Common use of Capitalization; Ownership Clause in Contracts

Capitalization; Ownership. (a) Seller indirectly owns 100% of the outstanding equity interests of each Selling Subsidiary. The Selling Subsidiaries are the sole owners, beneficially and of record, of 100% of the outstanding Holdings LLC Interests free and clear of any Lien and will transfer and deliver to Buyer at the Closing good and valid title to the Holdings LLC Interests free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities). Holdings LLC is the sole owner, beneficially and of record, of (i) 100% of the outstanding Gas Services GP LLC Interests free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities), (ii) 5,696,752 Common Units free and clear of any Lien and, except as expressly set forth in the KGS Partnership Agreement, free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities) and (iii) 11,513,625 Subordinated Units free and clear of any Lien and, except as expressly set forth in the KGS Partnership Agreement, free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities). Gas Services GP is the sole owner, beneficially and of record, of (x) 469,944 General Partner Units, which constitute 100% of the outstanding General Partner Units and (y) 100% of the outstanding Incentive Distribution Rights, in each case, free and clear of any Lien and, except as expressly set forth in the KGS Partnership Agreement, free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities). As of the date of this Agreement, there were 16,988,429 Common Units outstanding, 11,513,625 Subordinated Units outstanding, 469,944 General Partner Units outstanding and 547,772 Phantom Units outstanding under KGS’ Second Amended and Restated 2007 Equity Plan (the “2007 Equity Plan”), of which 516,263 represent the right to receive 516,263 Common Units upon vesting of such Phantom Units and 31,509 represent the right to receive a cash payment equal to the Fair Market Value (as defined under the 2007 Equity Plan) of a Common Unit upon the vesting of such Phantom Unit, in each case, pursuant to the terms of the 2007 Equity Plan. There are no Class B Units outstanding. (b) All of the outstanding Holdings LLC Interests, Gas Services GP LLC Interests, Common Units, Subordinated Units, General Partner Units and Incentive Distribution Rights have been duly authorized and validly issued in accordance with the KGS Partnership Agreement and are fully paid (to the extent required under the KGS Partnership Agreement) and non-assessable (except as such nonassessability is affected by the Delaware Revised Uniform Limited Partnership Act) and were not issued in violation of any pre-emptive rights, right of first refusal, right of first offer or similar rights of any Person. Except as set forth in this Section 3.06, there are no outstanding (i) units of capital stock, equity interests or voting securities of any of the Sold Entities, (ii) securities of any of the Sold Entities convertible into or exchangeable or exercisable for shares of capital stock, equity interests or voting securities of the Sold Entities or equity-based awards or (iii) options or other rights to acquire from Seller, the Selling Subsidiaries or any of the Sold Entities, or other obligation (whether firm or contingent) of any of the Sold Entities to issue, any capital stock, equity interests, voting securities or securities convertible into or exchangeable or exercisable for capital stock, equity interests or voting securities of any of the Sold Entities. There are no outstanding obligations of any of the Sold Entities to repurchase, redeem or otherwise acquire any of the securities referred to in Sections 3.06(b)(i), 3.06(b)(ii) and 3.06(b)(iii) (or Section 3.06(a)). (c) None of the Sold Entities has outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exchangeable or exercisable for securities having the right to vote) with the holders of equity interests in such Sold Entities on any matter or with respect to any matter pertaining to any Sold Entity. (d) Except for its ownership of equity interests in another Sold Entity, no Sold Entity owns any equity interests or other securities in any other Person or has any obligation or commitment to make any investment in or otherwise acquire any equity interests or other securities of any Person. A true and complete list of each Subsidiary and the equityholders thereof is set forth in Section 3.06(d) of the Seller Disclosure Schedules. (e) There are no voting trusts, proxies, agreements, commitments or understandings of any character to which Seller or the Selling Subsidiaries are bound with respect to the voting or transfer of the equity interests or other securities of the KWK Entities. There are no voting trusts, proxies or other agreements, commitments or understandings of any character to which any KGS Entity is a party or by which any of them is bound with respect to the holding, voting or disposition of any shares of capital stock or other equity interests or securities of any KGS Entity.