restricted Subsidiaries in cash or Cash Equivalents in respect of any Asset Sale or sale of Equity Interests (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any such sale), net of, without duplication, (1) the direct costs relating to such Asset Sale or sale of Equity Interests, including, without limitation, brokerage commissions and legal, accounting and investment banking fees, sales commissions, recording fees, title transfer fees, and any relocation expenses incurred as a result thereof, (2) taxes paid or payable as a result thereof, in each case after taking into account any available tax credits or deductions and any tax sharing arrangements and amounts required to be applied to the repayment of Indebtedness secured by a Lien on the asset or Equity Interests that were the subject of such Asset Sale or sale of Equity Interests, (3) all distributions and payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Sale and (4) any amounts to be set aside in any reserve established in accordance with GAAP or any amount placed in escrow, in either case for adjustment in respect of the sale price of such asset or Equity Interests or for liabilities associated with such Asset Sale or sale of Equity Interests and retained by the Partnership or any of its Restricted Subsidiaries until such time as such reserve is reversed or such escrow arrangement is terminated, in which case Net Proceeds shall include only the amount of the reserve so reversed or the amount returned to the Partnership or its Restricted Subsidiaries from such escrow arrangement, as the case may be.

 

“Non-Recourse Debt” means Indebtedness as to which:

 

(a)                                  neither the Partnership nor any of its Restricted Subsidiaries (i) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (ii) is directly or indirectly liable as a guarantor or otherwise, or (iii) constitutes the lender of such Indebtedness;

 

(b)                                 no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of the Partnership or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity; and

 

(c)                                  as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Partnership or any of its Restricted Subsidiaries, except as contemplated by clause (o) of the definition of “Permitted Liens.”

 

“Note Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

 

18

 

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursement obligations, damages and other liabilities payable under the documentation governing any Indebtedness.

 

“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice President of such Person (or, with respect to the Partnership, so long as it remains a partnership, the General Partner).

 

“Officers’ Certificate” means a certificate signed on behalf of each of the Partnership and MarkWest Finance by two of its Officers, one of whom must be the principal executive officer, the principal financial officer or the principal accounting officer of such Person, that meets the requirements of Section 13.04 hereof.

 

“Operating Company” means MarkWest Energy Operating Company, L.L.C., a Delaware limited liability company, and its successors.

 

“Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 13.04 hereof.  The counsel may be an employee of or counsel to the Partnership, MarkWest Finance or the General Partner (or any Subsidiary Guarantor, if applicable), any Subsidiary of the Partnership or the Trustee.

 

“Partnership” means MarkWest Energy Partners, L.P., a Delaware limited partnership, and its successors.

 

“Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership of MarkWest Energy Partners, L.P., dated as of February 21, 2008, as such may be amended, modified or supplemented from time to time.

 

“Permitted Business” means either (1) gathering, transporting, treating, processing, marketing or otherwise handling Hydrocarbons, or activities or services reasonably related or ancillary thereto including entering into Hedging Obligations to support these businesses, or (2) any other business that generates gross income that constitutes “qualifying income” under Section 7704(d) of the Code.

 

“Permitted Business Investments” means Investments by the Partnership or any of its Restricted Subsidiaries in any Unrestricted Subsidiary of the Partnership or in any Joint Venture, provided that:

 

(a)                                  either (i) at the time of such Investment and immediately thereafter, the Partnership could incur $1.00 of additional Indebtedness under Section 5.09(a) or (ii) such Investment does not exceed the aggregate amount of Incremental Funds (as defined in Section 5.08) not previously expended at the time of making such Investment;

 

19

 

(b)                                 if such Unrestricted Subsidiary or Joint Venture has outstanding Indebtedness at the time of such Investment, either (i) all such Indebtedness is Non-Recourse Debt or (ii) it is Indebtedness of such Unrestricted Subsidiary or Joint Venture that could, at the time such Investment is made and, if later, at the time any such Indebtedness is incurred, be incurred by the Partnership and its Restricted Subsidiaries in accordance with the limitation on Indebtedness set forth in Section 5.09(a); and

 

(c)                                  such Unrestricted Subsidiary’s or Joint Venture’s activities are not outside the scope of the Permitted Business.

 

“Permitted Investments” means:

 

(a)                                  any Permitted Business Investment;

 

(b)                                 any Investment in, or that results in the creation of, any Restricted Subsidiary of the Partnership;

 

(c)                                  any Investment in the Partnership or in a Restricted Subsidiary of the Partnership (excluding redemptions, purchases, acquisitions or other retirements of Equity Interests in the Partnership but including purchases of its Notes);

 

(d)                                 any Investment in cash or Cash Equivalents;

 

(e)                                  any Investment by the Partnership or any Restricted Subsidiary of the Partnership in a Person if as a result of such Investment:

 

(i)                                     such Person becomes a Restricted Subsidiary of the Partnership; or

 

(ii)                                  such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Partnership or a Restricted Subsidiary of the Partnership;

 

(f)                                    any Investment made as a result of the receipt of consideration consisting of other than cash or Cash Equivalents from an Asset Sale that was made pursuant to and in compliance with Section 5.07, including pursuant to clause (f) of the items deemed not to be Asset Sales in the definition of that term;

 

(g)                                 any Investment in a Person solely in exchange for the issuance of Equity Interests (other than Disqualified Equity) of the Partnership;

 

(h)                                 Investments in stock, obligations or securities received in settlement of debts owing to the Partnership or any of its Restricted Subsidiaries as a result of bankruptcy or insolvency proceedings or upon the foreclosure, perfection or enforcement of any Lien in favor of the Partnership or any such Restricted Subsidiary, in each case as to debt owing to the Partnership or any such Restricted Subsidiary that arose in the ordinary course of business of the Partnership or any such Restricted Subsidiary;

 

20

 

(i)                                     any Investment in Hedging Obligations permitted to be incurred under Section 5.09 hereof; and

 

(j)                                     other Investments in any Person engaged in a Permitted Business (other than an Investment in an Unrestricted Subsidiary) having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (i) since the Issue Date and existing at the time of the Investment, which is the subject of the determination, was made, not to exceed the greater of (i) $60.0 million and (ii) 2.5% of Consolidated Net Tangible Assets.

 

“Permitted Liens” means:

 

(a)                                  Liens securing Indebtedness under any of the Credit Facilities;

 

(b)                                 Liens in favor of the Partnership or any of its Restricted Subsidiaries;

 

(c)                                  any interest or title of a lessor in the property subject to a Capital Lease Obligation;

 

(d)                                 Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Partnership or any Restricted Subsidiary of the Partnership, provided that such Liens were in existence prior to, and were not obtained in contemplation of, such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Partnership or such Restricted Subsidiary;

 

(e)                                  Liens on property existing at the time of acquisition thereof by the Partnership or any Restricted Subsidiary of the Partnership, provided that such Liens were in existence prior to, and were not obtained in contemplation of, such acquisition and relate solely to such property, accessions thereto and the proceeds thereof;

 

(f)                                    Liens to secure the performance of tenders, bids, leases, statutory obligations, surety or appeal bonds, government contracts, performance bonds or other obligations of a like nature incurred in the ordinary course of business;

 

(g)                                 Liens on any property or asset acquired, constructed or improved by the Partnership or any Restricted Subsidiary, which (a) are in favor of the seller of such property or asset, in favor of the Person constructing or improving such property or asset, or in favor of the Person that provided the funding for the acquisition, construction or improvement of such property or asset, (b) are created within 360 days after the date of acquisition, construction or improvement, (c) secure the purchase price or construction or improvement cost, as the case may be, of such property or asset in an amount not to exceed the lesser of (i) the cost to the Partnership and its Restricted Subsidiaries of such acquisition, construction or improvement of such asset or property and (ii) 100% of the fair market value of such acquisition, construction or improvement of such property or asset, and (d) are limited to the asset or property so acquired, constructed or improved (including proceeds thereof, accessions thereto and upgrades thereof);

 

21

 

(h)                                 Liens to secure performance of Hedging Obligations of the Partnership or a Restricted Subsidiary;

 

(i)                                     Liens existing on the Issue Date;

 

(j)                                     Liens arising under operating agreements, joint venture agreements, partnership agreements, construction agreements, oil and gas leases, farmout agreements, division orders, agreements for the purchase, gathering, processing, sale, transportation or exchange of Hydrocarbons, unitization and pooling declarations and agreements, area of mutual interest agreements and other agreements arising in the ordinary course of the Partnership’s or any Restricted Subsidiary’s business that are customary in the Permitted Business;

 

(k)                                  Liens securing the Obligations of the Issuers under the Notes and the Indenture and of the Subsidiary Guarantors under the Guarantees;

 

(l)                                     Liens upon specific items of inventory, receivables or other goods or proceeds of the Partnership or any of its Restricted Subsidiaries securing such Person’s Obligations in respect of bankers’ acceptances or receivables securitizations issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory, receivables or other goods or proceeds and permitted by Section 5.09 hereof;

 

(m)                               Liens securing any Indebtedness equally and ratably with all Obligations due under the Notes or any Guarantee pursuant to a contractual covenant that limits Liens in a manner substantially similar to Section 5.10 hereof;

 

(n)                                 Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by the Partnership or any Restricted Subsidiary of the Partnership to the extent securing Non-Recourse Debt or other Indebtedness of such Unrestricted Subsidiary or Joint Venture;

 

(o)                                 Liens incurred in the ordinary course of business of the Partnership or any Restricted Subsidiary of the Partnership, provided that, after giving effect to any such incurrence, the aggregate principal amount of all Indebtedness then outstanding and secured by any Liens incurred pursuant to this clause (o) does not exceed the greater of $60.0 million or 2.5% of the Consolidated Net Tangible Assets of the Partnership; and

 

(p)                                 any Lien renewing, extending, refinancing or refunding a Lien permitted by clauses (a) through (o) above; provided, however, that (i) the principal amount of Indebtedness secured by such Lien does not exceed the principal amount of such Indebtedness outstanding immediately prior to the renewal, extension, refinancing or refunding of such Lien plus all accrued interest on the Indebtedness secured thereby and the amount of all fees, expenses and premiums incurred in connection therewith, and (ii) no assets encumbered by any such Lien other than the assets permitted to be encumbered immediately prior to such renewal, extension, refinancing or refunding are encumbered thereby.

 

22

 

“Permitted Refinancing Indebtedness” means any Indebtedness of the Partnership or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Partnership or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

 

(a)                                  the principal amount of such Permitted Refinancing Indebtedness does not exceed the principal amount of, plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of necessary fees and expenses incurred in connection therewith and any premiums paid on the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded);

 

(b)                                 such Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

 

(c)                                  if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Guarantees, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes or the Guarantees, as the case may be, on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

 

(d)                                 such Indebtedness is not incurred (other than by way of a guarantee) by a Restricted Subsidiary (other than MarkWest Finance) if the Partnership is the issuer or other primary obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

 

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or any agency or political subdivision thereof or any other entity.

 

“Prospectus” means the prospectus of the Issuers dated October 25, 2011 relating to the offering of the Initial Notes.

 

“Rating Agency” means each of Standard & Poor’s and Moody’s, or if Standard & Poor’s or Moody’s or both shall not make a rating on the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Issuers (as certified by a resolution of the Board of Directors of the General Partner) which shall be substituted for Standard & Poor’s or Moody’s, or both, as the case may be.

 

“Rating Category” means:

 

(a)                                  with respect to S&P, any of the following categories:  AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories); and

 

23

 

(b)                                 with respect to Moody’s, any of the following categories:  Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories).

 

“Ratings Decline” means a decrease in the rating of the Notes by either Moody’s or S&P by one or more gradations (including gradations within Rating Categories as well as between Rating Categories). In determining whether the rating of the Notes has decreased by one or more gradations, gradations within Rating Categories, namely + or - for S&P, and 1, 2, and 3 for Moody’s, will be taken into account; for example, in the case of S&P, a rating decline either from BB+ to BB or BB- to B+ will constitute a decrease of one gradation.

 

“Reporting Default” means a Default described in Section 7.01(d).

 

“Responsible Officer,” when used with respect to the Trustee, means the officer in the Corporate Trust Department of the Trustee having direct responsibility for administration of the Indenture.

 

“Restricted Investment” means an Investment other than a Permitted Investment.

 

“Restricted Subsidiary” of a Person means any Subsidiary of the referenced Person that is not an Unrestricted Subsidiary. Notwithstanding anything in the Indenture to the contrary, each of MarkWest Finance and the Operating Company shall be a Restricted Subsidiary of the Partnership.

 

“SEC” means the Securities and Exchange Commission.

 

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

 

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act and the Exchange Act, as such Regulation is in effect on the Issue Date.

 

“Standard & Poor’s” or “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor to the rating agency business thereof.

 

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent Obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

 

“Subordinated Obligation” means any Indebtedness of the Partnership or MarkWest Finance (whether outstanding on the Issue Date or thereafter incurred) that is subordinate or junior in right of payment to the Notes pursuant to a written agreement.

 

“Subsidiary” means, with respect to any Person:

 

24

 

(a)                                  any corporation, association or other business entity (other than an entity referred to in clause (b) below) of which more than 50% of the total Voting Stock is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

 

(b)                                 any partnership (whether general or limited), limited liability company or joint venture (i) the sole general partner or member of which is such Person or a Subsidiary of such Person, or (ii) if there is more than a single general partner or member, either (1) the only general partners, members, managing general partners or managing members of which are such Person or one or more Subsidiaries of such Person (or any combination thereof) or (2) such Person owns or controls, directly or indirectly, a majority of the outstanding general partner interests, member interests or other Voting Stock of such partnership, limited liability company or joint venture, respectively.

 

“Subsidiary Guarantors” means each of:

 

(a)                                  the Operating Company, MarkWest Hydrocarbon, Inc., the General Partner, MarkWest Blackhawk, L.L.C., MarkWest Energy Appalachia, L.L.C., MarkWest Energy East Texas Gas Company, L.L.C., MarkWest Gas Services, L.L.C., MarkWest Javelina Company, L.L.C., MarkWest Javelina Pipeline Company, L.L.C., MarkWest Mountaineer Pipeline Company, L.L.C., MarkWest Michigan Pipeline Company, L.L.C., MarkWest New Mexico, L.L.C., MarkWest Pinnacle, L.L.C., MarkWest Pipeline Company, L.L.C., MarkWest PNG Utility, L.L.C., MarkWest Power Tex, L.L.C., MarkWest Texas PNG Utility, L.L.C., MarkWest Oklahoma Gas Company, L.L.C., Mason Pipeline Limited Liability Company, Matrex, L.L.C., MarkWest Liberty Gas Gathering, L.L.C., MarkWest Marketing, L.L.C., MarkWest Gas Marketing, L.L.C., MarkWest McAlester, L.L.C., West Shore Processing Company, L.L.C. and MarkWest Ranger Pipeline Company, L.L.C.;

 

(b)                                 any other Subsidiary of the Partnership that becomes a Subsidiary Guarantor in accordance with the provisions of Section 5.13 and Article XI hereof; and

 

(c)                                  their respective successors and assigns.

 

in each case until such Subsidiary Guarantor ceases to be such in accordance with the Indenture. Notwithstanding anything in the Indenture to the contrary, MarkWest Finance shall not be a Subsidiary Guarantor.

 

“Tax Payment” means any payment of foreign, federal, state or local tax liabilities.

 

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§77aaa-77bbbb), as in effect on the date on which this Supplemental Indenture was executed and, to the extent required by law, as amended.

 

“Treasury Rate” means, at the time of computation, the yield to maturity of United States Treasury Securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two

 

25

 

Business Days prior to the redemption date or, if such Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the period from the redemption date to December 15, 2016; provided, however, that if such period is not equal to the constant maturity of a United States Treasury Security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury Securities for which such yields are given, except that if the period from the redemption date to December 15, 2016 is less than one year, the weekly average yield on actually traded United States Treasury Securities adjusted to a constant maturity of one year shall be used. The Issuers will (a) calculate the Treasury Rate on the third Business Day preceding the redemption date and (b) prior to such redemption date file with the Trustee an Officers’ Certificate setting forth the Make Whole Amount and the Treasury Rate and showing the calculation of each in reasonable detail.  Any weekly average yields calculated by interpolation shall be rounded to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward.

 

“Trustee” initially means Wells Fargo Bank, National Association and any other Person or Persons appointed as such from time to time pursuant to the Indenture, and, subject to the provisions of Article VIII, includes its or their successors and assigns.

 

“U.S. Government Obligations” means securities that are (1) direct Obligations of the United States of America for the payment of which its full faith and credit is pledged; (2) Obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case under clauses (1) or (2) above, are not callable or redeemable at the option of the issuers thereof; or (3) depository receipts issued by a bank or trust company as custodian with respect to any such U.S. Government Obligations or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation evidenced by such depository receipt.

 

“Unrestricted Subsidiary” means MarkWest Liberty Midstream & Resources, L.L.C., a Delaware limited liability company, and any Subsidiary of the Partnership (other than MarkWest Finance or the Operating Company) that is designated by the Board of Directors of the General Partner as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary: (1) has no Indebtedness (other than Non-Recourse Debt) owing to any Person other than the Partnership or any of its Restricted Subsidiaries, except to the extent permitted by subclause (b)(ii) of the definition of “Permitted Business Investments”; (2) is not a party to any agreement, contract, arrangement or understanding with the Partnership or any Restricted Subsidiary of the Partnership unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Partnership or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Partnership; (3) is a Person with respect to which neither the Partnership nor any of its Restricted Subsidiaries has

 

26

 

any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Partnership or any of its Restricted Subsidiaries.  All Subsidiaries of an Unrestricted Subsidiary shall be also Unrestricted Subsidiaries.  Notwithstanding anything in the Indenture to the contrary, neither MarkWest Finance nor the Operating Company shall be designated as an Unrestricted Subsidiary.

 

Any designation of a Subsidiary of the Partnership as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a Board Resolution of the General Partner giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 5.08 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Partnership as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 5.09 hereof, the Partnership shall be in default of such covenant.

 

“Voting Stock” of any Person as of any date means the Equity Interests of such Person pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers, general partners or trustees of such Person (regardless of whether, at the time, Equity Interests of any other class or classes shall have, or might have, voting power by reason of the occurrence of any contingency) or, with respect to a partnership (whether general or limited), any general partner interest in such partnership.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness.

 

Section 2.02                                Other Definitions.

 

	
Term
    	
 
    	
Defined in Section
    
	
“Affiliate   Transaction”
    	
 
    	
5.12
    
	
“Additional   Notes”
    	
 
    	
Recitals
    
	
“Asset   Sale Offer”
    	
 
    	
4.09
    
	
“Base   Indenture”
    	
 
    	
Preamble
    
	
“Calculation   Date”
    	
 
    	
2.01   (definition of Fixed Charge Coverage Ratio)
    
	
“Change   of Control Offer”
    	
 
    	
5.06(a)
    

 

27

 

	
“Change   of Control Payment”
    	
 
    	
5.06(a)
    
	
“Change   of Control Payment Date”
    	
 
    	
5.06(b)
    
	
“Covenant   Defeasance”
    	
 
    	
9.03
    
	
“Discharge”
    	
 
    	
12.01
    
	
“DTC”
    	
 
    	
3.06
    
	
“Event   of Default”
    	
 
    	
7.01
    
	
“Excess   Proceeds”
    	
 
    	
5.07(c)
    
	
“Guarantee”
    	
 
    	
14.01
    
	
“Incremental   Funds”
    	
 
    	
5.08
    
	
“incur”
    	
 
    	
5.09
    
	
“Indenture”
    	
 
    	
Preamble
    
	
“Initial   Notes”
    	
 
    	
Recitals
    
	
“Issuers”
    	
 
    	
Preamble
    
	
“Legal   Defeasance”
    	
 
    	
9.02
    
	
“MarkWest   Finance”
    	
 
    	
Preamble
    
	
“Notes”
    	
 
    	
Recitals
    
	
“Offer   Amount”
    	
 
    	
4.09
    
	
“Offer   Period”
    	
 
    	
4.09
    
	
“Paying   Agent”
    	
 
    	
3.06
    
	
“Payment   Default”
    	
 
    	
7.01
    
	
“Permitted   Debt”
    	
 
    	
5.09
    
	
“Purchase   Date”
    	
 
    	
4.09
    
	
“Register”
    	
 
    	
3.06
    
	
“Registrar”
    	
 
    	
3.06
    
	
“Regular   Record Date”
    	
 
    	
3.03
    
	
“Restricted   Payments”
    	
 
    	
5.08
    

 

Section 2.03                                Incorporation by Reference of Trust Indenture Act.

 

Whenever the Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of the Indenture.

 

The following TIA term used in this Supplemental Indenture has the following meaning:

 

“obligor” on the Notes means the Partnership, MarkWest Finance or any Subsidiary Guarantor and any successor obligor upon the Notes.

 

All other terms used in this Supplemental Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.

 

Section 2.04                                Rules of Construction.

 

Unless the context otherwise requires:

 

28

 

(a)                                  a term has the meaning assigned to it;

 

(b)                                 an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(c)                                  “or” is not exclusive;

 

(d)                                 words in the singular include the plural, and in the plural include the singular;

 

(e)                                  provisions apply to successive events and transactions;

 

(f)                                    references to sections of or rules under the Securities Act or the Exchange Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time;

 

(g)                                 unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Supplemental Indenture; and

 

(h)                                 the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision.

 

ARTICLE III
 THE NOTES

 

Section 3.01                                Forms Generally.

 

The Notes and the Trustee’s certificate of authentication shall be in substantially the form set forth in Exhibit A hereto, and the notations of Guarantee shall be in substantially the form set forth in Exhibit B hereto.  The Notes may have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Notes as evidenced by their execution thereof.

 

The terms and provisions contained in the Notes (including the notations of Guarantees) shall constitute, and are hereby expressly made, a part of the Indenture, and the Issuers, the Subsidiary Guarantors and the Trustee, by their execution and delivery of the Indenture, expressly agree to such terms and provisions and to be bound thereby.  However, to the extent any provision of any Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

 

29

 

The Certificated Notes shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the Officers executing such Notes, as evidenced by their execution of such Notes.

 

The Initial Notes shall be issued initially in the form of a Global Note, which shall be deposited with the Trustee, as Note Custodian. The aggregate principal amount of any Global Note may from time to time be increased or decreased by adjustments made on the schedule attached to such Global Note or on other records of the Trustee, acting as Note Custodian.

 

Section 3.02                                Form of Legend for Global Notes.

 

Every Global Note authenticated and delivered under the Indenture shall bear the Global Note Legend in substantially the following form:

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

Section 3.03                                Title and Terms.

 

The Notes shall be titled the “6.25% Senior Notes due 2022.” The Trustee shall authenticate the Notes to be authenticated and delivered under this Supplemental Indenture on the Issue Date in an aggregate amount equal to $700,000,000, upon delivery of an Issuer Order.

 

The Notes will mature on June 15, 2022. Interest on the Notes will accrue at the rate of 6.25% per annum and will be payable semiannually in cash on each Interest Payment Date to the Persons who are registered Holders of Notes at the close of business on the June 1 and December 1 (the “Regular Record Date”) immediately preceding the applicable Interest Payment Date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance to but excluding the actual

 

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Interest Payment Date.  If an Interest Payment Date falls on a day that is not a Business Day, the interest payment to be made on such Interest Payment Date will be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date, and no additional interest will accrue as a result of such delayed payment.

 

The Notes shall be redeemable as provided in Article IV and subject to Defeasance and Covenant Defeasance as provided in Article IX. The Notes shall have such other terms as are indicated in Exhibit A.

 

Section 3.04                                Denominations.

 

The Notes shall be issuable only in fully registered form without coupons and only in denominations of $2,000 and any integral multiple of $1,000 in excess thereof.

 

Section 3.05                                Execution and Authentication.

 

One Officer of the Partnership and one Officer of MarkWest Finance shall sign the Notes for the Partnership and MarkWest Finance, respectively, by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.

 

A Note shall not be valid until authenticated by the manual signature of the Trustee.  Such signature shall be conclusive evidence that the Note has been authenticated under the Indenture.

 

The aggregate principal amount of Notes which may be authenticated and delivered under the Indenture is unlimited.  The Issuers may, subject to Section 5.09 and applicable law, issue Additional Notes under the Indenture.  The Initial Notes and any Additional Notes subsequently issued shall be treated as a single class for all purposes under the Indenture, including waivers, amendments, redemptions and offers to purchase.

 

At any time and from time to time after the execution of this Supplemental Indenture, the Trustee shall, upon receipt of an Issuer Order, authenticate Notes for original issue in an aggregate principal amount specified in such Issuer Order.  The Issuer Order shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated.  The Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate Notes.  An authenticating agent may authenticate Notes whenever the Trustee may do so.  Each reference in the Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of either of the Issuers.

 

Each Note shall be dated the date of its authentication.

 

No Note shall be entitled to any benefit under the Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for in Exhibit A, signed manually in the name of the Trustee by an authorized

 

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signatory, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Note shall have been authenticated and delivered hereunder but never issued and sold by the Issuers, and the Issuers shall deliver such Note to the Trustee for cancellation as provided in Section 3.15, for all purposes of the Indenture such Note shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of the Indenture.

 

Section 3.06                                Registration, Registration of Transfer and Exchange.

 

The Issuers and the Subsidiary Guarantors shall maintain in the continental United States a registrar with an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”) and a paying agent with an office or agency where Notes may be presented for payment (“Paying Agent”).  The Registrar shall keep a register (the “Register”) of the Notes and of their transfer and exchange.  The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent.  The Issuers may change any Paying Agent or Registrar without prior notice to any Holder.  The Issuers shall notify the Trustee in writing of the name and address of any Agent not a party to the Indenture.  If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such.  The Issuers or any of their Subsidiaries may act as Paying Agent or Registrar.

 

The Issuers initially appoint The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.

 

The Issuers initially appoint the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes at the Corporate Trust Office.

 

Upon surrender for registration of transfer of any Note at the office of the Registrar, the Issuers shall execute and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes, of any authorized denominations and of like tenor and aggregate principal amount.

 

All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuers evidencing the same debt, and entitled to the same benefits under the Indenture, as the Notes surrendered upon such registration of transfer or exchange.

 

Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Issuers or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Issuers and the Registrar duly executed, by the Holder thereof or its attorney duly authorized in writing.

 

No service charge shall be made for any registration of transfer or exchange of Notes, but the Issuers may require payment of a sum sufficient to cover any transfer tax or other governmental taxes and fees that may be imposed by law or the Indenture in connection with any registration of transfer or exchange of Notes.

 

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If the Notes are to be redeemed in part, the Issuers shall not be required (A) to register the transfer of or exchange any Notes during a period of 15 days before a selection of Notes for redemption under Section 4.02, or (B) to register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. Further, the Issuers shall not be required to register the transfer of or exchange any Notes between a record date and the next succeeding Interest Payment Date.

 

The provisions of clauses (a) through (d) below shall apply only to Global Notes:

 

(a)                                  Each Global Note authenticated under the Indenture shall be registered in the name of the Depositary designated for such Global Note or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Note shall constitute a single Note for all purposes of the Indenture.

 

(b)                                 Notwithstanding any other provision in the Indenture, no Global Note may be exchanged in whole or in part for Notes registered, and no transfer of a Global Note in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Note or a nominee thereof, unless (A) such Depositary (i) has notified the Issuers that it is no longer willing or able to discharge its responsibilities properly as Depositary for such Global Note or (ii) has ceased to be a clearing agency registered under the Exchange Act, and in either case the Issuers have not appointed a qualified successor within 90 days, (B) an Event of Default has occurred and is continuing and the Depositary has notified the Issuers and the Trustee of its desire to exchange such Global Note for Certificated Notes or (C) subject to the Depositary’s rules, the Issuers, at their option, have elected to terminate the book-entry system through the Depositary.

 

(c)                                  Subject to clause (b) above, any exchange of a Global Note for other Notes may be made in whole or in part, and all Notes issued in exchange for a Global Note or any portion thereof shall be registered in such names as the Depositary for such Global Note shall direct.

 

(d)                                 Every Note authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Note or any portion thereof, whether pursuant to this Section or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note, unless such Note is registered in the name of a Person other than the Depositary for such Global Note or a nominee thereof.

 

Section 3.07                                Paying Agent to Hold Money in Trust.

 

The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest, on the Notes, and will notify the Trustee of any default by the Partnership, MarkWest Finance or the Subsidiary Guarantors in making any such payment.  While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Issuers at any time may

 

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require a Paying Agent to pay all money held by it to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than an Issuer or a Subsidiary Guarantor) shall have no further liability for the money.  If an Issuer or a Subsidiary Guarantor acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent.  Upon any bankruptcy or reorganization proceedings relating to the Partnership or MarkWest Finance, the Trustee shall serve as Paying Agent for the Notes.

 

Section 3.08                                Holder Lists.

 

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a).  If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Issuers shall otherwise comply with TIA Section 312(a).

 

Section 3.09                                Mutilated, Destroyed, Lost and Stolen Notes.

 

If any mutilated Note is surrendered to the Trustee or either of the Issuers and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an Issuer Order, shall authenticate a replacement Note (accompanied by a notation of the Guarantees duly endorsed by the Subsidiary Guarantors) if the Trustee’s requirements are met.  An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuers to protect the Issuers, the Subsidiary Guarantors, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced.  The Issuers may charge for their expenses in replacing a Note.

 

Every replacement Note is an additional obligation of the Issuers and the Subsidiary Guarantors and shall be entitled to all of the benefits of the Indenture equally and proportionately with all other Notes duly issued hereunder.  The provisions of this Section 3.09 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of mutilated, destroyed, lost or stolen Notes.

 

Section 3.10                                Outstanding Notes.

 

The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interests in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding.  Except as set forth in Section 3.11 hereof, a Note does not cease to be outstanding because an Issuer or an Affiliate of an Issuer holds the Note.

 

If a Note is replaced pursuant to Section 3.09 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

 

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If the principal amount of any Note is considered paid under Section 5.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

 

If the Paying Agent (other than an Issuer or a Subsidiary or an Affiliate of an Issuer) holds, on a redemption date or other maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.

 

Section 3.11                                Treasury Notes.

 

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by an Issuer, by any Subsidiary Guarantor or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Partnership or any Subsidiary Guarantor, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded.

 

Section 3.12                                Payment of Interest; Interest Rights Preserved.

 

If a Holder has given wire transfer instructions to the Issuers, the Issuers will make all payments of principal of, premium, if any, and interest on the Notes in accordance with those instructions.  All other payments in respect of the Notes shall be made at the office or agency of the Paying Agent in Dallas, Texas; provided that the Issuers may, at their option, pay interest on the Notes by check mailed to the Holders at their registered address as it appears in the Register.

 

The Company shall pay principal of, premium, if any, and interest on the Global Notes registered in the name of or held by DTC or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the registered Holder of such Global Notes.

 

Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note is registered at the close of business on the Regular Record Date for such interest.

 

If any of the Partnership, MarkWest Finance or any Subsidiary Guarantor defaults in a payment of interest on the Notes, it or they (to the extent of their obligations under the Guarantees) shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 3.03 hereof.  The Issuers shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note, the special record date and the date of the proposed payment.  The Issuers shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest.  At least 15 days before the special record date, the Issuers (or, upon the written request of the Issuers, the Trustee in the name and at the expense of the Issuers) shall mail or cause to be

 

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mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.

 

Subject to the foregoing provisions of this Section, each Note delivered under the Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

 

Section 3.13                                Persons Deemed Owners.

 

Prior to due presentment of a Note for registration of transfer, the Issuers, the Subsidiary Guarantors, the Trustee and any agent of the Issuers or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of, and any premium and (subject to Section 407) any interest on, such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Issuers, the Subsidiary Guarantors, the Trustee nor any of their respective agents shall be affected by notice to the contrary.

 

None of the Issuers, the Subsidiary Guarantors, the Trustee, nor any of their respective agents will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, Beneficial Ownership interests of a Note or for maintaining, supervising or reviewing any records relating to such Beneficial Ownership interests.

 

Section 3.14                                Temporary Notes.

 

Until Certificated Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Issuer Order, shall authenticate temporary Notes (accompanied by a notation of the Guarantees duly endorsed by the Subsidiary Guarantors).  Temporary Notes shall be substantially in the form of Certificated Notes but may have variations that the Issuers consider appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee.  Without unreasonable delay, the Issuers shall prepare and the Trustee, upon receipt of an Issuer Order, shall authenticate Certificated Notes (accompanied by a notation of the Guarantees duly endorsed by the Subsidiary Guarantors) in exchange for temporary Notes.

 

Holders of temporary Notes shall be entitled to all of the benefits of the Indenture.

 

Section 3.15                                Cancellation.

 

Either of the Issuers at any time may deliver Notes to the Trustee for cancellation.  The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall treat such canceled Notes in accordance with its documents retention policies.  The Issuers may not issue new Notes to replace Notes that have been paid or that have been delivered to the Trustee for cancellation.

 

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Section 3.16                                Computation of Interest.

 

Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

 

Section 3.17                                Global Securities.

 

Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary.

 

Section 3.18                                CUSIP Numbers.

 

The Issuers in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if they do so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.  The Issuers will promptly notify the Trustee of any change in the “CUSIP” numbers.

 

ARTICLE IV
 REDEMPTION AND PREPAYMENT OF NOTES

 

Section 4.01                                Notices to Trustee.

 

If an Issuer elects to redeem Notes pursuant to the optional redemption provisions of Section 4.07 hereof, it shall furnish to the Trustee, at least ten Business Days (unless a shorter period is acceptable to the Trustee) before the date of giving notice of the redemption pursuant to Section 4.03, an Officers’ Certificate setting forth (i) the clause of this Supplemental Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed, (iv) the redemption price and (v) whether it requests the Trustee to give notice of such redemption.  Any such notice may be cancelled at any time prior to the mailing of notice of such redemption to any Holder and shall thereby be void and of no effect.

 

Section 4.02                                Selection of Notes to Be Redeemed.

 

If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption as follows:

 

(a)                                  if the Notes are listed for trading on a national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are so listed; or

 

(b)                                 if the Notes are not so listed or there are no such requirements, on a pro rata basis (or, in the case of Notes in global form, the Trustee will select Notes for redemption

 

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based on DTC’s method that most nearly approximates a pro rata selection), by lot or by such method as the Trustee shall deem fair and appropriate.

 

No Notes of $2,000 or less shall be redeemed in part.  Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address.  Notices of redemption may not be conditional, except that any redemption described under Section 4.07(c) may at the Issuers’ discretion, be conditioned upon completion of the related Equity Offering.

 

If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note.  Except as provided in the immediately preceding paragraph, Notes called for redemption become due on the date fixed for redemption.  On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption unless the Issuers default in making such redemption payment.

 

Section 4.03                                Notice of Redemption.

 

At least 30 days but not more than 60 days before a redemption date, the Issuers shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a Legal Defeasance, Covenant Defeasance or Discharge.

 

The notice shall identify the Notes to be redeemed (including CUSIP numbers) and shall state:

 

(a)                                  the redemption date;

 

(b)                                 the redemption price (if then determined and otherwise the basis for its determination);

 

(c)                                  if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note;

 

(d)                                 the name and address of the Paying Agent;

 

(e)                                  that Notes called for redemption (other than a Global Note) must be surrendered to the Paying Agent to collect the redemption price;

 

(f)                                    that, unless the Issuers default in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;

 

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(g)                                 the paragraph of the Notes and/or Section of this Supplemental Indenture pursuant to which the Notes called for redemption are being redeemed; and

 

(h)                                 that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

 

If any of the Notes to be redeemed is in the form of a Global Note, then the Issuers shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to redemption.

 

At the Issuers’ request, the Trustee shall give the notice of redemption in the Issuers’ names and at their expense; provided, however, that the Issuers shall have delivered to the Trustee, as provided in Section 4.01, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

 

Section 4.04                                Effect of Notice of Redemption.

 

Once notice of redemption is mailed in accordance with Section 4.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price.  A notice of redemption may not be conditional, except as otherwise permitted in the Indenture.

 

Section 4.05                                Deposit of Redemption Price.

 

Not later than 11:00 a.m., New York City time, on the redemption date, the Issuers shall deposit with the Trustee or with the Paying Agent (or, if the Partnership or a Subsidiary thereof is acting as its own Paying Agent, segregate and hold in trust as provided in Section 3.07 hereof) money sufficient to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed on that date.  The Trustee or the Paying Agent shall promptly return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed.

 

If the Issuers comply with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption.  If a Note is redeemed on or after an interest record date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date.  If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 3.03 hereof.

 

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Section 4.06                                Notes Redeemed in Part.

 

Upon surrender of a Note that is redeemed in part, the Issuers shall issue and, upon receipt of an Issuer Order, the Trustee shall authenticate for the Holder at the expense of the Issuers a new Note (accompanied by a notation of the Guarantees duly endorsed by the Subsidiary Guarantors) equal in principal amount to the unredeemed portion of the Note surrendered.

 

Section 4.07                                Optional Redemption.

 

(a)                                  Except as set forth in clauses (b) and (c) of this Section 4.07 and in Section 5.06(h), the Issuers shall not have the option to redeem the Notes prior to December 15, 2016.  On or after December 15, 2016, the Issuers shall have the option to redeem all or, from time to time, a part of the Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest on the Notes, if any, to the applicable redemption date (subject to the rights of Holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date), if redeemed during the twelve-month period beginning on December 15 of the years indicated below:

 

	
Year
    	
 
    	
Percentage
    	
 
    
	
2016 
    	
 
    	
103.125
    	
%
    
	
2017 
    	
 
    	
102.083
    	
%
    
	
2018 
    	
 
    	
101.042
    	
%
    
	
2019 and thereafter 
    	
 
    	
100.000
    	
%
    

 

(b)                                 Before December 15, 2016, the Issuers may redeem all or, from time to time, a part of the Notes, at a redemption price equal to:

 

(i)                                     100% of the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date), plus

 

(ii)                                  the Make Whole Amount.

 

(c)                                  Before December 15, 2014, the Issuers may on any one or more occasions redeem in the aggregate up to 35% of the aggregate principal amount of Notes issued hereunder, in an amount not greater than the net cash proceeds of one or more Equity Offerings at a redemption price equal to 106.25% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date); provided that

 

(i)                                     at least 65% of the aggregate principal amount of Notes issued hereunder remains outstanding after each such redemption; and

 

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(ii)           any redemption occurs within 180 days after the closing of such Equity Offering (without regard to any over-allotment option).

 

Any redemption pursuant to this Section 4.07 shall be made pursuant to the provisions of Section 4.01 through 4.06 hereof.

 

Section 4.08           Mandatory Redemption.

 

Except for any repurchase offers required to be made pursuant to Sections 5.06 and 5.07 hereof, the Issuers shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes or to repurchase the Notes at the option of the Holders.

 

Section 4.09           Offer to Purchase by Application of Net Proceeds.

 

In the event that, pursuant to Section 5.07 hereof, the Partnership shall be required to commence a pro rata offer (an “Asset Sale Offer”) to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the Net Proceeds of sales of assets to purchase Notes and such other pair passu Indebtedness, it shall follow the procedures specified below.

 

The Asset Sale Offer shall remain open for a period of at least 30 days following its commencement but no longer than 60 days, except to the extent that a longer period is required by applicable law (the “Offer Period”).  Promptly after the termination of the Offer Period (the “Purchase Date”), the Partnership shall purchase the principal amount of Notes required to be purchased pursuant to Section 5.07 hereof (the “Offer Amount”) or, if less than the Offer Amount has been tendered, all Notes tendered and not withdrawn in response to the Asset Sale Offer.  Payment for any Notes so purchased shall be made in the same manner as interest payments are made.

 

Upon the commencement of an Asset Sale Offer, the Partnership shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee.  The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer.  The Asset Sale Offer shall be made to all Holders.  The notice, which shall govern the terms of the Asset Sale Offer, shall state:

 

(a)           that the Asset Sale Offer is being made pursuant to this Section 4.09 and Section 5.07 hereof and the length of time the Asset Sale Offer shall remain open;

 

(b)           the Offer Amount, the purchase price and the Purchase Date;

 

(c)           that any Note not validly tendered or accepted for payment shall continue to accrue interest;

 

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(d)           that, unless the Partnership defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date;

 

(e)           that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, or transfer by book-entry transfer, to the Partnership, a depositary, if appointed by the Partnership, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;

 

(f)            that Holders shall be entitled to withdraw their election if the Partnership, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

 

(g)           that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Issuers shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Issuers so that only Notes in minimum denominations of $2,000 or integral multiples of $1,000 in excess thereof, shall be purchased); and

 

(h)           that Holders whose Notes were purchased only in part shall be issued new Notes (accompanied by a notation of the Guarantees duly endorsed by the Subsidiary Guarantors) equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).

 

On the Purchase Date, the Partnership shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof validly tendered and not properly withdrawn pursuant to the Asset Sale Offer, or if less than the Offer Amount has been validly tendered and not properly withdrawn, all Notes so tendered and not withdrawn, shall deposit by 11:00 a.m., New York City time, with the Paying Agent or depositary an amount equal to the purchase price in respect of all Notes or portions thereof accepted for payment, and shall deliver to the Trustee an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Partnership in accordance with the terms of this Section 4.09.  Upon surrender and cancellation of a Certificated Note that is purchased in part, the Issuers shall promptly issue and the Trustee, upon receipt of an Issuer Order, shall authenticate and deliver to the surrendering Holder of such Certificated Note a new Certificated Note equal in principal amount to the unpurchased portion of such surrendered Certificated Note; provided that each such new Certificated Note shall be in a minimum principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.  Respecting a Global Note that is purchased in part pursuant to an Asset Sale Offer, the Trustee shall make an endorsement thereon to reduce the principal amount of such Global Note to an amount equal to the unpurchased portion of such Global Note, as provided in Section 3.06 hereof.  The depositary or the Paying Agent, as the case may be, shall promptly mail or deliver to each tendering Holder an

 

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amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Partnership for purchase, and the Issuers shall promptly issue a new Note (in each case, accompanied by a notation of the Guarantees duly endorsed by the Subsidiary Guarantors), and the Trustee, upon receipt of an Issuer Order, shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered.  Any Note not so accepted shall be promptly mailed or delivered by the Partnership to the Holder thereof.  The Partnership shall publicly announce the results of the Asset Sale Offer on or as soon as practicable after the Purchase Date.

 

ARTICLE V
 COVENANTS

 

Section 5.01           Payment of Notes.

 

The Issuers shall pay or cause to be paid the principal of and premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes.  Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than an Issuer or any Subsidiary Guarantor thereof, holds as of 11:00 a.m. Eastern Time on the due date money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.

 

The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium at the then applicable interest rate on the Notes to the extent lawful.  The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, without regard to any applicable grace period, at the same rate to the extent lawful.

 

Section 5.02           Maintenance of Office or Agency.

 

The Issuers shall maintain in the continental United States an office or agency (which may be an office of the Trustee or an Affiliate of the Trustee, Registrar or co-registrar), where Notes may be surrendered or presented for payment, where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuers or the Subsidiary Guarantors in respect of the Notes and the Indenture may be served.  The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

 

The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations.  The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in location of any such other office or agency.

 

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The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or agency of the Issuers in accordance with Section 3.06.

 

Section 5.03           Compliance Certificate.

 

(a)           The Issuers and the Subsidiary Guarantors shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Issuers and the Restricted Subsidiaries of the Partnership during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Issuers and the Subsidiary Guarantors have kept, observed, performed and fulfilled their respective obligations under the Indenture and the Guarantees, respectively, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge each of such Issuers and such Subsidiary Guarantors, as the case may be, has kept, observed, performed and fulfilled each and every covenant contained in the Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of the Indenture (or, if a Default or Event of Default shall have occurred and be continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action such Issuer or such Subsidiary Guarantor, as the case may be, is taking or proposes to take with respect thereto).

 

(b)           Each of the Issuers shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer of the General Partner or MarkWest Finance becoming aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Issuers are taking or propose to take with respect thereto.

 

Section 5.04           Taxes.

 

The Issuers shall pay, and shall cause each of its Restricted Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.

 

Section 5.05           Stay, Extension and Usury Laws.

 

Each of the Issuers and the Subsidiary Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of the Indenture; and each of the Issuers and the Subsidiary Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

 

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Section 5.06           Change of Control.

 

(a)           If a Change of Control occurs, each Holder of Notes shall have the right to require the Partnership to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”). In the Change of Control Offer, the Partnership shall offer a “Change of Control Payment” in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest thereon, if any, to the date of purchase (the “Change of Control Payment”), subject to the rights of any Holder in whose name a Note is registered on a record date occurring prior to the Change of Control Payment Date to receive interest due on an Interest Payment Date that is on or prior to such Change of Control Payment Date. Within 30 days following any Change of Control, the Partnership shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in such notice, pursuant to the procedures required by the Indenture and described in such notice. The Partnership shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 5.06, the Partnership shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 5.06 by virtue of such conflict.

 

(b)           Within 30 days following any Change of Control, the Partnership shall mail by first class mail, a notice to each Holder, with a copy of such notice to the Trustee.  The notice, which shall govern the terms of the Change of Control Offer, shall state, among other things:

 

(i)            that a Change of Control has occurred and a Change of Control Offer is being made as provided for herein, and that, although Holders are not required to tender their Notes, all Notes that are validly tendered shall be accepted for payment;

 

(ii)           the Change of Control Payment and the Change of Control Payment Date, which will be no earlier than 30 days and no later than 60 days after the date such notice is mailed (the “Change of Control Payment Date”);

 

(iii)          that any Note accepted for payment pursuant to the Change of Control Offer (and duly paid for on the Change of Control Payment Date) shall cease to accrue interest after the Change of Control Payment Date;

 

(iv)          that any Notes (or portions thereof) not validly tendered shall continue to accrue interest;

 

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(v)           that any Holder electing to have a Note purchased pursuant to any Change of Control Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, or transfer by book-entry transfer, to the Partnership, a depositary, if appointed by the Partnership, or a Paying Agent at the address specified in the notice at least one (1) Business Day before the Change of Control Payment Date;

 

(vi)          that Holders shall be entitled to withdraw their election if the Partnership, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Change of Control Offer, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and

 

(vii)         the instructions and any other information necessary to enable Holders to tender their Notes (or portions thereof) and have such Notes (or portions thereof) purchased pursuant to the Change of Control Offer.

 

(c)           On or before the Change of Control Payment Date, the Partnership shall, to the extent lawful, accept for payment all Notes or portions thereof properly tendered and not withdrawn pursuant to the Change of Control Offer.  Promptly after such acceptance, on the Change of Control Payment Date, the Partnership will:

 

(i)            deposit by 11:00 a.m., New York City time, with the Paying Agent or depositary an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and

 

(ii)           deliver or cause to be delivered to the Trustee for cancellation the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Partnership.

 

(d)           On the Change of Control Payment Date, the Paying Agent shall mail to each Holder of Notes accepted for payment the Change of Control Payment for such Notes (or, if all the Notes are then in global form, make such payment through the facilities of DTC), and the Issuers shall promptly issue a new Note (in each case, accompanied by a notation of the Guarantees duly endorsed by the Subsidiary Guarantors), and the Trustee, upon receipt of an Issuer Order, shall authenticate and mail (or cause to be transferred by book entry) to each Holder such new Note equal in principal amount to any unpurchased portion of the Notes surrendered; provided that each such new Note shall be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.  The Partnership shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

 

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(e)           The provisions described in this Section 5.06 that require the Issuers to make a Change of Control Offer following a Change of Control shall be applicable regardless of whether or not any other provisions of the Indenture are applicable.

 

(f)            Notwithstanding the other provisions of this Section 5.06, the Partnership shall not be required to make a Change of Control Offer upon a Change of Control, and a Holder will not have the right to require that the Partnership repurchase any Notes pursuant to a Change of Control Offer, if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Partnership and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or (2) notice of redemption has been given pursuant to the Indenture.

 

(g)           A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon the occurrence of the Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer.

 

(h)           In the event that Holders of not less than 90% of the aggregate principal amount of the outstanding Notes accept a Change of Control Offer and the Partnership (or a third party making the Change of Control Offer as provided in Section 5.06(f)) purchases all of the Notes held by such Holders, the Issuers will have the right, upon not less than 30 nor more than 60 days’  notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest on the notes that remain outstanding, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date).

 

Section 5.07           Asset Sales.

 

The Partnership shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

 

(a)           the Partnership (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of;

 

(b)           such fair market value is determined by (a) an executive officer of the General Partner if the value is less than $30.0 million, as evidenced by an Officers’ Certificate delivered to the Trustee or (b) the Board of Directors of the General Partner if the value is $30.0 million or more, as evidenced by a resolution of such Board of Directors of the General Partner; and

 

(c)           at least 75% of the aggregate consideration received by the Partnership and its Restricted Subsidiaries in the Asset Sale and all other Asset Sales of the Partnership and

 

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its Restricted Subsidiaries since the Issue Date is in the form of cash or Cash Equivalents. For purposes of this clause (c), each of the following shall be deemed to be cash:

 

(i)            any liabilities (as shown on the Partnership’s most recent consolidated balance sheet) of the Partnership or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Partnership or such Restricted Subsidiary from further liability; and

 

(ii)           any securities, notes or other Obligations received by the Partnership or any such Restricted Subsidiary from such transferee that are within 90 days after the Asset Sale (subject to ordinary settlement periods) converted by such Issuer or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion).

 

Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Partnership or a Restricted Subsidiary may apply (or enter into a definitive agreement for such application within such 360-day period, provided that such application occurs within 90 days after the end of such 360-day period) such Net Proceeds at its option:

 

(a)           to repay senior Indebtedness of the Partnership and/or its Restricted Subsidiaries (or to make an offer to repurchase or redeem any such Indebtedness, provided that such repurchase or redemption closes within 45 days after the end of such 360-day period);

 

(b)           to make a capital expenditure in a Permitted Business;

 

(c)           to acquire other long-term tangible assets that are used or useful in a Permitted Business; or

 

(d)           to invest in any other Permitted Investments other than Investments in Cash Equivalents, Interest Swaps or Currency Agreements.

 

Pending the final application of any such Net Proceeds, the Partnership or a Restricted Subsidiary may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture.

 

Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 5.07(b) above will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $25.0 million, within five days thereof the Partnership will make a pro rata offer (an “Asset Sale Offer”) to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest, if any, to the Purchase Date, subject

 

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to the rights of any Holder in whose name a Note is registered on a record date occurring prior to the Purchase Date to receive interest due on an Interest Payment Date that is on or prior to such Purchase Date, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Partnership and its Restricted Subsidiaries may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture, including, without limitation, the repurchase or redemption of Indebtedness of the Issuers or any Subsidiary Guarantor that is subordinated to the Notes or, in the case of a Subsidiary Guarantor, the Guarantee of such Subsidiary Guarantor. If the aggregate principal amount of Notes tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds allocated for repurchases of Notes pursuant to the Asset Sale Offer for Notes, the Trustee shall select the Notes to be purchased on a pro rata basis (or, in the case of notes in global form, the Trustee will select Notes for redemption based on DTC’s method that most nearly approximates a pro rata selection). Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

 

The Partnership shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with Section 4.09 or this Section 5.07, the Partnership shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under Section 4.09 or this Section 5.07 by virtue of such conflict.

 

Section 5.08           Restricted Payments.

 

The Partnership shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

 

(a)           declare or pay any dividend or make any other payment or distribution on account of the Partnership’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Partnership or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Partnership’s or of any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests of the Partnership (other than Disqualified Equity) and other than dividends or distributions payable to the Partnership or a Restricted Subsidiary of the Partnership);

 

(b)           purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving an Issuer) any Equity Interests of the Partnership or of any of its Restricted Subsidiaries (other than any such Equity Interests owned by the Partnership or any of its Restricted Subsidiaries);

 

(c)           make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Obligation or Guarantor Subordinated Obligation, except a payment of interest or principal at the Stated Maturity thereof; or

 

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(d)           make any Investment other than a Permitted Investment (all such payments and other actions set forth in clauses (a) through (d) above being collectively referred to as “Restricted Payments”);

 

unless, at the time of and after giving effect to such Restricted Payment, no Default (except a Reporting Default) or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and either:

 

(a)           if the Fixed Charge Coverage Ratio for the Partnership’s four most recent fiscal quarters for which internal financial statements are available is not less than 1.75 to 1.0, such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Partnership and its Restricted Subsidiaries during the quarter in which such Restricted Payment is made, is less than the sum, without duplication, of:

 

(i)            Available Cash as of the end of the immediately preceding quarter, plus

 

(ii)           the sum of (1) the aggregate net cash proceeds of any (A) substantially concurrent capital contribution to the Partnership from any Person (other than to a Restricted Subsidiary of the Partnership) made after November 2, 2010 or (B) substantially concurrent issuance and sale (other than to a Restricted Subsidiary of the Partnership) made after November 2, 2010 of Equity Interests (other than Disqualified Equity) of the Partnership or from the issuance or sale (other than to a Restricted Subsidiary of the Partnership) made after November 2, 2010 of convertible or exchangeable Disqualified Equity or convertible or exchangeable debt securities of the Partnership that have been converted into or exchanged for such Equity Interests (other than Disqualified Equity), and (2) the fair market value of any Permitted Business or long-term tangible assets that are useful in a Permitted Business to the extent acquired in consideration of Equity Interests of the Partnership (other than Disqualified Equity) since November 2, 2010, plus

 

(iii)          to the extent that any Restricted Investment that was made after the Issue Date is sold for cash or Cash Equivalents or otherwise liquidated or repaid for cash or Cash Equivalents, the lesser of the refund of capital or similar payment made in cash or Cash Equivalents with respect to such Restricted Investment (less the cost of such disposition, if any) and the initial amount of such Restricted Investment (other than to a Restricted Subsidiary of the Partnership), plus

 

(iv)          the net reduction in Restricted Investments resulting from dividends, repayments of loans or advances, or other transfers of assets in each case to the Partnership or any of its Restricted Subsidiaries from any Person (including, without limitation, Unrestricted Subsidiaries) or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, to the extent such amounts have not been included in Available Cash for any period commencing on or after

 

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November 2, 2010 (items (ii), (iii) and (iv) of this clause (a) being referred to as “Incremental Funds”), minus

 

(v)           the aggregate amount of Incremental Funds previously expended pursuant to this clause (a) or clause (b) below; or

 

(b)           if the Fixed Charge Coverage Ratio for the Partnership’s four most recent fiscal quarters for which internal financial statements are available is less than 1.75 to 1.0, such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Partnership and its Restricted Subsidiaries during the quarter in which such Restricted Payment is made (such Restricted Payments for purposes of this clause (b) meaning only distributions on common units of the Partnership, plus the related distribution on the general partner interest) is less than the sum, without duplication, of:

 

(i)            $200.0 million less the aggregate amount of all prior Restricted Payments made by the Partnership and its Restricted Subsidiaries pursuant to this clause (b)(i) since November 2, 2010, plus

 

(ii)           Incremental Funds to the extent not previously expended pursuant to this clause (b) or clause (a) above.

 

For the purpose of clause (a) above, the term “substantially concurrent” means that either (x) the offering was consummated within 120 days of the date of determination or (y) the offering was consummated within 24 months of the date of determination and the proceeds therefrom were used for the purposes expressly stated in the documents related thereto and may be traced to such use by segregating, separating or otherwise specifically identifying the movement of such proceeds.

 

So long as no Default (except a Reporting Default) has occurred and is continuing or would be caused thereby (except with respect to clause (a) below under which the payment of a distribution or dividend is permitted), the preceding provisions of this Section 5.08 shall not prohibit:

 

(a)           the payment by the Partnership or any of its Restricted Subsidiaries of any distribution or dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture;

 

(b)           the redemption, repurchase, retirement, defeasance or other acquisition of any Subordinated Obligation or any Guarantor Subordinated Obligation or of any Equity Interests of the Partnership in exchange for, or out of the net cash proceeds of, a substantially concurrent (i) capital contribution to the Partnership from any Person (other than a Restricted Subsidiary of the Partnership) or (ii) sale (other than to a Restricted Subsidiary of the Partnership) of Equity Interests (other than Disqualified Equity) of the Partnership (a sale will be deemed substantially concurrent if such redemption, repurchase, retirement, defeasance or other acquisition occurs not more than 120 days after such sale); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or

 

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other acquisition shall be excluded or deducted from the calculation of Available Cash and Incremental Funds;

 

(c)           the redemption, repurchase, retirement, defeasance or other acquisition of any Subordinated Obligation or Guarantor Subordinated Obligation with the net cash proceeds from an incurrence of, or in exchange for, Permitted Refinancing Indebtedness;

 

(d)           the payment of any distribution or dividend by a Restricted Subsidiary to the Partnership or to the holders of the Equity Interests (other than Disqualified Equity) of such Restricted Subsidiary on a pro rata basis; and

 

(e)           the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Partnership or any of its Restricted Subsidiaries pursuant to any management equity subscription agreement or equity option agreement or other employee benefit plan or to satisfy obligations under any Equity Interests appreciation rights or option plan or similar arrangement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $3.0 million in any calendar year.

 

In computing the amount of Restricted Payments previously made for purposes of Section 5.08, Restricted Payments made under clauses (a) (but only if the declaration of such dividend or other distribution has not been counted in a prior period) and, to the extent of amounts paid to holders other than the Partnership or any of its Restricted Subsidiaries, clause (d) of this Section shall be included, and Restricted Payments made under clauses (b), (c) and (e) and, except to the extent noted above, clause (d) of this Section shall not be included. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Partnership or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.

 

Section 5.09           Incurrence of Indebtedness and Issuance of Disqualified Equity.

 

(a)           The Partnership shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Partnership will not issue any Disqualified Equity and will not permit any of its Restricted Subsidiaries to issue any Disqualified Equity; provided, however, that the Partnership and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt), and the Partnership and the Restricted Subsidiaries may issue Disqualified Equity, if the Fixed Charge Coverage Ratio for the Partnership’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Equity is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Equity had been issued, as the case may be, at the beginning of such four-quarter period.

 

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(b)           Notwithstanding the prohibitions of Section 5.09(a), the Partnership and its Restricted Subsidiaries may incur any of the following items of Indebtedness (collectively, “Permitted Debt”):

 

(i)            the incurrence by the Partnership and any Restricted Subsidiary of Indebtedness under Credit Facilities and the guarantees thereof; provided that the aggregate principal amount of all Indebtedness of the Partnership and the Restricted Subsidiaries incurred pursuant to this clause (i) and outstanding under all Credit Facilities after giving effect to such incurrence does not exceed the greater of (A) $1.0 billion or (B) $500.0 million plus 15.0% of the Consolidated Net Tangible Assets of the Partnership;

 

(ii)           the incurrence by the Partnership and its Restricted Subsidiaries of Existing Indebtedness (other than under the Credit Facilities);

 

(iii)          the incurrence by the Issuers and the Subsidiary Guarantors of Indebtedness represented by the Notes issued and sold in the offering of the Initial Notes, and the related Guarantees;

 

(iv)          the incurrence by the Partnership or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Partnership or such Restricted Subsidiary, including all Permitted Refinancing Indebtedness incurred to extend, refinance, renew, replace, defease or refund any Indebtedness incurred pursuant to this clause (iv), provided that after giving effect to any such incurrence, the principal amount of all Indebtedness incurred pursuant to this clause (iv) and then outstanding shall not exceed the greater of (a) $25.0 million or (b) 1.0% of the Consolidated Net Tangible Assets of the Partnership at such time;

 

(v)           the incurrence by the Partnership or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, Indebtedness that was permitted by the Indenture to be incurred under Section 5.09(a) or clause (ii) or (iii) of this Section 5.09(b) or this clause (v);

 

(vi)          the incurrence by the Partnership or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Partnership and any of its Restricted Subsidiaries; provided, however, that:

 

(A)          if the Partnership is the obligor on such Indebtedness and a Subsidiary Guarantor is not the obligee, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all

 

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Obligations with respect to the Notes, or if a Subsidiary Guarantor is the obligor on such Indebtedness and neither the Partnership nor another Subsidiary Guarantor is the obligee, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Guarantee of such Subsidiary Guarantor; and

 

(B)           (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Partnership or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is neither the Partnership nor a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Partnership or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (vi);

 

(vii)         the incurrence by the Partnership or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging (but not for speculative purposes) (A) foreign currency exchange rate risks of the Partnership or any Restricted Subsidiary, (B) interest rate risks with respect to any floating rate Indebtedness of the Partnership or any Restricted Subsidiary that is permitted by the terms of the Indenture to be outstanding or (C) commodities pricing risks of the Partnership or any Restricted Subsidiary in respect of Hydrocarbons used, produced, processed or sold by the Partnership or any of its Restricted Subsidiaries;

 

(viii)        the guarantee by the Partnership or any of its Restricted Subsidiaries of Indebtedness of the Partnership or any of its Restricted Subsidiaries that was permitted to be incurred by another provision of this Section 5.09; provided, that in the event such Indebtedness that is being guaranteed is a Subordinated Obligation or a Guarantor Subordinated Obligation, then the guarantee shall be subordinated in right of payment to the Notes or the Guarantee, as the case may be;

 

(ix)           bid, performance, surety and appeal bonds incurred in the ordinary course of business, including guarantees and obligations respecting standby letters of credit supporting such obligations, to the extent not drawn (in each case other than an obligation for money borrowed);

 

(x)            the incurrence by the Partnership or any of its Restricted Subsidiaries of liability in respect of the Indebtedness of any Unrestricted Subsidiary of the Partnership or any Joint Venture but only to the extent that such liability is the result of the Partnership’s or any such Restricted Subsidiary’s being a general partner of such Unrestricted Subsidiary or Joint Venture and not as guarantor of such Indebtedness and provided that, after giving effect to any such

 

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incurrence, the aggregate principal amount of all Indebtedness incurred under this clause (x) and then outstanding does not exceed $25.0 million;

 

(xi)           the incurrence by the Partnership or any of its Restricted Subsidiaries of Acquired Debt in connection with a merger or consolidation meeting either one of the financial tests set forth in clause (iv) of Section 6.01(a); and

 

(xii)          the incurrence by the Partnership or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount at any time outstanding not to exceed the greater of (a) $100.0 million or (b) 4.0% of the Consolidated Net Tangible Assets of the Partnership.

 

(c)           For purposes of determining compliance with this Section 5.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in paragraphs (b)(i) through (b)(xii) above, or is entitled to be incurred pursuant to Section 5.09(a), the Partnership shall be permitted to classify (or later reclassify in whole or in part) such item of Indebtedness on the date of its incurrence in any manner that complies with this Section 5.09.  An item of Indebtedness may be divided and classified in one or more of the types of Permitted Indebtedness.  Any Indebtedness under Credit Facilities on the Issue Date shall be considered incurred under Section 5.09(a).

 

(d)           The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Equity in the form of additional shares of the same class of Disqualified Equity shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Equity for purposes of this Section 5.09; provided, in each such case, that the amount thereof is included in Fixed Charges of the Partnership as accrued. Notwithstanding any other provision of this Section 5.09, the maximum amount of Indebtedness that the Partnership or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. Further, the accounting reclassification of any obligation of the Partnership or any of its Restricted Subsidiaries as Indebtedness will not be deemed an incurrence of Indebtedness for purposes of this Section 5.09.

 

Section 5.10           Liens.

 

The Partnership shall not, and shall not permit any of its Restricted Subsidiaries to create, incur, assume or suffer to exist any Lien of any kind securing Indebtedness upon any asset now owned or hereafter acquired, except Permitted Liens, without making effective provision whereby all Obligations due under the Notes and the Indenture or any Guarantee, as applicable, will be secured by a Lien equally and ratably with (or prior to in the case of Liens with respect to Subordinated Obligations or Guarantor Subordinated Obligations, as the case may be) any and all Obligations thereby secured for so long as any such Obligations shall be so secured.

 

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Section 5.11           Dividend and Other Payment Restrictions Affecting Subsidiaries.

 

(a)           The Partnership shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to:

 

(i)            pay dividends or make any other distributions on its Equity Interests to the Partnership or any of the Partnership’s Restricted Subsidiaries, or pay any indebtedness or other obligations owed to the Partnership or any of the other Restricted Subsidiaries;

 

(ii)           make loans or advances to or make other Investments in the Partnership or any of the other Restricted Subsidiaries; or

 

(iii)          transfer any of its properties or assets to the Partnership or any of the other Restricted Subsidiaries.

 

(b)           The restrictions contained in Section 5.11(a) shall not apply to encumbrances or restrictions existing under or by reason of:

 

(i)            agreements as in effect on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of any such agreements or any Existing Indebtedness to which such agreement relates, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive, taken as a whole, with respect to such distribution, dividend and other payment restrictions and loan or investment restrictions than those contained in such agreement, as in effect on the Issue Date;

 

(ii)           the Indenture, the Notes and the Guarantees;

 

(iii)          applicable law;

 

(iv)          any instrument governing Indebtedness or Equity Interests of a Person acquired by the Partnership or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the property or assets of any Person, other than such Person, or the property or assets of such Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred;

 

(v)           customary non-assignment provisions in agreements for the purchase, gathering, processing, sale, transportation or exchange of Hydrocarbons or similar operational agreements or in licenses, leases, rights-of-way or other

 

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easements or servitudes, in each case entered into in the ordinary course of business;

 

(vi)          Capital Lease Obligations, mortgage financings or purchase money obligations, in each case for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (iii) of Section 5.11(a);

 

(vii)         any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending its sale or other disposition;

 

(viii)        Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

 

(ix)           Liens securing Indebtedness otherwise permitted to be incurred pursuant to the provisions of Section 5.10 that limit the right of the Partnership or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien;

 

(x)            provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business;

 

(xi)           any agreement or instrument relating to any property or assets acquired after the Issue Date, so long as such encumbrance or restriction relates only to the property or assets so acquired and is not and was not created in anticipation of such acquisitions;

 

(xii)          restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

 

(xiii)         with respect to any Foreign Subsidiary, any encumbrance or restriction contained in the terms of any Indebtedness or any agreement pursuant to which such Indebtedness was incurred if either (a) the encumbrance or restriction applies only in the event of a payment default or a default with respect to a financial covenant in such Indebtedness or agreement or (b) the Partnership determines that any such encumbrance or restriction will not materially affect the Issuers’ ability to make principal or interest payments on the Notes, as determined in good faith by the Board of Directors of the General Partner, whose determination shall be conclusive; and

 

(xiv)        any other agreement governing Indebtedness of the Partnership or any Restricted Subsidiary that is permitted to be incurred by Section 5.12;

 

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provided, however, that such encumbrances or restrictions are not materially more restrictive, taken as a whole, than those contained in the Indenture or the Credit Agreement as it exists on the Issue Date.

 

Section 5.12           Transactions With Affiliates.

 

The Partnership shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

 

(a)           such Affiliate Transaction is on terms that are no less favorable to the Partnership or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Partnership or such Restricted Subsidiary with an unrelated Person; and

 

(b)           the Partnership delivers to the Trustee:

 

(i)            with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million but less than or equal to $30.0 million, an Officers’ Certificate certifying that such Affiliate Transaction complies with this Section 5.12 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the General Partner; and

 

(ii)           with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $30.0  million, a resolution of the Board of Directors of the General Partner set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this Section 5.12 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the General Partner.

 

The following items shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of Section 5.11(a):

 

(a)           any employment, equity option or equity appreciation agreement or plan entered into by the Partnership or any of its Restricted Subsidiaries in the ordinary course of business;

 

(b)           transactions between or among the Partnership and/or its Restricted Subsidiaries;

 

(c)           Permitted Investments or Restricted Payments that are permitted by Section 5.08;

 

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(d)           customary compensation, indemnification and other benefits made available to officers, directors or employees of the Partnership or a Restricted Subsidiary, including reimbursement or advancement of out-of-pocket expenses and provisions of officers’ and directors’ liability insurance;

 

(e)           sales of Equity Interests (other than Disqualified Equity) to Affiliates of the Partnership;

 

(f)            in the case of contracts for gathering, transporting, treating, processing, marketing, distributing, storing or otherwise handling Hydrocarbons, or activities or services reasonably related or ancillary thereto, or other operational contracts, any such contracts are entered into in the ordinary course of business on terms substantially similar to those contained in similar contracts entered into by the Partnership or any Restricted Subsidiary and third parties;

 

(g)           transactions with a Person (other than an Unrestricted Subsidiary of the Partnership) that is an Affiliate of the Partnership solely because the Partnership owns an Equity Interest in such Person; and

 

(h)           transactions involving an Affiliate of the Partnership in which an unrelated third Person owns Voting Stock at least equal to that owned by the Partnership or any of its Restricted Subsidiaries.

 

Section 5.13           Additional Subsidiary Guarantees.

 

If, after the Issue Date, any Restricted Subsidiary of the Partnership that is not already a Subsidiary Guarantor guarantees any other Indebtedness of either of the Issuers or any Indebtedness of the Operating Company, or if the Operating Company, if not then a Subsidiary Guarantor, guarantees any other Indebtedness of either of the Issuers or incurs any Indebtedness under any Credit Facility, then in either case such Subsidiary must become a Subsidiary Guarantor by executing a supplemental indenture substantially in the form of Exhibit C hereto and delivering an Opinion of Counsel to the Trustee pursuant to Section 10.06 within 10 Business Days of the date on which it guaranteed or incurred such Indebtedness.  Notwithstanding the preceding, any Guarantee of a Restricted Subsidiary that was incurred pursuant to this Section 5.13 shall be released in accordance with the terms and subject to the conditions of Section 11.04.

 

Section 5.14           Designation of Restricted and Unrestricted Subsidiaries.

 

(a)           The Board of Directors of the General Partner may designate any Restricted Subsidiary of the Partnership to be an Unrestricted Subsidiary if that designation would not cause a Default or Event of Default.  If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, all outstanding Investments owned by the Partnership and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under Section 5.08(a), or represent Permitted Investments.  All such outstanding Investments will be valued at their fair market value at the time of such designation.  That designation will only be

 

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permitted if such Restricted Payment or Permitted Investments would be permitted under the Indenture at that time and such Restricted Subsidiary otherwise complies with the definition of an Unrestricted Subsidiary.  All Subsidiaries of an Unrestricted Subsidiary shall also be Unrestricted Subsidiaries.  Upon the designation of a Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary, the Guarantee of such entity shall be released and the Trustee shall be authorized to take such actions as may be appropriate to reflect such release.

 

(b)           The Board of Directors of the General Partner may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Partnership of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under Section 5.09, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.

 

Section 5.15           Business Activities.

 

The Partnership shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Partnership and its Restricted Subsidiaries, taken as a whole.

 

MarkWest Finance shall not incur Indebtedness unless (a) the Partnership is a co-obligor or guarantor of such Indebtedness or (b) the net proceeds of such Indebtedness are loaned to the Partnership, used to acquire outstanding debt securities issued by the Partnership or used to repay Indebtedness of the Partnership as permitted under Section 5.09.  MarkWest Finance shall not engage in any business not related directly or indirectly to obtaining money or arranging financing for the Partnership or its Restricted Subsidiaries.

 

Section 5.16           Sale and Leaseback Transactions.

 

The Partnership shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Partnership or any Restricted Subsidiary may enter into a sale and leaseback transaction if:

 

(a)           the Partnership or that Restricted Subsidiary, as applicable, could have (i) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under Section 5.09(a), and (ii) incurred a Lien to secure such Indebtedness pursuant to Section 5.10;

 

(b)           the gross cash proceeds of that sale and leaseback transaction are at least equal to the fair market value of the property that is the subject of such sale and leaseback transaction; and

 

(c)           the transfer of assets in that sale and leaseback transaction is permitted by, and the Partnership applies the proceeds of such transaction in compliance with, the provisions set forth under Sections 4.09 and 5.07.

 

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Section 5.17           Reports.

 

Whether or not required by the SEC, so long as any Notes are outstanding, the Partnership will file with the SEC (unless the SEC will not accept such a filing) within the time periods specified in the SEC’s rules and regulations, and upon request, the Partnership will furnish (without exhibits) to the Trustee for delivery to the Holders of Notes:

 

(a)           all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Partnership were required to file such forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Partnership’s certified independent accountants; and

 

(b)           all current reports that would be required to be filed with the SEC on Form 8-K if the Partnership were required to file such reports.

 

The availability of the foregoing information or reports on the SEC’s website will be deemed to satisfy the foregoing delivery requirements.

 

If as of the end of any such quarterly or annual period referred to in Section 5.17(a), the Partnership has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the Partnership shall deliver (promptly after such SEC filing referred to in Section 5.17(a)) to the Trustee for delivery to the Holders of the Notes quarterly and annual financial information required by Section 5.17(a) as revised to include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the financial condition and results of operations of the Partnership and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Partnership.

 

Whether or not required by the SEC, the Partnership will make such information available to securities analysts, investors and prospective investors upon request.  In addition, upon request the Partnership shall furnish the Trustee such other non-confidential information, documents and other reports which the Partnership is required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act.

 

Delivery of reports, information and documents to the Trustee pursuant to this Section 5.17 is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Partnership’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

 

Section 5.18           Termination of Covenants

 

If at any time (a) the Notes have an Investment Grade Rating from either of the Rating Agencies, (b) no Default has occurred and is continuing and (c) the Issuers have delivered to the Trustee an Officers’ Certificate certifying to (a) and (b) of this Section 5.18, the Partnership and

 

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its Restricted Subsidiaries shall no longer be subject to the provisions of Sections 4.09, 5.07, 5.08, 5.09, 5.11, 5.12, 5.15, clauses (a)(i) and (c) of Section 5.16, and clause (a)(iv) of Section 6.01 of the Indenture.  However, the Partnership and its Restricted Subsidiaries will remain subject to all of the other provisions of the Indenture.

 

ARTICLE VI
 SUCCESSORS

 

Section 6.01           Merger, Consolidation, or Sale of Assets.

 

(a)           Neither of the Issuers may, directly or indirectly: (x) consolidate or merge with or into another Person (whether or not such Issuer is the survivor); or (y) sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another Person; unless:

 

(i)            either: (A) such Issuer is the surviving entity of such transaction; or (B) the Person formed by or surviving any such consolidation or merger (if other than such Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is an entity organized or existing under the laws of the United States, any state thereof or the District of Columbia, provided that MarkWest Finance may not consolidate or merge with or into any entity other than a corporation satisfying such requirement for so long as the Partnership remains a partnership;

 

(ii)           the Person formed by or surviving any such consolidation or merger (if other than such Issuer) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made expressly assumes all the obligations of such Issuer under the Notes and the Indenture pursuant to agreements reasonably satisfactory to the Trustee;

 

(iii)          immediately after such transaction no Default or Event of Default exists;

 

(iv)          in the case of a transaction involving the Partnership and not MarkWest Finance, either:

 

(A)          the Partnership or the Person formed by or surviving any such consolidation or merger (if other than the Partnership), or to which such sale, assignment, transfer, lease, conveyance or other disposition has been made shall, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 5.09(a); or

 

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(B)           immediately after giving effect to such transaction on a pro forma basis and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, the Fixed Charge Coverage Ratio of the Partnership or the Person formed by or surviving any such consolidation or merger (if other than the Partnership) or to which such sale, assignment, transfer, lease, conveyance or other disposition has been made, will be equal to or greater than the Fixed Charge Coverage Ratio of the Partnership immediately before such transactions; and

 

(v)           such Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or disposition and, if a supplemental indenture is required, such supplemental indenture comply with the Indenture and all conditions precedent therein relating to such transaction have been satisfied.

 

(b)           Notwithstanding Section 6.01(a), the Partnership is permitted to reorganize as any other form of entity in accordance with the procedures established in the Indenture; provided that:

 

(i)            the reorganization involves the conversion (by merger, sale, contribution or exchange of assets or otherwise) of the Partnership into a form of entity other than a limited partnership formed under Delaware law;

 

(ii)           the entity so formed by or resulting from such reorganization is an entity organized or existing under the laws of the United States, any state thereof or the District of Columbia;

 

(iii)          the entity so formed by or resulting from such reorganization assumes all of the obligations of the Partnership under the Notes and the Indenture pursuant to agreements reasonably satisfactory to the Trustee;

 

(iv)          immediately after such reorganization no Default or Event of Default exists; and

 

(v)           such reorganization is not adverse to the Holders of the Notes (for purposes of this clause (v) it is stipulated that such reorganization shall not be considered adverse to the Holders of the Notes solely because the successor or survivor of such reorganization (A) is subject to federal or state income taxation as an entity or (B) is considered to be an “includible corporation” of an affiliated group of corporations within the meaning of Section 1504(b)(i) of the Code or any similar state or local law).

 

(c)           No Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another Person, except the Partnership or another Subsidiary Guarantor, unless (i) immediately after giving effect to such

 

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transaction, no Default or Event of Default exists, and (ii) the Person formed by or surviving any such consolidation or merger assumes all the obligations of such Subsidiary Guarantor pursuant to the Subsidiary Guarantor’s Guarantee of the Notes and the Indenture pursuant to a supplemental indenture substantially in the form of Exhibit C hereto, except that no such assumption or supplemental indenture shall be required in those circumstances described in clauses (i) and (ii) of Section 11.05 hereof.  In case of any such consolidation or merger and upon the assumption by the successor Person by supplemental indenture, executed and delivered to the Trustee substantially in the form of Exhibit C hereto, of the Guarantees contained herein and the due and punctual performance of all of the covenants of the Indenture to be performed by the Subsidiary Guarantor, such successor shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor.  Such successor thereupon may cause to be signed any or all of the notations of the Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Issuers and delivered to the Trustee.  All the Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Guarantees had been issued at the date of the execution hereof.

 

Section 6.02           Successor Entity Substituted.

 

(a)           Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of an Issuer in accordance with Section 6.01 hereof, the surviving entity formed by such consolidation or into or with which such Issuer is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of the Indenture referring to the “Partnership” or “MarkWest Finance,” as the case may be, shall refer instead to the surviving entity and not to the Partnership or MarkWest Finance, as the case may be), and may exercise every right and power of the Partnership or MarkWest Finance, as the case may be, under the Indenture with the same effect as if such successor Person had been named as an Issuer herein; and thereafter, if an Issuer is dissolved following a disposition of all or substantially all of its properties or assets in accordance with the Indenture, it shall be discharged and released from all obligations and covenants under the Indenture and the Notes; provided, however, that the predecessor shall not be relieved from the obligation to pay the principal of and interest on the Notes in the case of a lease of all or substantially all of its properties or assets.

 

(b)           If the surviving entity shall have succeeded to and been substituted for an Issuer, such surviving entity may cause to be signed, and may issue either in its own name or in the name of the applicable Issuer prior to such succession any or all of the Notes issuable hereunder which theretofore shall not have been signed by such Issuer and delivered to the Trustee; and, upon the order of such surviving entity, instead of such Issuer, and subject to all the terms, conditions and limitations in the Indenture prescribed, the Trustee shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by the Officers of such Issuer to the Trustee for authentication, and any Notes which such surviving entity

 

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thereafter shall cause to be signed and delivered to the Trustee for that purpose (in each instance with notations of Guarantees thereon by the Subsidiary Guarantors).  All of the Notes so issued and so endorsed shall in all respects have the same legal rank and benefit under the Indenture as the Notes theretofore or thereafter issued and endorsed in accordance with the terms of the Indenture and the Guarantees as though all such Notes had been issued and endorsed at the date of the execution hereof.

 

(c)           In case of any such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued or the Guarantees to be endorsed thereon as may be appropriate.

 

(d)           For all purposes of the Indenture and the Notes, Subsidiaries of any surviving entity (other than an Issuer) will, upon such transaction or series of transactions, become Restricted Subsidiaries or Unrestricted Subsidiaries as provided pursuant to the Indenture and all Indebtedness, and all Liens on property or assets, of such surviving entity and its Restricted Subsidiaries immediately prior to such transaction or series of transactions shall be deemed to have been incurred upon such transaction or series of transactions.

 

ARTICLE VII
 DEFAULTS AND REMEDIES

 

Section 7.01           Events of Default.

 

Each of the following is an “Event of Default”:

 

(a)           default for 30 days in the payment when due of interest on the Notes;

 

(b)           default in payment when due of the principal of or premium, if any, on the Notes;

 

(c)           failure by the Partnership to comply with the provisions described under Section 6.01 hereof;

 

(d)           failure by the Partnership to comply with the provisions described under Section 5.17 hereof for 90 days after notice to the Issuers by the Trustee or to the Issuers and Trustee by Holders of at least 25% in aggregate principal amount of the Notes then outstanding;

 

(e)           subject to Section 5.18, failure by the Partnership to comply with the provisions described under Section 4.09, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11. 5.12, 5.13, 5.14, 5.15 or 5.16 hereof for 30 days after notice to the Issuers by the Trustee or to the Issuers and Trustee by Holders of at least 25% in aggregate principal amount of the Notes then outstanding (provided that no such notice need be given, and an Event of Default shall occur, 30 days after a failure to comply with the covenants in Section 5.08 or 5.09 hereof, unless theretofore cured), in each case other than a failure to purchase Notes which will constitute an Event of Default under clause (b) of this Section 7.01;

 

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(f)            failure by the Partnership to comply with any of its other agreements in the Indenture for 60 days after notice to the Issuers by the Trustee or to the Issuers and Trustee by Holders of at least 25% in aggregate principal amount of the Notes then outstanding;

 

(g)           default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by either Issuer or any of the Restricted Subsidiaries of the Partnership (or the payment of which is guaranteed by either Issuer or any of such Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the date of this Supplemental Indenture, if that default:

 

(i)            is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness (a “Payment Default”), or

 

(ii)           results in the acceleration of such Indebtedness prior to its express maturity,

 

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20.0 million or more; provided that if any such default is cured or waived or any such acceleration rescinded, or such Indebtedness is repaid, within a period of 30 days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequential acceleration of the Notes shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree;

 

(h)           failure by an Issuer or any Restricted Subsidiary of the Partnership to pay final judgments entered by a court of competent jurisdiction aggregating in excess of $20.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;

 

(i)            except as permitted by the Indenture, any Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of a Subsidiary Guarantor, shall deny or disaffirm its obligations under its Guarantee;

 

(j)            either Issuer or any Restricted Subsidiary of the Partnership that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Partnership that, taken as a whole, would constitute a Significant Subsidiary, pursuant to or within the meaning of Bankruptcy Law:

 

(i)            commences a voluntary case,

 

(ii)           consents to the entry of an order for relief against it in an involuntary case,

 

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(iii)          consents to the appointment of a custodian of it or for all or substantially all of its property,

 

(iv)          makes a general assignment for the benefit of its creditors, or

 

(v)           generally is not paying its debts as they become due; and

 

(k)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(i)            is for relief against an Issuer or any Restricted Subsidiary of the Partnership that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Partnership that, taken as a whole, would constitute a Significant Subsidiary in an involuntary case;

 

(ii)           appoints a custodian of an Issuer or any Restricted Subsidiary of the Partnership that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Partnership that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of an Issuer or any Restricted Subsidiary of the Partnership that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Partnership that, taken as a whole, would constitute a Significant Subsidiary; or

 

(iii)          orders the liquidation of an Issuer or any Restricted Subsidiary of the Partnership that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Partnership that, taken as a whole, would constitute a Significant Subsidiary;

 

and the order or decree remains unstayed and in effect for 60 consecutive days.

 

Section 7.02           Acceleration.

 

If any Event of Default (other than an Event of Default specified in clause (j) or (k) of Section 7.01 hereof) occurs and is continuing, the Trustee may, and upon written request of the Holders of at least 25% in aggregate principal amount of the then outstanding Notes shall, declare all the Notes to be due and payable immediately.  Upon any such declaration, the Notes shall become due and payable immediately.  Notwithstanding the foregoing, if an Event of Default specified in clause (j) or (k) of Section 7.01 hereof occurs with respect to an Issuer, all outstanding Notes shall be due and payable immediately without further action or notice.  The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of the Holders of all of the Notes rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.

 

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Section 7.03           Other Remedies.

 

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or the Indenture.

 

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent permitted by law.

 

Section 7.04           Waiver of Past Defaults.

 

Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and/or interest on, the Notes (including in connection with an offer to purchase) (provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration).  Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

Section 7.05           Control by Majority.

 

Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it.  However, the Trustee may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes (it being understood that the Trustee has no affirmative duty to determine whether or not such direction is unduly prejudicial to such Holders) or that may involve the Trustee in personal liability.

 

Section 7.06           Limitation on Suits.

 

A Holder of a Note may pursue a remedy with respect to the Indenture or the Notes only if:

 

(a)           the Holder of a Note gives to the Trustee written notice of a continuing Event of Default;

 

(b)           the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;

 

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(c)           such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense;

 

(d)           the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and

 

(e)           during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request.

 

A Holder of a Note may not use the Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.

 

Section 7.07           Rights of Holders of Notes to Receive Payment.

 

Notwithstanding any other provision of the Indenture, the right of any Holder of a Note to receive payment of principal, premium and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

Section 7.08           Collection Suit by Trustee.

 

If an Event of Default specified in Section 7.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover a judgment in its own name and as trustee of an express trust against the Issuers for the whole amount of principal of, premium and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

Section 7.09           Trustee May File Proofs of Claim.

 

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to an Issuer or any of the Subsidiary Guarantors (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.07 hereof.  To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other

 

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amounts due the Trustee under Section 8.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise.  Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 7.10           Priorities.

 

If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order:

 

First: to the Trustee, its agents and attorneys for amounts due under Section 8.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

 

Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and interest, respectively; and

 

Third: to the Issuers or the Subsidiary Guarantors or to such other party as a court of competent jurisdiction shall direct.

 

The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 7.10.

 

Section 7.11           Undertaking for Costs.

 

In any suit for the enforcement of any right or remedy under the Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 7.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 7.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.

 

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ARTICLE VIII
 TRUSTEE

 

Section 8.01           Duties of Trustee.

 

(a)           If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise that a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

 

(b)           Except during the continuance of an Event of Default:

 

(i)            the duties of the Trustee shall be determined solely by the express provisions of the Indenture and the Trustee need perform only those duties that are specifically set forth in the Indenture and no others, and no implied covenants or obligations shall be read into the Indenture against the Trustee; and

 

(ii)           in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of the Indenture.  However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of the Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

 

(c)           The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

 

(i)            this paragraph does not limit the effect of paragraph (b) of this Section;

 

(ii)           the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

 

(iii)          the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to any provision of the Indenture relating to the time, method and place of conducting any proceeding or remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under the Indenture.

 

(d)           Whether or not therein expressly so provided, every provision of the Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section.

 

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(e)           No provision of the Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability.  The Trustee shall be under no obligation to exercise any of its rights and powers under the Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security or indemnity satisfactory to it against any claim, loss, liability or expense.

 

(f)            The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Partnership or MarkWest Finance.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

Section 8.02           Rights of Trustee.

 

(a)           Subject to the provisions of Section 8.01(a) hereof, the Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person.  The Trustee need not investigate any fact or matter stated in the document, but may accept the same as conclusive evidence of the truth and accuracy of such statement or the correctness of such opinion.

 

(b)           Before the Trustee acts or refrains from acting in the administration of the Indenture, it may require an Officers’ Certificate or an Opinion of Counsel or both.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.  The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(c)           The Trustee may execute any of its trusts or powers or perform any duties under the Indenture either directly by or through agents or attorneys, and may in all cases pay, subject to reimbursement as provided herein, such reasonable compensation as it deems proper to all such agents and attorneys employed or retained by it, and the Trustee shall not be responsible for any misconduct or negligence of any agent or attorney appointed with due care.

 

(d)           The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by the Indenture.

 

(e)           Unless otherwise specifically provided in the Indenture, any demand, request, direction or notice from an Issuer or any Subsidiary Guarantor shall be sufficient if signed by an Officer of the General Partner (in the case of the Partnership),  by an Officer of MarkWest Finance (in the case of MarkWest Finance) or by an Officer of such Subsidiary Guarantor (in the case of such Subsidiary Guarantor).

 

(f)            The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against

 

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the claims, costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.

 

(g)           The Trustee is not required to make any inquiry or investigation into facts or matters stated in any document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee determines to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuers, personally or by agent or attorney at the sole cost of the Issuers and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

 

(h)           The Trustee is not required to take notice or shall not be deemed to have notice of any Default or Event of Default hereunder except Defaults or Events of Default under Sections 7.01(a) and 7.01(b) hereof, unless a Responsible Officer of the Trustee has actual knowledge thereof or has received notice in writing of such Default or Event of Default from the Issuers or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding and such notice references the Notes and this Supplemental Indenture, and in the absence of any such notice, the Trustee may conclusively assume that no such Default or Event of Default exists.

 

(i)            The Trustee is not required to give any bond or surety with respect to the performance of its duties or the exercise of its powers under the Indenture.

 

(j)            Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Notes.

 

(k)           In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Holders of Notes, each representing less than the aggregate principal amount of Notes outstanding required to take any action hereunder, the Trustee, in its sole discretion may determine what action, if any, shall be taken.

 

(l)            The Trustee’s immunities and protections from liability and its right to indemnification in connection with the performance of its duties under the Indenture shall extend to the Trustee’s officers, directors, agents, attorneys and employees.  Such immunities and protections and right to indemnification, together with the Trustee’s right to compensation, shall survive the Trustee’s resignation of removal, the discharge of the Indenture and final payments of the Notes.

 

(m)          The permissive right of the Trustee to take actions permitted by the Indenture shall not be construed as an obligation or duty to do so.

 

(n)           Except for information provided by the Trustee concerning the Trustee, the Trustee shall have no responsibility for any information and any offering memorandum, disclosure material or prospectus distributed with respect to the Notes.

 

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(o)           The Trustee shall not be liable for any action taken or omitted by it in good faith at the direction of the Holders of not less than a majority in aggregate principal amount of the Notes as to the time, method, and place of conducting any proceedings for any remedy available to the Trustee or the exercising of any power conferred by the Indenture.

 

(p)           Subject to Section 8.01(d), whether or not therein expressly so provided, every provision of the Indenture relating to the conduct of, or affecting the liability of, or affording protection to the Trustee shall be subject to the provisions of this Section 8.02.

 

(q)           Any action taken, or omitted to be taken, by the Trustee in good faith, pursuant to the Indenture upon the request or authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the Holder of any Note shall be conclusive and binding upon all future Holders of that Note and upon securities executed and delivered in exchange therefore or in place thereof.

 

(r)            In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

Section 8.03           Individual Rights of Trustee.

 

The Trustee in its commercial banking or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers, any Subsidiary Guarantors or any Affiliate of the Partnership with the same rights it would have if it were not Trustee.  Any Affiliate of the Trustee or Agent may do the same with like rights and duties.  However, in the event that the Trustee acquires any conflicting interest (as defined in the TIA) after a Default has occurred and is continuing it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign.  The Trustee is also subject to Sections 8.10 and 8.11 hereof.

 

Section 8.04           Trustee’s Disclaimer.

 

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of the Indenture, the Notes or the Guarantees, it shall not be accountable for the Issuers’ use of the proceeds from the Notes or any money paid to an Issuer or upon an Issuer’s direction under any provision of the Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to the Indenture other than its certificate of authentication.

 

Section 8.05           Notice of Defaults.

 

If a Default or Event of Default known to the Trustee occurs, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs.

 

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Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interests of the Holders of the Notes.

 

Section 8.06           Reports by Trustee to Holders of the Notes.

 

Within 60 days after each May 15 beginning with the May 15 following the date of this Supplemental Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted).  The Trustee also shall comply with TIA Section 313(b)(2).  The Trustee shall also transmit by mail all reports as required by TIA Section 313(c).

 

A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Partnership and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d).  The Issuers shall promptly notify the Trustee when the Notes are listed on any stock exchange.

 

Section 8.07           Compensation and Indemnity.

 

The Issuers and the Subsidiary Guarantors shall pay to the Trustee from time to time such compensation as shall be agreed upon in writing between the Issuers and the Trustee for its acceptance of the Indenture and services hereunder.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Issuers and the Subsidiary Guarantors shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services.  Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

 

The Issuers and the Subsidiary Guarantors shall indemnify each of the Trustee or any successor Trustee against any and all losses, damages, claims, liabilities or expenses (including reasonable attorneys’ fees and expenses) incurred by it arising out of or in connection with the acceptance or administration of its duties under the Indenture, including the costs and expenses of enforcing the Indenture against either of the Issuers or any Subsidiary Guarantor (including this Section 8.07) and defending itself against any claim (whether asserted by an Issuer, any Subsidiary Guarantor, or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith.  The Trustee shall notify the Issuers promptly of any claim for which it may seek indemnity.  Failure by the Trustee to so notify the Issuers shall not relieve the Issuers and the Subsidiary Guarantors of their obligations hereunder.  The Issuers and the Subsidiary Guarantors shall defend the claim and the Trustee shall cooperate in the defense.  The Trustee may have separate counsel and the Issuers

 

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and the Subsidiary Guarantors shall pay the reasonable fees and expenses of such separate counsel; provided that the Issuers and the Subsidiary Guarantors will not be required to pay such fees and expenses if they assume the Trustee’s defense with counsel acceptable to and approved by the Trustee (such approval not to be unreasonably withheld) and there is no conflict of interest between the Issuers and the Trustee in connection with such defense.  The Issuers and the Subsidiary Guarantors need not pay for any settlement made without their consent, which consent shall not be unreasonably withheld.  Neither the Issuers nor the Subsidiary Guarantors need reimburse the Trustee for any expense or indemnity against any liability or loss of the Trustee to the extent such expense, liability or loss is attributable to the negligence or bad faith of the Trustee.

 

The obligations of the Issuers and the Subsidiary Guarantors under this Section 8.07 shall survive the satisfaction and discharge of the Indenture.

 

To secure the Issuers’ and the Subsidiary Guarantors’ payment obligations in this Section, the Trustee shall have a Lien (which it may exercise through right of set-off) prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal, premium, if any, and interest on particular Notes.  Such Lien shall survive the satisfaction and discharge of the Indenture.  When the Trustee incurs expenses or renders services after an Event of Default specified in Section 7.01(j) or (k) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

 

The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable.

 

Section 8.08           Replacement of Trustee.

 

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.  The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuers.  The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuers in writing.  The Issuers may remove the Trustee if:

 

(a)           the Trustee fails to comply with Section 8.10 hereof;

 

(b)           the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(c)           a custodian or public officer takes charge of the Trustee or its property; or

 

(d)           the Trustee becomes incapable of acting.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuers shall promptly appoint a successor Trustee.  Within one year after the

 

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successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuers.

 

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, any Subsidiary Guarantor or the Holders of Notes of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 8.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers.  Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under the Indenture.  The successor Trustee shall mail a notice of its succession to Holders of the Notes.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 8.07 hereof.  Notwithstanding replacement of the Trustee pursuant to this Section 8.08, the Issuers’ and the Subsidiary Guarantors’ obligations under Section 8.07 hereof shall continue for the benefit of the retiring Trustee.

 

Section 8.09           Successor Trustee by Merger, Etc.

 

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or association, the successor corporation or association without any further act shall be the successor Trustee.  As soon as practicable, the successor Trustee shall mail a notice of its succession to the Issuers and the Holders of the Notes.

 

Section 8.10           Eligibility; Disqualification.

 

There shall at all times be a Trustee hereunder that is a corporation or association organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trust powers, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition.

 

The Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5).  The Trustee is subject to TIA Section 310(b), provided, however, that there shall be excluded from the operation of TIA Section 310(b)(l) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Issuers are outstanding if the requirements of such exclusion set forth in TIA Section 310(b)(l) are met.  For purposes of the preceding sentence, the optional provision permitted by the second sentence of Section 310(b)(9) of the Trust Indenture Act shall be applicable.

 

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Section 8.11           Preferential Collection of Claims Against Issuers.

 

The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b).  A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein.

 

Section 8.12           U.S.A. Patriot Act.

 

The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Supplemental Indenture agree that they will provide the Trustee with such information within their possession or control as it may reasonably request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

 

Section 8.13           Force Majeure.

 

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

ARTICLE IX
 LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 9.01           Option to Effect Legal Defeasance or Covenant Defeasance.

 

The Issuers may, at the option of the Board of Directors of the General Partner (in the case of the Partnership) or of the Board of Directors of MarkWest Finance (in the case of MarkWest Finance) evidenced by a resolution set forth in an Officers’ Certificate, at any time, elect to have either Section 9.02 or 9.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article IX.

 

Section 9.02           Legal Defeasance and Discharge.

 

Upon the Issuers’ exercise under Section 9.01 hereof of the option applicable to this Section 9.02, the Issuers and the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, be deemed to have been discharged from their respective Obligations and certain other obligations with respect to all outstanding Notes and Guarantees, as applicable, on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that the Issuers and the

 

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Subsidiary Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 9.05 hereof and the other Sections of this Supplemental Indenture referred to in clauses (a) and (b) of this sentence below, and to have satisfied all its other obligations under such Notes and the Indenture (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 9.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on, such Notes when such payments are due, (b) the Issuers’ obligations with respect to such Notes under Sections 3.05, 3.06, 3.07, 3.09, 3.14 and 5.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Issuers’ and the Subsidiary Guarantors’ obligations in connection therewith and (d) this Article IX.  Subject to compliance with this Article IX, the Issuers may exercise the option under this Section 9.02 notwithstanding the prior exercise of its option under Section 9.03 hereof.

 

Section 9.03           Covenant Defeasance.

 

Upon the Issuers’ exercise under Section 9.01 hereof of the option applicable to this Section 9.03, the Issuers and the Subsidiary Guarantors shall, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, be released from their obligations under the covenants contained in Sections 4.09, 5.04, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16, 5.17 and 6.01(a)(iv) hereof and any covenant added to the Indenture subsequent to the Issue Date pursuant to Section 10.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes).  For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Issuers may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 7.01 hereof, but, except as specified above, the remainder of the Indenture and such Notes shall be unaffected thereby.  In addition, upon the Issuers’ exercise under Section 9.01 hereof of the option applicable to this Section 9.03 hereof, subject to the satisfaction of the conditions set forth in Section 9.04 hereof, Sections 7.01(d) through 7.01(i) hereof shall not constitute Events of Default.

 

Section 9.04           Conditions to Legal Defeasance or Covenant Defeasance.

 

The following shall be the conditions to the application of either Section 9.02 or 9.03 hereof to the outstanding Notes:

 

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(a)           the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, U.S. Government Obligations, or a combination thereof, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest, on the outstanding Notes at the Stated Maturity thereof or on the applicable redemption date, as the case may be, and the Issuers must specify whether the Notes are being defeased to Stated Maturity or to a particular redemption date;

 

(b)           in the case of an election under Section 9.02 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (i) the Partnership has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

 

(c)           in the case of an election under Section 9.03 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

 

(d)           no Default or Event of Default shall have occurred and be continuing either on the date of such deposit (other than a Default or Event of Default resulting from the incurrence of Indebtedness all or a portion of the proceeds of which shall be applied to such deposit);

 

(e)           such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture) to which the Partnership or any of its Subsidiaries is a party or by which the Partnership or any of its Subsidiaries is bound;

 

(f)            the Issuers shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuers with the intent of preferring the Holders over any other creditors of the Issuers or the Subsidiary Guarantors or with the intent of defeating, hindering, delaying or defrauding other creditors of the Issuers; and

 

(g)           the Issuers shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

 

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Section 9.05           Deposited Money and Government Securities to be Held in Trust, Other Miscellaneous Provisions.

 

Subject to Section 12.03 hereof, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 9.05, the “Trustee”) pursuant to Section 9.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and the Indenture, to the payment, either directly or through any Paying Agent (including either Issuer acting as a Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

 

The Issuers and the Subsidiary Guarantors shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable U.S. Government Obligations deposited pursuant to Section 9.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

 

Anything in this Article IX to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuers from time to time upon the request of the Issuers any money or non-callable U.S. Government Obligations held by it as provided in Section 9.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 9.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

If the Issuers exercise either their Legal Defeasance or Covenant Defeasance option, each Subsidiary Guarantor shall be released and relieved of any obligations under its Guarantee and any security for the Notes (other than the trust fund described in Section 9.04 hereof) shall be released.

 

Section 9.06           Reinstatement.

 

If the Trustee or Paying Agent is unable to apply any United States dollars or U.S. Government Obligations in accordance with Section 9.02 or 9.03 hereof, as the case may be, by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuers’ and the Subsidiary Guarantors’ Obligations under the Indenture, the Notes and the Guarantees, as applicable, shall be revived and reinstated as though no deposit had occurred pursuant to Section 9.02 or 9.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 9.02 or 9.03 hereof, as the case may be; provided, however, that, if the Issuers or the Subsidiary Guarantors make any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its Obligations, the Issuers and the Subsidiary Guarantors shall be

 

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subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

 

ARTICLE X
 AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 10.01         Without Consent of Holders of Notes.

 

Notwithstanding Section 10.02 of this Supplemental Indenture, the Issuers and the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture, the Guarantees, or the Notes without the consent of any Holder of a Note:

 

(a)           to cure any ambiguity, defect or inconsistency;

 

(b)           to provide for uncertificated Notes in addition to or in place of Certificated Notes;

 

(c)           to provide for the assumption of an Issuer’s or a Subsidiary Guarantor’s obligations to the Holders of the Notes in the case of a merger or consolidation or sale of all or substantially all of such Issuer’s or Subsidiary Guarantor’s properties or assets pursuant to Article VI hereof;

 

(d)           to add or release Subsidiary Guarantors pursuant to the terms of the Indenture;

 

(e)           to make any change that would provide any additional rights or benefits to the Holders of the Notes or surrender any right or power conferred upon the Issuers or the Subsidiary Guarantors by the Indenture that does not adversely affect the rights hereunder of any Holder of the Notes, provided that any change to conform the Indenture to the Prospectus shall not be deemed to adversely affect such rights;

 

(f)            to provide for the issuance of additional Notes in accordance with the limitations set forth in the Indenture;

 

(g)           to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA;

 

(h)           to evidence or provide for the acceptance of appointment under the Indenture of a successor Trustee;

 

(i)            to add any additional Events of Default;

 

(j)            to secure the Notes and/or the Guarantees; or

 

(k)           to provide for the reorganization of the Partnership as any other form of entity in accordance with Section 6.01(b).

 

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Upon the request of the Issuers accompanied by a resolution of the Board of Directors of the General Partner (in the case of the Partnership), and of the Board of Directors of MarkWest Finance and each of the Subsidiary Guarantors (in the case of MarkWest Finance and the Subsidiary Guarantors), authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 10.06 hereof, the Trustee shall join with the Issuers and each of the Subsidiary Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of the Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under the Indenture or otherwise.

 

Section 10.02         With Consent of Holders of Notes.

 

Except as provided below in this Section 10.02, the Issuers, the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture (including Sections 4.09, 5.06 and 5.07 hereof), the Guarantees, and the Notes with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), and, subject to Sections 7.04 and 7.07 hereof, any existing Default or Event of Default or compliance with any provision of the Indenture, the Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes).

 

Upon the request of the Issuers accompanied by a resolution of the Board of Directors of the General Partner (in the case of the Partnership) and of the Board of Directors of MarkWest Finance and each of the Subsidiary Guarantors (in the case of MarkWest Finance and each of the Subsidiary Guarantors) authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 10.06 hereof, the Trustee shall join with the Issuers and each of the Subsidiary Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture affects the Trustee’s own rights, duties or immunities under the Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture.

 

It shall not be necessary for the consent of the Holders of Notes under this Section 10.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

 

After an amendment, supplement or waiver under this Section becomes effective, the Issuers shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Issuers to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.  Subject to Sections 7.04 and 7.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a

 

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particular instance by the Issuers with any provision of the Indenture or the Notes.  However, without the consent of each Holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting Holder):

 

(a)           reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

 

(b)           reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption or repurchase of the Notes, except as provided above with respect to Sections 4.09, 5.06 and 5.07 hereof;

 

(c)           reduce the rate of or change the time for payment of interest, including default interest, on any Note;

 

(d)           waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);

 

(e)           make any Note payable in money other than that stated in the Notes;

 

(f)            make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes (other than as permitted by clause (g) below);

 

(g)           waive a redemption or repurchase payment with respect to any Note (other than a payment required by the covenants contained in Sections 4.09, 5.06 and 5.07 hereof);

 

(h)           except as otherwise permitted by the Indenture, release any Subsidiary Guarantor from any of its Obligations under its Guarantee or the Indenture, or change any Guarantee in any manner that would adversely affect the right of Holders; or

 

(i)            make any change in Section 7.04 or 7.07 hereof or in the foregoing amendment, supplement and waiver provisions (except to increase any percentage set forth therein).

 

Section 10.03         Compliance with Trust Indenture Act.

 

Every amendment or supplement to the Indenture, the Guarantees, or the Notes shall be set forth in an amended or supplemental Indenture that complies with the TIA as then in effect.

 

Section 10.04         Revocation and Effect of Consents.

 

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if

 

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notation of the consent is not made on any Note.  However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

 

The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver.  If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such amendment, supplement or waiver or revoke any consent previously given, whether or not such Persons continue to be Holders after such record date.  No consent shall be valid or effective for more than 90 days after such record date except to the extent that the requisite number of consents to the amendment, supplement or waiver have been obtained within such 90-day period or as set forth in the next paragraph of this Section 10.04.

 

After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (a) through (i) of Section 10.02, in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same indebtedness as the consenting Holder’s Note.

 

Section 10.05         Notation or Exchange of Notes.

 

The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated.  The Issuers in exchange for all Notes may issue and the Trustee, upon receipt of an Issuer Order, shall authenticate new Notes (accompanied by a notation of the Guarantees duly endorsed by the Subsidiary Guarantors) that reflect the amendment, supplement or waiver.  Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

 

Section 10.06         Trustee to Sign Amendments, Etc.

 

The Trustee shall sign any amended or supplemental indenture authorized pursuant to this Article X if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 8.01) shall be fully protected in relying upon, an Officers’ Certificate of the Partnership and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by the Indenture and that all conditions precedent have been satisfied.

 

Section 10.07         Effect of Supplemental Indentures.

 

Upon the execution of any supplemental indenture under this Article X, the Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of

 

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the Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.  After a supplemental indenture becomes effective, the Issuers shall mail to Holders a notice briefly describing such amendment.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

 

ARTICLE XI
 GUARANTEES

 

Section 11.01         Guarantees.

 

Subject to the provisions of this Article XI, each of the Subsidiary Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the other Obligations of the Issuers hereunder or thereunder, that: (a) the principal of, premium and interest on the Notes shall be promptly paid in full when due, whether at the maturity or interest payment or mandatory redemption date, by acceleration, redemption or otherwise, and interest on the overdue principal of, premium and interest on the Notes, if any, to the extent lawful, and all other Obligations of the Issuers to the Holders or the Trustee under the Indenture and the Notes shall be promptly paid in full or performed, all in accordance with the terms of the Indenture and the Notes; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at Stated Maturity, by acceleration or otherwise.  Failing payment when so due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately.  The Subsidiary Guarantors hereby agree that to the fullest extent permitted by applicable law, their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions of the Indenture and the Notes, the recovery of any judgment against the Issuers, any action to enforce the same or any other circumstance (other than complete performance) which might otherwise constitute a legal or equitable discharge or defense of a Subsidiary Guarantor.  To the fullest extent permitted by applicable law, each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuers, any right to require a proceeding first against the Issuers, protest, notice and all demands whatsoever and covenants that its Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture.

 

If any Holder or the Trustee is required by any court or otherwise to return to the Issuers or Subsidiary Guarantors, or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuers or Subsidiary Guarantors, any amount paid by any of them to the Trustee or such Holder, these Guarantees, to the extent theretofore discharged, shall be reinstated in full force and effect.  Each Subsidiary Guarantor agrees that it shall not be entitled to any right

 

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of subrogation in relation to the Holders in respect of any Obligations guaranteed hereby until payment in full of all Obligations guaranteed hereby.

 

Each Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article VII hereof for the purposes of these Guarantees, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Obligations as provided in Article VII hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of these Guarantees.  The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under these Guarantees.

 

Section 11.02         Limitation of Guarantor’s Liability.

 

Each Subsidiary Guarantor and, by its acceptance hereof, each Holder hereby confirms that it is its intention that the Guarantee by such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to the Guarantees.  To effectuate the foregoing intention, each such Person hereby irrevocably agrees that the Obligation of such Subsidiary Guarantor under its Guarantee under this Article XI shall be limited to the maximum amount as shall, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Subsidiary Guarantor that are relevant under such laws, and after giving effect to any rights to contribution of such Subsidiary Guarantor pursuant to any agreement providing for an equitable contribution among such Subsidiary Guarantor and other Affiliates of the Issuers of payments made by guarantees by such parties, result in the Obligations of such Subsidiary Guarantor in respect of such maximum amount not constituting a fraudulent conveyance.  Each Holder, by accepting the benefits hereof, confirms its intention that, in the event of bankruptcy, reorganization or other similar proceeding of either of the Issuers or any Subsidiary Guarantor in which concurrent claims are made upon such Subsidiary Guarantor hereunder, to the extent such claims shall not be fully satisfied, each such claimant with a valid claim against such Issuer shall be entitled to a ratable share of all payments by such Subsidiary Guarantor in respect of such concurrent claims.

 

Section 11.03         Execution and Delivery of Notations of Guarantees.

 

To evidence the Guarantees set forth in Section 11.01 hereof, each Subsidiary Guarantor hereby agrees that a notation of the Guarantees substantially in the form of Exhibit B shall be endorsed on each Note authenticated and delivered by the Trustee and that the Base Indenture and Supplemental Indenture shall each be executed on behalf of such Subsidiary Guarantor by one of its Officers.

 

Each Subsidiary Guarantor hereby agrees that the Guarantees set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a

 

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notation of the Guarantees.  If an Officer whose signature is on the Base Indenture or Supplemental Indenture or on the notation of Guarantees no longer holds that office at the time the Trustee authenticates the Note on which the notation of the Guarantees is endorsed, the Guarantees shall be valid nevertheless.

 

The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantees set forth in the Indenture on behalf of the Subsidiary Guarantors.

 

Section 11.04         Releases.

 

Concurrently with any sale of assets (including, if applicable, all of the Equity Interests of any Subsidiary Guarantor), any Liens in favor of the Trustee in the assets sold thereby shall be released; provided that in the event of an Asset Sale, the Net Proceeds from such sale or other disposition are treated in accordance with the provisions of Section 5.07 hereof.  The Guarantee and all other obligations under the Indenture of a Subsidiary Guarantor will be released:  (i) in connection with any sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary, if that sale or other disposition does not violate Section 5.07 hereof; or (ii) in connection with any sale or other disposition of the Equity Interests of a Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) an Issuer or a Restricted Subsidiary, if that sale or other disposition does not violate Section 5.07 hereof and the Subsidiary Guarantor ceases to be a Restricted Subsidiary of the Partnership as a result of the sale or other disposition; or (iii) if the Partnership designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary; or (iv) upon Legal Defeasance or Covenant Defeasance pursuant to Article IX hereof or upon satisfaction and discharge of the Indenture pursuant to Article XII hereof; or (v) in the case of any Subsidiary Guarantor other than the Operating Company, at such time as such Subsidiary Guarantor ceases to guarantee any other Indebtedness of either of the Issuers and any Indebtedness of the Operating Company; or (vi) in the case of the Operating Company, at such time as the Operating Company ceases to guarantee any other Indebtedness of either of the Issuers, provided that it is then no longer an obligor with respect to any Indebtedness under any Credit Facility.  Upon delivery by the Partnership to the Trustee of an Officers’ Certificate to the effect that such sale or other disposition was made by the Partnership in accordance with the provisions of the Indenture, including without limitation Section 5.07 hereof, or such Guarantee is to be released pursuant to the provisions of the immediately preceding sentence, the Trustee shall execute any documents reasonably required in order to evidence the release of any Subsidiary Guarantor from all of its obligations under its Guarantee and the Indenture.  Any Subsidiary Guarantor not released from its obligations under its Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Subsidiary Guarantor under the Indenture as provided in this Article XI.

 

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Section 11.05         “Trustee” to Include Paying Agent.

 

In case at any time any Paying Agent other than the Trustee shall have been appointed by the Issuers and be then acting hereunder, the term “Trustee” as used in this Article XI shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article XI in place of the Trustee.

 

ARTICLE XII
 SATISFACTION AND DISCHARGE

 

Section 12.01         Satisfaction and Discharge.

 

The Indenture shall upon the request of the Issuers cease to be of further effect (except for the Issuers’ obligations under Section 8.07 hereof, the Issuers’ rights of optional redemption under Article IV hereof, and the Trustee’s and the Paying Agent’s obligations under Section 12.02 and 12.03 hereof and except as provided in the penultimate paragraph of this Section 12.01) and the Trustee, at the expense of the Issuers, shall execute proper instruments acknowledging satisfaction and discharge of the Indenture when

 

(a)           either

 

(i)            all Notes theretofore authenticated and delivered (other than (A) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.09 and (B) Notes for whose payment money has been deposited in trust with the Trustee or any Paying Agent and thereafter paid to the Issuers or discharged from such trust) have been delivered to the Trustee for cancellation; or

 

(ii)           all such Notes not theretofore delivered to the Trustee for cancellation

 

(A)          have become due and payable;

 

(B)           shall become due and payable at their Stated Maturity within one year by reason of the mailing of a notice of redemption or otherwise, or

 

(C)           are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuers,

 

and the Issuers or any Subsidiary Guarantor, in the case of clause (A), (B) or (C) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the benefit of the Holders, cash in U.S. dollars, U.S. Government Obligations or a combination of cash in U.S. dollars and U.S.

 

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Government Obligations, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of fixed maturity or redemption;

 

(b)           no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and such deposit will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture) to which the Partnership or any of its Subsidiaries is a party or by which the Partnership or any of its Subsidiaries is bound;

 

(c)           the Issuers or any Subsidiary Guarantor has paid or caused to be paid all sums then due and payable hereunder by the Issuers;

 

(d)           the Issuers have delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at fixed maturity or the redemption date, as the case may be; and

 

(e)           the Issuers have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the Indenture (“Discharge”) have been satisfied.

 

Notwithstanding the satisfaction and discharge of the Indenture, the Issuers’ obligations in 3.05, 3.06, 3.07, 3.09, 3.14, 5.02, 8.07, 8.08, 12.02, 12.03 and 12.04, and the Trustee’s and Paying Agent’s obligations in Section 12.03 shall survive until the Notes are no longer outstanding.  Thereafter, only the Issuers’ obligations in Section 12.03 shall survive.

 

In order to have money available on a payment date to pay principal (and premium, if any, on) or interest on the Notes, the U.S. Government Obligations shall be payable as to principal (and premium, if any) or interest at least one Business Day before such payment date in such amounts as shall provide the necessary money.  The U.S. Government Obligations shall not be callable at the issuer’s option.

 

Section 12.02         Application of Trust.

 

All money deposited with the Trustee pursuant to Section 12.01 shall be held in trust and, at the written direction of the Issuers, be invested prior to maturity in U.S. Government Obligations, and applied by the Trustee in accordance with the provisions of the Notes and the Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for the payment of which money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

 

90

 

Section  12.03                            Repayment of the Issuers.

 

The Trustee and the Paying Agent shall promptly pay to the Issuers upon written request any excess money or securities held by them at any time.

 

Subject to applicable escheat laws, the Trustee and the Paying Agent shall notify the Issuers of, and pay to the Issuers upon written request, any money held by them for the payment of principal or interest that remains unclaimed for two years after the date upon which such payment shall have become due; provided that the Issuers shall have either caused notice of such payment to be mailed to each Holder of the Notes entitled thereto no less than 30 days prior to such repayment or within such period shall have published such notice in a financial newspaper of widespread circulation published in The City of New York, including, without limitation, The Wall Street  Journal (national edition).  After payment to the Issuers, Holders entitled to the money must look to the Issuers for payment as general creditors unless an applicable abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease.  In the absence of a written request from the Issuers to return unclaimed funds to the Issuers, the Trustee shall from time to time deliver all unclaimed funds to or as directed by applicable escheat authorities, as determined by the Trustee in its sole discretion, in accordance with the customary practices and procedures of the Trustee.

 

Section  12.04                            Reinstatement.

 

If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section  12.01 by reason of any legal proceeding or by reason of any order or judgment of any court of governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers’ and Subsidiary Guarantors’ Obligations under the Indenture, the Notes and the Guarantees, as applicable, shall be revived and reinstated as though no deposit has occurred pursuant to Section  12.01 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section  12.02, provided, however, that if the Issuers or the Subsidiary Guarantors have made any payment of interest or premium, if any, on or principal of any Notes because of the reinstatement of their Obligations, the Issuers or such Subsidiary Guarantors shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

 

ARTICLE  XIII
 MISCELLANEOUS

 

Section  13.01                            Notices.

 

Any notice or communication by the Issuers or the Trustee to the others is duly given if in writing (in the English language) and delivered in person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others’ address:

 

91

 

If to the Issuers or any Subsidiary Guarantor:

 

MarkWest Energy Partners, L.P.

1515 Arapahoe St., Tower 1, Suite  1600

Denver, Colorado  80202

Attention: Chief Financial Officer

 

With a copy to:

 

Vinson  & Elkins L.L.P.

2300 First City Tower

1001 Fannin St.

Houston, Texas  77002

Telecopier No.: (713) 615-5861

Attention: David P. Oelman,  Esq.

 

If to the Trustee or Paying Agent:

 

Wells Fargo Bank, National Association

750 St. Paul Place, Suite  1750

Dallas, Texas  75201

Attention:  Corporate Trust Department

Telecopier No.:  (214) 756-7401

 

The Issuers, any Subsidiary Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications.

 

All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged, if sent by facsimile transmission; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

 

Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar.  Any notice or communication shall also be so mailed to any Person described in TIA Section  313(c), to the extent required by the TIA.  Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.

 

If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

 

If either of the Issuers mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.

 

92

 

Section  13.02                            Communication by Holders of Notes with Other Holders of Notes.

 

The Trustee is subject to TIA Section  312(b), and Holders may communicate pursuant thereto with other Holders with respect to their rights under the Indenture or the Notes.  The Issuers, the Subsidiary Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA Section  312(c).

 

Section  13.03                            Certificate and Opinion as to Conditions Precedent.

 

Upon any request or application by the Issuers or any Subsidiary Guarantor to the Trustee to take any action under the Indenture, the Issuers or such Subsidiary Guarantors shall furnish to the Trustee:

 

(a)                                  an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section  13.04 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in the Indenture relating to the proposed action have been satisfied; and

 

(b)                                 an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section  13.04 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.

 

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

 

Any certificate or opinion of an Officer of the General Partner, an Issuer or any Subsidiary Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous.  Any such certificate or Opinion of Counsel may be based, and may state that it is so based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers of the General Partner, an Issuer or such Subsidiary Guarantor stating that the information with respect to such factual matters is in possession of the General Partner, an Issuer or such Subsidiary Guarantor, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate of opinion or representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under the Indenture, they may, but need not, be consolidated and form one instrument.

 

93

 

Section  13.04                            Statements Required in Certificate or Opinion.

 

Each certificate or opinion with respect to compliance with a condition or covenant provided for in the Indenture (other than a certificate provided pursuant to TIA Section  314(a)(4)) shall comply with the provisions of TIA Section  314(e)  and shall include:

 

(a)                                  a statement that the person making such certificate or opinion has read such covenant or condition;

 

(b)                                 a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(c)                                  a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

 

(d)                                 a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

 

Section  13.05                            No Personal Liability of Directors, Officers, Employees and Unitholders and No Recourse Against General Partner.

 

No past, present or future director, officer, partner, employee, incorporator, manager or unitholder or other owner of Equity Interests of the Issuers, the General Partner or any Subsidiary Guarantor, as such, shall have any liability for any Obligations of the Issuers or the Subsidiary Guarantors under the Notes, the Indenture or the Guarantees or for any claim based on, in respect of, or by reason of, such Obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.

 

Section  13.06                            No Adverse Interpretation of Other Agreements.

 

The Indenture may not be used to interpret any other indenture, loan or debt agreement of either of the Issuers or any Subsidiary of the Partnership or of any other Person.  Any such indenture, loan or debt agreement may not be used to interpret the Indenture or the Guarantees.

 

Section  13.07                            Successors.

 

All agreements of the Issuers and the Subsidiary Guarantors in the Indenture, the Notes and the Guarantees shall bind their respective successors.  All agreements of the Trustee in the Indenture shall bind its successors. Any act or proceeding pursuant to any provision of the Indenture authorized or required to be done or performed by any board, committee or officer of an Issuer shall and may be done and performed with like force and effect by the like board, committee or officer of any successor.

 

94

 

Section  13.08                            Counterpart Originals.

 

The parties may sign any number of copies of this Supplemental Indenture, and each party hereto may sign any number of separate copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages  by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section  13.09                            Indenture and Notes to Be Construed in Accordance with the Laws of the State of New York.

 

THIS SUPPLEMENTAL INDENTURE, THE INDENTURE, EACH NOTE AND THE GUARANTEES SHALL BE DEEMED TO BE NEW YORK CONTRACTS, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE.

 

Section  13.10                            Provisions Required by TIA to Control.

 

If and to the extent that any provision of the Indenture limits, qualifies or conflicts with another provision included in the Indenture which is required to be included in an indenture qualified under the TIA by any of Sections 310 to 318, inclusive, of the TIA, such required provision shall control.

 

Section  13.11                            Rules  by Trustee, Paying Agent and Registrar.

 

The Trustee may make reasonable rules  for action by or a meeting of Holders.  The Registrar and any Paying Agent may make reasonable rules  for their functions.

 

Section  13.12                            Severability.

 

In case any provision in the Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section  13.13                            Table of Contents, Headings,  Etc.

 

The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of the Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

 

[Signatures on following pages]

 

95

 

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

 

 

	
 
    	
 
    	
MARKWEST   ENERGY FINANCE CORPORATION
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
MARKWEST   ENERGY PARTNERS, L.P.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
MARKWEST   HYDROCARBON,  INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
MARKWEST   ENERGY GP, L.L.C.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    
							

 

Signature Page  to Fifth Supplemental Indenture

 

 

 

	
 
    	
 
    	
MASON   PIPELINE LIMITED LIABILITY COMPANY
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
MarkWest   Hydrocarbon,  Inc.,
    
	
 
    	
 
    	
 
    	
 
    	
its   Sole Member
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
MARKWEST   ENERGY OPERATING COMPANY, L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
MarkWest   Energy Partners, L.P.,
    
	
 
    	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    

 

Signature Page  to Fifth Supplemental Indenture

 

 

	
 
    	
 
    	
MARKWEST BLACKHAWK, L.L.C.

MARKWEST ENERGY APPALACHIA,   L.L.C.

MARKWEST ENERGY EAST TEXAS GAS   COMPANY, L.L.C.

MARKWEST GAS MARKETING, L.L.C.

MARKWEST GAS SERVICES, L.L.C.

MARKWEST JAVELINA COMPANY,   L.L.C.

MARKWEST JAVELINA PIPELINE   COMPANY, L.L.C.

MARKWEST LIBERTY GAS GATHERING,   L.L.C.

MARKWEST MARKETING, L.L.C.

MARKWEST MOUNTAINEER PIPELINE   COMPANY, L.L.C.

MARKWEST NEW MEXICO, L.L.C.

MARKWEST PINNACLE, L.L.C.

MARKWEST PIPELINE COMPANY,   L.L.C.

MARKWEST PNG UTILITY, L.L.C.

MARKWEST POWER TEX, L.L.C.

MARKWEST TEXAS PNG UTILITY,   L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
MarkWest   Energy Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
 
    	
its   Sole Member
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
MarkWest   Energy Partners, L.P.,
    
	
 
    	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    

 

Signature Page  to Fifth Supplemental Indenture

 

 

	
 
    	
MARKWEST MICHIGAN PIPELINE   COMPANY, L.L.C.

MARKWEST OKLAHOMA GAS COMPANY,   L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    

 

	
 
    	
MATREX,   L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
West   Shore Processing Company L.L.C.,
    
	
 
    	
 
    	
 
    	
its   Sole Member and Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   Sole Member and Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    

 

Signature Page  to Fifth Supplemental Indenture

 

 

	
 
    	
MARKWEST RANGER PIPELINE COMPANY,   L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Appalachia, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
MARKWEST   MCALESTER, L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Oklahoma Gas Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    
					

 

Signature Page  to Fifth Supplemental Indenture

 

 

	
 
    	
WEST   SHORE PROCESSING COMPANY L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nancy Buese
    
	
 
    	
Name:
    	
Nancy   Buese
    
	
 
    	
Title:
    	
Senior   Vice President and Chief Financial Officer
    

 

Signature Page to Fifth Supplemental Indenture

 

 

	
 
    	
WELLS   FARGO BANK, NATIONAL

ASSOCIATION,   AS TRUSTEE
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Patrick T. Giordano
    
	
 
    	
Name:
    	
Patrick   T. Giordano
    
	
 
    	
Title:
    	
Vice   President
    

 

Signature Page to Fifth Supplemental Indenture

 

 

SCHEDULE A

 

Schedule of Subsidiary Guarantors

 

MarkWest Energy Operating Company, L.L.C.

MarkWest Hydrocarbon, Inc.

MarkWest Energy GP, L.L.C.

MarkWest Blackhawk, L.L.C.

MarkWest Energy Appalachia, L.L.C.

MarkWest Energy East Texas Gas Company, L.L.C.

MarkWest Gas Services, L.L.C.

MarkWest Javelina Company, L.L.C.

MarkWest Javelina Pipeline Company, L.L.C.

MarkWest Mountaineer Pipeline Company, L.L.C.

MarkWest Michigan Pipeline Company, L.L.C.

MarkWest New Mexico, L.L.C.

MarkWest Pinnacle, L.L.C.

MarkWest Pipeline Company, L.L.C.

MarkWest PNG Utility, L.L.C.

MarkWest Power Tex, L.L.C.

MarkWest Texas PNG Utility, L.L.C.

MarkWest Oklahoma Gas Company, L.L.C.

Mason Pipeline Limited Liability Company

Matrex, L.L.C.

MarkWest Liberty Gas Gathering, L.L.C.

MarkWest Marketing, L.L.C.

MarkWest Gas Marketing, L.L.C.

MarkWest McAlester, L.L.C.

MarkWest Ranger Pipeline Company, L.L.C.

West Shore Processing Company, L.L.C.

 

Schedule A

 

 

Exhibit A

 

FORM OF NOTE

 

(Face of Note)

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.(1)

 

CUSIP: 570506 AP0

 

6.25% Senior Notes due 2022

 

No.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       $

 

MARKWEST ENERGY PARTNERS, L.P.
 and
 MARKWEST ENERGY FINANCE CORPORATION

 

promise to pay to                                               or registered assigns, the principal sum of                                                   dollars of the United States of America  [or such greater or lesser amount as may from time to time be endorsed on the Schedule of Exchanges of Interests in the Global Note](2)  on June 15, 2022.

 

(1)  This is included in Global Notes only.

(2)  This is included in Global Notes only.

 

Exhibit A-1

 

Interest Payment Dates: June 15 and December 15 of each year

 

Record Dates: June 1 and December 1

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authorization hereon has been duly executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit of the Indenture or be valid or obligatory for any purpose.

 

	
MARKWEST   ENERGY FINANCE CORPORATION
    	
 
    	
MARKWEST   ENERGY PARTNERS, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:  
    	
MarkWest   Energy GP, L.L.C.,
    
	
 
    	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Title:
    	
 
    	
 
    	
Title:
    	
 
    
									

 

 

Certificate of Authentication:

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 

	
By:
    	
 
    	
 
    
	
Authorized   Signatory
    	
 
    

 

Date of Authentication:                          ,      

 

Exhibit A-2

 

[Back of Note]

 

6.25% Senior Notes due 2022

 

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

 

1.                                       Interest.  MarkWest Energy Partners, L.P., a Delaware limited partnership (the “Partnership”), and MarkWest Energy Finance Corporation, a Delaware corporation (“MarkWest Finance” and, together with the Partnership, the “Issuers”), promise to pay interest on the principal amount of this Note at 6.25% per annum.  The Issuers will pay interest semi-annually on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”).  Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from November 3, 2011; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 15, 2012.  The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate then in effect; the Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, without regard to any applicable grace periods, from time to time on demand at the same rate to the extent lawful.  Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

2.                                       Method of Payment.  The Issuers will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the June 1 or December 1 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 3.12 of the Indenture with respect to defaulted interest.  The Notes will be payable as to principal, premium and interest at the office or agency of the Paying Agent maintained for such purpose in Dallas, Texas, or, at the option of the Issuers, payment of interest may be made by check mailed to the Holders at their addresses set forth in the Register, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of, interest and premium on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent.  Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

3.                                       Paying Agent and Registrar.  Initially, Wells Fargo Bank, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar.  The Issuers may change any Paying Agent or Registrar without prior notice to any Holder.  The Issuers or any of their Subsidiaries may act in any such capacity.

 

Exhibit A-3

 

4.                                       Indenture.  The Issuers issued the Notes under an Indenture dated as of November 2, 2010 among the Issuers, the Subsidiary Guarantors named therein and the Trustee, as supplemented and amended by the Fifth Supplemental Indenture, dated as of November 3, 2011 among the Issuers, the Subsidiary Guarantors and the Trustee.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb).  The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling to the extent permitted by law.  The Notes are unsecured general obligations of the Issuers.

 

5.                                       Optional Redemption.  Subject to the additional terms and conditions set forth in the Indenture:

 

On and after December 15, 2016, the Issuers shall have the option to redeem the Notes, in whole or in part from time to time, on at least 30 but not more than 60 days’ prior notice mailed to the registered address of each Holder of Notes to be so redeemed, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest on the Notes, if any, to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date), if redeemed during the twelve-month period beginning on December 15 of the years indicated below:

 

	
Year
    	
 
    	
Percentage
    	
 
    
	
2016  
    	
 
    	
103.125
    	
%
    
	
2017  
    	
 
    	
102.083
    	
%
    
	
2018  
    	
 
    	
101.042
    	
%
    
	
2019 and thereafter  
    	
 
    	
100.000
    	
%
    

 

(a)                                  Before December 15, 2016, the Issuers may redeem all or, from time to time, a part of the Notes upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to:

 

(i)                                     100% of the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date), plus

 

(ii)                                  the Make Whole Amount.

 

(b)                                 Before December 15, 2014, the Issuers may on any one or more occasions redeem in the aggregate up to 35% of the aggregate principal amount of Notes issued under the Indenture, upon not less than 30 nor more than 60 days’ notice, in an amount not greater than the net cash proceeds of one or more Equity Offerings at a redemption price equal to 106.25% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to the

 

Exhibit A-4

 

redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date); provided that

 

(i)                                     at least 65% of the aggregate principal amount of Notes issued under the Indenture remains outstanding after each such redemption; and

 

(ii)                                  any redemption occurs within 180 days after the closing of such Equity Offering (without regard to any over-allotment option).

 

(c)                                  In the event that Holders of not less than 90% of the aggregate principal amount of the outstanding Notes accept a Change of Control Offer and the Partnership purchases all of the Notes held by such Holders, the Issuers will have the right, upon not less than 30 nor more than 60 days’ notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described below, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest on the notes that remain outstanding, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the redemption date).

 

6.                                       Mandatory Redemption.  Except as set forth in paragraph 7 below, the Issuers shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes or to repurchase the Notes at the option of the Holders.

 

7.                                       Repurchase at Option of Holder.  Subject to the additional terms and conditions set forth in the Indenture:

 

If there is a Change of Control, each Holder of Notes will have the right to require the Partnership to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of such Holder’s Notes (the “Change of Control Offer”) at a purchase price equal to 101% of the aggregate principal amount of the Notes repurchased plus accrued and unpaid interest thereon, if any, to the date of purchase.  Within 30 days following any Change of Control, the Partnership shall mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture and information regarding such other matters as is required under Section 5.06 of the Indenture.  The Holder of this Note may elect to have this Note or a portion hereof in an authorized denomination purchased by completing the form entitled “Option of Holder to Elect Purchase” appearing below and tendering this Note pursuant to the Change of Control Offer.

 

If the Issuers or any Restricted Subsidiary of the Partnership consummates an Asset Sale, in certain circumstances specified in Section 5.07 of the Indenture the Issuers shall commence a pro rata offer to all Holders of Notes and all holders of other Indebtedness that is pari passu in right of payment with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an “Asset Sale Offer”) pursuant to Section 4.09 of the Indenture to purchase the maximum principal amount of

 

Exhibit A-5

 

Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase in accordance with the procedures set forth in the Indenture.  If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds allocated for repurchase of Notes, the Trustee shall select the Notes to be purchased on a pro rata basis.  Holders of Notes that are the subject of an Asset Sale Offer will receive an offer to purchase from the Issuers prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes.

 

8.                                       Notice of Redemption.  Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a Legal Defeasance, Covenant Defeasance or Discharge.  Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000 unless all of the Notes held by a Holder are to be redeemed.  On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption unless the Issuers defaults in making such redemption payment.

 

9.                                       Denominations, Transfer, Exchange.  The Notes are in registered form without coupons in minimum denominations of $2,000 or integral multiples of $1,000 in excess thereof.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture.  The Issuers need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the portion of any Note being redeemed in part that is not being redeemed.  Also, the Issuers need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption or during the period between a record date and the corresponding Interest Payment Date.

 

10.                                 Persons Deemed Owners.  The registered Holder of a Note may be treated as its owner for all purposes.

 

11.                                 Amendment, Supplement and Waiver.  Subject to certain exceptions, the Indenture, the Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture, the Guarantees or the Notes may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes.  Without the consent of any Holder of a Note, the Indenture, the Guarantees or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of Certificated Notes, to provide for the assumption of an Issuer’s or a Subsidiary Guarantor’s obligations to Holders of the Notes in case of a merger or consolidation or sale of all or

 

Exhibit A-6

 

substantially all of such Issuer’s  or Subsidiary Guarantor’s properties or assets, as applicable, to add or release Subsidiary Guarantors pursuant to the terms of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes or surrender any right or power conferred upon the Issuers or the Subsidiary Guarantors by the Indenture that does not adversely affect the rights under the Indenture of any such Holder, to provide for the issuance of additional Notes in accordance with the limitations set forth in the Indenture, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, to evidence or provide for the acceptance of appointment under the Indenture of a successor Trustee, to add additional Events of Default, to secure the Notes and/or the Guarantees or to provide for the reorganization of the Partnership as any other form of entity.

 

12.                                 Defaults and Remedies.  Events of Default include in summary form: (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of the principal of or premium, if any, on the Notes; (iii) failure by the Partnership or any of its Restricted Subsidiaries to comply with Section 6.01 of the Indenture; (iv) failure by the Partnership to comply with the provisions described under Section 4.09, 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15 or 5.16 of the Indenture for 30 days or under Section 5.17 of the Indenture for 90 days, in each case after notice to the Issuers by the Trustee or to the Issuers and Trustee by Holders of at least 25% in aggregate principal amount of the Notes then outstanding (provided that no such notice need be given, and an Event of Default shall occur, 30 days after a failure to comply with the covenants in Section 5.08 or 5.09 of the Indenture, unless theretofore cured), in each case other than a failure to purchase Notes which will constitute an Event of Default under clause (ii) above; (v) failure by the Partnership to comply with any of its other agreements in the Indenture for 60 days after notice to the Issuers by the Trustee or to the Issuers and Trustee by Holders of at least 25% in aggregate principal amount of the Notes then outstanding; (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by an Issuer or any Restricted Subsidiary of the Partnership (or the payment of which is guaranteed by an Issuer or any Restricted Subsidiary of the Partnership), whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness (a “Payment Default”) or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20.0 million or more; provided that if any such default is cured or waived or any such acceleration rescinded, or such Indebtedness is repaid, within a period of 30 days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequential acceleration of the Notes shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree; (vii) the failure by an Issuer or any Restricted Subsidiary of the Partnership to pay final judgments entered by courts of competent jurisdiction aggregating in excess of $20.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the Indenture, any Guarantee of a Subsidiary Guarantor shall

 

Exhibit A-7

 

be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under its Guarantee; and (ix) certain events of bankruptcy or insolvency with respect to an Issuer or any Restricted Subsidiary of the Partnership that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary.  If any Event of Default occurs and is continuing, the Trustee may or at the request of the Holders of at least 25% in aggregate principal amount of the then outstanding Notes shall declare all the Notes to be due and payable.  Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to an Issuer, all outstanding Notes will become due and payable without further action or notice.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest.

 

The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal or premium, if any, of the Notes.  The Issuers and the Subsidiary Guarantors are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

 

13.                                 Trustee Dealings with Partnership.  The Trustee, in its commercial banking or any other capacity, may make loans to, accept deposits from, and perform services for the Partnership or its Affiliates, and may otherwise deal with the Partnership or its Affiliates, as if it were not the Trustee.

 

14.                                 Personal Liability of Directors, Officers, Employees and Unitholders; No Recourse Against General Partner. No past, present or future director, officer, partner, employee, incorporator, manager or unitholder or other owner of Equity Interests of the Issuers, the General Partner, or any Subsidiary Guarantor, as such, shall have any liability for any Obligations of the Issuers or the Subsidiary Guarantors under the Notes, the Indenture, the Guarantees or for any claim based on, in respect of, or by reason of, such Obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

 

15.                                 Authentication.  This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

 

16.                                 Abbreviations.  Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),

 

Exhibit A-8

 

JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

17.                                 CUSIP Numbers.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.  The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture.

 

Requests may be made to:

 

MarkWest Energy Partners, L.P.

1515 Arapahoe St., Tower 1, Suite 1600

Denver, Colorado, 80202

Attention:  Chief Financial Officer

 

Exhibit A-9

 

[FORM OF ASSIGNMENT]

 

To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:

	
 
    

(Insert assignee’s soc. sec. or tax I.D. no.)

	
 
    

(Print or type name, address and zip code of assignee)

 

and irrevocably appoint                                                                                                                                                                                 to transfer this Note on the books of the Issuers.  The agent may substitute another to act for him.

 

	
Date:
    	
 
    	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
 
    	
(Sign exactly as name   appears on the other side of this Note)
    

Signature Guarantee*

 

*                                         NOTICE: The Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs:

 

(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee program acceptable to the Trustee.

 

Exhibit A-10

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Partnership pursuant to Sections 4.09 and 5.07 or Section 5.06 of the Indenture, check the box below:

 

[ ] Sections 4.09 and 5.07                                    [ ] Section 5.06

 

If you want to elect to have only part of the Note purchased by the Issuers pursuant to Sections 4.09 and 5.07 or Section 5.06 of the Indenture, state the amount you elect to have purchased (must be a minimum of $2,000 or an integral multiple of $1,000 in excess thereof):

 

$

 

 

	
Date:
    	
 
    	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Your Signature:
    	
 
    
	
 
    	
 
    	
 
    	
(Sign exactly as name   appears on the other side of this Note)
    
						

 

Signature Guarantee*

 

*                                         NOTICE: The Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs:

 

(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such other guarantee program acceptable to the Trustee.

 

Exhibit A-11

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

 

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Certificated Note, or exchanges of a part of another Global Note or Certificated Note for an interest in this Global Note, have been made:

 

	
Date of Exchange
    	
 
    	
Signature of
   authorized signatory
   of Trustee or Note
   Custodian
    	
 
    	
Amount of decrease
   in Principal amount
   of this Global Note
    	
 
    	
Amount of increase
   in Principal amount
   of this Global Note
    	
 
    	
Principal amount
   of this Global Note
   following such
   decrease or increase
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

*              This schedule should only be included if the Note is issued in global form.

 

Exhibit A-12

 

EXHIBIT B

 

FORM OF GUARANTEE NOTATION

 

Subject to the limitations set forth in the Indenture (the “Indenture”) referred to in the Note upon which this notation is endorsed, each of the entities listed on Schedule A thereto (hereinafter referred to as the “Subsidiary Guarantors,” which term includes any successor or additional Subsidiary Guarantor under the Indenture) (i) has unconditionally guaranteed: (a) the due and punctual payment of the principal of, premium and interest on the Notes, whether at maturity or interest payment date, by acceleration, call for redemption or otherwise, (b) the due and punctual payment of interest on the overdue principal of, premium and interest if lawful, on the Notes, (c) the due and punctual payment or performance of all other Obligations of the Issuers to the Holders or the Trustee, all in accordance with the terms set forth in the Indenture, and (d) in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the prompt payment in full thereof when due or performance thereof in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise and (ii) has agreed to pay any and all costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or any Holder in enforcing any rights under this Guarantee.

 

This Guarantee Notation is subject to the limitations set forth in the Indenture, including Article XI thereof.

 

No member, manager, stockholder, partner, officer, employee, director or incorporator, as such, past, present or future, of the Subsidiary Guarantors shall have any personal liability under this Guarantee by reason of his or its status as such member, manager, partner, stockholder, officer, employee, director or incorporator.

 

The Guarantee shall be binding upon each Subsidiary Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof.

 

Each Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which this notation of Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

 

The Subsidiary Guarantors may be released from their Guarantees upon the terms and subject to the conditions provided in the Indenture.

 

Exhibit B-1

 

	
 
    	
Subsidiary Guarantors:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MARKWEST HYDROCARBON,   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MARKWEST ENERGY GP,   L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MASON PIPELINE LIMITED   LIABILITY COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Hydrocarbon,   Inc.,
    
	
 
    	
 
    	
 
    	
its Sole Member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MARKWEST ENERGY   OPERATING COMPANY, L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy GP,   L.L.C.,
    
	
 
    	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    
					

 

Exhibit B-2

 

	
 
    	
WEST SHORE PROCESSING   COMPANY, L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its Sole Member and   Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy GP,   L.L.C.,
    
	
 
    	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
MARKWEST RANGER   PIPELINE COMPANY, L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Appalachia, L.L.C.,
    
	
 
    	
 
    	
 
    	
its Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy GP,   L.L.C.,
    
	
 
    	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    
					

 

Exhibit B-3

 

	
 
    	
MARKWEST BLACKHAWK,   L.L.C.
    
	
 
    	
MARKWEST ENERGY   APPALACHIA, L.L.C.
    
	
 
    	
MARKWEST ENERGY EAST   TEXAS GAS COMPANY, L.L.C.
    
	
 
    	
MARKWEST GAS MARKETING,   L.L.C.
    
	
 
    	
MARKWEST GAS SERVICES,   L.L.C.
    
	
 
    	
MARKWEST JAVELINA   COMPANY, L.L.C.
    
	
 
    	
MARKWEST JAVELINA   PIPELINE COMPANY, L.L.C.
    
	
 
    	
MARKWEST LIBERTY GAS   GATHERING, L.L.C.
    
	
 
    	
MARKWEST MARKETING,   L.L.C.
    
	
 
    	
MARKWEST MOUNTAINEER   PIPELINE COMPANY, L.L.C.
    
	
 
    	
MARKWEST NEW MEXICO,   L.L.C.
    
	
 
    	
MARKWEST PINNACLE,   L.L.C.
    
	
 
    	
MARKWEST PIPELINE   COMPANY, L.L.C.
    
	
 
    	
MARKWEST PNG UTILITY,   L.L.C.
    
	
 
    	
MARKWEST POWER TEX,   L.L.C.
    
	
 
    	
MARKWEST TEXAS PNG UTILITY,   L.L.C.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy GP,   L.L.C.,
    
	
 
    	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    

 

Exhibit B-4

 

	
 
    	
MARKWEST MICHIGAN   PIPELINE COMPANY, L.L.C.
    
	
 
    	
MARKWEST OKLAHOMA GAS   COMPANY, L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy GP,   L.L.C.,
    
	
 
    	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MATREX, L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
West Shore Processing   Company, L.L.C.
    
	
 
    	
 
    	
 
    	
its Sole Member and   Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its Sole Member and   Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy GP,   L.L.C.,
    
	
 
    	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    

 

Exhibit B-5

 

	
 
    	
MARKWEST MCALESTER,   L.L.C.
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Oklahoma Gas   Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its Sole Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Operating Company, L.L.C.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy   Partners, L.P.,
    
	
 
    	
 
    	
 
    	
its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
MarkWest Energy GP,   L.L.C.,
    
	
 
    	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Nancy Buese
    
	
 
    	
Title:
    	
Senior Vice President   and Chief Financial Officer
    

 

 

Exhibit B-6

 

EXHIBIT C

 

FORM OF SUPPLEMENTAL INDENTURE

 

This SUPPLEMENTAL INDENTURE, dated as of                            ,          is among MarkWest Energy Partners, L.P., a Delaware limited partnership (the “Partnership”), MarkWest Energy Finance Corporation, a Delaware corporation (“MarkWest Finance” and, together with the Partnership, the “Issuers”), each of the parties identified under the caption “Subsidiary Guarantors” on the signature page hereto (the “Subsidiary Guarantors”) and Wells Fargo Bank, National Association, a national banking association, as Trustee.

 

RECITALS

 

WHEREAS, the Issuers, the initial Subsidiary Guarantors and the Trustee entered into an Indenture, dated as of November 2, 2010 (as supplemented and amended by the Fifth Supplemental Indenture dated as of November 3, 2011, the “Indenture”), pursuant to which the Issuers have issued $                         in principal amount of 6.25% Senior Notes due 2022 (the “Notes”);

 

WHEREAS, Section 10.01 of the Indenture provides that the Issuers, the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture in order to add Subsidiary Guarantors pursuant to Section 5.13 or 6.01(c) thereof, without the consent of the Holders of the Notes; and

 

WHEREAS, all acts and things prescribed by the Indenture, by law and by the Certificate of Incorporation and the Bylaws (or comparable constituent documents) of the Issuers, of the Subsidiary Guarantors and of the Trustee necessary to make this Supplemental Indenture a valid instrument legally binding on the Issuers, the Subsidiary Guarantors and the Trustee, in accordance with its terms, have been duly done and performed;

 

NOW, THEREFORE, to comply with the provisions of the Indenture and in consideration of the above premises, the Issuers, the Subsidiary Guarantors and the Trustee covenant and agree for the equal and proportionate benefit of the respective Holders of the Notes as follows:

 

ARTICLE 1

 

This Supplemental Indenture is supplemental to the Indenture and does and shall be deemed to form a part of, and shall be construed in connection with and as part of, the Indenture for any and all purposes.

 

This Supplemental Indenture shall become effective immediately upon its execution and delivery by each of the Issuers, the Subsidiary Guarantors and the Trustee.

 

Exhibit C-1

 

ARTICLE II

 

From this date, in accordance with Section 4.13 or 5.01(c) and by executing this Supplemental Indenture, the Guarantors whose signatures appear below are subject to the provisions of the Indenture to the extent provided for in Article XI thereunder.

 

ARTICLE III

 

Except as specifically modified herein, the Indenture and the Notes are in all respects ratified and confirmed (mutatis mutandis) and shall remain in full force and effect in accordance with their terms with all capitalized terms used herein without definition having the same respective meanings ascribed to them as in the Indenture.

 

The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, which terms and provisions shall in like manner define and limit its liabilities and responsibilities in the performance of the trust created by the Indenture as hereby amended, and without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuers and the Subsidiary Guarantors, and the Trustee makes no representation with respect to any such matters.  Additionally, the Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture

 

THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of such executed copies together shall represent the same agreement.

 

[NEXT PAGE IS SIGNATURE PAGE]

 

Exhibit C-2

 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above.

 

	
 
    	
MARKWEST   ENERGY PARTNERS, L.P.
    
	
 
    	
BY:   MARKWEST ENERGY GP, L.L.C.,
    
	
 
    	
ITS GENERAL PARTNER
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

	
 
    	
MARKWEST   ENERGY FINANCE CORPORATION
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

	
 
    	
SUBSIDIARY   GUARANTORS
    	
 
    
	
 
    	
[
    	
 
    	
]
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
						

 

 

	
 
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION,
    
	
 
    	
as   Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

Exhibit C-3Exhibit 10.1

 

CERTAIN MATERIAL (INDICATED BY [***]) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.  THE OMITTED MATERIAL HAS BEEN  FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Patheon Puerto Rico, Inc.

and

Depomed, Inc.

 

COMMERCIAL MANUFACTURING SERVICES AGREEMENT

 

THIS COMMERCIAL MANUFACTURING SERVICES AGREEMENT, including all schedules attached hereto (collectively, the “Agreement”) is effective as of June 1, 2011 (the “Effective Date”), by and between Patheon Puerto Rico, Inc. (“Patheon”), a corporation organized under the laws of the Commonwealth of Puerto Rico, having its principal place of business at Villa Blanca Industrial Park, State Road No. 1, Km. 34.8, Jose Garrido Avenue, Caguas,  Puerto Rico 00725 and at State Road 670, Km 2.7, State Road 670 Km 2.7, Manatí, Puerto Rico 00674, and Depomed, Inc. (“Depomed”), a corporation organized under the laws of the State of California, having its principal place of business at 1360 O’Brien Drive, Menlo Park, California 94025.  Patheon and Depomed each is referred to herein as a “Party” and collectively as the “Parties.”

 

WITNESSETH:

 

WHEREAS, Patheon is in the business of providing contract manufacturing services to the pharmaceutical industry and desires to provide such services to Depomed;

 

WHEREAS, Depomed desires to engage Patheon to provide certain of such services; and

 

WHEREAS, Patheon and Depomed have agreed upon a contract pursuant to which Patheon would provide manufacturing and packaging services for the Product (as hereinafter defined) for Depomed pursuant to the terms and conditions set forth below.

 

NOW, THEREFORE, in consideration of the foregoing premises, which are hereby incorporated as a substantive part of this Agreement, and in consideration of the performance of the mutual covenants and promises herein contained, Patheon and Depomed, intending to be legally bound, agree as follows:

 

ARTICLE 1 — DEFINITIONS

 

The following terms not defined elsewhere in this Agreement have the following respective meanings.  Terms defined in plural shall include the singular and vice-versa.

 

“Act” means the Federal Food, Drug, and Cosmetic Act, together with all regulations promulgated thereunder, including without limitation cGMPs, in each case as amended from time to time.

 

“Active Pharmaceutical Ingredient” or “API” means the substance having the name of gabapentin.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

 

“Affiliates” means, with respect to either Party, all corporations or other business entities that, directly or indirectly, are controlled by, control or are under the common control with that Party.  For this purpose, the meaning of the word “control” shall mean having the ability substantially to direct the affairs or management of an entity, including, but not be limited to, ownership of more than fifty percent (50%) of the voting shares or interest of such corporation or other business entity.

 

“Annual Volume” means that volume of Product to be manufactured in any Year of this Agreement, as set forth in Schedule B.

 

“API Credit Value” means the value to be attributed to the API for certain purposes of this Agreement, as set forth in Schedule E.

 

“Applicable Laws”  means all laws, statutes, ordinances, regulations, rules, judgments, decrees or orders of any Authority, including, but not limited to, the Act and cGMPs, to the extent applicable to the subject matter of, or the performance by, the Parties of their respective obligations under this Agreement.

 

“Authority” means any governmental or regulatory authority, department, body or agency or any court, tribunal, bureau, commission or other similar body, whether federal, state, provincial, county or municipal, including, but not limited to, the FDA.

 

“Batch” means a batch of the Product.

 

“Batch Records” means the executed manufacturing instructions, batch production records, the executed packaging order, the analytical testing results and any other manufacturing related document, such as deviation or investigation reports.

 

“Bill-Back Items” means the expenses for all third party supplier fees for the purchase of columns, standards, tooling RFID tags and supporting equipment, and other project specific items necessary for Patheon to perform the Manufacturing Services, and which are not included as Materials or subject to the Capital Expenditure and Equipment Agreement. Bill-Back Items will be charged to Depomed at Patheon’s cost plus a [***] handling fee.

 

“Business Day” means any day other than a Saturday, Sunday or public holiday in the USA.

 

“Certificate of Analysis” means documented test results, in written form, executed by an authorized responsible person employed by Patheon, that demonstrate compliance of Product to the Specifications.

 

“cGMPs” means current and applicable good manufacturing practice requirements established in 21 C.F.R. Parts 210 and 211, as amended from time to time, and other applicable FDA policies, guidelines, and advisory opinions, in effect at the time a Batch of Product is manufactured.

 

“Conforming” or “Conformity,” with respect to Product, means Product (a) that was manufactured, packaged and labeled in accordance with cGMPs, other Applicable Laws, the Master Batch Record, applicable standard operating procedures of Patheon, the Packaging Instructions, and

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

2

 

any other directions or protocols agreed upon by the Parties, in writing (b) for which the associated Lot Documentation Package has been provided to Depomed, along with any other documentation required hereunder to be provided to Depomed by such time, and (c) that, at the time of Delivery, conforms to the Specifications.

 

“Control” or “Controlled” means, with respect to a Party’s rights to Intellectual Property, that the Party owns or has a license to such Intellectual Property and has the ability to grant to the other Party a license to such Intellectual Property, as provided for herein, without violating the terms of any agreement or other arrangement with any third party existing at the time such Party would be first required hereunder to grant the other Party such license.

 

“Dedicated Equipment” means the Dedicated Equipment set forth in Exhibit A of the Capital Expenditure and Equipment Agreement attached hereto as Schedule D, as it may be amended from time to time by the Parties, pursuant to its terms.

 

“Depomed Intellectual Property” means any and all Intellectual Property Controlled by Depomed or its Affiliates that is necessary or useful to perform the Manufacturing Services, or that covers the Product, including but not limited to the composition of matter of the Product and methods of using, manufacturing, and/or administering the Product.

 

“Deliver” or “Delivery,” with respect to Product, means delivery by Patheon to a common carrier, as provided in Section 2.2.1.

 

“Equipment” means the Dedicated Equipment and the Non-Dedicated Equipment.

 

“FDA” means the United States Food and Drug Administration.

 

“Intellectual Property” means all intellectual property rights, including, without limitation, patents, patent applications, formulae, trademarks, trade names, Inventions, works of authorship, copyrights, industrial designs, and registrations and applications for registration of any of the foregoing.

 

“Invention” means any information, innovation, improvement, development, discovery, computer program, device, trade secret, method, know-how, process, technique or the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which it is contained and whether or not patentable or copyrightable.

 

“Latent Defect,” (a) with respect to the Product, means a defect that results in the Product’s being Nonconforming, which was not discoverable, through a commercially reasonable inspection conducted in accordance with Section 5.3 and was not known to Depomed at the time it accepted such Product, and (b) with respect to API, means API that failed, at the time of receipt by Patheon, to conform to the specifications therefor or to, which failure was not discoverable through an inspection of the API in accordance with such specifications and agreed upon test methods and was not known to Patheon at the time it was used to manufacture Product.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

3

 

“Lot Documentation Package” has the meaning given in Section 2.1(c)(ii).

 

“Manufacturing Services” means the process validation, manufacturing, quality control, quality assurance, stability testing, packaging, and related services to be performed under this Agreement with respect to the Product.

 

“Master Batch Record” or “MBR” means the master batch record most recently upon by the Parties, in writing, that describes how the Product is to be manufactured.

 

“Materials” means all materials and components, other than API, that are necessary for the manufacture or packaging of Product, including but not limited to excipients and other raw materials, labels and packaging components.

 

“Maximum Credit Value” means the maximum value of API that may be credited by Patheon under this Agreement as set forth in Section 5.6.5 and Schedule E.

 

“Minimum Run Quantity” means the minimum number of Batches to be produced during the same cycle of manufacturing as set forth in Schedule B.

 

“NDA” means the New Drug Application for the Product to be submitted to the FDA by Depomed, including any amendments and supplements thereto.

 

“Nonconforming,” or “Nonconformity,” with respect to Product, means Product that is not Conforming.

 

“Non-Dedicated Equipment” means the Non-Dedicated Equipment, as set forth in Exhibit A of the Capital Expenditure and Equipment Agreement as of the Effective Date and at any time during the term of the Agreement pursuant to any amendment of Exhibit A implemented pursuant to Section 6.5.

 

“Packaging Instructions” means instructions for the packaging of Product agreed upon by the Parties as provided in Section 2.1(f) and Schedule B.

 

“Patheon Facility” means the Patheon manufacturing facility located at Villa Blanca Industrial Park, State Road No. 1, Km. 34.8, Jose Garrido Avenue, Caguas,  Puerto Rico 00725 (the “Caguas Facility”), and at State Road 670, Km 2.7, State Road 670 Km 2.7, Manatí, Puerto Rico 00674 (the “Manati Facility”), or any other facility operated by Patheon and agreed upon by the Parties, pursuant to Section 3.6.

 

“Patheon Intellectual Property” means any and all Intellectual Property Controlled by Patheon or its Affiliates that is necessary or useful to perform the Manufacturing Services or that otherwise covers the Product, including but not limited to the composition of matter of the Product, or a method of using, manufacturing, or administering the Product.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

4

 

“Post-Validation Product” means Product manufactured following Patheon’s validation of its scaled-up manufacturing process, as described in Section 2.1(a).

 

“Product” means the finished pharmaceutical product known as GRALISE (gabapentin) for PHN, in a formulation and at a dosage, which is the subject of Investigational New Drug application No. 71, 439 and NDA No. 22-544.  For clarity, the Product may be supplied under this Agreement in bulk tablet form or packaged and labeled for use commercially, as samples or as otherwise agreed by the Parties in writing, and in accordance with the applicable Purchase Order.

 

“Purchase Order” means a numbered, written order for the Product that states the quantity, packaging configuration, and requested delivery date(s) for such Product, and any other facts necessary to ensure the timely and correct manufacture, packaging, labeling, and shipment of the Product so ordered.

 

“Quality Agreement” means the quality agreement attached hereto as Schedule C.

 

“Recall” means any (a) action by Depomed, its Affiliates or its authorized licensees or Marketing Partner(s) to recover title to or possession of quantities of the Product sold or shipped to third parties (including, without limitation, any recall, field correction, or voluntary withdrawal of Product from the market); (b) action, request, directive or order by any Authority to detain or destroy, or conduct a recall, field correction, or voluntary withdrawal with respect to any Product or to distribute a “Dear Doctor” letter or its equivalent, regarding use of the Product; or (c) action by Depomed, its Affiliates or licensees to refrain from selling or shipping quantities of the Product to third parties which would have been subject to a recall, field correction, or voluntary withdrawal if sold or shipped.

 

“Specifications means the specifications for the Product, its packaging and its labeling, including those attached hereto as Schedule A and those added thereto by mutual written agreement of the Parties during the term of this Agreement. Schedule A may be amended from time to time as required and as authorized, in writing, by Depomed.

 

“Territory” means the USA, each of its territories, districts and possessions and the commonwealth of Puerto Rico.

 

“Third Party Rights” has the meaning given in Section 8.3.

 

“USA” means the United States of America.

 

“Validation Product” means Product manufactured prior to Patheon’s completion of process validation, as described in Section 2.1(a).

 

“Year” means a calendar year.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

5

 

ARTICLE 2 — MANUFACTURING SERVICES AND RESPONSIBILITIES

 

2.1                               Manufacturing Services.  Patheon will perform the Manufacturing Services for Depomed, at the Patheon Facility.  Such Manufacturing Services shall include the following.

 

(a)                                  Process Validation.  Patheon  will validate the current Product manufacturing process according to cGMPs,  as agreed upon and detailed in the Process Validation Proposal (Patheon proposal number DPM-CCG1-11-0410-R1 and Depomed Purchase Orders 10927 and 10936).

 

(b)                                 Product Manufacture.  Patheon will manufacture Product for purposes of supplying Product to Depomed, for commercial and other lawful use in the Territory, in accordance with the terms and conditions herein.  All manufactured Product must meet specifications and criteria as set forth in the process validation protocol.

 

(c)                                  Quality Control and Quality Assurance.

 

(i)  Patheon will perform the quality control and quality assurance testing specified in the Quality Agreement.  Batch review and release for shipment to Depomed will be the responsibility of Patheon’s quality assurance group.  (Subject to Patheon’s obligations under this Agreement, Depomed will be responsible for the release of Product to the market.)  Patheon will perform its batch review and release responsibilities in accordance with Patheon’s standard operating procedures, which are subject to Depomed audit review.

 

(ii)  Each time Patheon releases a Batch, and prior to shipment of the Batch, Patheon shall provide Depomed with the Certificate of Analysis and certificate of compliance for the Batch, including, but not limited, to a statement that the Batch has been manufactured and tested in accordance with cGMPs and Applicable Laws and conforms to the Specifications, and any deviation reports (collectively, the “Lot Documentation Package”).  Patheon shall retain ownership of the (A) Batch Records, including, but not limited to, batch production, lot packaging, equipment set-up control and operating parameters records, data printouts, and raw material data, and (B) laboratory notebooks prepared by Patheon, shall be the exclusive property of Patheon; provided that Patheon hereby grants Depomed a perpetual, fully paid-up, royalty-free, worldwide, irrevocable, unencumbered right and license to use, and to grant to third parties the right to use, the foregoing in connection with the development, manufacture, testing, seeking of regulatory approval, and commercialization of Product.  Notwithstanding anything to the contrary herein, the Parties agree that any and all specific Product related information contained in such documents (the “Product Information”) shall be the sole property of Depomed, subject only to a limited right by Patheon to use the Product Information to provide the Manufacturing Services in accordance with the terms and conditions herein.  To the extent that any rights in the Product Information do not automatically vest in Depomed by the terms of this Agreement, Patheon hereby irrevocably and unconditionally assigns and agrees to

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

6

 

assign to Depomed all of Patheon’s rights, title, and interest in and to such Product Information, including any Intellectual Property therein.

 

(d)                                 Supply of Materials.  Patheon shall supply all Materials, at Patheon’s expense.  Patheon shall purchase the Materials from vendors that have been pre-approved by Depomed, in writing, and shall not change any vendors of packaging components or excipient materials without prior written approval from Depomed.  Patheon shall be responsible for sampling, inspecting, testing and releasing Materials, in accordance with the terms and conditions of this Agreement.

 

(e)                                  Stability Testing.  Patheon will conduct stability testing of the Product, for separately-charged fees, in accordance with a written scope of work, which is minimally defined in the stability commitment per the applicable NDA to be agreed upon by the Parties at a future date, and which shall be made subject to the terms and conditions of this Agreement.  Patheon will not make any changes to such testing protocols without prior written approval from Depomed.  If a confirmed stability test failure occurs, Patheon will notify Depomed within one (1) Business Day, after which Patheon and Depomed will jointly determine the proceedings and methods to be undertaken to investigate the cause of the failure, including, but not limited to, which Party will bear the cost of the investigation.  Patheon will not be liable for these costs unless it has failed to perform the Manufacturing Services in accordance with cGMPs or other Applicable Laws, or to supply Product that is Conforming.  Patheon will give Depomed all stability test data and results, at Depomed’s request.

 

(f)                                    Packaging.  Patheon will package the Product as set out in the Specifications.  Depomed will be responsible for the cost of artwork development.  Patheon will determine and imprint the batch numbers and expiration dates for each Batch shipped.  The batch numbers and expiration dates will be affixed on the Product and on each shipping carton of Product, as outlined in the Specifications and as required by cGMPs.  Depomed may, in its sole discretion, make changes to labels, product inserts, and other packaging for the Product.  Depomed will be responsible for submitting such changes to Authorities responsible for the approval of the Product.  Depomed also will be responsible for the cost of labelling obsolescence when changes are made.  Patheon’s name will not appear on the Product or its labeling or packaging, except to the extent (i) required by Applicable Laws or (ii) agreed upon by the Parties, in writing.

 

(g)                                 Bill Back Items.  Patheon shall obtain Depomed’s written approval before ordering any Bill-Back Item.  Depomed shall reimburse Patheon for the actual cost of Bill-Back Items, plus a [***] handling fee.

 

(h)                                 Product Rejection  for Specification Failure. Internal process specifications will be defined and agreed upon by the Parties, in writing.  If Patheon manufactures Product in accordance with such agreed-upon process specifications, and a Batch or portion of a Batch does not meet the Specifications, Patheon will immediately notify Depomed and Depomed and Patheon shall meet and discuss in good faith to correct apparent Product deficiencies at Patheon’s expense.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

7

 

(i)                                 Transfer to Manati Facility.  Patheon shall be responsible for the transfer of the Product manufacturing process from the Caguas Facility to the Manati Facility.  Depomed will be responsible for completing all required Product-related regulatory filings. Patheon will manufacture Product at the Caguas Facility until such transfer to the Manati Facility is complete, all regulatory approvals or clearances required to market Product manufactured at the Manati Facility have been obtained, and all of Depomed’s Product requirements will be met by Product manufactured at the Manati Facility. The parties will work in good faith to expedite the transfer process.

Notwithstanding any other provision of this Agreement (or the Capital Expenditure and Equipment Agreement or the Quality Agreement) to the contrary, any and all expenses associated with the transfer contemplated this Section 2.1(i) shall be borne by Patheon.

 

2.2                               API Supply.

 

2.2.1                     Timing and Method of Delivery.  At least [***] days before (a) the scheduled production date, in the case of Validation Product, and (b) the start of each calendar month, in the case of Post-Validation Product, Depomed will deliver to the Patheon Facility, DDP (Incoterms 2010), free of charge, API in such quantities as Depomed reasonably believes are sufficient to enable Patheon to manufacture the required quantities of Product.  Each shipment of API shall be accompanied by a certificate of analysis from the API manufacturer confirming the identity, purity, and compliance with specifications covering such API that have been approved by Depomed, in writing.  Patheon shall verify the quantity of each batch of API received and will release the batch based on tests of conformance detailed in the specifications for the API.

 

2.2.2                     Failure of Timely Delivery.

 

(a)  If the API required for Product manufacture is not received within the applicable time-period provided in section 2.2.1, Patheon may delay the shipment of such Product as necessary as a result of the delay, such delay not to exceed the number of days of the delay in receipt of the API, and if Patheon is unable to manufacture the Product in time to meet such revised shipment date, due to prior third-party production commitments, Patheon may further delay such shipment for a period of time sufficient to enable Patheon to fulfill such prior third-party commitments, and the Parties shall agree, in writing, on a revised shipment date.

 

(b)  The failure of Depomed to supply API shall not give rise to a right to terminate this Agreement or to any cause of action by Patheon, but shall stand as sufficient justification of Patheon’s inability to Deliver Product, as set forth in Section 2.2.1., without any further consequences to Patheon, to the extent such inability to Deliver is a direct result of such failure to supply API by Depomed.

 

2.2.3                     Patheon’s Responsibility for API; Title.  API received from Depomed will be held by Patheon, on behalf of Depomed.  Title to the API, all work in progress to manufacture the Product, and all Product in possession or under the control or responsibility of Patheon, shall at all times remain in Depomed and, to the extent such rights do not automatically vest in Depomed by the nature of this Agreement, Patheon hereby assigns to Depomed all such rights; provided, however,  Patheon shall be liable for any loss or damage caused directly or indirectly by Patheon due to Patheon’s negligence,

 

	
 
    	
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willful misconduct, or breach of this Agreement subject to Section 8.2 and to Section 5.6 in the case of API.

 

Except as set forth in Section 5.6, Patheon shall use the API only to perform Manufacturing Services and for no other purpose.

 

ARTICLE 3 — FORECASTS AND ORDERS FOR PRODUCT

 

3.1                               [***] Month Forecasts.

 

3.1.1                     Initial Forecast.  Within one (1) month after the Effective Date, Depomed will give Patheon a non-binding, initial, [***] forecast of the quantity of Product (i.e., the number of tablets and, where applicable, bottles in which they will be contained) that Depomed expects to order during the following [***].  Such initial forecast will be updated by Depomed (i) on or before the date on which Depomed files the NDA and (ii) within [***] prior to the expected grant of approval of the NDA by the FDA.

 

3.1.2                     Rolling Monthly Forecast.  Contemporaneously with the first delivery of a Purchase Order under Section 3.4, Depomed will give Patheon a non-binding, [***] rolling forecast of the quantity of Product that Depomed expects to order during the following [***] (the “Forecast”).  The Forecast will be updated by Depomed on or before the fifteenth day of each month thereafter, so that it covers each subsequent [***] time-period.  Depomed will update the Forecast on a more frequent basis if it determines that the quantity of Product it will require in the following months has changed by more than [***] from that provided in most recently updated Forecast.

 

3.2                               [***] Year Forecast.  On or before the [***] during the term of this Agreement, Depomed will give Patheon a written, non-binding [***] forecast of the quantity of Product that Depomed expects to order during such [***].

 

3.3                               Firm Orders.

 

3.3.1                     For First Shipment of Post-Validation Product.

 

(a)  Except as otherwise contemplated by Section 3.3(d), at least [***] before the anticipated start of manufacture of Post-Validation Product, Depomed will update the Forecast for the first [***] of such Post-Validation Product manufacture.  Subject to subsection (b), below, the [***] of such updated Forecast will constitute a firm order (the “First Firm Order”) by Depomed to purchase and by Patheon to manufacture and Deliver the quantity of Product that is the subject of the First Firm Order, in accordance with the terms and conditions herein.  Notwithstanding the foregoing provisions of this Section 3.3(a), Product subject to Depomed purchase orders [***] lots of Gralise TM 300mg and [***] lots of Gralise TM 600mg will be delivered not later than [***] for bulk product and [***] for Bottled Product and [***] lot of Gralise TM 300mg and [***] lots of Gralise TM 600mg will be Delivered not later than [***].

 

	
 
    	
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(b) If the manufacturing has not started Depomed may cancel any or all of the First Firm Order upon delivery of notice of cancellation to Patheon, (i) at no cost to Depomed, if such notice is delivered not later than [*** ] before the scheduled delivery date of the Product covered by the First Firm Order, or (ii) at a cost of [***] per cancelled Batch, if such notice is delivered not later than [***], but less than [***] before such scheduled delivery date.  The Parties agree that such payment will be considered liquidated damages for Patheon’s loss of manufacturing and will not be considered a penalty.  If Depomed so cancels any part of the First Firm Order, the Forecast (and the First Firm Order) will be adjusted accordingly, at such time.

 

(c) Firm Orders Thereafter.  After the Initial Manufacturing Month, on a rolling basis during the term of this Agreement, and on or before the [***] day of each month, Depomed will issue an updated [***] forecast that starts with the next calendar month.  The first [***]  of that updated forecast will constitute a firm written order in the form of a purchase order or otherwise (“Firm Order”) by Depomed to purchase and, when accepted by Patheon, for Patheon to manufacture and deliver the agreed quantity of the Products on a date not less than  [***] following the date that the Firm Order is submitted.

 

3.3.2                     For Subsequent Shipments.  Upon Delivery of Product pursuant to the First Firm Order and thereafter, Patheon will use commercially reasonable efforts to supply Depomed up to [***] of the total quantity of Product forecasted for such [***] period (the “Maximum Firm Order”).

 

3.4                               Purchase Orders.

 

3.4.1                     For Validation Product.  Depomed has already submitted Purchase Order(s) for Validation Product.  Patheon shall  Deliver all such Validation Product so ordered by Depomed within the time frames requested in such Purchase Orders, in accordance with the terms and conditions of this Agreement.

 

3.4.2                     For Post-Validation Commercial Product.

 

(a)  Except as set forth in Section 3.3 with respect to the First Firm Order, Depomed will provide Patheon with each Purchase Order for Post-Validation Product not less than [***] prior to the delivery date requested in such Purchase Order.  Patheon shall supply all quantities of Product covered by such the Purchase Order and will use commercially reasonable efforts to supply any amounts of Product ordered in excess of the Firm Order.  Within [***] days after receipt of each such Purchase Order, Patheon shall provide Depomed with written confirmation of the Purchase Order and shall notify Depomed of Patheon’s requirements for API to manufacture and package the Product to be supplied pursuant to such Purchase Order.  In addition, Patheon shall notify Depomed of the corresponding needs for API for each month of the Firm Orders.

 

3.5                               Reliance by Patheon.

 

3.5.1                     Depomed understands and acknowledges that Patheon will rely on the Maximum Firm Orders and Forecasts in ordering Materials sufficient to meet the Purchase Orders.  In addition, Depomed understands that, to ensure an orderly supply of the Materials, Patheon may want to purchase the Materials in sufficient volumes to meet the production requirements for Product during the ensuing

 

	
 
    	
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[***] of the Forecast or to meet the production requirements of any longer period agreed to by Patheon and Depomed, in writing.  Accordingly, Depomed authorizes Patheon to purchase Materials sufficient for it to supply all Product forecasted for the [***] of the most recent Forecast given by Depomed under Section 3.1.  Patheon may make other purchases of Materials to meet anticipated manufacturing requirements, based on forecasts for longer periods, if agreed to in writing by the Parties.   Depomed has authorized Patheon to order Materials for any launch quantities of Product requested by Depomed.  If Materials ordered by Patheon to meet Depomed’s Purchase Orders issued in accordance with Section 3.4.2 or as permitted under this Section 3.5.1 are not included in Product manufactured prior to their expiration dates through no fault of Patheon, then Depomed will pay to Patheon all costs incurred by Patheon for the purchase and handling of such Materials.  Patheon shall promptly notify Depomed of the identity of any Materials that have been purchased in accordance with this Section 3.5 and that have expired or become obsolete, and any costs to be charged to Depomed therefor, in accordance with this Section 3.5.  Reimbursement of such costs by Depomed shall be due, where applicable, within [***] after its receipt of Patheon’s reconciliation report and calculation of such costs prepared in accordance with Section 5.6.  Patheon shall provide pricing information sufficient to show the costs of such Materials, where reimbursement is requested by Patheon.

 

3.5.2                     If Depomed fails to take possession or to arrange for the delivery or destruction of any (a) Materials for which Depomed has paid Patheon’s costs pursuant to Section 3.5.1 or (b) Product, within [***] after such payment for Materials or manufacture of such Product, then, upon at least [***] written notice to Depomed, (i) Patheon will destroy such Materials and will charge Depomed for its reasonable costs of such destruction, and (ii) Depomed will pay Patheon [***] per pallet for Product that does not contain controlled substances or require refrigeration or [***] per pallet for Product that contains controlled substances or requires refrigeration, per month thereafter, for storing such Product.  Patheon may ship Product held by it longer than [***] to Depomed, at Depomed’s reasonable expense, on [***] written notice to Depomed.

 

3.6                               Second Source.  The Parties acknowledge that Depomed may obtain Product from one or more third parties during the term of this Agreement and that Depomed shall be entitled, at any time, in its discretion, to qualify a second source for manufacturing Product. Depomed shall give Patheon notice at the time of initiation of qualification of a Second source. If Depomed appoints a third party as a second-source-supplier of Product, (a) Patheon shall, at Depomed’s expense, provide reasonable assistance to enable the establishment of such second source, including without limitation, providing any and all documents necessary or useful in connection therewith to Depomed, and (b) [***].  Notwithstanding the foregoing, Patheon shall notify Depomed promptly upon determining that it will not, for any reason, Deliver in any [***] period, Conforming Product in quantities of at least [***] of the quantities of Product ordered by Depomed during such [***] period in accordance with Section 3.4, and, in addition to any other rights Depomed may have, if Patheon so notifies Depomed, or if Patheon otherwise fails to Deliver such quantities of Product in such [***] period, the requirement that [***], as provided in the preceding sentence shall not apply.

 

ARTICLE 4 — PRODUCT DELIVERY

 

4.1                               Shipment Authorization.  Depomed will determine when Product released by Patheon will be shipped, following its review of the relevant Lot Documentation Package provided in accordance with

 

	
 
    	
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Section 2.1(c)(ii).  Patheon shall not Deliver the Product until Depomed has authorized its Delivery, in writing.

 

4.2                               Manner of Delivery.  Promptly upon receipt of Depomed’s authorization for the Delivery of Product, in accordance with Section 4.1, Patheon shall have the Product shipped to Depomed or its designee, as indicated on the relevant Purchase Order, FCA (Incoterms 2010), the Patheon Facility, unless the Parties have agreed otherwise, in writing.  Patheon will, in accordance with Depomed’s instructions and as agent for Depomed, (a) arrange for shipping to be paid by Depomed and (b) at Depomed’s expense, obtain any official authorization necessary to export the Product for Delivery.  Depomed will arrange for insurance and will select the freight carrier used by Patheon to ship the Product and may monitor Patheon’s shipping and freight practices as they pertain to this Agreement.  Product will be transported in accordance with Depomed’s written shipping instructions.

 

ARTICLE 5— QUALITY

 

5.1                               Quality Control.  Patheon shall ensure that all Product supplied to Depomed is Conforming and that Depomed timely receives all documentation required hereunder in connection therewith.  In addition, Patheon and Depomed shall comply with their respective obligations under the Quality Agreement.

 

5.2                               Deviations.  Patheon will diligently track all deviations associated with the Product.  Patheon shall be responsible for investigating, resolving, and documenting deviations from Batch Records, cGMPs and Specifications and reporting such matters to Depomed promptly and regularly.  Patheon will notify Depomed of any Significant Deviations (as defined below) within [***] of occurrence, according to standard operating procedures pre-approved in writing by Depomed.  Patheon shall ensure that appropriate investigations are conducted in accordance with such standard operating procedures.  Patheon shall provide quality assurance approval for all investigations and corrective and preventive action plans, all of which shall be shared in advance with Depomed and shall be subject to the written approval of Depomed, which shall not be unreasonably withheld.  For purposes of this Agreement “Significant Deviation” means any deviation that (a) has an immediate or probable wide-ranging impact on a cGMP product, process or system in any facility where activities are conducted pursuant to this Agreement, (b) could result in significant Product safety or efficacy risk (e.g., sterility failure or data integrity issues), (c) would require notification to an Authority, or (d) would otherwise be considered by a reasonable quality assurance professional to be significant.

 

5.3                               Product Rejection.

 

5.3.1  Timing and Notice.

 

(a)  Except with respect to Product with a Latent Defect, Depomed shall have (i) [***] from the date on which Depomed or its designee received a Batch or (ii) [***] from the date on which Depomed received the complete Lot Documentation Package for such Batch, whichever is earlier, to reject all or part of such Batch because it is Nonconforming.

 

	
 
    	
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(b)  Depomed shall have [***] following the date of discovery of a Latent Defect in the Product to reject such Product, provided, however, that Depomed may not reject any Product or make a claim that it is Nonconforming more than [***] after the Product’s expiration date.

 

(c)  A Product rejection shall be made effective by Depomed or its designee giving Patheon a written notice (a “Deficiency Notice”), within the time period permitted under Section 5.3.1(a) or (b), as applicable, which specifies the manner in which the Product is Nonconforming.  Should Depomed or its designee fail to provide Patheon with a Deficiency Notice for Product within the applicable time period, such Product shall be deemed to have been accepted.

 

5.3.2  Defect Due to API.  If any rejected Product failed, at the time of Delivery, to meet the Specifications, due to a Latent Defect in the API used to manufacture it, Patheon shall be entitled to the Production Fees for such Product and the costs of any tests reasonably employed by Patheon to determine the defect in the API.

 

5.3.3  Remediation of Rejected Product.  Upon rejection of any Batch, Depomed or its designee may require, at its option, rework in accordance with procedures spelled out in the NDA, destruction, or replacement of the Batch.  Costs associated with such rework, destruction or replacement shall be borne by Patheon, if the Batch was Nonconforming.

 

5.3.4  Payment Adjustments.  If Depomed rejects Product pursuant to Section 5.3.1 before the date on which payment therefor is due pursuant to Sections 6.1 and 6.2, Depomed may withhold payment for that Product. If Depomed timely rejects Nonconforming Product after payment therefor has been made, Depomed shall be entitled to recoup all costs incurred in connection therewith, including the amount paid to Patheon therefor, as well as all associated shipping costs borne by Depomed within [***] of rejection. Such recoupment shall be made, at Depomed’s election: (a) by Patheon’s issuing a prompt refund or (b) by Depomed’s offsetting such amount against the payment of future invoices for Product.  Payments for all Product that Depomed rejects but that is later agreed or determined pursuant to Section 5.4 to be Conforming shall be paid to Patheon within [***] following the later of the date on which such determination is made or, if applicable, the date such determination is relayed to Depomed.

 

5.4                               Disputes Regarding Conformity.  If Patheon and Depomed fail to agree on whether any rejected Product is Nonconforming, upon request by either Party, samples of such Product and any relevant documentation shall be submitted to an independent testing laboratory that is compliant with FDA regulations and guidelines, or, if the dispute relates to another item of compliance with the Specifications, an independent expert of recognized repute within the United States pharmaceutical industry, as applicable (the “Laboratory”), agreed upon by the Parties, in writing (such agreement not to be unreasonably withheld or delayed by either Party).  The determination of the Laboratory shall be final and binding upon the Parties.  The fees and expenses of the Laboratory shall be paid by the Party against which the determination is made.  Patheon shall not destroy any rejected Product as to which there exists a dispute, until such dispute has been resolved.

 

	
 
    	
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5.5                               Access to the Patheon Facility by Depomed Representatives.  Upon reasonable advance notice, Patheon shall permit Depomed representatives to enter the Patheon Facility during regular business hours for the purpose of making quality control inspections of (a) the facilities used in the manufacture of Product and (b) the Equipment, during the period it is used in connection therewith.  Any such Depomed representatives shall be advised of the confidentiality obligations of Article 7 and shall follow such security and facility access procedures as are reasonably designated by Patheon in advance of such inspections.  Patheon may require that, at all times at the Patheon Facility, Depomed representative be accompanied by a Patheon representative and that Depomed representatives not enter areas of the facility used in production of the Product at times other than when production is occurring, to ensure the protection of Patheon’s or a third party’s confidential information.

 

5.6                               API Yield Calculation.

 

5.6.1                     Monthly Reporting.  Patheon shall provide Depomed with a monthly inventory report, within [***] Business Days after the end of each month, of the API held by Patheon, which shall be substantially in the form of the inventory report form annexed hereto as Schedule F.  The report shall contain the following information for such month:

 

“Quantity Received,” which shall mean the total quantity of API in Patheon’s possession that complies with the specifications for the API when received at the Patheon Facility.

 

“Quantity Dispensed,” which  shall mean the total quantity of API dispensed at the Patheon Facility during the applicable month.  The Quantity Dispensed is calculated by adding the Quantity Received to the existing inventory of API that complied with the specifications for API upon receipt by Patheon and is held at the beginning of the applicable month, less the inventory of API that is held by Patheon at the end of such month.  The Quantity Dispensed shall only include API received and dispensed in connection with the manufacture of Product and shall not include any API (a) that must be retained by Patheon as samples, pursuant to this Agreement, the Quality Agreement or Applicable Laws, (b) contained in Product that must be retained as samples pursuant to this Agreement, the Quality Agreement or Applicable Laws, (c) used in connection with testing, by or on behalf of Patheon or Depomed, in the performance of this Agreement or the Quality Agreement (if applicable) and (d) dispensed at Depomed’s request in connection with technical transfer activities or development activities during the applicable period, including, without limitation, any regulatory, stability, validation or test batches manufactured during the applicable period and required in the performance of this Agreement, the Quality Agreement or pursuant to Applicable Laws.

 

“Quantity Converted,” which shall mean the total quantity of API contained in Product produced with the Quantity Dispensed and delivered to Depomed, other than Product that was rejected, recalled or returned in accordance with Section 5.3, as a result of a failure by Patheon to provide Manufacturing Services and/or Product in accordance with this Agreement or the Quality Agreement.

 

5.6.2                     Annual Reconciliation Reports.  Within [***] after the end of each Year, Patheon shall prepare a report of the annual reconciliation of API, in accordance with the reconciliation report form

 

	
 
    	
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annexed hereto as Schedule G, including the calculation of the “Actual Annual Yield” or “AAY” of Product from API during the Year.  AAY is the percentage of the Quantity Dispensed that was converted to Product delivered and is calculated as follows:

 

	
Quantity Converted during the Year
    	
x
    	
100%
    
	
Quantity Dispensed during the Year
    	
 
    	
 
    

 

5.6.3                     Shortfall Calculation.  If the Actual Annual Yield falls below [***] (the “Target Yield”) in a Year, then the shortfall for such Year (the “Shortfall”) shall be determined based on the following calculation:

 

[Target Yield — AAY] * API Credit Value * Quantity Dispensed (in kilograms)

 

The Shortfall shall be disclosed by Patheon on a reconciliation report prepared in the form annexed hereto as Schedule G.

 

5.6.4                     Credit to Depomed for Shortfalls.  If there is a Shortfall for a Product, then Patheon shall credit Depomed’s account for the amount of any such Shortfall not later than [***] after the end of the Year in which the Shortfall occurred.  Each credit under this Section shall be summarized on the reconciliation report prepared in the form annexed hereto as Schedule G and shall be made in accordance with Section 5.6.3.  Upon expiration or termination of this Agreement any remaining credit amount owing under this Section shall be reimbursed to Depomed by payment thereof to Depomed.

 

5.6.5                     Maximum Credit.  Patheon’s liability for API calculated in accordance with this Section 5.6 for any Product in a Year shall not exceed, in the aggregate, the Maximum Credit Value set forth in Schedule E.

 

ARTICLE 6 — PRODUCTION FEES AND PAYMENT

 

6.1                               Production Fees.  Depomed shall pay Patheon for manufacturing Product, in accordance with the tiered Production Fees for the Product for the first Year as listed in Schedule B (“Production Fees”), subject to any adjustments made pursuant to Sections 6.3 and 6.4 or as otherwise agreed to by the Parties, in writing.  The costs of [***] are included in such Production Fees.  The costs of [***] are not included and shall be established in a separate agreement between the Parties.

 

6.2                               Invoices.

 

6.2.1  For Delivered Product.  Patheon shall invoice Depomed for the Production Fees on or after the date on which Patheon has delivered the subject Product, pursuant to Article 4, and, except for disputed amounts, Depomed will pay all invoices within [***] days of the date of the invoice.  Interest on past due, undisputed amounts will accrue from the date due until the date as payment is made, at a rate equal to the prime rate, as reported by Citibank, New York, New York, on the date such payment was due to be paid; provided, however, that in no event shall such rate exceed the maximum legal

 

	
 
    	
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annual interest rate.  If Depomed disagrees for any reason with the amount of any invoice submitted by Patheon, Depomed shall notify Patheon of such disagreement within [***] days after receipt of such invoice, and the Parties shall promptly attempt to resolve the difference.  Any portion of such invoiced amount that is not in dispute shall be paid within [***] days of the date of the invoice.

 

6.2.2  For Product Ordered But Not Shipped.  In the event that any Product manufactured in accordance with Depomed’s orders cannot be recommended for release by Patheon for a period of [***] days following completion of manufacturing, and such delay arises from cause(s) which have been established to be other than the negligence or willful misconduct of Patheon, or Patheon’s failure to fully comply with the manufacturing protocols, cGMPs or the terms of this Agreement, Patheon may, upon the expiration of such [***] day period, invoice Depomed for the applicable Production Fees, and such invoice shall be due according to Section 6.2.1.

 

6.3                               Price Adjustments.  After the first Year of the Agreement, Patheon may adjust the Production Fees, [***] as follows:

 

6.3.1                     Manufacturing Costs.  Patheon may adjust the Production Fees for inflation, based upon the preliminary number for any increase in the Producer Price Index for Pharmaceutical Preparation Manufacturing (pcu325412325412) published by the United States Department of Labor, Bureau of Labor Statistics in August of the preceding Year, compared to the final number for the same month of the Year prior to that, unless the Parties otherwise agree in writing.  On or about [***] of each Year, Patheon will give Depomed a statement setting forth the calculation for the inflation adjustment to be applied in calculating the Production Fees for the next Year.

 

6.3.2                     Materials Costs.  If Patheon incurs an increase in Materials costs during a Year, it may increase the Production Fees for the next Year to the extent necessary to pass through the additional Materials costs; provided that, prior to November 1st of the Year in which Patheon’s Materials costs increased, Patheon notifies Depomed thereof and gives Depomed information about the increase in its Materials costs which will be applied to the calculation of the Production Fees for the next Year sufficient to reasonably demonstrate that the increase is justified.  Any information provided by Patheon to Depomed pursuant to this Section 6.3.2 that is subject to obligations of confidentiality between Patheon and its suppliers shall be deemed Confidential Information of Patheon, and subject to the provisions of Article 7.

 

6.3.3                     Pricing Basis.  Depomed acknowledges that the Production Fees in any Year are quoted based upon the Minimum Run Quantity and the price tiers specified in Schedule B.  If at any time during the term of this Agreement Depomed does not order the specified Minimum Run Quantity changes or the minimum Annual Volume in the lowest tier in a given Year, then Patheon shall be entitled to request an adjustment to the Production Fees with respect to the Product to reflect the increased costs that Patheon will incur as a result of the reduced volumes, and such adjustment shall be effective upon Depomed’s written consent.  To the extent that the Production Fee has been previously adjusted pursuant to this Section 6.3.3 to reflect reduced volumes, the adjustment provided for shall operate based on the fees attributed to such Product at the time the last of such adjustments were made, including any other applicable price adjustments in accordance with this Article 6.

 

	
 
    	
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6.4                               Extraordinary Increases in Cost of Materials.  If, at any time, market conditions result in Patheon’s cost of Materials being materially greater than normally forecasted increases, then Patheon will be entitled to an adjustment to the Production Fees for any affected Product to compensate it for the increased Materials costs.  Changes materially greater than normally forecasted increases will have occurred if (a) the cost of a Material increases by [***] of the cost for that Material upon which the most recent fee quote was based (b) the aggregate cost of all Materials required to manufacture Product increases by [***] of the aggregate cost of all Materials required to manufacture Product upon which the most recent fee quote was based.  If Materials costs have been previously adjusted to reflect an increase in the cost of one or more Materials, the adjustments set out in (a) and (b), above will operate based on the last cost adjustment for the Materials.

 

Production Fees revised under this Section 6.4 shall be effective for any Product delivered on or after the first day of the month following Depomed’s receipt of the revised Schedule B, in accordance with Section 6.6.

 

6.5                               Adjustments Due to Technical Changes. Depomed will inform Patheon in writing of any changes required to the Specifications.  Amendments to the Specifications or the Quality Agreement requested by either party will only be implemented following a technical and cost review by Patheon and are subject to Depomed and Patheon reaching agreement on Production Fees changes required because of the amendment.  Amendments to the Specifications or Quality Agreement, or any change of the Patheon Facility (including without limitation the location thereof) requested by Patheon will only be implemented following the written approval of Depomed, such approval not to be unreasonably withheld.  Any change in the manufacturing process by Patheon (such as changes in Materials testing, quality controls, equipment, facilities, or manufacture and/or packaging methods) shall be subject to Depomed’s prior written approval.  If Depomed accepts a proposed Production Fees change, the proposed change in the Specifications will be implemented, and the Production Fees change will become effective only for those orders of Product manufactured under the revised Specifications.  In addition, Depomed agrees to purchase, at Patheon’s cost (including all costs incurred by Patheon for the purchase and handling of the Inventory), all Inventory to be used for manufacturing Product under the formerly applicable Specifications and purchased or maintained by Patheon in order to fill Purchase Orders or under Section 3.4 if the Inventory can no longer be used under the revised Specification.  Open orders for Materials no longer required under any revised Specifications that were placed by Patheon with suppliers in order to fill Purchase Orders or under Section 3.4 will be cancelled where possible, and if the orders may not be cancelled without penalty, will be assigned to and satisfied by Depomed.

 

6.6                               Notices of Adjustment.  For a Production Fees adjustment under Sections 6.3, 6.4, and/or 6.5, Patheon will deliver to Depomed a revised Schedule B and budgetary pricing information, adjusted Materials costs or other documents reasonably sufficient to demonstrate that a Production Fees adjustment is justified. Any information provided by Patheon to Depomed pursuant to this Section 6.6 that is subject to obligations of confidentiality between Patheon and its suppliers shall be deemed Confidential Information of Patheon, and subject to the provisions of Article 7.  Notwithstanding Sections 6.3, 6.4, and/or 6.5, Patheon shall use commercially reasonable efforts to minimize or avoid, where possible, any increases in the Production Fees.

 

	
 
    	
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6.7                               Currency; Taxes.  Unless otherwise indicated, all monetary amounts are expressed in this Agreement in the lawful currency of the USA.  Patheon shall be responsible for and shall pay any applicable sales, use, excise or similar taxes, including value added taxes and customs duties due on the importation of Product and arising from purchases made by Depomed under this Agreement.

 

ARTICLE 7 — CONFIDENTIAL INFORMATION

 

7.1                               Confidentiality.  Any information or data (a) disclosed by or on behalf of one Party to the other Party regarding such Party’s formulations, plans, programs, plants, process, technical materials, products, production requirements, standard specifications, costs, equipment, operations, procedures, instructions or customers, or (b) generated by Patheon for Depomed pursuant to this Agreement, is collectedly referred to as “Confidential Information.”).  Confidential Information described in subsection (a) shall be the sole property of the disclosing Party.  Confidential Information described in subsection (b) shall be the sole property of Depomed.  Each Party shall treat the other Party’s Confidential Information in the same protective manner as it treats its own Confidential Information, but in no event with less than reasonable care.  Except as provided herein, during the term of this Agreement and, for information not considered a trade secret under Applicable Law, for a period of five (5) years thereafter or, for information considered a trade secret under Applicable Law, for so long as such information is considered a trade secret under Applicable Law, neither Party shall use, disclose to others, or permit its employees or agents to use or disclose to others, the other Party’s Confidential Information.  For the avoidance of doubt, manufacturing processes, analytical methods used in the manufacture of Product, and test results shall be the Confidential Information of Depomed.

 

7.2                               Exclusions.  Section 7.1 shall not prevent either Party from using or disclosing to others information described in Section 7.1(a):

 

(a)                                  that is known to the receiving Party at the time it is disclosed by or obtained from the disclosing Party, which knowledge can be established by competent evidence;

 

(b)                                 that is in the public domain at the time of disclosure hereunder, or through no fault of the receiving Party becomes available to the public;

 

(c)                                  that lawfully becomes available to the receiving Party from a source other than the disclosing Party with the legal right to disclose it;

 

(d)                                 that a Party can prove, by written records made prior to the date of disclosure hereunder, was independently developed by persons not engaged in activities hereunder and without regard to any information described in Section 7.1(a) conveyed hereunder or arising in connection herewith;

 

(e)                                  that is required by Applicable Laws, court order or a order of a judicial or administrative agency of competent jurisdiction to be disclosed, after maximum practicable notice by the receiving Party to the disclosing Party, provided that in each case the receiving Party shall use its best efforts to limit such disclosure and maintain the confidentiality of such information to the extent reasonably possible;

 

	
 
    	
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(f)                                    to its Affiliates, potential or actual investment bankers, investors, lenders, or acquirers, and, solely as to Depomed, its potential or actual collaborators and/or licensees; provided, however, that the receiving Party shall remain responsible for any failure by any of the foregoing recipients of Confidential Information pursuant to this Section 7.2(f), to treat such Confidential Information as required under this Article 7.

 

7.3                               Obligations Upon Termination.  Upon termination of this Agreement, if requested, a Party shall deliver to the other Party all notes, drawings, blueprints, manuals, letters, notebooks, reports and other materials in its possession or under its control, that contain or constitute Confidential Information of the other Party, including all copies thereof, except that (a) one copy may be maintained by the non-owning Party, in the files of its counsel, for the sole purpose of ensuring compliance with the continuing confidentiality obligations under this Agreement, and (b) Patheon may keep copies of those records described in Section 7.1(b) to the extent and for the time period that they are required to be kept pursuant to Applicable Laws.

 

7.4                               Access Restriction.  Each Party shall restrict access to the other Party’s Confidential Information to as few as practicable of its employees and agents, each of whom shall be directly connected with the performance or receipt of the services or Product hereunder.

 

7.5                               Equitable Relief.  Each Party acknowledges and agrees that disclosure, distribution, use or any other handling of the other Party’s Confidential Information contrary to the terms of this Agreement may cause irreparable harm to the owner, for which damages at law may not provide an adequate remedy.  The Parties agree that the provisions of this Article 7 may be specifically enforced, in addition to any and all other remedies available at law or in equity.

 

ARTICLE 8 — LIMITATION OF LIABILITY; INDEMNIFICATION; INSURANCE

 

8.1                               Consequential Damages.  EXCEPT AS SET FORTH IN THIS SECTION 8.1, UNDER NO CIRCUMSTANCES WHATSOEVER WILL EITHER PARTY BE LIABLE, UNDER THIS AGREEMENT, TO THE OTHER IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY, OR OTHERWISE FOR (A) ANY (DIRECT OR INDIRECT) LOSS OF PROFITS, OF PRODUCTION, OF ANTICIPATED SAVINGS, OF BUSINESS, OR GOODWILL OR (B) ANY OTHER LIABILITY, DAMAGE, COSTS, OR EXPENSE OF ANY KIND INCURRED BY THE OTHER PARTY OF AN INDIRECT OR CONSEQUENTIAL NATURE, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF THESE DAMAGES.

 

8.2                               Limitations of Liability.

 

8.2.1                        For API.  Except as expressly set forth in Section 5.6, under no circumstances will Patheon be responsible for any loss or damage to API.  Patheon’s maximum responsibility for loss or damage to API will not exceed the Maximum Credit Value set forth in Schedule E

 

8.2.2                        Patheon’s Maximum Liability. Excluding any liability arising under Section 8.3, Patheon’s maximum liability to Depomed in any Year, under this Agreement, for any reason whatsoever will not exceed [***] of revenues up to a cap of [***].

 

	
 
    	
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8.3                               Indemnification by Patheon.  Patheon agrees to defend, indemnify, and hold Depomed, its officers, employees, and agents (collectively, the “Depomed Indemnitees”) harmless against any and all losses, damages, costs, claims, demands, judgments and liability to, from and in favour of third parties (other than Affiliates) (collectively, “Losses”) resulting from, or relating to any claim of infringement or alleged infringement of any Intellectual Property, including but not limited to patent rights of any third party (“Third Party Rights”) as a result of the conduct of the Manufacturing Services (except for claims directly related to the API or any Depomed-owned technology transferred by Depomed to Patheon pursuant to this Agreement) or any claim of personal injury or property damage, to the extent that the injury or damage is the result of (a) a failure by Patheon to provide Conforming Product, or (b) any other breach of this Agreement by Patheon, including, without limitation, any representation or warranty contained herein, except to the extent that the injury or damage is due to the gross negligence or wilful misconduct of any Depomed Indemnitee or a breach of this Agreement by Depomed.

 

8.4                               Indemnification by Depomed.  Depomed agrees to defend, indemnify, and hold Patheon, its officers, employees, and agents (collectively, the “Patheon Indemnitees”) harmless against any and all Losses resulting from, or relating to any claim of infringement or alleged infringement of any Third Party Rights relating to the API or any Depomed-owned technology transferred by Depomed to Patheon pursuant to this Agreement, or any claim of personal injury or property damage, to the extent that the injury or damage is the result of a breach of this Agreement by Depomed, including, without limitation, any representation or warranty contained herein, except to the extent that the Loss is due to the gross negligence or wilful misconduct of any Patheon Indemnitee.

 

8.5                               Indemnification Procedures.  If a Party learns of any Loss for which it could seek indemnity under this Article 8, such party shall: (a) promptly notify the other Party of the Loss and of whether such indemnity is sought; (b) use commercially reasonable efforts to mitigate the effects of the Loss; (c) reasonably cooperate with the indemnifying Party in the defense of the Loss.

 

8.6                               Insurance.  During the term of this Agreement, each Party shall maintain adequate product liability insurance.  During the term of this Agreement, Patheon and Depomed shall each maintain comprehensive general liability insurance, including product liability.  At the time of first commercial sale of Product manufactured pursuant to this Agreement, the insurance afforded by the Parties shall be primary insurance with minimum limits of [***] per occurrence and an annual aggregate amount of [***].  Such insurance shall not be cancelled or modified without providing the other Party at least thirty (30) days prior written notice.  If requested each Party will provide the other with a certificate of insurance evidencing the above and showing the name of the issuing company, the policy number, the effective date, the expiration date and the limits of liability.  If a Party is unable to maintain the insurance policies required under this Agreement through no fault on the part of such Party, then such Party shall forthwith notify the other Party in writing and the Parties shall in good faith negotiate appropriate amendments to the insurance provision of this Agreement in order to provide adequate assurances.

 

	
 
    	
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ARTICLE 9 — RECALLS AND PRODUCT CLAIMS

 

9.1                               Recalls.  In the event of a Recall, each of the Parties hereby agrees to cooperate to take all appropriate corrective actions, including without limitation providing to the other Party copies of all relevant correspondence, notices, and similar documentation.  Each Party shall notify the other Party if such Party (a) determines that an event, incident, or circumstance has occurred which may result in the need for a Recall of the Product or (b) becomes aware that an Authority is threatening or has initiated an action to remove the Product from the market or to require the distribution of a “Dear Doctor” letter, or its equivalent, regarding use of the Product.  Depomed, its Affiliate or licensee, as applicable, shall be responsible for conducting any Recall of the Product, whether voluntary or involuntary, or taking such other remedial action required by Applicable Laws or agreed to by the Parties.  At the request of Depomed, its Affiliate or licensee, as applicable, Patheon shall assist with respect to any such Recall or remedial action, and will provide to Depomed or a Depomed-authorized requestor all information requested, in connection with Patheon’s or its Affiliates’ dealings with Authorities in connection with such Recall.

 

9.2                               Recall Coordination.  All coordination of any Recall involving Product shall be handled by Depomed, its Affiliate or licensee, as applicable, but Patheon shall reasonably cooperate with such Party in accomplishing any of the foregoing actions.

 

9.3                               Recall Records.  Each of the Parties shall maintain complete and accurate Recall records of all the Product sold by it for such periods as may be required by Applicable Law, but in no event less than three (3) years after the date of the Recall.  Each Party shall promptly notify the other by telephone, with a written confirmation within 24 hours, of any information which might affect the marketability, safety or effectiveness of the Product and/or which might result in the Recall or seizure of the Product.  Upon receiving any such notice or upon any such discovery, each Party shall cease and desist from further shipments of such Product in its possession or control until a decision has been made whether a Recall or some other corrective action is necessary.  The decision to initiate a Recall or to take other corrective action, if any, shall be made and implemented solely by Depomed.

 

9.4                               Disputes Regarding the Conformity of Recalled Product.  Any disputes, as between Patheon and Depomed, with respect to the quality of the Product shall be handled according to the provisions stated in Section 5.4.

 

9.5                               Product Returns.  Depomed will have the responsibility for handling customer returns of the Product.  Patheon will give Depomed any assistance that Depomed may reasonably require to handle the returns.

 

9.6                               Responsibilities with Respect to Recalled Product

 

9.6.1                     Patheon’s Responsibilities.  In the event that a Recall results from the manufacture, packaging, storage, testing or handling of the Product by Patheon, and such Recall is due to Patheon’s failure to provide the Manufacturing Services in accordance with cGMPs or other Applicable Laws, or to have supplied Conforming Product, as determined by a Laboratory pursuant to Section  5.4 or otherwise agreed upon in writing by the Parties, Patheon shall be responsible for documented out-of-pocket expenses of such Recall and shall use its commercially reasonable efforts to replace Recalled

 

	
 
    	
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Product with new Product, contingent upon the receipt from Depomed of all API required for the manufacture of such replacement Product, for which Patheon shall reimburse Depomed, subject to the limitation on liability for lost API set forth in Article 8, which will be captured and calculated in the API Yield under Section  5.6.  In the event that Patheon is unable to replace the Recalled Product (except where this inability results from a failure to receive the required API), then upon request by Depomed, Patheon shall reimburse Depomed promptly for the Production Fees paid to Patheon with respect to the Recalled Product.  In all other circumstances, costs and expenses associated with a Recall shall be Depomed’s responsibility.  For purposes of this Agreement, the expenses of Recalls shall include, without limitation, the expenses of notification and destruction or return of the Recalled Product, and Depomed’s costs for the Product Recalled. Marketing and advertising expenses associated with the goodwill of the Product subject to the Recall shall not be included as an expense of Recall and shall, in all instances, be borne by Depomed.

 

9.6.2                     Limitations on Patheon’s Responsibilities.  Patheon will have no obligation pursuant to Section 9.6.2 above to the extent the Recall results from (a) deficiencies in the Specifications, the safety, efficacy, or marketability of the Product, or any distribution thereof following its Delivery, (b) a defect in a Material that was not reasonably discoverable by Patheon using the test methods set forth in the specifications for such Material, the Specifications or otherwise in this Agreement, (c) Latent Defect in the API unknown to Patheon at the time of Delivery of the Product at issue, (d) actions of third parties occurring after the Product is Delivered, (e) packaging design or labelling defects or omissions for which Patheon has Patheon has no responsibility, or (f) is due to any breach by Depomed of its obligations under this Agreement.

 

9.7                               Disposition of Nonconforming or Recalled Product.  Depomed will dispose of any Nonconforming, returned, or Recalled Product pursuant to FDA procedure, rules or guidelines, but will notify Patheon, in writing, prior to doing so.  Unless it is inconsistent with FDA procedures, rules or guidelines, Depomed will not dispose of any Nonconforming, returned or Recalled Product for which it intends to assert a claim against Patheon, without Patheon’s prior written authorization to do so.  Alternatively, Patheon may instruct Depomed to return the Product to Patheon.  Patheon will bear the cost of disposition of any Product returned, or Recalled Product for which it bears responsibility under Section 9.6.1.  In all other circumstances, Depomed will bear the cost of disposition, including all Production Fees charged for Nonconforming, defective, returned, or Recalled Product.

 

9.8                               Healthcare Provider or Patient Questions and Complaints.  Depomed will have the sole responsibility for responding to questions and complaints from its customers.  Questions or complaints received by Patheon from Depomed’s customers, healthcare providers or patients will be promptly referred to Depomed.  Patheon will cooperate as reasonably required to allow Depomed to determine the cause of and resolve any questions or complaints. This assistance will include follow-up investigations, including testing.  In addition, Patheon will give Depomed all agreed upon information that will enable Depomed to respond properly to questions or complaints about the Product as set forth in the Quality Agreement.  Unless it is determined that the cause of the complaint resulted from a failure by Patheon to Deliver Conforming Product, all costs incurred under this Section 9.8 will be borne by Depomed.

 

	
 
    	
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ARTICLE 10 — RECORDS AND AUDITS; COOPERATION

 

10.1                        Records and Retained Samples.  During the term of this Agreement, Patheon shall (a) prepare and maintain Batch Records and (b) retain samples, properly stored, from each lot or Batch supplied by Patheon hereunder, sufficient to perform each quality control test specified in the Specifications at least twice.  Depomed agrees to provide for such purpose all the information, processes, analytical methods, testing procedures, and any other information reasonably requested by Patheon and in the possession of Depomed necessary for manufacturing the Product in accordance with cGMPs.  Patheon agrees to provide Depomed upon release and delivery of the Product, copies of the analytical testing data such as Certificate of Analysis. Patheon agrees to provide Depomed with copies of its executed batch production records and related documents.  Such records shall be available for audit by Depomed and its designees, as well as FDA and foreign regulatory agencies, upon request.  Patheon shall store the manufacture and analysis documentation for each Batch for the shelf life of the Batch and for two (2) years thereafter.  Patheon will keep records of the manufacture, testing, and shipping of the Product and shall retain samples of the Product, as necessary to comply with manufacturing regulatory requirements applicable to Patheon, as well as to assist with resolving product complaints and other similar issues.  Copies of the records and samples will  be retained for a period of three (3) years following the date of Product expiry, or longer if required by law, at which time Depomed will be contacted concerning the delivery and destruction of the documents and/or samples of Product.

 

10.2                        Quarterly Review.  Each Party shall forthwith upon the Effective Date appoint one of its employees to be a relationship manager responsible for liaison between the Parties.  The relationship managers shall meet not less than quarterly, whether in person, by means of video conference, telephone, or such other agreed upon means of communication, to review the current status of the business relationship and manage any issues that have arisen.

 

10.3                        Reporting.  Patheon shall provide Depomed with a monthly inventory report, within four (4) Business Days after the end of each month, of the Materials, API, and Product then held by Patheon, and any work in progress as of such time.

 

10.4                        Authorities.  Subject to Section 12.3, each Party may communicate with any Authority regarding the Product if, in the opinion of that Party’s counsel, the communication is necessary to comply with the terms of this Agreement or the requirements of any Applicable Law.  Unless, in the reasonable opinion of its counsel, there is a legal prohibition against doing so, Patheon will permit Depomed to accompany and take part in any such communications with the agency, and to receive copies of all such communications from the agency.

 

10.5                        Records Inspection.  Depomed may inspect Patheon reports and records relating to this Agreement during normal business hours and with reasonable advance notice, but a Patheon representative must be present during the inspection.

 

10.6                        Access to Facility.  Patheon will give Depomed reasonable access, at mutually agreeable times, to the areas of the Facility in which the Product is manufactured, stored, handled and/or shipped, to permit Depomed to verify that the Manufacturing Services are being performed in accordance with cGMPs and other Applicable Laws and that Product is Conforming.  But, with the exception of “for-cause” audits (i.e., audits conducted to investigate alleged non-compliance with the Specifications,

 

	
 
    	
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cGMPs, or other Applicable Laws), Depomed will be limited each Year to [***] hereunder, lasting no more than [***] days, and involving no more than [***] auditors.  Depomed may request additional such audits, audit days and/or auditors, subject to payment to Patheon of a fee of [***] for each additional audit day, and [***] per audit-day for each additional auditor.  The right of access set forth in this Section 10.6 will not include a right to access or inspect Patheon’s financial records.

 

10.7                        Notification of Regulatory Inspections.  Patheon will notify Depomed within one Business Day of any inspections by any governmental agency specifically involving the Product or a general systems-based audit relating to Patheon’s conduct of the Manufacturing Services.  Patheon will also notify Depomed of receipt of any form 483’s or warning letters or any other significant regulatory action which Patheon’s quality assurance group determines could impact the regulatory status of the Product.

 

10.8                        Reports.  Patheon will supply to Depomed, on an annual basis, all Product data in its control, including release test results, complaint test results, and all data regarding investigations (relating to manufacturing, testing, and storage).  At Depomed’s request, Patheon will provide a copy of any annual Product review report to Depomed at no additional cost. Any additional report requested by Depomed beyond the scope of cGMPs and customary FDA requirements will be subject to an additional fee to be agreed upon between Patheon and Depomed.

 

ARTICLE 11 — TERM AND TERMINATION

 

11.1                        Term.  Subject to the termination provisions of Section 11.3, the initial term of this Agreement shall commence on the Effective Date and shall end on May 31, 2016 (“Initial Term”).  Thereafter, this Agreement shall be automatically renewed for an additional term of two (2) years unless one Party gives notice to terminate eighteen (18) months prior to the expiration of the Initial Term or any extension thereof.

 

11.2                        Early Termination by Depomed.

 

(a)                                  At any time  after a period of two (2) years from the Effective Date, Depomed may terminate this Agreement upon one hundred and eighty (180) days written notice to Patheon, if it or its affiliates intend to no longer order Manufacturing Services for a Product due to the Product’s discontinuance in the market.

 

(b)                                 If Depomed or its affiliates subsequently elect to resume commercializing the Product, Depomed shall so notify Patheon in writing, and this Agreement shall once again take effect between the Parties, and the Parties shall meet in good faith to determine the procedure to follow in order for Depomed to resume the purchase of Product from Patheon and Patheon resume the supply of Product to Depomed.

 

11.3                        Termination.  This Agreement may be terminated under the conditions stated herein:

 

(a)                                  by either Party for material breach of this Agreement by the other Party, if such other Party either fails to cure any such breach within ninety (90) days after it receives a written notice of

 

	
 
    	
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such breach from the non-breaching Party, or, if such breach cannot be reasonably cured within such ninety (90) day period.

 

(b)                                 by Depomed for material breach of the Quality Agreement by Patheon, if Patheon either fails to cure any such breach within ninety (90) days after it receives a written notice of such breach from Depomed, or, if such breach cannot be reasonably cured within such ninety (90) day period.

 

(c)                                  by either Party, immediately upon written notice to the other Party, if the other Party is declared insolvent or bankrupt by a court of competent jurisdiction, or a voluntary petition of bankruptcy is filed in any court of competent jurisdiction by the other Party, or the other Party makes or executes any assignment for the benefit of creditors.

 

(d)                                 by Depomed, immediately, by giving Patheon written notice of such termination as a result of any debarment, whether actual or threatened, or any conviction which could result in debarment, whether it does so in fact or not; provided that if such circumstance relates to an individual, Patheon may avoid such termination by the immediate removal of such person from all tasks performed pursuant to this Agreement and replacement of such person by another qualified person.

 

11.4                        Effects of Termination.

 

11.4.1              Upon expiration or termination of this Agreement for any reason:

 

(a)                                  Patheon shall furnish to Depomed a complete inventory of all stock on hand of work-in-progress for the manufacture of the Product and Product.  Unless otherwise agreed to between the Parties, all stock on hand as of the effective date of termination of this Agreement shall be dealt with promptly as follows:

 

(i)                                     Product manufactured and packaged pursuant to Purchase Orders from Depomed shall be delivered by Patheon to Depomed, whereupon Depomed shall pay Patheon therefor in accordance with the terms hereof and Depomed shall take delivery of such products;

 

(ii)                                  Work-in-progress commenced by Patheon against Purchase Orders from Depomed shall be completed by Patheon, whereupon Depomed shall pay Patheon therefor in accordance with the terms hereof; and

 

(iii)                               Materials not necessary to complete work-in-progress commenced under Section 11.4(a)(ii) but having been ordered or purchased by Patheon in accordance with Depomed’s then current [***] rolling forecast shall be disposed of by Patheon or returned to Depomed at Depomed’s option and expense.  If Patheon terminates this Agreement under Section 11.3, Depomed shall reimburse Patheon for Patheon’s actual cost of such Materials purchased by Patheon in order to fulfill Depomed’s then current [***] rolling forecast.  If Depomed terminates this Agreement under Section 11.3(a), (b), or (d), Patheon shall bear the costs of disposal of Materials and Active Pharmaceutical Ingredient, the cost of such Materials purchased by Patheon in order to fulfill Depomed’s then current [***] rolling forecast, and any fees charged to Patheon for the termination of such supply contracts for

 

	
 
    	
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Materials which Patheon can only use for the manufacture of Product.  Any credit balance owed to Depomed after application to amounts due to Patheon shall be promptly paid to Depomed.

 

(b)                                 Patheon will promptly transfer to Depomed any and all tooling purchased by Patheon to perform activities under this Agreement for which Depomed has remitted payment to Patheon, that is then in the possession of Patheon; provided that the cost of removing and moving any and all such tooling to a location designated by Depomed shall be borne by Depomed.

 

(c)                                  Depomed will make commercially reasonable efforts, at its own expense, to remove from Patheon site(s), within fifteen (15) Business Days, all of Depomed’s Materials, Inventory and Materials (whether current or obsolete), supplies, undelivered Product, chattels, Equipment or other moveable property owned by Depomed, related to the Agreement and located at a Patheon site or that is otherwise under Patheon’s care and control (“Depomed Property”).  If Depomed fails to remove Depomed Property within thirty (30) days following the completion, termination, or expiration of the Agreement Depomed will pay Patheon [***] per pallet, per month, one pallet minimum thereafter for storing Depomed Property and will assume any third party storage charges invoiced to Patheon regarding Depomed Property.  Patheon will invoice Depomed for the storage charges as set forth in Section 6.2 of this Agreement.

 

(d)                                 Depomed acknowledges that no Competitor of Patheon will be permitted access to the Facility (a “Competitor of Patheon” shall mean any company engaged in providing manufacturing services to pharmaceutical or biotechnology companies on a fee-for-service basis that is not also engaged in the development and/or commercialization of Product as a licensee or distributor of Depomed); and

 

(e)                                  Patheon will return to Depomed all unused API (with shipping and related expenses, if any, to be borne by Depomed).

 

11.4.2              Patheon hereby grants to Depomed, effective as of the effective date of termination, a worldwide, transferable, sublicenseable, fully paid-up, irrevocable non-exclusive license, under the Patheon Intellectual Property, to manufacture Product or products based on or derived from the Product, including without limitation to perform manufacturing, quality control, quality assurance, stability testing, packaging, and related services with respect to the Product or products based on or derived from the Product.  Patheon will promptly transfer to Depomed, in a commercially reasonable manner and at Depomed’s sole expense, all information, materials and technology then in its possession or control that is necessary or reasonably useful to enable Depomed, its Affiliates, licensees or contractors to practice the foregoing license, including without limitation transferring to Depomed all related know-how.  Patheon will provide, at Depomed’s sole expense, reasonable assistance, including training and education, to enable Depomed or its designee to manufacture any and all Product.  Until all transfer tasks described above are completed and Depomed’s new manufacturer and new manufacturing site have been qualified, Patheon will continue to perform Manufacturing Services under this Agreement as requested by and at the direction of Depomed.

 

	
 
    	
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11.5                        No Discharge of Obligations.  Termination of this Agreement for any reason shall not discharge either Party’s liability for obligations incurred hereunder or under the Capital Expenditure Agreement or for payments due there under.

 

ARTICLE 12 — REGULATORY MATTERS

 

12.1                        Regulatory Filings.  Depomed will have the sole responsibility for preparing and filing all documents with all regulatory authorities and taking any other actions that may be required for the receipt and/or maintenance of regulatory authority approval for the Product, including without limitation filing the NDA, and making adverse drug reaction reports and annual reports to regulatory authorities.  Patheon shall use commercially reasonable efforts to assist Depomed in complying with any arising requirements of the FDA and any other regulatory authorities.  Patheon agrees to comply with all reasonable commitments made in such regulatory filings, including the NDA and any supplements thereto, regarding Patheon’s manufacturing responsibilities as provided herein, provided that Patheon is notified of any such responsibilities that differ in scope from those set forth herein and is given an opportunity to review such commitments with sufficient time prior to their being included in the submitted document by Depomed and provided they are not inconsistent with the then-applicable Specifications.  Any incremental costs as a result of the above are subject to the price adjustments as provided in Section 6.3.  Patheon shall be responsible, at its expense, for obtaining and maintaining all licenses and approvals necessary for it to manufacture Product pursuant to this Agreement.

 

12.2                        Compliance.  Depomed shall be responsible for compliance of the Specifications (including but not limited to the text and accuracy of any labeling required by Depomed) with FDA standards.  Patheon shall be responsible for compliance of the manufacturing, processing, packaging procedures and testing procedures with FDA standards, including without limitation those pertaining to cGMPs.  Each Party will provide reasonable assistance to the other, at no charge, if necessary to respond to FDA audits, inspections, inquiries, or requests concerning the Product.  Depomed employees present at the Patheon Facility shall at all times adhere to safety regulations, cGMPs and work schedule generally applicable to Patheon’s own employees, provided that such Depomed employees are notified of the same.

 

12.3                        Adverse Events Reporting and Product Information Requests.

 

12.3.1              Adverse Reaction Reporting.  During the term of this Agreement, Patheon shall immediately but in any case within twenty-four (24) hours notify Depomed, by facsimile or telephone, of any adverse drug experience involving the Product that any employee or agent of Patheon becomes aware of.

 

12.3.2              Product Information Requests.  Information concerning any complaints, inquiries, and/or drug information requests from consumers, physicians, or other third parties regarding the Product shall be communicated in writing to Depomed within twenty-four (24) hours of Patheon’s receipt of the information and/or inquiry.  Depomed shall respond to such complaints and inquiries, if necessary, in accordance with its usual and customary procedures.

 

	
 
    	
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12.3.3              Governmental Reports.  Depomed shall be responsible for filing with the FDA any required adverse reaction reports that it receives directly from third parties and any adverse reaction reports that it receives through Patheon.

 

12.4                        Cooperation.  The Parties expect that any information concerning the Product required by the FDA will be submitted by Depomed.  If Patheon is required to submit to the FDA any information concerning the Product as part of a FDA inspection or audit in connection with the manufacture of the Product, Depomed will provide to Patheon such documentation, data and other information as Patheon may require for submission to the FDA.  Depomed shall also provide, if required by the FDA, information concerning its quality control procedures and marketing of the Product and any other information reasonably requested by FDA.  Depomed shall provide its reasonable cooperation and consultation to Patheon in addressing any issue raised by FDA concerning manufacture of the Product.

 

ARTICLE 13 — INTELLECTUAL PROPERTY

 

13.1                        Trademarks and Labeling.  Patheon shall affix labeling to the Product as specified in the Specifications.  Any such labeling shall bear one or more trademarks to be designated by Depomed, in a form and manner pre-approved in writing by Depomed.  Nothing contained herein shall give Patheon any right to use any Depomed trademark except as expressly permitted herein, and Patheon shall not obtain any right, title, or interest in any Depomed trademark by virtue of this Agreement or its performance of services hereunder.

 

13.2                        Inventions.

 

13.2.1              Background Technology.  Each Party agrees and acknowledges that, except as expressly granted under this Agreement, such Party shall acquire no rights of any kind whatsoever with respect to any Intellectual Property of the other Party existing as of the Effective Date.

 

13.2.2              License.  For the term of this Agreement, Depomed hereby grants Patheon a non-exclusive, paid-up, royalty-free, non-transferable, non-sublicenseable license to Depomed’s Intellectual Property that is delivered from Depomed to Patheon hereunder, specifically for use in the performance by Patheon of the Manufacturing Services.

 

13.2.3              Inventions.

 

(a)                                  All Inventions, and Intellectual Property therein, identified, generated or derived, in whole or in part, by Patheon, Depomed, or their respective employees or independent contractors engaged in manufacturing Product pursuant to this Agreement, in the course of performing the Manufacturing Services, that are specific to, based on, derived from or related to the development, manufacture, use or sale of the Product, or components or formulations of the Product, shall be the sole property of Depomed.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

28

 

(b)                                 All Inventions, and Intellectual Property therein, identified, generated or derived, in whole or in part, by Patheon, Depomed, or their respective employees or independent contractors engaged in manufacturing Product pursuant to this Agreement, in the course of performing the Manufacturing Services, that are not specific to, based on, derived from or related to the development, manufacture, use or sale of the Product, or components or formulations of the Product, and that have applications to manufacturing processes or formulation development of drug products or drug delivery systems generally (the “Broader Intellectual Property Rights”) shall be the sole property of Patheon.  Patheon hereby grants Depomed a non-exclusive, paid-up, royalty-free, worldwide, sublicenseable, transferable license, under the Broader Intellectual Property Rights and the Patheon Intellectual Property, to manufacture, use, sell, offer for sale, and import any product containing API or any derivatives thereof.

 

(c)                                  Inventorship of Inventions identified, generated or derived, in whole or in part, by Patheon, Depomed, or their respective employees or independent contractors, shall be determined in accordance with U.S. patent laws.  Except as otherwise provided in Sections 13.2.3(a) and 13.2.3(b), (i) any and all Inventions, and all intellectual property rights therein, identified, generated or derived, in whole or in part, by Depomed, or its respective employees or independent contractors, shall be solely owned by Depomed, (ii) any and all Inventions, and all intellectual property rights therein, identified, generated or derived, in whole or in part, by Patheon, or its respective employees or independent contractors, shall be solely owned by Patheon, and (iii) any and all Inventions, and all intellectual property rights therein, identified, generated or derived, in whole or in part, jointly by Depomed and Patheon, or employees or independent contractors of each of Depomed and Patheon, shall be jointly owned by the Parties such that each Party has an undivided one-half (1/2) interest, without a duty of accounting to the other Party, in and to such Joint Invention.  In the event that a jurisdiction requires consent of co-owners for one co-owner to grant license rights under or otherwise exploit jointly owned intellectual property, each of the Parties hereby consents to such license grant under or exploitation of such intellectual property by the other Party without a requirement of accounting.

 

(d)                                 Patheon shall promptly notify Depomed upon learning of the conception or reduction to practice of any such Inventions and Intellectual Property therein.  Without additional consideration, each Party hereby assigns to the other Party such of its right, title and interest in and to any Inventions, patent and patent applications claiming them, and all other Intellectual Property therein, and shall require its employees or independent contractors engaged in manufacturing Product pursuant to this Agreement to so assign to the other Party such of their right, title and interest in and to the foregoing, as is necessary to effectuate the allocation of ownership of Inventions and Intellectual Property therein as set forth in this Section 13.2.3.  Each Party shall, and shall cause its employees or independent contractors engaged in manufacturing Product pursuant to this Agreement to, cooperate with the other Party and take all reasonable actions and execute and deliver all necessary documents, including without limitation, any agreements, declarations, legal instruments, documents of assignment or conveyance, and other documents as may be reasonably required to perfect the other Party’s right, title and interest in and to Inventions, patent and patent applications claiming them, and all other Intellectual Property therein as set forth in this Section 13.2.3.  Each Party shall also include provisions in its relevant agreements with third parties that effect the intent of this Section 13.2.3.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

29

 

13.3        Intellectual Property; No Implied Rights.  Subject to Section 13.2.3, all Depomed Intellectual Property shall be owned by Depomed and all Patheon Intellectual Property shall be owned by Patheon.  Neither Party has, nor shall it acquire, any interest in any of the other Party’s Intellectual Property except as expressly set forth in this Agreement or unless otherwise expressly agreed to in writing.  Except as expressly set forth herein, nothing in this Agreement is intended to transfer or license any right, title or interest in or to either Party’s Inventions or background technology.  Neither Party shall use any Intellectual Property of the other Party, except as expressly set forth in this Agreement or specifically authorized by the other Party or as required for the performance of its obligations under this Agreement.

 

ARTICLE 14 — RELATIONSHIP OF PARTIES

 

14.1        Independent Contractors.  It is not the intent of the Parties to form any partnership or joint venture.  Each Party shall, in relation to its obligations hereunder, act as an independent contractor, and nothing in this Agreement shall be construed to give such Party the power or authority to act for, bind or commit the other Party in any way whatsoever.

 

14.2        Public Statements.  Patheon and Depomed each agree not to disclose the terms of this Agreement in any public statements, whether oral or written, including but not limited to shareholder reports, communications with stock market analysts, statements to other customers or prospective customers, press releases or other communications with the media, or prospectuses, without the other Party’s prior written consent, which shall not be unreasonably withheld or delayed, or as required by Applicable Laws or rules of a securities exchange.  If possible, each Party shall give the other at least five (5) days advance written notice of a disclosure required by Applicable Laws or rules of a securities exchange and will cooperate with the other Party to minimize the scope and content of such disclosure.

 

ARTICLE 15 — WARRANTIES

 

15.1        Patheon’s Warranty.  Patheon hereby represents and warrants as follows:

 

15.1.1     The Product shall conform with the Specifications as set out in Schedule A at the time of Delivery;

 

15.1.2     Patheon shall comply in all material respects with Applicable Laws.  For purposes of this Section 15.1, and without limiting the foregoing sentence, any failure to comply with any Applicable Laws that exposes Depomed to any sanction or liability, or prevents Depomed from using the Product as intended, shall be deemed to be a material non-compliance;

 

15.1.3     Patheon shall maintain all required governmental permits, licenses, orders, applications and approvals regarding the manufacturing of the Product, and Patheon shall manufacture Product in accordance with all such permits, licenses, orders, applications and approvals.  Any expenses incurred to obtain special permits for Product that Patheon would not have to acquire absent this Agreement will be reimbursed by Depomed;

 

	
 
    	
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and filed separately with the Securities and Exchange Commission.
    

 

30

 

15.1.4     Product shall, at the time it is shipped to Depomed (i) not be adulterated or misbranded within the meaning of the Act, or within the meaning of any Applicable Laws in the Territory and (ii) not be articles that may not, under the Act or any other Law, be introduced into interstate commerce;

 

15.1.5     To Patheon’s knowledge, there are no actions or other legal proceedings, concerning the infringement of Third Party Rights relating to the performance of the Manufacturing Services by Patheon under this Agreement;

 

15.1.6     Patheon has full authority to enter into this Agreement, that it has no reason to believe that its performance under this Agreement will infringe any Third Party Rights and that nothing contained in any other agreement prohibits or restricts Patheon from entering into any part of this Agreement; and

 

15.1.7     Patheon represents that, as of the Effective Date and continuously during the term of this Agreement, it and its employees, Affiliates, and agents have never been (i) debarred or (ii) convicted of a crime for which a person could be debarred under Section 335(a) or 335(b) of the Act.  Patheon represents that it has never been and, to the best of its knowledge after due inquiry, none of its employees, Affiliates, or agents has ever been (i) threatened to be debarred, (ii) indicted for a crime or (iii) otherwise engaged in conduct for which a person can be debarred under Section 335(a) or 335(b) of the Act.  Patheon agrees that it will promptly notify Depomed in the event of any such debarment, conviction, threat, or indictment.

 

15.2        Depomed’s Warranty.  Depomed hereby represents and warrants as follows:

 

15.2.1     The Active Pharmaceutical Ingredient shall, to the best of Depomed’s knowledge, at the time it is shipped to Patheon, (i) not be adulterated or misbranded within the meaning of the Act or within the meaning of any other Applicable Laws in which the definitions of adulteration and misbranding are substantially the same as those contained in the Act, (ii) not be articles that may not, under the Act or any other Applicable Law, be introduced into interstate commerce, and (iii) comply with its specifications as provided by Depomed;

 

15.2.2     As of the time that any Product produced hereunder is sold to a third party, Depomed will own all rights to the Product trademarks, and the Product labeling will meet regulatory requirements;

 

15.2.3     Depomed may lawfully disclose the Specifications to Patheon;

 

15.2.4     To Depomed’s knowledge, there are no actions or other legal proceedings against Depomed in the Territory, concerning the infringement of Third Party Rights directed to the Product Specification(s), the API or the Materials, or the sale, or use of the Product in the Territory, which is made in accordance with the Specifications.

 

15.2.5     15.2.6     The Specifications are consistent with the NDA;

 

15.2.7     The Specifications conform to all applicable cGMPs

 

	
 
    	
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31

 

15.2.8     Depomed has full authority to enter into this Agreement and nothing contained in any other agreement prohibits or restricts Depomed from entering into any part of this Agreement; and

 

15.2.10      All material safety data sheets, Active Pharmaceutical Ingredient or any data supplied by Depomed to Patheon are accurate to the best of Depomed’s knowledge.  The Parties understand that Patheon will not do analysis to verify the accuracy of such Depomed supplied data.

 

15.3        No Implied Warranties.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, PATHEON AND DEPOMED MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

ARTICLE 16 — ASSIGNMENT

 

Except as set forth in this Article 16, this Agreement, and all rights and obligations hereunder, are personal to the Parties and shall not be assigned in whole or in part by a Party to any other person or company without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed.  Notwithstanding the foregoing, Patheon and Depomed shall be entitled to assign this Agreement to an Affiliate whose performance is guaranteed by the assigning Party or to a Party which is the successor to, or the assignee of, all or substantially all of Depomed’s or Patheon’s pharmaceutical business; provided, however, that any such successor or assignee has agreed in writing to assume all of the assigning Party obligations under this Agreement.  Any assignee of a Party hereunder must be qualified to perform the assigning Party’s obligations and (a) hall have a financial condition at the time of assignment at least comparable to that of the assigning Party as of the Effective Date, and (b) shall neither have been debarred by the FDA nor otherwise made subject to an order of the FDA or a court of competent jurisdiction which would prevent it from performing the obligations of the assigning Party hereunder.  In the event of any assignment pursuant to the provisions of this Article 16, the assigning Party shall have no further obligations hereunder except (i) to the extent the same has accrued prior to such assignment or (ii) pursuant to the guarantee obligation set forth above.  The terms and conditions of this Agreement shall be binding upon, and shall inure to the benefit of, the Parties and their respective successors and permitted assigns.  Patheon may terminate this Agreement upon six months prior written notice if Depomed assigns under this Article 16 this Agreement to any Competitor of Patheon (as defined in Section 11.4.1(d)).

 

ARTICLE 17 — DISPUTE RESOLUTION

 

17.1        Exclusive Dispute Resolution Mechanism

 

In the event that the Parties cannot reach agreement on a matter arising out of or in connection with this Agreement (including without limitation matters relating to either Party’s rights and/or obligations hereunder and/or regarding the construction, interpretation and enforceability of such agreements), the procedures set forth in this Article 17 shall be the exclusive mechanism for resolving any dispute,

 

	
 
    	
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and filed separately with the Securities and Exchange Commission.
    

 

32

 

controversy, or claim (collectively, “Disputes”) between the Parties that may arise from time to time that cannot be resolved through good faith negotiation between the Parties.

 

17.2        Resolution by Executive Officers.  In the event of any Dispute between the Parties in connection with this Agreement, the construction hereof, or the rights, duties or liabilities of either Party under this Agreement, the Parties shall first attempt in good faith to resolve such Dispute by negotiation and consultation between themselves.  In the event that such Dispute is not resolved on an informal basis within ten (10) Business Days after one Party provides notice to the other Party of such Dispute, either Party may, by written notice to the other Party, refer such Dispute to the other Party for attempted resolution by good faith negotiation within thirty (30) days after such notice is received.  Such Disputes shall be referred to the senior executives of each of the Parties for attempted resolution.  In the event that any Dispute is not resolved under the foregoing provisions, each Party may, at its sole discretion, seek resolution of such Dispute in accordance with Section 17.3 and, if applicable, Section 17.4.

 

17.3        Mediation.  Any dispute that has not been resolved within [***] after being referred to the senior executives pursuant to Section 17.2 shall be referred to mediation before a mediator that is mutually acceptable to the Parties.  Such mediation shall be conducted as soon as practicable, but in no event more than [***] after referral to mediation.

 

17.4        Arbitration.  Any Dispute that is not resolved pursuant to Section 17.3 shall be exclusively and finally resolved by binding arbitration pursuant to this Section 17.4.

 

17.4.1     Any such arbitration shall be conducted in New York, New York, United States of America, unless otherwise agreed to by the Parties in writing.  Each and any arbitration shall be administered by the American Arbitration Association (the “AAA”), and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “Rules”), as such Rules may be amended from time to time, or modified by this Section 16.4 or by agreement of the Parties.  The Parties will be entitled to conduct discovery as provided in the U.S. Federal Rules of Civil Procedure and the local rules of the U.S. District Court for the Southern District of New York, provided, however, that the Parties will conduct all discovery expeditiously within the time limit set by the arbitrator(s), it being the intent that discovery be permitted to the extent necessary to introduce all salient facts.  At any applicable hearing, the Parties may present testimony (either by live witness or deposition) and documentary evidence and have the right to be represented by counsel.  The U.S. Federal Rules of Evidence will apply to any and all matters submitted to final and binding arbitration under this Agreement.

 

17.4.2     Within ten (10) days after receipt of an arbitration notice from a Party, the Parties shall attempt in good faith to agree on a single neutral arbitrator with relevant industry experience to conduct such arbitration.  If the Parties do not agree on a single neutral arbitrator within ten (10) days after receipt of an arbitration notice, each Party shall select one (1) arbitrator and the two (2) Party-selected arbitrators shall select a third arbitrator with relevant industry experience to constitute a panel of three (3) arbitrators to conduct the arbitration in accordance with the Rules.  In the event that only one of the Parties selects an arbitrator, then such arbitrator shall be entitled to act as the sole arbitrator to resolve the Dispute or any and all unresolved issues subject to such arbitration.  Each and every

 

	
 
    	
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and filed separately with the Securities and Exchange Commission.
    

 

33

 

arbitrator of the arbitration panel conducting the arbitration must and shall agree to render an opinion within thirty (30) days after the final hearing before the panel.

 

17.4.3     The decision or award of the arbitrator(s) shall be final, binding, and incontestable and may be used as a basis for judgment thereon in any jurisdiction.  The arbitrator(s) shall, upon the request of any Party, issue a written opinion of the findings of fact and conclusions of law and shall deliver a copy to each of the Parties.  Each Party shall bear its own costs and attorney’s fees, and the Parties shall equally bear the fees, costs, and expenses of the arbitrator(s) and the arbitration proceedings; provided, however, that the arbitrator(s) may exercise discretion to award costs, including attorney’s fees, to the prevailing Party.  Without limiting any other remedies that may be available under Applicable Laws, the arbitrator(s) shall have no authority to award provisional remedies of any nature whatsoever, or punitive, special, consequential, or any other similar form of damages.

 

17.5        Preliminary Injunctions.  Notwithstanding anything in this Agreement to the contrary, a Party may seek a temporary restraining order or a preliminary injunction or other equitable remedy from any court of competent jurisdiction in order to prevent immediate and irreparable injury, loss, or damage on a provisional basis, pending the decision of the arbitrator(s) on the ultimate merits of any Dispute.

 

17.6        Patent Disputes.  Notwithstanding anything in this Agreement to the contrary, any and all issues regarding the scope, construction, validity, and enforceability of any Patent Rights in a country within the Territory shall be determined in a court or other Governmental Authority of competent jurisdiction under the applicable patent laws of such country.

 

17.7        Confidentiality.  All proceedings and decisions of the arbitrator(s) shall be deemed Confidential Information of each of the Parties, and shall be subject to Article 7.

 

ARTICLE 18 — FORCE MAJEURE

 

Neither Party shall be liable to the other for default or delay in the performance of its obligations under this Agreement, if such default or delay shall be caused directly or indirectly by accident, fire, flood, riot, war, weather, act of God, embargo, strike, failure or delay of usual sources of supply of materials, or delay of carriers or governmental orders or regulations, or complete or partial shutdown of plant by any of the foregoing causes or other causes beyond its reasonable control, provided the same are not due to the negligence or willful misconduct of such Party and provided further that any such default (“Force Majeure Event”), delay or failure shall be remedied by such Party as soon as possible after the removal of the cause of such default, failure or delay.  Obligations to pay amounts due under this Agreement shall not be subject to the aforestated excuses.  If due to a Force Majeure Event Patheon is unable to supply Depomed with the Product for a period exceeding ninety (90) days then Depomed shall have the right to terminate this Agreement without further cost and with immediate effect and upon written notice to Patheon.  At the end of the first sixty (60) days during the persistence of the Force Majeure Event Patheon shall reasonably determine whether it will be able to resume supplying Product at the end of such ninety (90) days period and notify Depomed in writing of such assessment.  If Patheon has concluded that it will be unable to resume supplying Product at the end of such period, Depomed shall have the right to terminate this Agreement upon

 

	
 
    	
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and filed separately with the Securities and Exchange Commission.
    

 

34

 

thirty (30) days written notice to Patheon without further cost.  Patheon will provide reasonable assistance during the technology transfer for the Product upon termination due to force majeure.

 

ARTICLE 19 — NOTICES

 

Unless otherwise provided herein, any notice required or permitted to be given hereunder or any proposal for any modification of this Agreement (hereinafter collectively referred to as the “Correspondence”) shall be faxed, mailed by overnight mail, mailed by certified mail, postage prepaid, or delivered by hand to the Party or the individual to whom such Correspondence is required or permitted to be given hereunder.  If mailed, any such Correspondence shall be deemed to have been given five (5) Business Days from the date mailed, as evidenced by the postmark at the point of mailing.  If delivered by hand or fax, any such Correspondence shall be deemed to have been given when received by the Party to whom such Correspondence is given, as evidenced by written and dated receipt of the receiving Party.

 

All correspondence to Patheon shall be addressed as follows:

 

Patheon Puerto Rico, Inc.

State Road 670 Km 2.7

Manatí, PR 00674

Attention:  Legal Department

Telecopier No.: (787) 621-2525

Email address: joanna.bocanegra@patheon.com

 

	
 
    	
With   a copy to:
    	
 
    
	
 
    	
Patheon   Inc.
    	
 
    
	
 
    	
4721   Emperor Boulevard
    	
 
    
	
 
    	
Research   Triangle Park,
    	
 
    
	
 
    	
NC   27703
    	
 
    
	
 
    	
Attention:
    	
 
    
	
 
    	
Telecopier   No.:
    	
 
    
	
 
    	
Email   address:
    	
 
    

 

All correspondence to Depomed shall be addressed as follows:

 

	
 
    	
Depomed, Inc.
    	
 
    
	
 
    	
1360   O’Brien Drive
    	
 
    
	
 
    	
Menlo   Park, California 94025
    	
 
    
	
 
    	
Attention:   Vice President, General Counsel
    	
 
    
	
 
    	
Facsimile:   (650) 462-9993
    	
 
    

 

Either Party may change the address to which any correspondence to it is to be addressed by notification to the other Party as provided herein.

 

	
 
    	
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35

 

ARTICLE 20 — SECTIONS; HEADINGS; INTERPRETATION

 

The division of this Agreement into Articles, Sections, Subsections, and Schedules and the insertion of headings are for convenience of reference only and will not affect the interpretation of this Agreement.  Unless otherwise indicated, any reference in this Agreement to a Section or Schedule refers to the specified Section or Schedule to this Agreement.  In this Agreement, the terms “this Agreement,” “hereof”, “herein,” “and hereunder” and similar expressions refer to this Agreement and not to any particular part, Section or Schedule of this Agreement.  Except as otherwise expressly stated or unless the context otherwise requires, all references to the singular will include the plural and vice versa.

 

ARTICLE 21 — SEVERABILITY

 

Should any part or provision of this Agreement be held unenforceable or in conflict with Applicable Law, the invalid or unenforceable part or provision shall be replaced with a provision that accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Agreement shall remain binding upon the Parties.

 

ARTICLE 22 — WAIVER

 

No failure on the part of either Party to exercise, and no delay in exercising, any right, privilege or power hereunder shall operate as a waiver or relinquishment of the provision giving rise thereto; nor shall any single or partial exercise by either Party of any right, privilege or power hereunder preclude any other further exercise thereof, or the exercise of any other right, privilege or power.

 

ARTICLE 23 — SURVIVAL

 

The provisions of Articles 1, 6 (for the period set forth therein), 8, 9 (for the period set forth therein), and 15 through 27 and Sections 2.6 (last two sentences only), 7.1 through 7.5, 10.4, 10.5, 11.1, 11.2, 11.4, 12.2.1, 12.2.3, 12.3, 13.1, and 14.3 shall survive the termination or expiration of this Agreement.  [to be revised]

 

	
 
    	
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ARTICLE 24 — ENTIRE AGREEMENT

 

This Agreement, together with the Schedules hereto, which are incorporated herein by reference, constitute the entire Agreement between the Parties with respect to the subject matter hereof, and no statement or other agreements, oral or written, made prior to or at the signing hereof shall vary or modify the written terms hereof, and neither Party shall claim any modification or rescission of any provision hereof unless such modification or rescission is in writing and signed by the other Party.  No terms, provisions or conditions of any purchase order or other business form or written authorization used by Depomed or Patheon will have any effect on the rights, duties, or obligations of the Parties under or otherwise modify this Agreement, regardless of any failure of Depomed or Patheon to object to the terms, provisions, or conditions unless the document specifically refers to this Agreement, states that it is intended to modify this Agreement, and is signed by both Parties.

 

ARTICLE 25 — NO THIRD PARTY BENEFIT OR RIGHT

 

For greater certainty, nothing in this Agreement will confer or be construed as conferring on any third party any benefit or the right to enforce any express or implied term of this Agreement.

 

ARTICLE 26 — USE OF DEPOMED’S NAME

 

Patheon will not make any use of Depomed’s name, trademarks or logo or any variations thereof, alone or with any other word or words, without the prior written consent of Depomed in its sole discretion.  Despite this, Depomed agrees that Patheon may include Depomed’s name and logo in customer lists or related marketing and promotional material for the purpose of identifying users of Patheon’s Manufacturing Services.

 

ARTICLE 27 — EXECUTION IN COUNTERPARTS

 

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

 

ARTICLE 28 — GOVERNING LAW

 

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to principles of conflicts of law that would result in the application of the laws of any other jurisdiction.

 

	
 
    	
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37

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized representatives as of the Effective Date.

 

	
PATHEON PUERTO   RICO, INC.
    	
 
    	
DEPOMED, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Francisco R. Negron o
    	
 
    	
By:
    	
/s/   James Schoeneck
    
	
Name:
    	
Francisco   R. Negron o
    	
 
    	
 
    	
Name:   James Schoeneck
    
	
Title:
    	
VP   Operations P.R.
    	
 
    	
Title:
    	
CEO
    

 

LIST OF SCHEDULES

 

	
1.
    	
 
    	
SCHEDULE A — SPECIFICATIONS
    
	
2.
    	
 
    	
SCHEDULE B — MINIMUM RUN QUANTITY, ANNUAL VOLUME, AND   PRODUCTION FEES
    
	
3.
    	
 
    	
SCHEDULE C — QUALITY AGREEMENT
    
	
4.
    	
 
    	
SCHEDULE D — CAPITAL EXPENDITURE AND EQUIPMENT AGREEMENT
    
	
5.
    	
 
    	
SCHEDULE E — API, API CREDIT VALUE, AND MAXIMUM CREDIT   VALUE
    
	
6.
    	
 
    	
SCHEDULE F — QUARTERLY API INVENTORY REPORT
    
	
7.
    	
 
    	
SCHEDULE G — REPORT OF ANNUAL API INVENTORY RECONCILIATION   AND CALCULATION OF ACTUAL YIELD
    
	
8.
    	
 
    	
SCHEDULE H — STABILITY TESTING SERVICES AND PRICING
    

 

	
 
    	
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38

 

Schedule A

SPECIFICATIONS

 

[***]

 

Redacted 121 pages

 

	
 
    	
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39

 

Schedule B

MINIMUM RUN QUANTITY, ANNUAL VOLUME, AND  PRODUCTION FEES FOR PROPOSAL C-CGC-16206-R3

 

Gabapentin ER 300mg Tablets (PHN) — Bottle SKU

 

	
Bottle SKU
    	
 
    	
30’s
    	
 
    
	
Tier (# of tablets)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Run Qty (bottles)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Mfg Run Qty (batches)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Pkg Run Qty (batches)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Price per bottle (USD)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

Gabapentin ER 300 mg Tablets (PHN) — Bulk Packaging

 

	
Tier (# of tablets)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Run Qty (1,000’s tablets)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Min. Mfg Run Qty (batches)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Min. Bulk Pkg Run Qty (batches)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Price per 1,000 Bulk Tablets  (USD)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

	
 
    	
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Gabapentin ER 600 mg Tablets (PHN) — Bottle SKU’s

 

	
Tier (# of tablets)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Bottle SKU
    	
 
    	
19’s
    	
 
    	
90’s
    	
 
    	
300’s
    	
 
    	
19’s
    	
 
    	
90’s
    	
 
    	
300’s
    	
 
    	
19’s
    	
 
    	
90’s
    	
 
    	
300’s
    	
 
    	
19’s
    	
 
    	
90’s
    	
 
    	
300’s
    	
 
    
	
Run Qty (bottles) 
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Min. Mfg Run Qty (batches)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Min. Pkg Run Qty (batches)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Price per Bottle  (USD)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

Gabapentin ER 600 mg Tablets (PHN)- Bulk Packaging

 

	
Tier (# of tablets)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Run Qty (1,000’s tablets)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Min. Mfg Run Qty (batches)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Min. Bulk Pkg Run Qty (batches)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
Price per 1,000 Bulk Tablets  (USD)
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

41

 

Key Technical Assumptions

 

1.                                      Manufacturing Assumptions

 

1.                   The manufacturing process at Patheon will closely follow the process information provided by Depomed and experience to-date at the site.

 

2.                   The API, Gabapentin, has been categorized by Patheon as a [***] and can be handled safely using existing equipment and facility at the site.

 

3.                   The core tablet weights and manufacturing batch sizes for Gabapentin Tablets, 2 strengths, proposed by Patheon are summarized in the following table.  The formulation for the 2 strengths is different.

 

	
Strength
    	
 
    	
Core Weight
    	
 
    	
Batch Size
    	
 
    	
Theoretical Yield
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

4.                   Manufacturing process involves high shear wet granulation, fluid bed drying, milling, final blending, compressing and aqueous film coating.

 

5.                   The manufacturing equipment train will consist of the following equipment for both strengths:

 

·                  [***]

·                  [***]

·                  [***]

·                  [***]

·                  [***]

·                  [***]

 

6.                   There will be [***] granulation loads per batch for [***] strength and [***] granulation loads per batch for the [***] strength, and will be combined for final blending in the 75 cu.ft. V-Blender respectively.

 

7.                   Aqueous film coating will be completed in [***] and [***] pan loads per batch in the 60” Vector Coater, for [***] and [***], respectively.

 

8.                   For each strength, a different color for aqueous film coating is required.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

42

 

9.                   Various manufacturing campaigns are proposed as noted in the Pricing Tables.

 

10.             The 2 strengths cannot be campaigned in the same manufacturing run due to the difference in formulation and excipients for each respective strength.

 

11.             For bulk packaging, the manufactured tablets will be packaged into [***] at approximately [***] for both [***] and [***] strength tablets.

 

12.             A manufacturing yield of [***] is assumed.

 

2.                                      Packaging Assumptions

 

1.               Tablets will be packaged into various bottle SKU’s for both strengths on Packaging Line 6 using the following equipment train;

 

	
Packaging Line 4 or 6
    	
 
    
	
·  [***]
    	
 
    
	
·  [***]
    	
 
    
	
·  [***]
    	
 
    
	
·  [***]
    	
 
    
	
·  [***]
    	
 
    
	
·  [***]
    	
 
    
	
·  [***]
    	
 
    
	
·  [***]
    	
 
    

 

2.               The packaging configuration at launch for each respective strength will be as follows (other configurations are contemplated and may be launch by Depomed at a later date):

 

	
Bulk Product [***]
    	
 
    	
30’s Bottle [***]
    	
 
    	
90’s Bottle [***]
    	
 
    
	
·  [***]
    	
 
    	
·  [***]
    	
 
    	
·  [***]
    	
 
    
	
·  [***]
    	
 
    	
·  [***]
    	
 
    	
·  [***]
    	
 
    
	
·  [***]
    	
 
    	
·  [***]
    	
 
    	
·  [***]
    	
 
    
	
 
    	
 
    	
·  [***]
    	
 
    	
·  [***]
    	
 
    
	
 
    	
 
    	
·  [***]
    	
 
    	
·  [***]
    	
 
    

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

43

 

3.               One common outsert is assumed for all bottle SKUs.

 

4.               Various packaging campaigns are proposed in the Pricing Tables.

 

3.                                      Testing Assumptions

 

1.               Testing for raw materials, packaging components and finished product are based on the specifications and methods completed to-date at the site. Testing is based on standard USP.

 

2.               Release testing includes appearance, ID, assay, related substances, dissolution, water content, uniformity of dosage units and residual solvents.

 

3.               Testing cost may be subject to change based on final specifications and agreement between the two parties.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

44

 

Schedule C

QUALITY AGREEMENT

 

[TO BE ATTACHED AS SOON AS PRACTICABLE]

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

45

 

Schedule D

CAPITAL EXPENDITURE AND EQUIPMENT AGREEMENT

 

CAPITAL EXPENDITURE AND EQUIPMENT AGREEMENT

THIS CAPITAL EXPENDITURE AND EQUIPMENT AGREEMENT (the “Agreement”) is made as of March                   , 2011 (the “Effective Date”) between

 

DEPOMED, Inc. (“DEPOMED” or “DEPOMED”), a corporation organized under the laws of the State of California, having its principal place of business at 1360 O’Brien Drive, Menlo Park, California  94025.

 

“DEPOMED”)

 

 

- and -

 

 

PATHEON PUERTO RICO, INC.,

 

a corporation organized  under the laws of the Commonwealth of Puerto Rico, located at State Road 670 Km. 2.7, Manati, Puerto Rico 00674 (hereinafter referred to as “PATHEON”)

 

BACKGROUND

 

DEPOMED and PATHEON are currently negotiating the terms of a Commercial Manufacturing Services Agreement (the “MSA”) under which PATHEON will perform certain manufacturing services (the “Services”) related to DEPOMED for Gralise (the “Product”).  In order for PATHEON to perform the Services, certain capital expenditures will be required for the purchase and installation of capital equipment and facility improvements at PATHEON’s facility located at State Road 670 Km. 2.7 Manatí, Puerto Rico 00674 (the “Facility”).  The purpose of this Agreement is to set out the parties’ agreement and undertakings regarding such capital expenditures.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the rights conferred and the obligations assumed herein, and intending to be legally bound, the parties hereby agree as follows:

 

1.             Definitions

 

“DEPOMED EQUIPMENT” means the items listed in that category on Schedule A as belonging to, owned or otherwise property of DEPOMED.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

46

 

“DEDICATED REQUIREMENTS” means the items listed in that category on Schedule A that will be used exclusively for the services covered under the MSA by and between DEPOMED and PATHEON.

 

“NON-DEDICATED REQUIREMENTS” means the items listed in that category on Schedule A that can be used by PATHON for services other than those covered under the MSA by and between DEPOMED and PATHEON.

 

2.             Expenditures

 

The DEPOMED shall be responsible for the cost of the Equipment as described on Schedule A and all expenses and costs related to its installation and qualifications at the Facility.

 

3.                                      Equipment

 

(a)          DEPOMED shall, at its expense, arrange to purchase (if not already owned by DEPOMED) and deliver DEPOMED EQUIPMENT to the Facility including, without limitation, all costs and expenses associated with transportation, insurance and customs clearance (if applicable).

 

(b)                                 DEPOMED shall also be responsible for all costs and expenses associated with the installation and installation qualification / operational qualification and process qualification of DEPOMED EQUIPMENT at the Facility, upon successful completion of the installation and qualification DEPOMED EQUIPMENT shall be deemed to be in good working order and shall be suitable to manufacture the Products in accordance with current Good Manufacturing Practices

 

4.                                PATHEON Use of Equipment and Facility Improvements

 

PATHEON may use the NON-DEDICATED REQUIREMENTS to manufacture products for third parties without any compensation for this use owed to DEPOMED.  PATHEON will indemnify and hold DEPOMED harmless from any claims which arise out of the use of the NON-DEDICATED REQUIREMENTS subject to the MSA limitations of liablity.

 

5.                                Maintenance of Dedicated Requirements

 

(a)          PATHEON will at its expense perform routine repairs, preventive maintenance, and calibration on the NON-DEDICATED REQUIREMENTS and the DEDICATED REQUIREMENTS owned by DEPOMED.   Repair, maintenance, and calibration costs, including the cost of spare part purchases or equipment upgrades requested by DEPOMED will be invoiced to DEPOMED at PATHEON’s actual cost.  PATHEON will conduct routine repairs and preventive maintenance of the DEDICATED REQUIREMETS up to a maximum of $[***] per year.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

47

 

(b)         PATHEON will give DEPOMED reasonable access during normal working hours for the inspection of the DEDICATED REQUIREMENTS.

 

(c)          PATHEON will keep the DEDICATED REQUIREMENTS free from encumbrances, liens, and interests of third parties.

 

(d)         PATHEON will notify DEPOMED if any accident, loss of or damage occurs to the DEDICATED REQUIREMENTS.

 

6.             Title and Risk of Loss of the Equipment and Facility Improvements

 

The DEDICATED REQUIREMENTS will be owned by DEPOMED, which will be the sole legal and beneficial owner thereof.  Title and risk of loss to the NON-DEDICATED REQUIREMENTS and the FACILITY IMPROVEMENTS, will be with PATHEON, which will be the sole legal and beneficial owner thereof.  PATHEON will at all times keep the DEDICATED REQUIREMENTS, the NON-DEDICATED REQUIREMENTS and the FACILITY IMPROVEMENTS, insured at replacement cost, and PATHEON will replace any of these items that are lost, damaged or destroyed.  PATHEON will name DEPOMED as an additional insured on an insurance policy that covers the DEDICATED REQUIREMENTS owned by DEPOMED.

 

7.             Term; Termination.

 

(a)                                  This Agreement will commence on the Effective Date and will continue in effect until the expiration or termination of the MSA, including any extensions thereof.  This Agreement will terminate automatically if the parties have not executed all of the documents comprising the Amendment to the MSA by TBD unless this date is extended by written agreement of the parties.

 

(b)                                 Upon the expiration or termination of the MSA for any reason, (a) DEPOMED shall offer PATHEON the first right option to purchase the DEPOMED EQUIPMENT at fair market value, or (b) DEPOMED shall remove, or arrange to remove, from the Facility at its expense all DEPOMED EQUIPMENT that is not purchased by PATHEON and DEPOMED shall repair, or arrange to repair, at its expense any damage to the Facility resulting from such removal.

 

(c)                                  Removal of Equipment.  If this Agreement expires or is terminated for any reason: (i) DEPOMED will remove, or arrange to remove, from the Facility at its expense all DEDICATED REQUIREMENTS and any Equipment not purchased by PATHEON and will repair or arrange to repair, at its expense, any damage to the Facility resulting from this removal.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

48

 

8.             General

 

(a)                                  All monetary amounts are expressed in the lawful currency of the United States of America.

 

(b)                                 This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to principles of conflicts of law that would result in the application of the laws of any other jurisdiction.

 

(c)                                  This Agreement contains the entire understanding of the parties about the subject matter herein and supersedes all previous agreements (oral and written), negotiations and discussions.

 

(d)                                 The parties may modify or amend the provisions hereof only by an instrument in writing duly executed by both of the parties.

 

(e)                                  Neither party may assign or otherwise transfer its rights or obligations hereunder without the prior written consent of the other party.

 

(f)                                    This Agreement may be signed by facsimile or in two counterparts, each of which when executed and delivered or transmitted, will be considered an original and both of which together will constitute one and the same instrument.

 

(g)                                 The “Background” section of this document is expressly incorporated into the Agreement.

 

IN WITNESS WHEREOF the duly authorized representatives of the parties have executed this Agreement.

 

	
DEPOMED, INC.
    	
 
    	
PATHEON PUERTO   RICO, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ James Schoeneck
    	
 
    	
/s/   Francisco R. Negrono
    
	
Name:
    	
James   Schoeneck
    	
 
    	
Name:
    	
Francisco   R. Negrono
    
	
Title:
    	
CEO
    	
 
    	
Title:
    	
VP   PR Operations
    
	
Date:
    	
9/1/11
    	
 
    	
Date:
    	
31-Aug-2011
    

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

49

 

SCHEDULE A

 

	
Item
   #
    	
 
    	
Category
    	
 
    	
Item/Serial Number
    	
 
    	
Depomed
   Number
    	
 
    	
Country
   of Origin
    	
 
    	
Cost/Value
    	
 
    	
Client
   Investment
    	
 
    
	
1
    	
 
    	
Depomed Equipment  (Dedicated)
    	
 
    	
[***]
    	
 
    	
etched “Gabapentin”
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[* **]
    	
 
    
	
2
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0142
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
3
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0143
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
4
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0144
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
5
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0145
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
6
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0146
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
7
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0147
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
8
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0148
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
9
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0149
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

50

 

	
10
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
0150
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
11
    	
 
    	
Depomed Equipment  (Dedicated
    	
 
    	
[***]
    	
 
    	
etched “Gabapentin”
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
12
    	
 
    	
Depomed   Equipment (Non- Dedicated)
    	
 
    	
[***]
    	
 
    	
0140
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
13
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0222
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
14
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0221
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
15
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0219
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
16
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0220
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
17
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0217
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
18
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0218
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

51

 

	
19
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0139
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
20
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0223
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
21
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0224
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
 
    	
 
    
	
22
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0225
    	
 
    	
Patheon Caguas I
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
23
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0226
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
 
    	
 
    
	
24
    	
 
    	
Depomed Equipment (Non-dedicated)
    	
 
    	
[***]
    	
 
    	
0141
    	
 
    	
Patheon Caguas 1
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    
	
 
    	
 
    	
Total Cost/Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
[***]
    	
 
    	
[***]
    	
 
    

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

52

 

Schedule E

API, API CREDIT VALUE, AND MAXIMUM CREDIT VALUE

 

API

 

	
API
    	
 
    	
Supplier
    
	
 
    	
 
    	
·  [***]
    
	
Gabapentin   HCl
    	
 
    	
 
    
	
 
    	
 
    	
·  [***]
    

 

API CREDIT VALUE

 

The API Credit Value for Product will be as follows:

 

Depomed’s actual average yearly cost for the API.

 

	
PRODUCT
    	
 
    	
API
    	
 
    	
API
    CREDIT VALUE
    	
 
    
	
Gralise
    	
 
    	
Gabapentin HCl
    	
 
    	
[***]
    	
 
    

 

MAXIMUM CREDIT VALUE

 

Patheon’s liability for API calculated in accordance with Section 8.2.2 of the Agreement for any Product in a Year will not exceed, in the aggregate, the maximum credit value set forth below:

 

	
PRODUCT
    	
 
    	
MAXIMUM CREDIT VALUE
    
	
Gralise
    	
 
    	
[***] of the purchase   price of Product delivered pursuant to Purchase Orders submitted during the   last [***]
    

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

53

 

Schedule F

QUARTERLY API INVENTORY REPORT

 

TO:                  DEPOMED, INC.

 

FROM:            PATHEON PUERTO RICO, INC.

 

RE:                   API monthly inventory report under Section 5.6.1

 

	
Reporting quarter:
    	
                                              
    	
 
    
	
 
    	
 
    
	
API on hand
    	
 
    
	
at beginning of month:
    	
                                            kg         (A)
    	
 
    
	
 
    	
 
    
	
API on hand
    	
 
    
	
at end of month:
    	
                                              kg        (B)
    	
 
    
	
 
    	
 
    
	
Quantity Received during month:
    	
                                                  kg     (C)
    	
 
    
	
 
    	
 
    
	
Quantity Dispensed(1) during month:
    	
                                                     kg
    	
 
    
	
(A + C – B)
    	
 
    
	
 
    	
 
    
	
Quantity Converted during month:
    	
                                                   kg
    	
 
    
	
(total API in Product produced
    	
 
    
	
and not rejected, recalled or returned)
    	
 
    

 

Capitalized terms used in this report have the meanings given to the terms in the Agreement.

 

	
PATHEON PUERTO RICO, INC.
    	
DATE:
    	
 
    

 

	
Per:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

Excludes any (i) API this must be retained by Patheon as samples, (ii) API contained in Product that must be retained as samples, and (iii) API used any regulatory, stability, validation, or test batches manufactured during the Year.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

54

 

Schedule G

REPORT OF ANNUAL API INVENTORY RECONCILIATION AND CALCULATION
 OF ACTUAL ANNUAL YIELD

 

TO:                  DEPOMED, INC.

 

FROM:            PATHEON PUERTO RICO, INC.

 

RE:                   API annual inventory reconciliation report and calculation of Actual Annual Yield under Section 5.6

 

	
Reporting Year ending:
    	
                                               
    	
 
    
	
 
    	
 
    	
 
    
	
API on hand
    	
 
    	
 
    
	
at beginning of Year:
    	
                                                      kg       (A)
    	
 
    
	
 
    	
 
    	
 
    
	
API on hand
    	
 
    	
 
    
	
at end of Year:
    	
                                                     kg       (B)
    	
 
    
	
 
    	
 
    	
 
    
	
Quantity Received during Year:
    	
                                                    kg         (C)
    	
 
    
	
 
    	
 
    	
 
    
	
Quantity Dispensed(2) during Year:
    	
                                                          kg        (D)
    	
 
    
	
(A + C - B)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Quantity Converted during   Year:                         
    	
                                                         kg       (E)
    	
 
    
	
(total API in Product produced
    	
 
    	
 
    
	
and not rejected, recalled or returned)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
API Credit Value:
    	
$                                                  / kg     (F)
    	
 
    
	
 
    	
 
    	
 
    
	
Target Yield:
    	
                                                       [***]  %   (G)
    	
 
    
	
 
    	
 
    	
 
    
	
Actual Annual Yield:
    	
                                                          %        (H)
    	
 
    
	
((E / D) * 100)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Reimburse Amount (if any)
    	
                                                     $
    	
 
    
	
(G-H)*F*D
    	
 
    	
 
    

 

(2) Excludes any (i) API this must be retained by Patheon as samples, (ii) API contained in Product that must be retained as samples, and (iii) API used any regulatory, stability, validation, or test batches manufactured during the Year.

 

	
 
    	
Confidential Information, indicated by [***] has been omitted from   this filing
    
	
 
    	
and filed separately with the Securities and Exchange Commission.
    

 

55

 

Based on the foregoing reimbursement calculation Patheon will reimburse Depomed the amount of $                              .

 

Capitalized terms used in this report have the meanings given to the terms in the Agreement.

 

 

	
DATE:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
PATHEON PUERTO RICO, INC.
    	
 
    
	
 
    	
 
    
	
Per:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

56

 

Schedule H

STABILITY TESTING SERVICES AND PRICING

 

Patheon and Depomed will agree in writing on any stability testing to be performed by Patheon on the Product.  Any agreement governing such testing will specify the protocols applicable to the stability testing and the fees payable by Depomed for this testing.

 

57

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