EXHIBIT 10.5
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OMNIBUS AGREEMENT
among
MARKWEST HYDROCARBON, INC.,
MARKWEST ENERGY GP, L.L.C.,
MARKWEST ENERGY PARTNERS, L.P.
and
MARKWEST ENERGY OPERATING COMPANY, L.L.C.
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OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing
Date (as defined herein) among MarkWest Hydrocarbon, Inc., a Delaware
corporation ("MarkWest"), MarkWest Energy Partners, L.P., a Delaware limited
partnership (the "Partnership"), MarkWest Energy GP, L.L.C., a Delaware limited
liability company (the "General Partner"), and MarkWest Energy Operating
Company, L.L.C., a Delaware limited liability company (the "Operating Co."). The
above-named entities are sometimes referred to in this Agreement each as a
"Party" and collectively as the "Parties."
R E C I T A L S:
1. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article II, with respect to
those business opportunities that the MarkWest Entities (as defined herein) will
not engage in for so long as the Partnership is an Affiliate (as defined herein)
of MarkWest unless the Partnership has declined to engage in any such business
opportunity for its own account and the procedures whereby such business
opportunities are to be offered to the Partnership and accepted or declined.
2. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article III, with respect to
certain indemnification obligations of the Parties to each other.
3. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article IV, with respect to
MarkWest's operation of the Assets (as defined herein) and the maximum amount to
be paid by the Partnership to MarkWest and its affiliates for general and
administrative services in the one year period following the date hereof.
4. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article V, with respect to the
use of MarkWest's Name and ▇▇▇▇ (as defined herein) by the Partnership Entities
(as defined herein).
In consideration of the premises and the covenants, conditions, and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS. (a) As used in this Agreement, the following terms shall
have the respective meanings set forth below:
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. As
used herein, the term "control" means the possession, direct or indirect,
of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"AGREEMENT" means this Omnibus Agreement, as it may be amended,
modified, or supplemented from time to time in accordance with Section 6.7
hereof.
"ALLOCATED GENERAL AND ADMINISTRATIVE EXPENSES" means expenses
associated with centralized corporate functions including general and
administrative services and including, but not limited to, certain
management, engineering, legal, accounting, finance, information
technology, insurance, human resource, administration of employee benefit
plans and other shared corporate services; PROVIDED, HOWEVER, that
Allocated General and Administrative Expenses shall not include the direct
operating and maintenance expenses associated with the operation of the
assets of the Partnership.
"ASSETS" means all assets conveyed, contributed or otherwise
transferred by the MarkWest Entities to the Partnership Group prior to or
on the Closing Date.
"CHANGE OF CONTROL" means, with respect to MarkWest, any of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of MarkWest's assets to any other Person unless immediately following
such sale, lease, exchange or other transfer such assets are owned,
directly or indirectly, by MarkWest; (ii) the consolidation or merger of
MarkWest with or into another Person pursuant to a transaction in which the
outstanding Voting Stock of MarkWest is changed into or exchanged for cash,
securities or other property, other than any such transaction where both
(a) the outstanding Voting Stock of MarkWest is changed into or exchanged
for Voting Stock of the surviving corporation or its parent and (b) the
holders of the Voting Stock of MarkWest immediately prior to such
transaction own, directly or indirectly, not less than a majority of the
Voting Stock of the surviving Person or its parent immediately after such
transaction; and (iii) a "person" or "group" (within the meaning of
Sections 13(d) or 14(d)(2) of the Exchange Act) being or becoming the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act) of more than 50% of all of the then outstanding Voting Stock of
MarkWest, except (a) in a merger or consolidation that would not constitute
a Change of Control under clause (ii) above or (b) if such "person" or
"group" includes ▇▇▇▇ ▇. ▇▇▇ and Persons who are Affiliates of ▇▇▇▇ ▇. ▇▇▇.
"CLOSING DATE" means the date of the closing of the Partnership's
initial public offering of Common Units.
"COLUMBIA" means Columbia Gas Transmission Corporation.
"COLUMBIA ▇▇▇▇▇▇▇ LEASE" means the Ground Lease Agreement, dated
October 16, 1999, and effective as of February 1, 2000, between Columbia
Gas Transmission Corporation, as lessor, and MarkWest Hydrocarbon Inc., as
lessee.
"COLUMBIA ▇▇▇▇ LEASE" means the Ground Lease Agreement, dated
February 29, 2000 between Columbia Gas Transmission Corporation, as lessor,
and MarkWest Hydrocarbon Inc., as lessee.
"COMMON UNITS" is defined in the Partnership Agreement.
"CONFLICTS COMMITTEE" is defined in the Partnership Agreement.
"CONTRIBUTION AGREEMENT" means that certain Contribution, Conveyance
and Assumption Agreement, dated as of the Closing Date, among the General
Partner, the Partnership, the Operating Partnership and certain other
parties, together with the additional conveyance documents and instruments
contemplated or referenced thereunder.
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"COVERED ENVIRONMENTAL LOSSES" is defined in Section 3.1.
"ENVIRONMENTAL LAWS" means all federal, state, and local laws,
statutes, rules, regulations, orders, and ordinances, now or hereafter in
effect, relating to protection of human health and the environment
including, without limitation, the federal Comprehensive Environmental
Response, Compensation, and Liability Act, the Superfund Amendments
Reauthorization Act, the Resource Conservation and Recovery Act, the Clean
Air Act, the Federal Water Pollution Control Act, the Toxic Substances
Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the
Hazardous Materials Transportation Act, and other environmental
conservation and protection laws, each as amended from time to time.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GENERAL PARTNER" is defined in the Partnership Agreement.
"HAZARDOUS SUBSTANCE" means (a) any substance that is designated,
defined, or classified as a hazardous waste, hazardous material, pollutant,
contaminant, or toxic or hazardous substance, or that is otherwise
regulated under any Environmental Law, including, without limitation, any
hazardous substance as defined under the Comprehensive Environmental
Response, Compensation, and Liability Act, and (b) petroleum, oil,
gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet
fuel, and other refined petroleum hydrocarbons.
"INDEMNIFIED PARTY" means the Partnership Group or the MarkWest
Entities, as the case may be, in their capacity as the party entitled to
indemnification in accordance with Article III.
"INDEMNIFYING PARTY" means either the Partnership Group or MarkWest,
as the case may be, in its capacity as the party from whom indemnification
may be sought in accordance with Article III.
"LICENSEE" is defined in Section 5.1 hereof.
"LOSSES" means any losses, damages, liabilities, claims, demands,
causes of action, judgments, settlements, fines, penalties, costs, and
expenses (including, without limitation, court costs and reasonable
attorney's and expert's fees) of any and every kind or character.
"MARKWEST" is defined in the introduction to this Agreement.
"MARKWEST ENTITIES" means MarkWest and any Person controlled,
directly or indirectly, by MarkWest other than the Partnership Entities;
and "▇▇▇▇ ▇▇▇▇ ENTITY" means any of the MarkWest Entities.
"NAME AND ▇▇▇▇" means the name "MarkWest" and the logo attached on
SCHEDULE II.
"OFFER" is defined in Section 2.3.
"OPERATING CO." is defined in the introduction to this Agreement.
"PARTNERSHIP" is defined in the introduction to this Agreement.
"PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of the MarkWest Energy Partners, L.P., dated as of the
Closing Date, as such agreement is in effect on the Closing Date, to which
reference is hereby made for all purposes of this Agreement. No amendment
or modification to the Partnership Agreement subsequent to the Closing Date
shall be given effect for the purposes of this Agreement unless consented
to by each of the Parties to this Agreement.
"PARTNERSHIP ENTITIES" means the General Partner, the Partnership,
the Operating Co. and any Subsidiary of any such Person.
"PARTNERSHIP GROUP" means the Partnership, the Operating Co. and any
Subsidiary of any such Person.
"PARTY" and "PARTIES" is defined in the introduction to this
Agreement.
"PERSON" means an individual or a corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
association, government agency or political subdivision thereof or other
entity.
"RESTRICTED BUSINESS" is defined in Section 2.1.
"RETAINED ASSETS" means any assets and investments owned by any of
the MarkWest Entities that were not conveyed, contributed or otherwise
transferred to the Partnership Group pursuant to the Contribution Agreement
and other documents relating to the transactions referred to in the
Contribution Agreement.
"SUBJECT ASSETS" is defined in Section 2.2.
"SUBSIDIARY" means, with respect to any Person, (a) a corporation of
which more than 50% of the voting power of shares entitled (without regard
to the occurrence of any contingency) to vote in the election of directors
or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person or a combination thereof, (b) a partnership
(whether general or limited) in which such Person or a Subsidiary of such
Person is, at the date of determination, a general or limited partner of
such partnership, but only if more than 50% of the partnership interests of
such partnership (considering all of the partnership interests of the
partnership as a single class) is owned, directly or indirectly, at the
date of determination, by such Person, by one or more Subsidiaries of such
Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or
indirectly, at the date of determination, has (i) at least a majority
ownership interest or (ii) the power to elect or direct the election of a
majority of the directors or other governing body of such Person.
"UNITS" is defined in the Partnership Agreement.
"VOTING STOCK" means securities of any class of a Person entitling
the holders thereof to vote on a regular basis in the election of members
of the board of directors or other governing body of such Person.
ARTICLE II
BUSINESS OPPORTUNITIES
2.1. RESTRICTED ACTIVITIES. For so long as the Partnership is an
Affiliate of MarkWest and except as permitted by Section 2.2, each of the
MarkWest Entities shall be prohibited from engaging in, whether by acquisition,
construction or otherwise, the business of processing natural gas and
transporting, fractionating and storing natural gas liquids (the "Restricted
Business").
2.2. PERMITTED EXCEPTIONS. Notwithstanding any provision of Section 2.1 to
the contrary, the MarkWest Entities may engage in the following activities under
the following circumstances:
(a) The ownership and/or operation of any of the Retained Assets
(including replacements of and modifications or additions to the Retained
Assets);
(b) The operation on behalf of a member of the Partnership Group of
any asset or group of assets owned by the Partnership Group;
(c) The ownership and/or operation of any Restricted Business or
asset or group of related assets used in a Restricted Business that are acquired
or constructed by a MarkWest Entity after the date of this Agreement (the
"Subject Assets") if:
(A) the fair market value of the Subject Assets (as determined in
good faith by the Board of Directors of MarkWest) is less than $7.5 million
at the time of such acquisition by the MarkWest Entity or completion of
construction, as the case may be;
(B) in the case of an acquisition of Subject Assets with a fair
market value (as determined in good faith by the Board of Directors of the
MarkWest) equal to or greater than $7.5 million at the time of such
acquisition by a MarkWest Entity, the Partnership has been offered the
opportunity to purchase the Subject Assets in accordance with Section
2.3(a) and the Partnership (with the concurrence of the Conflicts
Committee) has elected not to purchase the Subject Assets;
(C) in the case of the construction of Subject Assets with a fair
market value (as determined in good faith by the Board of Directors of
MarkWest) equal to or greater than $7.5 million at the time of completion
of construction, the Partnership has been offered the opportunity to
purchase the Subject Assets in accordance with Section 2.3(a) and the
Partnership (with the concurrence of the Conflicts Committee) has elected
not to purchase the Subject Assets; or
(D) in case of the acquisition or construction of any Subject Assets
with a fair market value (as determined in good faith by the Board of
Directors of MarkWest) that is (i) greater than $7.5 million and (ii) less
than 20% of the aggregate value of the business or assets acquired or
constructed, the Partnership is offered the opportunity to purchase the
Subject Assets within 90 days of such acquisition or completion of
construction in accordance with Section 2.3(b) and the Partnership (with
the concurrence of the Conflicts Committee) has elected not to purchase the
Subject Assets;
2.3. PROCEDURES.
(a) If a MarkWest Entity becomes aware of an opportunity to purchase
or construct Subject Assets described in Section 2.2(c)(B) or (C), then as soon
as practicable, such MarkWest Entity shall notify the General Partner of such
opportunity and deliver to the General Partner all information prepared by or on
behalf of such ▇▇▇▇ ▇▇▇▇ Entity relating to such potential purchase. As soon as
practicable but in any event within 30 days after receipt of such notification
and information, the General Partner, on behalf of the Partnership, shall notify
the MarkWest Entity that either (i) the General Partner, on behalf of the
Partnership, has elected, with the approval of the Conflicts Committee, not to
cause a member of the Partnership Group to pursue the opportunity to acquire
such Subject Assets, or (ii) the General Partner, on behalf of the Partnership,
has elected to cause a member of the Partnership Group to pursue the opportunity
to acquire such Subject Assets. If, at any time, the General Partner abandons
such opportunity with the approval of the Conflicts Committee (as evidenced in
writing by the General Partner following the request of the MarkWest Entity),
the MarkWest Entity may pursue such opportunity. Any Subject Assets that are
permitted to be purchased by a MarkWest Entity pursuant to this Section 2.3(a)
must be so purchased (i) within 12 months of the time the MarkWest Entity
becomes able to pursue such opportunity in accordance with the provisions of
this Section 2.3(a) and (ii) on terms not materially more favorable to the
MarkWest Entity than were offered to the Partnership. If either of these
conditions are not satisfied, the opportunity must be reoffered to the
Partnership in accordance with this Section 2.3(a).
(b) If a MarkWest Entity acquires or constructs Subject Assets
described in Section 2.2(c)(D), then not later than 90 days after the
consummation of the acquisition or the completion of construction by such
MarkWest Entity of the Subject Assets, as the case may be,
the MarkWest Entity shall notify the General Partner in writing of such
acquisition or construction and offer the Partnership Group the opportunity to
purchase such Subject Assets for their fair market value in accordance with this
Section 2.3 (the "Offer"). The Offer shall set forth the MarkWest Entity's
proposed terms relating to the purchase of the Subject Assets by the Partnership
Group. The MarkWest Entity will provide all information concerning the business,
operations and finances of such Restricted Business as may be reasonably
requested by the General Partner. As soon as practicable, but in any event
within 60 days after receipt of such written notification, the General Partner
shall notify the MarkWest Entity in writing that either (i) the General Partner
has elected, with the approval of the Conflicts Committee, not to cause a member
of the Partnership Group to purchase the Subject Assets, in which event the
MarkWest Entity shall be forever free to continue to own or operate such Subject
Assets, provided, however, that any future acquisitions or opportunities related
to such particular Subject Assets (except for expansions of existing facilities
and except as provided in Section 2.2(c)(A)) shall be subject to the procedures
set forth in this Section 2.3, or (ii) the General Partner has elected to cause
a member of the Partnership Group to purchase the Subject Assets, in which event
the procedures outlined in this Section 2.3 shall apply.
(c) After the receipt of such Offer by the General Partner, the
MarkWest Entity and the General Partner shall negotiate in good faith the terms
on which the Subject Assets will be sold to a member of the Partnership Group.
If the MarkWest Entity and the General Partner (with the concurrence of the
Conflicts Committee) are able to agree on the fair market value of the Subject
Assets that are subject to the Offer and the other terms of the Offer within 60
days after receipt by the General Partner of the Offer, a member of the
Partnership Group shall purchase the Subject Assets for the agreed upon fair
market value as soon as commercially practicable after such agreement has been
reached.
(d) If the MarkWest Entity and the General Partner are unable to
agree on the fair market value of the Subject Assets that are subject to the
Offer or the other terms of the Offer within 60 days after receipt by the
General Partner of the Offer, the MarkWest Entity and the General Partner will
engage a mutually agreed upon, nationally recognized investment banking firm to
determine the fair market value of the Subject Assets. Such investment banking
firm will determine the fair market value of the Subject Assets within 30 days
of its engagement and furnish the MarkWest Entity and the General Partner its
determination. The fees and expenses of the investment banking firm will be
split equally between the MarkWest Entity and the Partnership Group. Once the
investment banking firm has submitted its determination of the fair market value
of the Subject Assets, the General Partner will have the right, but not the
obligation, subject to the approval of the Conflicts Committee, to cause a
member of the Partnership Group to purchase the Subject Assets pursuant to the
Offer as modified by the determination of the investment banking firm. If the
General Partner elects to cause a member of the Partnership Group to purchase
the Subject Assets, then such member of the Partnership Group shall purchase the
Subject Assets pursuant to the Offer as modified by the determination of the
investment banking firm as soon as commercially practicable after such
determination. If the General Partner elects not to cause a member of the
Partnership Group to purchase the Subject Assets, such MarkWest Entity shall be
forever free to continue to own or operate such Subject Assets; provided,
however, that any future acquisitions or opportunities related to such Subject
Assets (except for expansions of existing facilities and except as provided in
Section 2.2(c)(A)) shall be subject to the procedures set forth in this Section
2.3.
2.4. SCOPE OF PROHIBITION. Except as provided in this Article II and the
Partnership Agreement, each MarkWest Entity shall be free to engage in any
business activity whatsoever, including those that may be in direct competition
with any Partnership Entity.
2.5. ENFORCEMENT. The MarkWest Entities agree and acknowledge that the
Partnership Group does not have an adequate remedy at law for the breach by the
MarkWest Entities of the covenants and agreements set forth in this Article II,
and that any breach by the MarkWest Entities of the covenants and agreements set
forth in Article II would result in irreparable injury to the Partnership Group.
The MarkWest Entities further agree and acknowledge that any member of the
Partnership Group may, in addition to the other remedies which may be available
to the Partnership Group, file a suit in equity to enjoin the MarkWest Entities
from such breach, and consent to the issuance of injunctive relief under this
Agreement.
ARTICLE III
INDEMNIFICATION
3.1. ENVIRONMENTAL INDEMNIFICATION.
(a) MarkWest shall indemnify, defend and hold harmless the
Partnership Group for a period of three years after the Closing Date from and
against environmental and toxic tort Losses suffered or incurred by the
Partnership Group by reason of or arising out of:
i. any violation or correction of violation of Environmental Laws
associated with the Assets, or
ii. any event or condition associated with the ownership or operation of
the Assets (including, without limitation, the presence of Hazardous
Substances on, under, about or migrating to or from the Assets or the
disposal or release of Hazardous Substances generated by operation of
the Assets at non-Asset locations) including, without limitation, (A)
the cost and expense of any investigation, assessment, evaluation,
monitoring, containment, cleanup, repair, restoration, remediation,
or other corrective action required or necessary under Environmental
Laws, (B) the cost or expense of the preparation and implementation
of any closure, remedial, corrective action, or other plans required
or necessary under Environmental Laws, and (C) the cost and expense
for any environmental or toxic tort pre-trial, trial, or appellate
legal or litigation support work;
but only to the extent that such violation complained of under Section 3.1(a)(i)
or such events or conditions included under Section 3.1(a)(ii) occurred before
the Closing Date and only to the extent that a written notice of violation is
given to MarkWest by the Indemnified Party within three years following the
Closing Date (collectively, "Covered Environmental Losses"), PROVIDED, that no
claim may be made against MarkWest for indemnification pursuant to this Section
3.1(a) unless the aggregate dollar amount of all claims for indemnification
pursuant to this Section 3.1(a) shall exceed $500,000, in which case MarkWest
shall be liable for claims for indemnification only to the extent such aggregate
amount exceeds $500,000; PROVIDED FURTHER, in no event shall the aggregate
liability of MarkWest pursuant to this Section 3.1(a) exceed $5,000,000.
(b) MarkWest shall indemnify, defend and hold harmless the
Partnership Group from and against any Losses suffered or incurred by the
Partnership Group to the extent that any MarkWest Entity is entitled to and
receives indemnification, is defended or held harmless against any such Losses
from any third-party pursuant to any agreement between any third-party and such
MarkWest Entity (collectively, "Pass-Through Environmental Losses"). In
furtherance of such agreement, MarkWest agrees to use its best commercially
reasonable efforts to pursue, for the benefit of the Partnership, any such
indemnification with respect to which it might be entitled; provided that, the
Partnership shall reimburse the applicable MarkWest Entity for all costs and
expenses incurred in connection with pursuing such indemnity on behalf of the
Partnership.
(c) The Partnership Group shall indemnify, defend and hold harmless
the MarkWest Entities from and against environmental and toxic tort Losses
suffered or incurred by the MarkWest Entities by reason of or arising out of:
i. any violation or correction of violation of Environmental Laws
associated with the Assets, or
ii. any event or condition associated with ownership or operation of the
Assets (including, but not limited to, the presence of Hazardous
Substances on, under, about or migrating to or from the Assets or the
disposal or release of Hazardous Substances generated by operation of
the Assets at non-Asset locations) including, without limitation, (A)
the cost and expense of any investigation, assessment, evaluation,
monitoring, containment, cleanup, repair, restoration, remediation,
or other corrective action required or necessary under Environmental
Laws, (B) the cost or expense of the preparation and implementation
of any closure, remedial, corrective action, or other plans required
or necessary under Environmental Laws, and (C) the cost and expense
for any environmental or toxic tort pre-trial, trial, or appellate
legal or litigation support work;
and regardless of whether such violation complained of under Section 3.1(c)(i)
or such events or conditions included under Section 3.1(c)(ii) occurred before
or after the Closing Date, except to the extent that any of the foregoing are
Covered Environmental Losses or Pass-Through Environmental Losses for which the
Partnership Group is entitled to indemnification from MarkWest under this
Article III.
3.2. RIGHT OF WAY INDEMNIFICATION.
MarkWest shall indemnify, defend and hold harmless the Partnership Group
for a period of three years after the Closing Date from and against any Losses
suffered or incurred by the Partnership Group by reason of or arising out of (a)
the failure of the applicable member of the Partnership Group to be the owner or
lessee of such valid and indefeasible easement rights or fee ownership interests
in and to the lands on which any natural gas liquids or natural gas pipeline or
related compressor station, tank farm, liquids plant or equipment related to any
of the foregoing ("Covered Property") conveyed or contributed (or a leasehold
interest in which is conveyed or contributed) to the applicable member of the
Partnership Group on the Closing Date is located as of the Closing Date and such
failure renders the Partnership Group incapable of using or operating the
applicable Covered Property in the manner used or operated immediately prior to
the Closing Date and (b) the failure of the applicable member of the Partnership
Group to have the consents, licenses and permits necessary to allow any such
pipeline referred to in clause (a) of this Section 3.2 to cross the roads,
waterways, railroads and other areas upon which any such pipeline is located as
of the Closing Date and such failure renders the Partnership Group incapable of
using or operating the applicable pipeline or related equipment in the manner
used or operated immediately prior to the Closing Date.
3.3. ADDITIONAL INDEMNIFICATION.
(a) In addition to and not in limitation of the indemnification
provided under Sections 3.1(a), 3.1(b) and 3.2, MarkWest shall indemnify,
defend, and hold harmless the Partnership Group from and against any Losses
suffered or incurred by the Partnership Group by reason of or arising out of (i)
events and conditions associated with the operation of the Retained Assets and
whether occurring before or after the Closing Date, (ii) the claims that are the
subject of the currently pending legal actions against the MarkWest Entities set
forth on SCHEDULE I hereto including any claims brought in the future that arise
out of the factual matters that are the subject of the currently pending legal
actions set forth on SCHEDULE I and (iii) all federal, state and local income
tax liabilities attributable to the operation of the Assets prior to the Closing
Date, including any such income tax liabilities of the MarkWest Entities that
may result from the consummation of the formation transactions for the
Partnership Group and General Partner.
(b) In addition to and not in limitation of the indemnification
provided under Section 3.1(c) or the Partnership Agreement, the Partnership
Group shall indemnify, defend, and hold harmless the MarkWest Entities from and
against any Losses suffered or incurred by the MarkWest Entities by reason of or
arising out of events and conditions associated with the operation of the Assets
and occurring on or after the Closing Date (other than Covered Environmental
Losses which are provided for under Section 3.1), unless in any such case such
indemnification would not be permitted under the Partnership Agreement by reason
of one of the provisos contained in Section 7.7(a) of the Partnership Agreement.
3.4. INDEMNIFICATION PROCEDURES.
(a) The Indemnified Party agrees that within a reasonable period of
time after it becomes aware of facts giving rise to a claim for indemnification
under this Article III, it will
provide notice thereof in writing to the Indemnifying Party, specifying the
nature of and specific basis for such claim.
(b) The Indemnifying Party shall have the right to control all
aspects of the defense of (and any counterclaims with respect to) any claims
brought against the Indemnified Party that are covered by the indemnification
under this Article III, including, without limitation, the selection of counsel,
determination of whether to appeal any decision of any court and the settling of
any such matter or any issues relating thereto; PROVIDED HOWEVER, that no such
settlement shall be entered into without the consent of the Indemnified Party
unless it includes a full release of the Indemnified Party from such matter or
issues, as the case may be.
(c) The Indemnified Party agrees to cooperate fully with the
Indemnifying Party, with respect to all aspects of the defense of any claims
covered by the indemnification under this Article III, including, without
limitation, the prompt furnishing to the Indemnifying Party of any
correspondence or other notice relating thereto that the Indemnified Party may
receive, permitting the name of the Indemnified Party to be utilized in
connection with such defense, the making available to the Indemnifying Party of
any files, records or other information of the Indemnified Party that the
Indemnifying Party considers relevant to such defense and the making available
to the Indemnifying Party of any employees of the Indemnified Party; PROVIDED
HOWEVER, that in connection therewith the Indemnifying Party agrees to use
reasonable efforts to minimize the impact thereof on the operations of the
Indemnified Party. In no event shall the obligation of the Indemnified Party to
cooperate with the Indemnifying Party as set forth in the immediately preceding
sentence be construed as imposing upon the Indemnified Party an obligation to
hire and pay for counsel in connection with the defense of any claims covered by
the indemnification set forth in this Article III; PROVIDED HOWEVER, that the
Indemnified Party may, at its own option, cost and expense, hire and pay for
counsel in connection with any such defense. The Indemnifying Party agrees to
keep any such counsel hired by the Indemnified Party reasonably informed as to
the status of any such defense, but the Indemnifying Party shall have the right
to retain sole control over such defense.
(d) In determining the amount of any loss, cost, damage or expense
for which the Indemnified Party is entitled to indemnification under this
Agreement, the gross amount of the indemnification will be reduced by (i) any
insurance proceeds realized or to be realized by the Indemnified Party, and such
correlative insurance benefit shall be net of any incremental insurance premium
that becomes due and payable by the Indemnified Party as a result of such claim
and (ii) all amounts recovered or recoverable by the Indemnified Party under
contractual indemnities from third Persons.
(e) Before any member of the Partnership Group shall be entitled to
enforce its indemnity rights pursuant to Section 3.1(a) above with respect to a
Covered Environmental Loss associated with the ▇▇▇▇ or ▇▇▇▇▇▇▇ gas processing
facilities, the Partnership must first pursue and exhaust all rights, remedies
and procedures for indemnification available to it or to which it might be
entitled pursuant to the Columbia ▇▇▇▇ Lease or the Columbia ▇▇▇▇▇▇▇ Lease,
which leases have been assigned to the Partnership prior to the date hereof.
ARTICLE IV
SERVICES
4.1. GENERAL AND ADMINISTRATIVE REIMBURSEMENT. The amount for which
MarkWest or its Affiliates shall be entitled to reimbursement from the
Partnership pursuant to Sections 7.4(b) and 7.6(c) of the Partnership Agreement
for Allocated General and Administrative Expenses shall not exceed $4.9 million
in the aggregate in the first year following the date of this Agreement;
PROVIDED FURTHER, that such reimbursement cap will not apply to the cost of any
third party legal, accounting or advisory services received, or the direct
expenses of MarkWest and its Affiliates incurred in connection with acquisition
or business development opportunities evaluated on behalf of the Partnership.
4.2. DESIGNATION OF AGENTS. In connection with the provision of services
to the Partnership by the employees of MarkWest, the General Partner, on behalf
of the Partnership, hereby appoints and empowers each current and future
employee of MarkWest who is fulfilling a job function for the Partnership in
connection with the conduct by the Partnership of its business in the ordinary
course, as agent of the Partnership with full power and authority to execute and
deliver on behalf of the Partnership, any documents, contracts, governmental
filings or other instruments commensurate with, but limited to, such job
function. The power and authority granted pursuant to this Section 4.2 to a
person described in the preceding sentence will be valid only for so long as
such person is employed by MarkWest.
4.3. RIGHT TO OPERATE. MarkWest shall have the right, but not the
obligation, to act as operator of the Partnership's facilities to the same
extent it acted as operator of such facilities prior to the effective date of
this Agreement for so long as MarkWest has responsibilities associated with such
facilities, or the operation thereof, or with respect to the delivery of natural
gas to or from such facilities, including the reimbursement of heating value
extracted and/or consumed by the Partnership Group during the operation of those
facilities, pursuant to any agreement between MarkWest and Columbia.
ARTICLE V
USE OF NAME AND ▇▇▇▇
5.1. GRANT OF LICENSE. MarkWest hereby grants to each of the Partnership
Entities, including future Partnership Entities (each a "Licensee"), and each
Licensee hereby accepts, a nontransferable, nonexclusive royalty-free right and
license to use the Name and ▇▇▇▇ in connection with the business conducted by
each such Licensee now or in the future.
5.2. USE. All use of and reference to the Name and ▇▇▇▇ by each Licensee
shall be generally approved by MarkWest prior to such use or reference, and all
such use and reference shall conform with such instructions and quality
standards as MarkWest from time to time may issue. MarkWest shall have 30 days
from the submission of approval to approve or disapprove of the use or
reference. Failure on the part of MarkWest to act within such 30-day period
shall be deemed to constitute approval. The current use and reference is hereby
deemed approved. In no event shall use of or reference to the Name and ▇▇▇▇ be
inconsistent in form or content with the sole ownership of the Name and ▇▇▇▇ by
MarkWest. All use of the Name and ▇▇▇▇ by each Licensee, its agents, servants,
employees and vendees, shall inure solely to the benefit of
MarkWest. MarkWest shall have the right to make reasonable inspection of
Licensee's services rendered in connection with the Name and ▇▇▇▇ to protect the
goodwill of MarkWest associated with the Name and ▇▇▇▇.
5.3. VARIATIONS. No Licensee shall adopt and commence using any variations
of the Name and ▇▇▇▇, or any other names and marks confusingly similar thereto,
without the prior approval of MarkWest. MarkWest shall have 30 days from the
submission of approval to approve or disapprove of the variation. Failure on the
part of MarkWest to act within such 30-day period shall be deemed to constitute
approval.
5.4. NONTRANSFERABLE. The license granted to each Licensee to use the Name
and ▇▇▇▇ is not assignable or transferable, and it shall not inure to the
benefit of any other Person, including, without limitation, a trustee in
bankruptcy or any other successor to any Licensee, whether by operation of law
or otherwise.
5.5. INDEMNITY. Each Licensee agrees to be solely responsible for and to
defend and indemnify MarkWest from and against any and all claims, demands and
causes of action, and all costs, liabilities, expenses (including, without
limitation, reasonable attorney's fees), damages or judgments sustained in
connection therewith, arising out of, resulting from or related to the use of
the Name and ▇▇▇▇ by such Licensee, its agents, servants, employees and
representatives, even if such claim, demand or cause of action is based on the
sole, partial or concurrent negligence of MarkWest, except that MarkWest shall
defend and indemnify each Licensee from and against all claims, demands or
causes of action for trademark infringement arising from the use of the Name and
▇▇▇▇ by such Licensee. If requested by MarkWest, such Licensee shall retain
counsel reasonably satisfactory to MarkWest to represent MarkWest, and such
Licensee shall pay the fees and expenses of such counsel relating to such claim,
demand, or cause of action. MarkWest shall be consulted with respect to all
matters concerning such claim, demand, or cause of action, and settlement of
such claim, demand, or cause of action shall not be made without the prior
written approval of MarkWest.
(a) DISCLAIMER OF WARRANTIES. MARKWEST DISCLAIMS ANY AND ALL
WARRANTIES, CONDITIONS OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN)
WITH RESPECT TO THE LICENSE IN THIS ARTICLE V, OR ANY PART THEREOF, INCLUDING
ANY AND ALL IMPLIED WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS
OR SUITABILITY FOR ANY PURPOSE (WHETHER THE PARTY KNOWS, HAS REASON TO KNOW, HAS
BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE) WHETHER ALLEGED
TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE OR BY COURSE OF
DEALING.
ARTICLE VI
MISCELLANEOUS
6.1. INSURANCE MATTERS. MarkWest hereby agrees to cause the Partnership
Entities to be named as additional or named insureds in MarkWest's current
insurance program, which is described on SCHEDULE II attached hereto. Each of
the Partnership Entities shall pay for its allocated cost of that insurance
coverage in an amount equal to MarkWest's cost of insuring the
assets and operations of such Partnership Entity and generally in accordance
with the allocations and methodology described in SCHEDULE III.
6.2. CHOICE OF LAW; SUBMISSION TO JURISDICTION. This Agreement shall be
subject to and governed by the laws of the State of Colorado, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state. Each Party hereby
submits to the jurisdiction of the state and federal courts in the State of
Colorado and to venue in the City and County of Denver.
6.3. NOTICE. All notices or requests or consents provided for by, or
permitted to be given pursuant to, this Agreement must be in writing and must be
given by depositing same in the United States mail, addressed to the Person to
be notified, postpaid, and registered or certified with return receipt requested
or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a Party
pursuant to this Agreement shall be sent to or made at the address set forth
below such Party's signature to this Agreement, or at such other address as such
Party may stipulate to the other parties in the manner provided in this Section
6.3.
6.4. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written, relating to the matters
contained herein.
6.5. TERMINATION. This Agreement, other than the provisions of Article III
and Section 4.1, shall terminate if (i) the Partnership is no longer an
affiliate of MarkWest or (ii) a Change of Control occurs; PROVIDED HOWEVER, the
terms of Section 4.1 shall terminate once the Partnership is no longer an
affiliate of MarkWest. Termination of this Agreement shall not terminate any
Indemnifying Party's continuing obligation of indemnification pursuant to
Article III of this Agreement which obligations shall survive as provided in
Article III. In the event of termination of this Agreement, the license granted
by Article V hereof shall automatically cease. As promptly as practicable (but
in no event more than 180 days) following the termination of this Agreement,
each Licensee shall cease all use of the Name and ▇▇▇▇ and any and all other
names and marks confusingly similar thereto. Termination of the license granted
by Article V hereof shall not terminate each Licensee's continuing obligation of
indemnification under Section 5.5 hereof. Upon termination of this Agreement,
MarkWest shall have the right, but not the obligation, to continue as operator
of the Partnership's facilities to the same extent it acted as operator of such
facilities on behalf of the Partnership prior to the termination of this
Agreement for so long as MarkWest has responsibilities associated with such
facilities, or the operation thereof, or with respect to the delivery of natural
gas to or from such facilities, including the reimbursement of heating value
extracted and/or consumed by the Partnership Group during the operation of those
facilities, pursuant to any agreement between MarkWest and Columbia.
6.6. EFFECT OF WAIVER OR CONSENT. No waiver or consent, express or
implied, by any Party to or of any breach or default by any Person in the
performance by such Person of its
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance by such Person of the same
or any other obligations of such Person hereunder. Failure on the part of a
Party to complain of any act of any Person or to declare any Person in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such Party of its rights hereunder until the applicable statute of
limitations period has run.
6.7. AMENDMENT OR MODIFICATION. This Agreement may be amended or modified
from time to time only by the written agreement of all the Parties hereto;
PROVIDED HOWEVER, that the Partnership and Operating Co. may not, without the
prior approval of the Conflicts Committee, agree to any amendment or
modification of this Agreement that, in the reasonable discretion of the General
Partner, will adversely affect the holders of Common Units. Each such instrument
shall be reduced to writing and shall be designated on its face an "Amendment"
or an "Addendum" to this Agreement.
6.8. ASSIGNMENT. No Party shall have the right to assign its rights or
obligations under this Agreement without the consent of the other Parties
hereto.
6.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.
6.10. SEVERABILITY. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.
6.11. FURTHER ASSURANCES. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
6.12. LAWS AND REGULATIONS. Notwithstanding any provision of this Agreement
to the contrary, no Party this Agreement shall be required to take any act, or
fail to take any act, under this Agreement if the effect thereof would be to
cause such Party to be in violation of any applicable law, statute, rule or
regulation.
6.13. NEGOTIATION OF RIGHTS OF LIMITED PARTNERS, ASSIGNEES, AND THIRD
PARTIES. The provisions of this Agreement are enforceable solely by the Parties
to this Agreement, and no limited partner, member, assignee or other Person of
the Partnership or Operating Co. shall have the right, separate and apart from
the Partnership or the Operating Co., to enforce any provision of this Agreement
or to compel any Party to this Agreement to comply with the terms of this
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on, and
effective as of, the Closing Date.
MARKWEST HYDROCARBON, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
Address for Notice:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Contract Administrator
Telecopy Number: (303) 290- 8769
MARKWEST ENERGY GP, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
Address for Notice:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Contract Administrator
Telecopy Number: (303) 290- 8769
MARKWEST ENERGY PARTNERS, L.P.
By: MarkWest Energy GP, L.L.C.
ITS SOLE GENERAL PARTNER
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
Address for Notice:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Contract Administrator
Telecopy Number: (303) 290- 8769
MARKWEST ENERGY OPERATING
COMPANY, L.L.C.
By: MarkWest Energy Partners, L.P.
ITS SOLE MEMBER
By: MarkWest Energy GP, L.L.C.
ITS GENERAL PARTNER
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
Address for Notice:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Contract Administrator
Telecopy Number: (303) 290- 8769