STOCK PURCHASE AGREEMENT by and between ANTERO RESOURCES LLC (Seller), and CARDINAL ARKOMA, INC., (Buyer) dated as of October 1, 2010

Contract Categories: Business Finance - Stock Agreements
EX-2.2 3 a12-8000_4ex2d2.htm EX-2.2

Exhibit 2.2

 

 

STOCK PURCHASE AGREEMENT

 

by and between

 

ANTERO RESOURCES LLC

 

(“Seller”),

 

and

 

CARDINAL ARKOMA, INC.,

 

(“Buyer”)

 

dated as of

 

October 1, 2010

 

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION

1

 

 

 

Section 1.1

Definitions

1

Section 1.2

Rules of Construction

12

 

 

 

ARTICLE II PURCHASE AND SALE; CLOSING

13

 

 

 

Section 2.1

Purchase and Sale of Purchased Interests

13

Section 2.2

Purchase Price

14

Section 2.3

The Closing

14

Section 2.4

Estimated Net Working Capital Adjustment Procedure

15

Section 2.5

Final Net Working Capital Adjustment Procedure

16

Section 2.6

Adjustments to Purchase Price

18

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES RELATING TO SELLER

18

 

 

 

Section 3.1

Organization of Seller

18

Section 3.2

Authorization; Enforceability

18

Section 3.3

No Conflict

18

Section 3.4

Consents and Approvals

18

Section 3.5

Litigation

19

Section 3.6

Brokers’ Fees

19

Section 3.7

Ownership of Purchased Interests

19

Section 3.8

Non-Foreign Status

19

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO ANTERO MIDSTREAM

19

 

 

 

Section 4.1

Organization of Antero Midstream

19

Section 4.2

No Conflict

20

Section 4.3

Consents and Approvals

20

Section 4.4

Capitalization

20

Section 4.5

Subsidiaries

21

Section 4.6

Financial Statements; Records; Undisclosed Liabilities

21

Section 4.7

Absence of Certain Changes

21

Section 4.8

Contracts

21

Section 4.9

Intellectual Property

23

Section 4.10

Litigation

24

Section 4.11

Taxes

24

Section 4.12

Environmental Matters

25

Section 4.13

Legal Compliance

26

Section 4.14

Permits

26

Section 4.15

Insurance

26

Section 4.16

Labor Relations and Employee Benefits

26

 

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Section 4.17

Title to Properties and Related Matters

29

Section 4.18

Gas Imbalances

30

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES RELATING TO BUYER

30

 

 

 

Section 5.1

Organization of Buyer

30

Section 5.2

Authorization; Enforceability

30

Section 5.3

No Conflict

30

Section 5.4

Consents and Approvals

31

Section 5.5

Litigation

31

Section 5.6

Brokers’ Fees

31

Section 5.7

Investment Representation

31

Section 5.8

Financing

31

 

 

 

ARTICLE VI COVENANTS AND AGREEMENTS

31

 

 

 

Section 6.1

Conduct of Business

31

Section 6.2

Investigation; Access; No Other Representations and Warranties

33

Section 6.3

Third-Party Approvals

34

Section 6.4

Regulatory Filings

35

Section 6.5

Company Guarantees

35

Section 6.6

Books and Records

36

Section 6.7

Permits

36

Section 6.8

Indemnification of Officers and Directors, Employees and Agents

36

Section 6.9

Name Change

36

Section 6.10

Interim Audited Financials

37

Section 6.11

No Shop

37

Section 6.12

Non-Compete

38

Section 6.13

Execution of Agreements

38

Section 6.14

Further Assurances

38

Section 6.15

Section 382 Study

39

 

 

 

ARTICLE VII DUE DILIGENCE EXAMINATION

39

 

 

 

Section 7.1

Assertion of Defects

39

Section 7.2

Defects Defined

40

Section 7.3

Remedies for Defects

41

Section 7.4

Dispute of Defect or Defect Amount

41

Section 7.5

Exclusive Remedy

42

Section 7.6

Defect Amount

42

Section 7.7

Limitations on Adjustment

43

Section 7.8

Arbitration

43

 

 

 

ARTICLE VIII TAX MATTERS

44

 

 

 

Section 8.1

Tax Returns Due After the Closing Date

44

Section 8.2

Tax Cooperation

44

Section 8.3

Transfer Taxes

44

 

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ARTICLE IX CONDITIONS TO OBLIGATIONS

45

 

 

 

Section 9.1

Conditions to the Obligations of Buyer

45

Section 9.2

Conditions to the Obligations of Seller

46

 

 

 

ARTICLE X INDEMNIFICATION

48

 

 

 

Section 10.1

Survival

48

Section 10.2

Indemnification

48

Section 10.3

Procedures

49

Section 10.4

Exclusive Remedy and Release

51

 

 

 

ARTICLE XI TERMINATION

51

 

 

 

Section 11.1

Termination

51

Section 11.2

Procedure and Effect of Termination

52

Section 11.3

Return of Information

52

 

 

 

ARTICLE XII MISCELLANEOUS

53

 

 

 

Section 12.1

Notices

53

Section 12.2

Assignment

54

Section 12.3

Rights of Third Parties

54

Section 12.4

Expenses

54

Section 12.5

Counterparts

54

Section 12.6

Entire Agreement

54

Section 12.7

Amendments

54

Section 12.8

Publicity

54

Section 12.9

Severability

54

Section 12.10

Governing Law; Jurisdiction

55

Section 12.11

Affiliate Liability

55

Section 12.12

Specific Performance

56

 

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Disclosure Schedules

 

Schedule 1.1

-

Permitted Liens

Schedule 1.1(i)

-

Buyer Knowledge

Schedule 1.1(ii)

-

Seller Knowledge

Schedule 2.3

-

Resigning Officers, Directors and Managers

Schedule 2.4

-

GAAP Exceptions on Estimated Balance Sheet

Schedule 3.4

-

Seller Approvals

Schedule 3.7

-

Liens on Purchased Interests

Schedule 4.3

-

Antero Midstream Approvals

Schedule 4.7

-

Absence of Certain Changes

Schedule 4.8(a)

-

Material Contracts

Schedule 4.8(c)

-

Enforceability of Material Contracts; No Defaults

Schedule 4.8(d)

-

Purchase and Sale Agreements

Schedule 4.9

-

Intellectual Property

Schedule 4.10

-

Litigation

Schedule 4.11

-

Taxes

Schedule 4.12

-

Environmental Matters

Schedule 4.15

-

Insurance

Schedule 4.16

-

Labor Relations

Schedule 4.17

-

Property; Liens on Personal Property of Antero Midstream

Schedule 4.18

-

Gas Imbalances

Schedule 5.4

-

Buyer Approvals

Schedule 6.1

-

Conduct of Business

Schedule 6.5

-

Company Guarantees

 

 

 

Exhibit A

-

Centrahoma ARMC First Amendment

Exhibit B

-

Centrahoma Fourth Amendment

Exhibit C

-

Centrahoma MarkWest First Amendment

Exhibit D

-

MarkWest Tupelo Agreement

Exhibit E

-

ONEOK Tupelo Proposal

Exhibit F

-

Form of Transition Services Agreement

Exhibit G

-

Form of Indemnity Agreement

Exhibit H

-

Midstream Facilities

Exhibit I

-

ARC Gathering & Processing Agreement

Exhibit J

-

ARC Gathering & Treating Agreement

 

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STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT, dated as of October 1, 2010 (this “Agreement”), is entered into by and between Antero Resources LLC, a Delaware limited liability company (“Seller”), and Cardinal Arkoma, Inc., a Delaware corporation (“Buyer”).

 

RECITALS

 

WHEREAS, Seller owns 100% of the equity interests in Antero Resources Midstream Corporation, a Delaware corporation (“Antero Midstream”), and such equity interests are referred to herein as the “Purchased Interests”;

 

WHEREAS, Antero Midstream and MarkWest Oklahoma Gas Company, L.L.C. (“MarkWest”) hold 60% (the “ARMC Centrahoma Interest”) and 40% (collectively, the “Centrahoma Interests”), respectively, of the ownership interests in Centrahoma Processing LLC, a Delaware limited liability company (“Centrahoma JV”), which is a joint venture that operates two cryogenic processing plants in the Arkoma Basin;

 

WHEREAS, prior to Buyer’s acquisition of the Purchased Interests pursuant hereto, an Affiliate of Buyer will acquire the ARMC Centrahoma Interest and certain other intangible assets from Antero Midstream pursuant to a Purchase and Sale Agreement dated of even date herewith by and among Seller, Antero Midstream and Cardinal Arkoma Midstream, LLC, a Delaware limited liability company (the “Centrahoma Purchase Agreement”); and

 

WHEREAS, at the Closing, Seller will sell, assign, transfer and convey to Buyer all of the Purchased Interests.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION

 

Section 1.1             Definitions.  As used herein, the following terms shall have the following meanings:

 

Acquisition Transaction” has the meaning provided such term in Section 6.11.

 

Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, such specified Person through one or more intermediaries or otherwise; provided that, for purposes of this Agreement, Warburg, Yorktown and Trilantic, their respective affiliates and all private equity funds, portfolio companies (other than Seller) owned or managed by Warburg, Yorktown or Trilantic or their respective affiliates shall not be deemed to be affiliates of Seller or the Companies, and provided further that, for purpose of this Agreement, EnCap and Flatrock, their respective affiliates and all private equity funds, portfolio companies (other than Cardinal and its Subsidiaries) owned or managed by EnCap or Flatrock or their respective affiliates shall not be

 



 

deemed to be affiliates of Buyer.  For the purposes of this definition, “control” means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings.

 

Agreement” has the meaning provided such term in the preamble to this Agreement.

 

Antero Affiliate” has the meaning provided such term in Section 12.11.

 

Antero Midstream” has the meaning provided such term in the recitals to this Agreement.

 

Antero Midstream Approvals” has the meaning provided such term in Section 4.3.

 

Antero Resources Corporation” means Antero Resources Corporation, a Delaware corporation.

 

ARC Agreements” means the ARC Gathering & Processing Agreement and the ARC Gathering & Treating Agreement.

 

ARC Gathering & Processing Agreement” means the Gas Gathering & Processing Agreement effective as of October 1, 2010 by and between Antero Midstream and Antero Resources Corporation substantially in the form attached hereto as Exhibit I.

 

ARC Gathering & Treating Agreement” means the Gas Gathering & Treating Agreement effective as of October 1, 2010 by and between Antero Resources Corporation and Antero Midstream substantially in the form attached hereto as Exhibit J.

 

ARMC Centrahoma Interest” has the meaning provided such term in the recitals to the Agreement.

 

Asserted Defects” has the meaning provided such term in Section 7.1.

 

Business” means the operations and business conducted by Antero Midstream (excluding for the purposes of this Agreement, the operations and business conducted by Centrahoma JV).

 

Business Day” means any day that is not a Saturday, Sunday or legal holiday in the State of Colorado or a federal holiday in the United States.

 

Buyer” has the meaning provided such term in the preamble to this Agreement.

 

Buyer Approvals” has the meaning provided such term in Section 5.4.

 

Buyer Final ARMC Working Capital Payment Amount” has the meaning provided such term in Section 2.5(c).

 

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Buyer Final Centrahoma Working Capital Payment Amount” has the meaning provided such term in the Centrahoma Purchase Agreement.

 

Buyer Indemnified Parties” has the meaning provided such term in Section 10.2(a).

 

Cardinal” means Cardinal Midstream, LLC, a Delaware limited liability company.

 

Capital Lease” means that certain Master Lease Agreement dated as of November 20, 2006 by and between Antero Midstream and Chase Equipment Leasing Inc.

 

Capitalized Lease Obligation Amount” means the aggregate unpaid lease payment obligations as of the Closing Date arising under the Capital Lease.

 

Centrahoma ARMC First Amendment” means that certain First Amendment to Gas Processing Agreement dated March 1, 2008 between Centrahoma JV (as Processor) and Antero Midstream (as Supplier) substantially in the form attached hereto as Exhibit A.

 

Centrahoma Fourth Amendment” means that certain Fourth Amendment to Centrahoma Processing LLC Ownership and Operating Agreement dated February 11, 2008 between Antero Midstream and MarkWest substantially in the form attached hereto as Exhibit B.

 

Centrahoma Interests” has the meaning provided such term in the recitals to the Agreement.

 

Centrahoma JV” has the meaning provided such term in the recitals to this Agreement.

 

Centrahoma MarkWest First Amendment” means that certain First Amendment to Gas Processing Agreement dated March 1, 2008 between Centrahoma JV (as Processor), MarkWest (as Supplier) and Antero Midstream substantially in the form attached hereto as Exhibit C.

 

Centrahoma Purchase Agreement” has the meaning provided such term in the recitals to the Agreement.

 

Centrahoma Section 382 Tax” has the meaning provided such term in Section 6.15.

 

Claim Date” has the meaning provided such term in Section 7.1.

 

Claim Notice” has the meaning provided such term in Section 10.3(a).

 

Closing” has the meaning provided such term in Section 2.3(a).

 

Closing Date” has the meaning provided such term in Section 2.3(a).

 

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

 

Companies” means Antero Midstream and the Centrahoma JV and “Company” means any one of the foregoing.

 

3



 

Company Guarantees” means all guaranties, letters of credit, bonds, sureties, cash collateral accounts, and other credit support or assurances provided by Seller or its Affiliates (other than the Companies) in support of any obligations of any of the Companies or the Business, including those obligations listed on Schedule 6.5.

 

Company Securities” has the meaning provided such term in Section 4.4(b).

 

Confidentiality Agreement” means that confidentiality letter agreement between Antero Midstream and Buyer dated April 30, 2010.

 

Contract” means any written and legally binding contract, agreement, commitment, obligation, lease, license or other arrangement, understanding or undertaking.

 

Credit Agreement” means that certain Third Amended And Restated Credit Agreement dated as of January 14, 2009 among Antero Resources Corporation, Antero Midstream, Antero Resources Piceance Corporation, Antero Resources Pipeline Corporation and Antero Resources Appalachian Corporation, as borrowers, certain subsidiaries of borrowers, as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, BNP Paribas and Bank of Scotland Plc, as co-syndication agents, Union Bank, N.A., as documentation agent and J.P. Morgan Securities Inc., as sole lead arranger and sole bookrunner, as amended.

 

Cure Period” has the meaning provided such term in Section 7.1.

 

Current Assets” means, with respect to Antero Midstream as of the Effective Time, the sum of (i) cash (including restricted cash), (ii) accounts receivable (including trade receivables, unbilled receivables, claims and other receivables), (iii) inventory, (iv) prepaid assets (including prepaid insurance premiums), and (v) deposits.  For purposes of this Agreement, “Current Assets” (a) shall not include (A) any deferred Tax assets or (B) an amount of cash equal to the Deposit (as such term is defined under the Centrahoma Purchase Agreement), and (b) shall be based upon the balance sheet of Antero Midstream as of the Effective Time excluding Centrahoma JV and not on a consolidated basis.

 

Current Liabilities” means, with respect to Antero Midstream as of the Effective Time, the sum of (i) accounts payable, (ii) accrued liabilities, (iii) any accrued and unpaid interest arising under the Capital Lease; (iv) any other short term liabilities or accruals, and (v) Tax liabilities payable in the current period.  For purposes of this Agreement, “Current Liabilities” shall not include: (A) the Scheduled Debt (including the current portion thereof) and the Capitalized Lease Obligation Amount (including the current portion thereof), (B) any accrued liability arising out of the payment of the Management Bonus Amount to the extent such liability is paid to Antero Resources Corporation in accordance with Section 2.2, (C) any deferred Tax liabilities, (D) any liability relating to retention bonuses payable to Kahuna Operating LLC personnel, (E) 50% of the accrued liability included in the consolidated financial statements of Antero Midstream for the audit fees expected to be incurred for the audit of such financial statements for the nine months ending September 30, 2010 and (F) any costs, liabilities or capital expenditures incurred in excess of the $21,875 cash fine payable by Antero Midstream (which cash fine shall be included as a “Current Liability” for purposes of this Agreement to the extent not paid prior to the Effective Time) associated with the Consent Order entered into with respect

 

4



 

to the environmental matter at the Atoka facility described in Item 1 of Schedule 4.12.  For purposes of this Agreement, “Current Liabilities” shall be based upon the balance sheet of Antero Midstream as of the Effective Time excluding Centrahoma JV and not on a consolidated basis.  Notwithstanding the foregoing, in the event the Section 382 Study indicates that there has been one or more ownership changes with respect to Antero Midstream under Section 382 of the Code, there shall also be taken into account, as a Current Liability as of the Effective Time, the Centrahoma Section 382 Tax; provided that, (i) the amount of the Centrahoma Section 382 Tax shall be deemed to be equal to $1,000,000 in the event Buyer provides Seller notice of its election pursuant to Section 9.2(l) and (ii) the amount of the Centrahoma Section 382 Tax shall remain fixed and shall not be subject to adjustment in preparing the Final Net Working Capital.

 

Defect” has the meaning provided such term in Section 7.2.

 

Defect Amount” has the meaning provided such term in Section 7.3.

 

Defect Cap” has the meaning provided such term in Section 7.7.

 

Defect Deductible” has the meaning provided such term in Section 7.7.

 

Defect Notice” has the meaning provided such term in Section 7.1.

 

Defect Operation” has the meaning provided such term in Section 7.1.

 

Defect Property” has the meaning provided such term in Section 7.1.

 

Direct Claim” has the meaning provided such term in Section 10.3(d).

 

Disclosure Schedules” means the schedules attached hereto.

 

Dollars” and “$” mean the lawful currency of the United States.

 

Draft Section 382 Study” has the meaning provided such term in Section 6.15.

 

EnCap” means EnCap Investments L.P.

 

Effective Time” means 11:59 p.m. Denver, Colorado time on September 30, 2010.

 

Environment” means soil, land, surface or subsurface strata, surface waters (including navigable waters, ocean waters, seabed, streams, ponds, drainage basins, and wetlands), groundwater, stream sediments, ambient air, vegetation, wildlife, natural resources, and any other environmental medium.

 

Environmental Condition” means any event occurring or condition existing prior to the Closing Date which causes Antero Midstream to be subject to Environmental Liability or Remediation under applicable Environmental Law or Environmental Permits or not to be in compliance with applicable Environmental Law or Environmental Permits.

 

Environmental Defect” has the meaning provided such term in Section 7.2(b).

 

5



 

Environmental Law” means all applicable federal, state, municipal or local Law relating to (i) protection or conservation of the Environment , (ii) protection of human health and safety in the workplace, or (iii) exposure to or Release, monitoring, or other environmental regulation of Hazardous Substances, Hydrocarbons, greenhouse gases or climate change, including all applicable provisions of the Comprehensive Environmental Response, Compensation and Liability Act (“CERLCA”), 42 U.S.C. § 9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq., the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., the Occupational, Health and Safety Act, 29 U.S.C. § 651 et seq. and the regulations promulgated pursuant thereto.

 

Environmental Liability” means any cost, damage, expense, liability, obligation, or other responsibility incurred (i) from or under applicable Environmental Law or Environmental Permits, (ii) in connection with the Release, handling, or use of Hazardous Substances, (iii) in connection with an Environmental Condition, or (iv) in connection with any workplace exposure to Hazardous Substances, and which in either (i), (ii), (iii) or (iv) relates to the Property or the operation of the Business.

 

Environmental Permit” means all permits, licenses, registrations, authorizations, certificates and approvals of a Governmental Authority required by Environmental Laws and necessary for or held in connection with the conduct of the Business.

 

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

 

Estimated Balance Sheet” has the meaning provided such term in Section 2.4.

 

Estimated Buyer Working Capital Payment” has the meaning provided such term in Section 2.4.

 

Estimated Net Working Capital” has the meaning provided such term in Section 2.4.

 

Estimated Seller Working Capital Payment” has the meaning provided such term in Section 2.4.

 

Express Affiliate Obligations” has the meaning provided such term in Section 12.11.

 

Final Balance Sheet” has the meaning provided such term in Section 2.5(a).

 

Final Net Working Capital” has the meaning provided such term in Section 2.5(b).

 

Financial Statements” has the meaning provided such term in Section 4.6.

 

Flatrock” means Flatrock Energy Advisors, LLC.

 

6



 

Fundamental Representations and Warranties” means the representations and warranties contained in Sections 3.1, 3.2, 3.7, 4.1, 4.4 and 4.5.

 

Funds Flow Statement” has the meaning provided such term in Section 2.2.

 

GAAP” means generally accepted accounting principles of the United States, consistently applied.

 

Governmental Authority” means any federal, state, municipal, local or similar governmental authority, regulatory or administrative agency, court or arbitral body.

 

Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, settlement, determination or award entered by or with any Governmental Authority.

 

Hazardous Substance(s)” means and includes (i) each substance, chemical, material, waste, contaminant or pollutant defined, designated, classified or regulated as a hazardous substance, hazardous material, hazardous waste, extremely hazardous waste, restricted hazardous waste, toxic waste, toxic substance, contaminant, pollutant, solid waste or greenhouse gas, in each case in any form, under any Environmental Law; and (ii) any petroleum or petroleum products or Hydrocarbons and their derivatives when Released into the Environment, asbestos, asbestos-containing material, presumed asbestos-containing material, lead paint, urea formaldehyde, polychlorinated biphenyls, or any radioactive material used in the oil and gas industry, including naturally occurring radioactive material that is present in excess of any applicable standard, including any cleanup standard, under applicable Environmental Laws.

 

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

Hydrocarbons” means oil, gas, casinghead gas, condensate, sulfur and other liquid or gaseous hydrocarbons, or any of them or any combination thereof, and all products and substances extracted, separated, processed therefrom, including coalbed gas and carbon dioxide.

 

Indebtedness” means all obligations to any Person for borrowed money, including (a) any obligation to reimburse any bank or other Person in respect of amounts paid or payable under a standby letter of credit or (b) any guaranty with respect to indebtedness of another Person.

 

Indemnified Party” has the meaning provided such term in Section 10.3(a).

 

Indemnifying Party” has the meaning provided such term in Section 10.3(a).

 

Indemnity Agreement” has the meaning provided such term in Section 7.3.

 

Intellectual Property” means intellectual property rights, statutory or common law, worldwide, including (a) trademarks, service marks, trade dress, slogans, logos and all goodwill associated therewith, and any applications or registrations for any of the foregoing; (b) copyrights and any applications or registrations for any of the foregoing; and (c) patents, all confidential know-how, trade secrets and similar proprietary rights in confidential inventions,

 

7



 

discoveries, improvements, processes, techniques, devices, methods, patterns, formulae, and specifications.

 

Interim Financial Statements” has the meaning provided such term in Section 6.10.

 

Knowledge” as to Buyer means the actual knowledge of those Persons listed in Schedule 1.1(i) and as to Seller means the actual knowledge of those Persons listed in Schedule 1.1(ii).

 

Law” means any applicable statute, writ, common law, rule, regulation, ordinance, order, judgment, injunction, award, determination or decree of a Governmental Authority, or any requirement under the common law in each case as in effect on and as interpreted on the date of this Agreement or on and as of the Closing Date, as applicable, unless the context otherwise clearly requires a different date, in which case on and as of such different date.

 

Lien(s)” means, with respect to any property or asset, any mortgage, pledge, charge, security interest or other encumbrance of any kind in respect of such property or asset.

 

Losses” means all actual liabilities, losses, damages, fines, penalties, judgments, settlements, awards, costs and expenses (including reasonable fees and expenses of counsel); provided, however, that Losses shall not include any special, punitive, exemplary, incidental, consequential or indirect damages.

 

Management Bonus Amount” means the amount of the bonus payment to certain officers and employees paid to Antero Resources Corporation in accordance with Section 2.2.

 

MarkWest” has the meaning provided such term in the recitals to the Agreement.

 

MarkWest Tupelo Agreement” means that certain Gas Processing Agreement (Tupelo Plant) between Antero Midstream (as Processor) and MarkWest (as Supplier) substantially in the form attached hereto as Exhibit D.

 

Material Adverse Effect” means, with respect to any Person, any circumstance, change or effect that (a) is materially adverse to the business, assets, properties, operations (including results of operations) or financial condition of such Person (and in the case of any of the Companies, of the Companies and their respective businesses taken as a whole), or (b) that materially impedes the ability of such Person or any of its Affiliates to complete the transactions contemplated herein, but shall exclude for purposes of clause (a) any circumstance, change or effect resulting or arising from, either alone or in combination with any other circumstance, change or effect:

 

(i)            any change in general economic conditions in the industries or markets in which any of the Companies operate;

 

(ii)           seasonal reductions in revenues and/or earnings of the Companies in the ordinary course of their respective businesses;

 

8



 

(iii)          national or international political conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack;

 

(iv)          any change affecting the natural gas transportation industry generally or the target markets of the Companies in particular;

 

(v)           any disruption in the purchase of natural gas or natural gas liquids produced, processed or otherwise sold by the Business as a result of any shutdown, interruption or declaration of force majeure by any pipeline operator or other purchaser of such products;

 

(vi)          changes in Law or GAAP or the interpretation thereof; and

 

(vii)         the entry into or announcement of this Agreement, actions contemplated by this Agreement, or the consummation of the transactions contemplated hereby.

 

Material Contracts” has the meaning provided such term in Section 4.8(a).

 

Midstream Facilities” means the pipelines, gathering systems, plant and other facilities described on the maps set forth on Exhibit H.

 

Net Working Capital” means Current Assets minus Current Liabilities.

 

Net Working Capital Threshold” has the meaning provided such term in Section 2.4.

 

Non-Compete Business” has the meaning provided such term in Section 6.12.

 

ONEOK” means ONEOK Hydrocarbon, L.P., a Delaware limited partnership.

 

ONEOK Agreement” means that certain Natural Gas Liquids Purchase Agreement dated September 28, 2007 between Antero Midstream and ONEOK.

 

ONEOK Tupelo Proposal” means the letter from ONEOK dated September 7, 2010 and attached hereto as Exhibit E.

 

Organizational Documents” means any charter, certificate of incorporation, articles of association, bylaws, partnership agreement, operating agreement or similar formation or governing documents and instruments.

 

Order” means any award, decision, injunction, judgment, order, ruling or verdict entered, issued, made or rendered by any Governmental Authority.

 

Parties” means Seller and Buyer.

 

Permits” means authorizations, licenses, permits, franchises, grants, variances, exemptions, consents, approvals, orders, registrations or certificates issued by Governmental Authorities; provided, right-of-way agreements and similar approvals are not included in the definition of Permits.

 

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Permitted Liens means (a) Liens for Taxes not yet delinquent or being contested in good faith by appropriate proceedings and for which appropriate reserves have been established, (b) statutory Liens (including materialmen’s, warehousemen’s, mechanic’s, repairmen’s, landlord’s, and other similar Liens) arising in the ordinary course of business securing payments not yet delinquent or being contested in good faith by appropriate proceedings and for which appropriate reserves have been established, (c) the rights of lessors and lessees under leases executed in the ordinary course of business, (d) restrictive covenants, easements and defects, imperfections or irregularities of title, if any, as would not reasonably be expected to materially and adversely affect the assets or properties (or the use thereof) affected thereby, (e) preferential purchase rights and other similar arrangements listed on Schedule 1.1 with respect to which consents or waivers are obtained for this transaction, (f) restrictions on transfer with respect to which consents or waivers are obtained for this transaction and (g) Liens created by Buyer or its successors and assigns.

 

Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity or organization of any kind.

 

Proceeding” means any action, arbitration, audit, hearing, litigation, or suit (whether civil, criminal or administrative) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority.

 

Property” means all real property that is owned, leased or otherwise used by Antero Midstream, or with respect to which Antero Midstream has an easement, right-of-way or other such property use rights, for the conduct of its Business thereon.

 

Proposed Centrahoma Agreements” means the proposed Centrahoma Fourth Amendment, the Centrahoma ARMC First Amendment, the Centrahoma MarkWest First Amendment, and the MarkWest Tupelo Agreement.

 

Purchase Price” has the meaning provided such term in Section 2.2.

 

Purchased Interests” has the meaning provided such term in the recitals of this Agreement.

 

Reasonable Efforts” means efforts in accordance with reasonable commercial practice and without the incurrence of unreasonable expense.

 

Referee” has the meaning provided such term in Section 2.5(b).

 

Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, seeping, leaking, leaching, dumping, burying or disposing.

 

Remediate” or “Remediation” means any action or work required to be performed pursuant to applicable Environmental Laws or Environmental Permits to address or remedy an Environmental Condition or any other condition, including (i) any survey, site assessment, audit, investigation, inspection, sampling, analysis, removal, excavation, cleanup, abatement, corrective

 

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action, remediation, disposal, storage, handling or treatment; and (ii) any action required to bring any Property or operations of Antero Midstream into compliance with applicable Environmental Laws or Environmental Permits.

 

Representatives” means, as to any Person, its officers, directors, employees, counsel, accountants, financial advisers and consultants.

 

Scheduled Debt” means the aggregate amount of Indebtedness of Antero Midstream as of the Closing Date (excluding the Capitalized Lease Obligation Amount and after giving effect to the closing of the Centrahoma Purchase Agreement and the repayment of Indebtedness by Antero Midstream using the proceeds from such closing) plus any accrued and unpaid interest thereon and any prepayment penalties required in connection with the repayment of such Indebtedness on the Closing Date.

 

Section 382 Study” has the meaning provided such term in Section 6.15.

 

Seller” has the meaning provided such term in the preamble to this Agreement.

 

Seller Approvals” has the meaning provided such term in Section 3.4.

 

Seller Final ARMC Working Capital Payment Amount” has the meaning provided such term in Section 2.5(c).

 

Seller Final Centrahoma Working Capital Payment Amount” has the meaning provided such term in the Centrahoma Purchase Agreement.

 

Seller Indemnified Parties” has the meaning provided such term in Section 10.2(b).

 

Service Agreement” has the meaning provided such term in Section 4.16(a).

 

Shared Employees” has the meaning provided such term in Section 4.16(a).

 

Straddle Period” has the meaning provided such term in Section 8.1.

 

Subsidiary” means, with respect to any Person, (a) any corporation 50% or more of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person, directly or indirectly through Subsidiaries, and (b) any partnership, limited liability company, association, joint venture, trust or other entity in which such Person, directly or indirectly through Subsidiaries has a 50% or greater equity interest at the time.

 

Tax Authority” means any Governmental Authority or political subdivision thereof having jurisdiction over the assessment, determination, collection, or imposition of any Tax.

 

Tax Returns” means any report, return, election, document, estimated tax filing, declaration or other filing provided to any Tax Authority, including any amendments thereto.

 

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Tax Sharing Agreements” means all existing agreements or arrangements (whether or not written) that are binding on Antero Midstream and regarding the sharing, allocation, or payment of Taxes or amounts in lieu of Taxes.

 

Taxes” or “Tax” means (a) all taxes, assessments, duties, levies, imposts or other similar charges imposed by a Governmental Authority, including all income, franchise, profits, capital gains, capital stock, registration, gross receipts, sales, use, transfer, service, occupation, ad valorem, property, excise, severance, windfall profits, premium, stamp, license, payroll, employment, social security, unemployment, disability, environmental (including taxes under Code Section 59A), alternative minimum, add-on, value-added, withholding (including backup withholding) and other taxes, assessments, duties, levies, imposts or other similar charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), and all estimated taxes, deficiency assessments, additions to tax, additional amounts imposed by any Governmental Authority, penalties and interest, (b) any liability of any Company for the payment of any amounts of any of the foregoing types as a result of being a member of an affiliated, consolidated, combined or unitary group, or being a party to any agreement or arrangement whereby liability of such Company for payment of such amounts was determined or taken into account with reference to the liability of any other Person, and (c) any liability of any Company for the payment of any amounts as a result of being a party to any Tax Sharing Agreement or with respect to the payment of any amounts of any of the foregoing types as a result of any express or implied obligation to indemnify any other Person.

 

Termination Date” has the meaning provided such term in Section 11.1(a).

 

Third Party Claim” has the meaning provided such term in Section 10.3(a).

 

Title Defect” has the meaning provided such term in Section 7.2(a).

 

Transition Services Agreement” shall mean that certain Transition Services Agreement between Antero Midstream and Antero Resources Corporation substantially in the form attached hereto as Exhibit F.

 

Trilantic” means Trilantic Capital Management LLC.

 

United States” means United States of America.

 

Warburg” means Warburg Pincus LLC, including WP Antero, LLC.

 

WARN Act” has the meaning provided such term in Section 4.16(a).

 

Yorktown” means, collectively, Yorktown Energy Partners V, L.P., Yorktown Energy Partners VI, L.P. and Yorktown Energy Partners VII, L.P.

 

Section 1.2             Rules of Construction.

 

(a)           All article, section, schedule and exhibit references used in this Agreement are to articles, sections, schedules and exhibits to this Agreement unless otherwise

 

 

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specified.  The schedules and exhibits attached to this Agreement constitute a part of this Agreement and are incorporated herein for all purposes.

 

(b)           If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb).  Terms defined in the singular have the corresponding meanings in the plural, and vice versa.  Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral genders and vice versa. The term “includes” or “including” shall mean “including without limitation.”  The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular section or article in which such words appear.

 

(c)           With respect to Seller, or any of its Affiliates, the term “ordinary course of business” will be deemed to refer to the ordinary conduct of the Business in a manner consistent with past practices and customs of such Person.

 

(d)           The Parties acknowledge that each Party and its attorney have reviewed this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be applicable to the construction or interpretation of this Agreement.

 

(e)           The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.

 

(f)            All references to currency herein shall be to, and all payments required hereunder shall be paid in, Dollars.

 

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

 

(h)           Any event hereunder requiring the payment of cash or cash equivalents on a day that is not a Business Day shall be deferred until the next Business Day.

 

ARTICLE II
PURCHASE AND SALE; CLOSING

 

Section 2.1             Purchase and Sale of Purchased Interests.  At the Closing, upon the terms and subject to the conditions set forth in this Agreement, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and acquire from Seller, the Purchased Interests, free and clear of any Liens other than transfer restrictions imposed thereon by applicable securities Laws.  The Closing shall occur immediately following the closing of the transactions contemplated by the Centrahoma Purchase Agreement.

 

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Section 2.2             Purchase Price.

 

(a)           Not less than two (2) Business Days prior to the Closing Date, Seller shall deliver to Buyer a statement (the “Funds Flow Statement”), signed by the Vice President and Treasurer of Seller (on behalf and in the name of Seller), which sets forth (i) by lender, the aggregate amount of the Scheduled Debt and (ii) the Management Bonus Amount.  The total consideration to be paid by the Buyer to Seller for the sale, assignment, transfer and conveyance of the Purchased Interests shall be cash in an aggregate amount equal to (i) $205,000,000 plus (ii) the Estimated Buyer Working Capital Payment, if any, or minus (iii) the Estimated Seller Working Capital Payment, if any, subject to adjustment pursuant to this Article II or Article VII (the “Purchase Price”).

 

(b)           Payment of the Purchase Price shall be made as follows:

 

(i)            first, the Scheduled Debt shall be paid by Buyer to each lender thereof by wire transfer of immediately available funds in the amounts and in accordance with the wire transfer instructions set forth in the Funds Flow Statement;

 

(ii)           second, the Management Bonus Amount shall be paid by Buyer to Antero Resources Corporation by wire transfer of immediately available funds in the amounts and in accordance with the wire transfer instructions set forth in the Funds Flow Statement; and

 

(iii)          third, the remaining portion of the Purchase Price shall be paid by Buyer to Seller by wire transfer of immediately available funds in the amounts and in accordance with the wire transfer instructions set forth in the Funds Flow Statement.

 

Section 2.3             The Closing.

 

(a)           The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Vinson & Elkins L.L.P., 1001 Fannin, Houston, Texas 77002, commencing at 10:00 a.m. local time on the later of (i) November 5, 2010 or (ii) the second Business Day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the Parties shall take at the Closing itself) or such other date as Buyer and Seller may mutually determine (the “Closing Date”).  Notwithstanding the foregoing, Buyer may, by delivery of written notice to Seller no less than six (6) Business Days prior to the anticipated Closing Date, amend the previous sentence by replacing the reference to “November 5, 2010” with “November 15, 2010” so long as such extension applies to the closing under this Agreement and the closing under the Centrahoma Purchase Agreement.

 

(b)           At the Closing, Seller will deliver the following documents and deliverables to Buyer:

 

(i)            a stock power effecting the transfer to Buyer of ownership of all of the Purchased Interests together with a certificate representing the Purchased Interests;

 

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(ii)           a certification in the form prescribed by Treasury Regulation Section 1.1445-2(b)(2) to the effect that Seller is not a foreign person;

 

(iii)          certified resolutions of the applicable managers of Seller required for approval of the transactions contemplated by this Agreement;

 

(iv)          certificate of good standing and existence as of a recent date with respect to Antero Midstream;

 

(v)           resignation letters of each of the officers, directors and managers of Antero Midstream as set forth on Schedule 2.3;

 

(vi)          certificates required by Article IX; and

 

(vii)         either (A) executed payoff letters or (B) releases reasonably satisfactory to Buyer to evidence the release of all Liens upon any assets of Antero Midstream and executed copies of UCC-3 termination statements for any such Liens that have been released, as may be reasonably requested by Buyer;

 

(viii)        such other certificates, instruments of conveyance, and documents as may be reasonably requested by Buyer and agreed to by Seller prior to the Closing Date to carry out the intent and purposes of this Agreement.

 

(c)        At the Closing, Buyer will deliver the following documents and deliverables to Seller:

 

(i)            a cash amount equal to the Purchase Price by wire transfer of immediately available funds to the accounts specified in the Funds Flow Statement;

 

(ii)           certified resolutions of the applicable managers, directors and equityholders of Buyer required for approval of the transactions contemplated by this Agreement; and

 

(iii)          such other certificates, instruments, and documents as may be reasonably requested by Seller and agreed to by Buyer prior to the Closing Date to carry out the intent and purposes of this Agreement.

 

Section 2.4             Estimated Net Working Capital Adjustment Procedure.

 

(a)           The Parties acknowledge that the Purchase Price has been based in part on Antero Midstream having a Net Working Capital as of the Effective Time equal to $0 (the “Net Working Capital Threshold”).  The Purchase Price delivered at the Closing pursuant to Section 2.3(c) shall be adjusted in accordance with the following procedures.  Seller shall prepare and deliver to Buyer not less than five (5) Business Days prior to the Closing Date an estimated balance sheet of Antero Midstream as of the Effective Time, which balance sheet will be prepared in accordance with GAAP, except as set forth on Schedule 2.4.  The balance sheet prepared in accordance with the foregoing is referred to as the “Estimated Balance Sheet”, together with supporting documentation reasonably necessary for Seller to verify the Estimated

 

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Balance Sheet.  Seller shall also prepare a worksheet showing the difference, if any, between the Net Working Capital derived from the Estimated Balance Sheet (based upon, and subject to the adjustments set forth in, the definitions of Current Assets and Current Liabilities as set forth herein) (the “Estimated Net Working Capital”) and the Net Working Capital Threshold.

 

(b)           If the Estimated Net Working Capital exceeds the Net Working Capital Threshold (such excess, the “Estimated Buyer Working Capital Payment”), the Purchase Price delivered at the Closing pursuant to Section 2.3(c) shall be increased by an amount equal to the Estimated Buyer Working Capital Payment.

 

(c)           If the Net Working Capital Threshold exceeds the Estimated Net Working Capital (such excess, the “Estimated Seller Working Capital Payment”), the Purchase Price delivered at the Closing pursuant to Section 2.3(c) shall be reduced by an amount equal to the Estimated Seller Working Capital Payment.

 

Section 2.5             Final Net Working Capital Adjustment Procedure.

 

(a)           For the purpose of confirming the Estimated Seller Working Capital Payment or the Estimated Buyer Working Capital Payment, as applicable, Buyer shall prepare, or cause to be prepared, a balance sheet of Antero Midstream as of the Effective Time, which balance sheet will be prepared in accordance with GAAP, except as set forth on Schedule 2.4.  The balance sheet prepared in accordance with the foregoing is referred to as the “Final Balance Sheet.”

 

(b)           No later than 90 calendar days after the Closing Date (or such later date as mutually agreed by Buyer and Seller), Buyer shall deliver to Seller the Final Balance Sheet together with a worksheet showing the difference, if any, between the Net Working Capital derived from the Final Balance Sheet (based upon, and subject to the adjustments set forth in, the definitions of Current Assets and Current Liabilities as set forth herein) (the “Final Net Working Capital”) and the Estimated Net Working Capital.  If Buyer does not deliver the Final Balance Sheet and Final Net Working Capital calculation in accordance with this Section 2.5(b) on or before the 90th calendar day after the Closing Date (or such later date as mutually agreed by Buyer and Seller), Seller shall have the right to prepare the Final Balance Sheet and Final Net Working Capital on or before the 120th day after the Closing Date (or such later date as mutually agreed by Buyer and Seller), in which case the relative obligations of Buyer and Seller in the remainder of this Section 2.5 shall be switched.  Buyer and Seller shall promptly provide to each other all documents reasonably requested by the other to verify any of the elements of working capital set forth in the Final Balance Sheet and Final Net Working Capital.  Seller shall have the right for 30 days following receipt of the Final Balance Sheet to object to the Final Balance Sheet and the proposed calculation of the Final Net Working Capital.  Seller and its Representatives shall be entitled to access during normal business hours to all books and records and personnel of Antero Midstream as may be reasonably requested by Seller for the purpose of this Section 2.5.  Any objection made by Seller shall be made in writing and shall set forth such objection in reasonable detail.  Seller shall be deemed to have waived any rights to object under this Section 2.5(b) unless Seller furnishes its written objections to Buyer within such 30-day period. If Seller delivers an objection within such 30-day period, then Buyer and Seller shall endeavor in good faith to resolve the objections.  If, at the end of a 15-day period from the date

 

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of delivery of any objection by Seller or such longer period as may be mutually agreed by Buyer and Seller, there are any objections that remain in dispute, then the remaining objections in dispute shall be submitted for resolution to an independent accounting firm to be selected jointly by Seller and Buyer within the following five Business Days (the “Referee”).  The Referee shall determine the Final Net Working Capital as promptly as reasonably practicable after the objections that remain in dispute are submitted to it, but in any event within 30 days after such objections that remain in dispute are submitted to it.  If any objections are submitted to the Referee for resolution, (i) each of Buyer and Seller shall furnish to the Referee such workpapers and other documents and information relating to such objections as the Referee may request and are reasonably available to that Party (or its independent public accountants) and will be afforded the opportunity to present to the Referee any material relating to the determination of the matters in dispute and to discuss such determination with the Referee; (ii) the Referee must adopt the amount of the Final Net Working Capital submitted by either Buyer or Seller and may not adopt any other amount; (iii) the determination by the Referee of the Final Net Working Capital, as set forth in a written notice delivered to both Buyer and Seller by the Referee, shall be made in accordance with this Agreement and shall be binding and conclusive on the parties and, absent manifest error, shall constitute an arbitral award that is final, binding and unappealable and upon which a judgment may be entered by a court having jurisdiction thereof; and (iv) the fees and expenses of the Referee shall be paid (1) by Buyer if the Referee adopts the amount of the Final Net Working Capital submitted by Seller and (2) by Seller if the Referee adopts the amount of the Final Net Working Capital submitted by Buyer.  The Parties further agree that the Referee and procedures set forth herein shall be the sole method for resolving any disputes regarding the Final Net Working Capital or the provisions of this Section 2.5 in lieu of the provisions set forth in Section 12.10.

 

(c)           Following the final determination of the Final Net Working Capital for Antero Midstream as set forth in Section 2.5(b) and the Final Net Working Capital for Centrahoma JV as set forth in Section 2.6(b) of the Centrahoma Purchase Agreement:

 

(i)                 if the Estimated Net Working Capital exceeds the Final Net Working Capital, the amount of such excess over the Final Net Working Capital shall be referred to herein as the “Seller Final ARMC Working Capital Payment Amount”; and

 

(ii)                if the Final Net Working Capital exceeds the Estimated Net Working Capital, the amount of such excess over the Estimated Net Working Capital shall be referred to herein as the “Buyer Final ARMC Working Capital Payment Amount.

 

(d)           Any Seller Final ARMC Working Capital Payment Amount or Buyer Final ARMC Working Capital Payment Amount shall be netted against, or added to (as applicable), any Seller Final Centrahoma Working Capital Payment Amount or Buyer Final Centrahoma Working Capital Payment Amount, which final amount payable to either Buyer or Seller shall be referred to herein as the Final Working Capital Payment Amount.  In the event that the Final Working Capital Payment Amount is more than $100,000, the amount of the Final Working Capital Payment Amount in excess of $100,000 shall be promptly (but in any event within five Business Days of the determination of the Final Working Capital Payment Amount) paid by wire transfer in immediately available funds to the Buyer or Seller, as applicable, to an account designated by such payee.

 

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Section 2.6             Adjustments to Purchase Price.  All amounts to be paid under this Article II shall be deemed to be adjustments to the Purchase Price for Tax purposes.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATING TO SELLER

 

Except as disclosed in the Disclosure Schedules, Seller hereby represents and warrants to Buyer as follows:

 

Section 3.1             Organization of Seller.  Seller is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite limited liability company power and authority to own, operate and lease its properties and assets and to carry on its business as now conducted.

 

Section 3.2             Authorization; Enforceability.  Seller has all requisite limited liability company power and authority to execute and deliver this Agreement and to perform all obligations to be performed by it hereunder.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by all requisite limited liability company action on the part of Seller.  This Agreement has been duly and validly executed and delivered by Seller, and this Agreement constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

 

Section 3.3             No Conflict.  The execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby by Seller do not and shall not directly or indirectly (with or without notice or lapse of time):

 

(a)           violate any Law applicable to Seller or require any filing with, consent, approval or authorization of, or notice to, any Governmental Authority;

 

(b)           violate any Organizational Document or any resolution of the members or managers of Seller (in their capacities as such); or

 

(c)           (i) breach any Contract to which Seller is a party or by which Seller may be bound, (ii) result in the termination of, or give any Person the right to terminate, modify or accelerate performance under, any such Contract, (iii) result in the creation of any Lien upon any of the Purchased Interests or (iv) constitute an event which, after notice or lapse of time or both, would result in any such breach, termination or creation of a Lien upon any of the Purchased Interests.

 

Section 3.4             Consents and Approvals.  The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby does not and will not require any consent, approval, authorization or other order or declaration of, action by, filing with, notification to or permit from, any third Person or any Governmental Authority, other than (a) the filings, consents, approvals, authorizations and notices set forth in Schedule 3.4 (collectively, the “Seller Approvals”), (b) compliance with, and

 

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filings under, the HSR Act or (c)  as may be necessary as a result of any facts or circumstances relating solely to Buyer or any of its Affiliates.

 

Section 3.5             Litigation.  There are no Proceedings before any Governmental Authority pending or, to the Knowledge of Seller, threatened against Seller that may, individually or in the aggregate, adversely affect the ability of Seller to enter into and perform its obligations under this Agreement, and there are no Orders binding upon Seller that may adversely affect the ability of Seller to perform its obligations under this Agreement.

 

Section 3.6             Brokers’ Fees.  Except for Goldman, Sachs & Co., no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by Seller or any of its Affiliates (including Antero Midstream and Centrahoma JV).  No Person other than Seller has any liability or obligations for any costs or expenses related to Seller’s engagement of Goldman, Sachs & Co., and no agreements or other arrangements with Goldman, Sachs & Co. relating to or affecting the Companies or the Business exist that will continue after the Closing Date.

 

Section 3.7             Ownership of Purchased Interests.  Seller is the sole stockholder of Antero Midstream and has good and valid title to, holds of record and owns beneficially the Purchased Interests, which constitute all of the outstanding capital stock of Antero Midstream, free and clear of any Liens other than Permitted Liens and the Liens set forth in Schedule 3.7.  Upon Closing, Buyer will be the sole stockholder of Antero Midstream and will acquire good and valid title to all of the Purchased Interests, free and clear of any Liens other than the transfer restrictions imposed thereon by applicable securities Laws or Liens created by Buyer.

 

Section 3.8             Non-Foreign Status.  Seller is not a “foreign person” within the meaning of Section 1445 of the Code.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING TO ANTERO MIDSTREAM

 

Except as disclosed in the Disclosure Schedules, Seller hereby represents and warrants to Buyer as follows:

 

Section 4.1             Organization of Antero Midstream.  Antero Midstream is duly organized, validly existing and in good standing under the Laws of the State of Delaware and has the requisite corporate power and authority to own or lease its assets and to conduct its business as it is now being conducted.  Antero Midstream is duly licensed or qualified in each jurisdiction in which the ownership or operation of its assets or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not reasonably be expected to have a Material Adverse Effect on Antero Midstream.  Seller has made available to Buyer true copies of all existing Organizational Documents of Antero Midstream.  The minute books of Antero Midstream, true and complete copies of which have been made available to Buyer, contain true and correct records of all meetings and other corporate or organizational actions held or taken of its stockholders and

 

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board of directors (including committees thereof).  No meeting of any such board or such committees has been held for which minutes have not been prepared and are not contained in such minute books.

 

Section 4.2             No Conflict.  The consummation of the transactions contemplated hereby do not and shall not directly or indirectly (with or without notice or lapse of time):

 

(a)           violate any Law applicable to Antero Midstream or require any filing with, consent, approval or authorization of, or notice to, any Governmental Authority;

 

(b)           violate any Organizational Document or resolution of the board of director or stockholders of Antero Midstream (in their capacities as such); or

 

(c)           (i) breach any Material Contract, (ii) result in the termination of or give any Person the right to terminate, modify or accelerate performance under any Material Contract, (iii) result in the creation of any Lien under any Material Contract, or (iv) constitute an event which, after notice or lapse of time or both, would result in any such breach, termination or creation of a Lien.

 

Section 4.3             Consents and Approvals.  The consummation of the transactions contemplated hereby does not and will not require any consent, approval, authorization or other order or declaration of, action by, filing with, notification to or permit from, any third Person or any Governmental Authority other than (a) the filings, consents, approvals, authorizations and notices set forth in Schedule 4.3 (collectively, the “Antero Midstream Approvals”), (b) compliance with, and filings under, the HSR Act or (c) as may be necessary as a result of any facts or circumstances relating solely to Buyer or any of its Affiliates.

 

Section 4.4             Capitalization.

 

(a)           The Purchased Interests constitute all of the issued and outstanding shares of capital stock of Antero Midstream. The Purchased Interests are duly authorized, validly issued, fully paid, nonassessable and are free and clear of any Lien (other than Liens arising as a result of the Credit Agreement) or other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such shares, subject only to applicable securities Laws) and were not issued in violation of any preemptive or other similar right.

 

(b)           There are no (i) outstanding shares of capital stock, equity interests or other securities of Antero Midstream other than the Purchased Interests, (ii) outstanding securities of Antero Midstream convertible into, exchangeable or exercisable for shares of capital stock, equity interests or other securities of Antero Midstream, (iii) authorized or outstanding options, warrants or other rights to purchase or acquire from Antero Midstream, or obligations of Antero Midstream to issue, any capital stock, equity interests or other securities, including securities convertible into or exchangeable for capital stock or other securities of Antero Midstream or (iv) authorized or outstanding bonds, debentures, notes or other Indebtedness that entitles the holders to vote (or convertible or exercisable for or

 

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exchangeable into securities that entitle the holders to vote) with holders of shares, units or interests of Antero Midstream on any matter (the items in clauses (i), (ii), (iii) and (iv) being referred to collectively as the “Company Securities”). There are no outstanding obligations of Antero Midstream to repurchase, redeem or otherwise acquire any Company Securities.

 

Section 4.5             Subsidiaries.  As of the date of this Agreement, except for the ARMC Centrahoma Interest, Antero Midstream does not own or have any rights to acquire any equity interests in any Person.  As of the Closing (and after giving effect to the closing of the Centrahoma Purchase Agreement), Antero Midstream will not own or have any rights to acquire any equity interests in any Person.

 

Section 4.6             Financial Statements; Records; Undisclosed Liabilities.

 

(a)           True and complete copies of the following financial statements have been provided to Buyer on or prior to the date hereof (collectively, the “Financial Statements”): (i) the audited consolidated balance sheets of Antero Midstream (with related statements of income and comprehensive income, changes in capital and cash flows) as of, and for the years ended on, December 31, 2007, 2008 and 2009 and (ii) the unaudited consolidated balance sheet of Antero Midstream, together with related statements of income as of, and for the six month period ended on, June 30, 2010.  The Financial Statements have been prepared in accordance with GAAP (except as otherwise stated in the footnotes or the audit opinion related thereto and except for, with respect to the June 30, 2010 balance sheet and the related statements of income, normal year-end adjustments and the absence of an audit opinion and footnote disclosure) and present fairly in accordance with GAAP, in all material respects, the financial position and the results of operations of Antero Midstream, as of, and for the periods ended on, such dates.

 

(b)           All respective liabilities of Antero Midstream that are required by GAAP to be reflected or reserved against in the June 30, 2010 balance sheet included in the Financial Statements have been so reflected or reserved against in the June 30, 2010 balance sheet included in the Financial Statements.

 

Section 4.7             Absence of Certain Changes.  Except as disclosed on Schedule 4.7, from June 30, 2010 to the date of this Agreement, (a) there has not occurred any event or circumstance that has had or would be reasonably likely to have a Material Adverse Effect on Antero Midstream, (b) the Business has been conducted, in all material respects, only in the ordinary course of business, and (c) there has been no damage, destruction or loss to the assets of Antero Midstream which could reasonably be expected to have a material and adverse impact on the Business.

 

Section 4.8             Contracts.

 

(a)           Schedule 4.8(a) contains a true and complete listing of the following Contracts to which Antero Midstream is a party or otherwise relating to the Business as of the date of this Agreement (such Contracts that are required to be listed on Schedule 4.8(a) being “Material Contracts”):

 

(i)            each Contract representing Indebtedness;

 

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(ii)           each Contract involving a remaining commitment by Antero Midstream to pay amounts in excess of $250,000;

 

(iii)          each Contract for lease of personal property or real property involving payments in excess of $250,000;

 

(iv)          except for Contracts of the nature described in clauses (i) through (iii) above, each Contract between Seller or any Affiliate of Seller (other than any of the Companies) on the one hand, and Antero Midstream, on the other hand, which will survive the Closing;

 

(v)           any Hydrocarbon purchase and sale, gathering, intra-state transportation, processing or similar Contract unless terminable by each party without penalty on sixty (60) days or less notice;

 

(vi)          any Contract for the provision of services relating to gathering, compression, collection, processing, treating or transportation of Hydrocarbons;

 

(vii)         any Contract that constitutes a pipeline interconnect or facility operating agreement with respect to all or any part of the assets constituting part of the Business;

 

(viii)        each Contract that provides for a limit on the ability of Antero Midstream to compete in any line of business or with any Person or in any geographic area during any period of time after the Closing;

 

(ix)          except for Contracts of the nature described in clauses (i) through (vii) above and except for Contracts of which Antero Midstream has fully satisfied its payment and performance obligations under such Contract in accordance with its terms, any Contract for the purchase of materials, supplies, goods, services, equipment or other assets that provides for aggregate payments by Antero Midstream of $250,000 or more;

 

(x)           any partnership or joint venture agreement (other than the Organizational Documents of the Companies);

 

(xi)          any Contract pursuant to which any third party has rights to own or use any material asset of Antero Midstream, including any Intellectual Property right of Antero Midstream;

 

(xii)         any agreement relating to the acquisition or disposition following the Closing of any business (whether by merger, sale of stock, sale of assets or otherwise) or granting to any Person a right of first refusal, first offer or right to purchase any of the assets of Antero Midstream (other than as a result of Permitted Liens);

 

(xiii)        each employment, non-disclosure, non-competition, non-solicitation, intellectual property, consulting, collective bargaining, labor agreement, or similar Contract and each Contract providing any change of control, retention, severance, project bonus payments, or any other payment for or on account of employment or services rendered, in each case that have not been paid in full as of the date of this Agreement;

 

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(xiv)        each swap, option, hedge, futures or similar instrument or Contract involving natural gas or other commodity trading;

 

(xv)         each Contract (A) that includes an indemnity or other obligation (contingent or otherwise) by Antero Midstream that has not by its terms expired and that if such indemnity or other obligation arose, would reasonably be likely to result in payments by Antero Midstream in excess of $250,000, (B) that grants an option or preferential purchase right for Antero Midstream to purchase any material assets, properties or rights of a third party or (C) that creates a partnership, joint venture or other arrangement that involves the sharing of profits or expenses;

 

(xvi)        any Contract involving a commitment by Antero Midstream to (i) Remediate or otherwise address or (ii) indemnify any Person for an Environmental Condition or any other Environmental Liability in accordance with applicable Environmental Laws that might involve expenditures in excess of $250,000; and

 

(xvii)       except for Contracts of the nature described in clauses (i) through (xvi) above, each Contract involving aggregate payments by or to Antero Midstream in excess of $250,000 that cannot be terminated by Antero Midstream party thereto upon 60 days or less notice without payment penalty in excess of $100,000.

 

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

 

(c)           Except as set forth in Schedule 4.8(c), each Material Contract (other than such Material Contracts with respect to which all performance and payment obligations have been fully performed or otherwise discharged by all parties thereto prior to the Closing) (i) is in full force and effect and (ii) represents the legal, valid and binding obligation of Antero Midstream that is a party thereto and, to the Knowledge of Seller, represents the legal, valid and binding obligation of the other parties thereto, in each case enforceable in accordance with its terms.  Except as set forth in Schedule 4.8(c), Antero Midstream is not and, to the Knowledge of Seller, no other party is in breach of any Material Contract, and neither Seller nor Antero Midstream has received any written notice of termination or breach of any Material Contract.

 

(d)           Schedule 4.8(d) lists all of the purchase and sale agreements pursuant to which Antero Midstream has acquired or disposed of any assets or entities since January 1, 2009, other than purchases and disposals of assets in the ordinary course of business, none of which would be reasonably expected to have any significant and adverse impact on the Business.  True and correct copies of the documents listed on Schedule 4.8(d) have been made available to Buyer.

 

Section 4.9             Intellectual PropertySchedule 4.9 sets forth a true and correct list of all Intellectual Property Antero Midstream owns or has the right to use, pursuant to a valid license, sublicense, agreement or otherwise.  Schedule 4.9 also sets forth a true, correct, and complete list of all software and other intellectual property licenses used by Antero Midstream other than software that is commercially available for less than $100,000 per license. 

 

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Except as set forth in Schedule 4.9, Antero Midstream owns or has the right to use, pursuant to a valid license, sublicense, agreement or otherwise, all items of Intellectual Property required in the operation of the Business as presently conducted, and such rights will not be adversely affected by the consummation of the transactions contemplated hereby.  No third party has asserted against Antero Midstream any written claim that Antero Midstream is infringing the Intellectual Property of such third party, and, to the Knowledge of Seller, no third party is infringing the Intellectual Property owned by Antero Midstream.  None of the Intellectual Property of Antero Midstream is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use thereof by Antero Midstream.

 

Section 4.10           Litigation.  Except as set forth in Schedule 4.10 (a) there are no Proceedings before any Governmental Authority pending or, to the Knowledge of Seller, threatened by any Person against Antero Midstream and (b) there is no outstanding Order against Antero Midstream or any of its assets or properties.

 

Section 4.11           Taxes.  Except as set forth on Schedule 4.11, with respect to Antero Midstream (a) all Tax Returns required to be filed have been duly and timely filed with the appropriate Tax Authority and all such Tax Returns are true, correct and complete, (b) all Taxes due and owing (whether or not shown as due on any Tax Returns) have been timely paid in full, (c) there are no Tax Liens (other than Permitted Liens) on any of the assets of Antero Midstream, (d) there is no claim, action, or proceeding pending by any applicable Tax Authority in connection with any Tax, (e) no Tax Returns are now under audit or examination by any Tax Authority, no written notice has been received from any Taxing Authority of the expected commencement of such an audit or examination, and no requests for information have been received from any Tax Authority, (f) there are no agreements or waivers providing for an extension of time with respect to the filing of any Tax Return or the assessment or collection of any such Tax, (g) no written claim has been made by any Tax Authority in a jurisdiction where Antero Midstream does not file a Tax Return that it is or may be subject to taxation in that jurisdiction, (h) Antero Midstream is not a party to any Tax Sharing Agreement, (i) no power of attorney that is currently in force has been granted with respect to any matter relating to Taxes that could affect Antero Midstream, (j) Antero Midstream has not participated in any listed transaction required to be disclosed under Treasury Regulation Section 1.6011-4, (k) Antero Midstream has not been a member of an affiliated group filing a consolidated Tax Return and has no liability for the Taxes of another Person under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign applicable law) as a transferee or successor, by contract or otherwise, (l) for federal income Tax purposes, Antero Midstream is (and always has been) a corporation, (m) Antero Midstream has not agreed to make any adjustments under Code Section 481(a) or similar provisions of other state, local or foreign applicable law as a result of a change in accounting method, (n) Antero Midstream will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Effective Time as a result of any (i) closing agreement with a Tax Authority executed on or prior to the Effective Time; (ii) installment sale or open transaction disposition made on or prior to the Effective Time; or (iii) prepaid amount received on or prior to the Effective Time, (o) Antero Midstream has no Tax rulings, requests for rulings or closing agreements with any Tax Authority, (p) Antero Midstream has complied with all applicable Laws relating to the withholding of Taxes and the payment thereof, and timely and properly withheld from employee wages and paid over to the proper Tax Authority all amounts required

 

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to be withheld and paid over under applicable Laws, (q) Antero Midstream has not entered into any compensatory agreements with respect to the performance of services with respect to which payment thereunder would reasonably be expected to result in a nondeductible expense to Antero Midstream pursuant to Section 280G of the Code, and Antero Midstream has no obligation to reimburse or gross-up any service provider with respect to Taxes imposed by Section 4999 of the Code, and (r) each nonqualified deferred compensation plan subject to Section 409A of the Code with respect to which Antero Midstream may have any liability complies with Section 409A of the Code in form and has been operated and administered in compliance (including good faith compliance, as applicable) with Section 409A of the Code and all applicable guidance promulgated thereunder, and Antero Midstream has no obligation to reimburse or gross-up any service provider with respect to Taxes imposed by Section 409A of the Code.

 

Section 4.12           Environmental Matters.  To the Knowledge of Seller, except as set forth on Schedule 4.12:

 

(a)           The Properties and operations of Antero Midstream are in compliance with applicable Environmental Law and Environmental Permits;

 

(b)           Antero Midstream has not received a notice of any violation of applicable Environmental Law or any Environmental Permits which has not been addressed to the satisfaction of the Governmental Authority issuing such notice;

 

(c)           Antero Midstream is not the subject of any outstanding administrative or judicial order or judgment, nor any agreement with or directive from any Governmental Authority, requiring investigation or Remediation of a Release of Hazardous Substances or the payment of a fine or penalty under any Environmental Laws;

 

(d)           none of the Property nor any previously owned, leased or otherwise used property of Antero Midstream is listed on the National Priorities List, the Comprehensive Environmental Response, Compensation and Liability Information System List, or any similar federal or state list of sites requiring environmental investigation or Remediation, nor has Antero Midstream received a CERCLA § 104(e) request for information or similar request for information from a Governmental Authority regarding a state or federal Superfund site or any other type of site;

 

(e)             no employee of Antero Midstream nor any third party has asserted a claim against Antero Midstream alleging liability for (i) exposure to Hazardous Substances in connection with the Business or (ii) personal injury caused by the failure of Antero Midstream to comply with applicable Environmental Laws that in either (i) or (ii) has not been resolved to the satisfaction of the employee or third party asserting such claim or any Governmental Authority involved in the resolution of such claim;

 

(f)             no underground storage tank currently exists or previously existed on the Property; and

 

(g)             Antero Midstream is not subject to any Environmental Liabilities with respect to which Remediation or corrective action is currently required under applicable Environmental Laws.

 

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Section 4.13           Legal Compliance.  Except with respect to (a) matters set forth in Schedule 4.10, (b) compliance with Laws concerning Taxes (as to which certain representations and warranties are made pursuant to Section 4.11), (c) compliance with Environmental Laws (as to which certain representations and warranties are made pursuant to Section 4.12), and (d) compliance with Permits (as to which representations and warranties are made pursuant to Section 4.14), to the Knowledge of Seller, Antero Midstream is in compliance with all applicable Laws and Antero Midstream has not received written notice of any violation of any Law relating to the Business or to any of their assets or operations which could reasonably be expected to materially and adversely impact Antero Midstream.

 

Section 4.14           Permits.  To the Knowledge of Seller, Antero Midstream possesses all Permits, including all Environmental Permits, necessary for it to own, lease and operate its assets and to lawfully operate and carry on the Business as currently conducted.  All such Permits are in full force and effect and, to the Knowledge of Seller, Antero Midstream or the applicable operator has operated the Business in compliance with such Permits.  Except as set forth in Schedule 4.12, there are no Proceedings pending or, to the Knowledge of Seller, threatened in writing before any Governmental Authority that seek the revocation, cancellation, suspension or adverse modification of any Permit or the imposition of any fine, penalty or other sanctions for violation of any legal or regulatory requirements relating to any Permit.  To the Knowledge of Seller, such Permits will not be subject to suspension, modification, revocation or non-renewal as a result of the execution, delivery and consummation of the transactions contemplated hereby.

 

Section 4.15           InsuranceSchedule 4.15 contains a summary description of all policies of property, fire and casualty, product liability, workers’ compensation and other insurance held by or for the benefit of Antero Midstream as of the date of this Agreement.  Except as reflected on Schedule 4.10, there is no material claim by Antero Midstream pending under any of such policies or bonds as to which coverage has been denied or disputed by the underwriters of such policies or bonds nor has any denial of coverage or reservation of rights notice been given by any such underwriter and issuer with respect to a claim that is still pending.  All premiums due under such policies have been timely paid, and Antero Midstream has complied with the terms and conditions of such policies.  All such insurance policies are in full force and effect.  No notice of cancellation or material alteration of coverage under, or indication of an intention not to renew, any such insurance policy has been received by Antero Midstream or any of its Affiliates other than in the ordinary course of business.

 

Section 4.16           Labor Relations and Employee Benefits.

 

(a)           Antero Midstream (i) is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed by Antero Midstream or third Person that provides services to Antero Midstream, and, to the Knowledge of Seller, there are no organizational campaigns, petitions or other unionization activities focusing on persons employed by Antero Midstream or third Person that provides services to Antero Midstream which seeks recognition of a collective bargaining unit and there have been no such campaigns, petitions, or activities in the previous four years, or (ii) is not, and has not been within the previous four years, subject to any strikes, material slowdowns or material

 

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work stoppages pending or, to the Knowledge of Seller, threatened between Antero Midstream and any group of the foregoing employees or any representative of the foregoing employees.  Antero Midstream is in material compliance with, and has at all times within the previous four years materially complied with, all applicable Laws relating to employment and employment practices, including the engagement of independent contractors, the engagement of staff leasing or similar companies, equal employment opportunity, non-discrimination, non-harassment, retaliation, affirmative action, terms and conditions of employment, wages, employment benefits, hours of work and overtime, worker classification as an employee or otherwise, employment-related immigration and authorization to work in the United States, occupational safety and health, notice of plant closings or mass layoffs, employee waivers of liability, and privacy of employee medical and health information.  As to Antero Midstream, there is no pending or threatened, nor within the previous four years has there been any, demand, charge, complaint, lawsuit, investigation, or Proceeding of any kind and in any forum by or on behalf of any present or former employee, applicant, person claiming to be an employee, or any classes of the foregoing, alleging or concerning a violation of, or compliance with any such applicable Laws relating to employment and employment practices.  Before the Closing, Antero Midstream co-employed certain employees (the “Shared Employees”) with Antero Resources Corporation and other Persons pursuant to that certain Amended and Restated Services Agreement by and among Antero Midstream, Antero Resources Corporation, and the other parties thereto (the “Service Agreement”).  As of the Closing Date, Antero Midstream no longer employs or co-employs any Shared Employees or other Persons and has no obligations or liabilities to any Shared Employees or other Persons under the Service Agreement, and Antero Midstream will not have any such obligations or liabilities following the Closing Date to any Shared Employees or other Persons under the Service Agreement.  As of the Closing Date, the obligations of Antero Midstream under the Service Agreement have been terminated and Antero Midstream has no liabilities under the Service Agreement, and Antero Midstream will not have any such obligations or liabilities following the Closing Date under the Service Agreement.  To the Knowledge of Seller, no current or former Shared Employee or other employee of Antero Midstream has a right to be recalled, reinstated or restored to employment by Antero Midstream following the Closing Date under any collective bargaining agreement, applicable Laws relating to employment and employment practices or employee leave, or contract, policy, or practice of Antero Midstream.  Except as set forth on Schedule 4.16, Antero Midstream is not a party to any outstanding agreements or contracts with any service provider that cannot be terminated upon notice by and at no expense or liability to Antero Midstream, or that provide for the payment of any severance, compensation, bonus, commission, or any similar remuneration by Antero Midstream following termination of such agreement or contract.  Antero Midstream has not experienced a “plant closing” nor “mass layoff” as those terms are defined by Worker Adjustment and Retraining Notification Act (“WARN Act”) within the last four years.  Antero Midstream is not the subject of any currently ongoing or, to the Knowledge of Seller, threatened investigations or audits related to employment-related violations by any Governmental Authority, and Antero Midstream is not, nor has been within the previous four years, subject to or otherwise bound by any Governmental Order issued by any Governmental Authority relating to employment-related violations.

 

(b)           Except as set forth in Schedule 4.16, Antero Midstream (i) does not have any employees as defined under applicable Law as of the Closing Date, whether co-

 

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employed or otherwise or (ii) does not sponsor, maintain, is not a participating employer in, or contributes, nor does it have any obligation to contribute, to any Benefit Plan.  For purposes of this Agreement, a “Benefit Plan” includes any employee benefit or welfare plan of any nature, whether or not subject to ERISA, and including but not limited to, any personnel policy, stock option plan, bonus plan or arrangement, incentive award plan or arrangement, vacation policy, severance or retention pay plan, policy, program or agreement, deferred compensation agreement or arrangement, executive compensation or supplemental income arrangement, retiree benefit plan or arrangement, fringe benefit program or practice (whether or not taxable), employee loan, consulting agreement, employment agreement and each other employee benefit plan, agreement, arrangement, program, practice or understanding.  The Shared Employees are not eligible to participate in or entitled to benefits under any Benefit Plan in which Antero Midstream sponsors, maintains, is a participating employer in, contributes, or has any obligation to contribute.

 

(c)           No fiduciary (as defined in ERISA Section 3(21)) has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any Benefit Plan which breach or failure could impose liability upon Antero Midstream.  With respect to any Benefit Plan listed or required to be listed on Schedule 4.16: (i) Seller has made available to the Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter or, if applicable, opinion letter received from the Internal Revenue Service, the most recent Form 5500 Annual Report, and all related trust agreements, insurance contracts, and other funding agreements, (ii) each such Benefit Plan complies in form and in operation in all material respects with the applicable requirements of ERISA, the Code, and other applicable Laws except for the adoption of any amendments the adoption of which is not yet required by applicable Laws, and all required reports, returns and descriptions have been timely and appropriately filed or distributed, as required, and (iii) all contributions, including premiums and other payments, have been timely made and no further contributions or other payments, including any premiums, costs, fees, penalties, taxes, or other amounts, will be owed by Antero Midstream with respect to any Benefit Plan on or after the Closing.

 

(d)           Neither Antero Midstream nor any ERISA Affiliate of Antero Midstream currently sponsors, maintains, participates in, contributes to or is required to contribute to, or has ever sponsored, maintained, participated in, contributed to or been required to contribute to any plan (including any multiemployer plan) subject to Title IV of ERISA or to Section 412 of the Code. “ERISA Affiliate” means with respect to a person or entity, any other person or entity which, together with such person or entity, would be treated as a single employer under Section 414 of the Code.   There does not now exist, nor do any circumstances exist that could result in, any “benefit plan liability” of Seller or any Affiliate or ERISA Affiliate of Seller that would be, or could become, a liability of Antero Midstream following the Closing.  As used in the preceding sentence, the term “benefit plan liability” means any and all liabilities (1) under Title IV of ERISA, (2) under Sections 206(g), 302 or 303 of ERISA, and (3) under Sections 412, 430, 431, 436 or 4971 of the Code.

 

(e)           Effective prior to the Closing, Seller will take all such action as may be needed to cause Antero Midstream to cease sponsoring, maintaining, administering, participating in or otherwise being obligated to contribute to or with respect to any and all

 

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Benefit Plans such that Antero Midstream shall no longer sponsor, maintain, administer, participate in or contribute to or be obligated to contribute to, or owe any other amounts with respect to any Benefit Plan on or after Closing.

 

(f)            There does not now exist, nor do the circumstances exist that could result in, any “incentive plan liability” of Seller or any Affiliate of Seller, including Antero Midstream, that would be, or could become, a liability of Antero Midstream following the Closing.  For this purpose, the term “incentive plan liability” includes any and all liabilities arising under or in connection with the Antero Midstream Corporation Amended and Restated 2006 Stock Incentive Plan, including all awards thereunder and documentation relating to the termination of said Plan and the cancellation of said awards, including under that certain instrument dated November 3, 2009 entitled “Termination of the Antero Resources Midstream Corporation Amended and Restated 2006 Stock Incentive Plan” and under that certain instrument dated May 25, 2010 entitled “Stock Option Termination Liability Transfer Agreement,” it being understood that any and all liability that Antero Midstream may have had under any said plans, awards or agreements has been paid in full or transferred to, and assumed by, Antero Resources Corporation or another Person with the result that Antero Midstream has no further liability thereunder.  Seller shall indemnify and hold harmless Buyer and its Affiliates, including Antero Midstream, for any claims, costs, fees, expenses or other amounts arising out of or relating to such incentive plan liabilities.

 

Section 4.17           Title to Properties and Related Matters.

 

(a)           Antero Midstream has delivered or made available to Buyer copies of the deeds and other instruments (as recorded) by which Antero Midstream acquired the real property interests owned by Antero Midstream, and copies of all title insurance policies, opinions, abstracts and surveys in the possession of Antero Midstream and relating to such real property interests.

 

(b)           Schedule 4.17(a) sets forth a true and correct list of all the personal property of Antero Midstream, which personal property is sufficient, in the aggregate, for Antero Midstream to conduct the Business as currently conducted (other than certain personal property assets located in Denver, Colorado that are used in the performance of administrative tasks and duties related to the Business that are conducted by Affiliates of Antero Midstream, including the functions contemplated by the Transition Services Agreement).  Antero Midstream has good and valid title to all of its personal property used in the ordinary conduct of the Business, except for easements, rights of way and similar property use rights which are addressed in subsection (d) below.  Except as set forth in Schedule 4.17(b), the personal property owned by Antero Midstream and used in the Business are subject to no Liens other than Permitted Liens.  Antero Midstream is not a party to any leases for real property.

 

(c)           All of the pipelines, gas gathering systems, facilities and other tangible assets owned, leased or used by Antero Midstream in the conduct of the Business are, to the Knowledge of Seller (i) structurally sound with no known defects, (ii) in good operating condition and repair, subject to ordinary wear and tear, and (iii) not in need of maintenance or repair except for ordinary, routine maintenance and repair.

 

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(d)           To the Knowledge of Seller, Schedule 4.17(d) sets forth a true and correct list of the Property.  Antero Midstream has such easements, rights of way and other similar property use rights which are sufficient, in the aggregate, for Antero Midstream to conduct the Business as currently conducted.  Buyer acknowledges that this Section 4.17(d) shall be deemed to be the only representation and warranty in the Agreement with respect to easements, rights of way and other similar property use rights held or used by Antero Midstream.

 

Section 4.18           Gas Imbalances.  Except as disclosed on Schedule 4.18, there do not exist as of the date of this Agreement any gas imbalances (production, gathering, processing, transportation or otherwise) which are associated with the Property and Antero Midstream has not received any quantity of gas prior to the Effective Time for which Buyer will have a duty to deliver an equivalent quantity of gas after the Effective Time.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES RELATING TO BUYER

 

Buyer hereby represents and warrants to Seller as follows:

 

Section 5.1             Organization of Buyer.  Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.

 

Section 5.2             Authorization; Enforceability.  Buyer has all requisite corporate power and authority to execute and deliver this Agreement and to perform all obligations to be performed by it hereunder.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by Buyer, and no other action or proceeding on the part of Buyer is necessary to authorize this Agreement.  This Agreement has been duly and validly executed and delivered by Buyer, and this Agreement constitutes a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

 

Section 5.3             No Conflict.  The execution and delivery of this Agreement by Buyer and the consummation of the transactions contemplated hereby by Buyer do not and shall not directly or indirectly (with or without notice or lapse of time):

 

(a)           violate any Law applicable to Buyer or any of its Affiliates or require any filing with, consent, approval or authorization of, or notice to, any Governmental Authority;

 

(b)           violate any Organizational Document or any resolution of the board of directors or stockholders of Buyer or any of its Affiliates; or

 

(c)           (i) breach any Contract to which Buyer or any of its Affiliates is a party or by which Buyer or any of its Affiliates may be bound, (ii) result in the termination of any such Contract, (iii) result in the creation of any Lien upon any of the properties or assets of Buyer or any of its Affiliates or (iv) constitute an event which, after notice or lapse of time

 

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or both, would result in any such breach, termination or creation of a Lien upon any of such properties or assets of Buyer or any of its Affiliates.

 

Section 5.4             Consents and Approvals.  The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby does not and will not require any consent, approval, authorization or other order or declaration of, action by, filing with, notification to or permit from, any third Person or any Governmental Authority, other than (a) the filings, consents, approvals authorizations and notices set forth in Schedule 5.4 (collectively, the “Buyer Approvals”), (b) compliance with, and filings under, the HSR Act or (c) as may be necessary as a result of any facts or circumstances relating solely to Seller or any of its Affiliates.

 

Section 5.5             Litigation.  There are no Proceedings before any Governmental Authority pending or, to the Knowledge of Buyer, threatened in writing against Buyer or any of its Affiliates that may, individually or in the aggregate, adversely affect the ability of Buyer to enter into and perform its obligations under this Agreement, and there are no Orders binding upon Buyer or any of its Affiliates that may adversely affect the ability of Buyer to perform its obligations under this Agreement.

 

Section 5.6             Brokers’ Fees.  No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by Buyer.

 

Section 5.7             Investment Representation.  Buyer is an “accredited investor” (as such term is defined in Rule 501 promulgated under the Securities Act of 1933) and is purchasing the Purchased Interests for its own account with the present intention of holding the Purchased Interests for investment purposes and not with a view to or for sale in connection with any public distribution of the Purchased Interests in violation of any federal or state securities Laws.  Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Purchased Interests.  Buyer acknowledges that the Purchased Interests have not been registered under applicable federal and state securities Laws and that the Purchased Interests may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of unless such transfer, sale, assignment, pledge, hypothecation or other disposition is registered under applicable federal and state securities Laws or pursuant to an exemption from registration under any federal or state securities Laws.

 

Section 5.8             FinancingBuyer will have available on the Closing Date all funds necessary to (i) pay the Purchase Price and all other amounts payable hereunder; (ii) pay any fees and expenses payable by Buyer in connection with the transactions contemplated hereby; and (iii) satisfy any of its other payment obligations hereunder.

 

ARTICLE VI
COVENANTS AND AGREEMENTS

 

Section 6.1             Conduct of Business.  From the date of this Agreement through the Closing, Seller agrees that it shall not, and shall not permit any of its Subsidiaries to,

 

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enter into any transaction involving a merger, consolidation, business combination, or disposition of any material amount of Seller’s assets or take any other action that would, in each case, be reasonably expected to materially delay the performance by Seller of its obligations under this Agreement.  From the date of this Agreement through the Closing, except as set forth on Schedule 6.1 or as consented to by Buyer in writing (which consent shall not be unreasonably withheld, conditioned or delayed), (a) Seller shall cause Antero Midstream to (x) operate its business in the ordinary course and (y) without limiting the generality of the effect of the foregoing, use Reasonable Efforts to preserve intact the business of Antero Midstream and Antero Midstream’s relationships with customers, suppliers and others having business relationships with Antero Midstream, (b) Seller shall not in any way transfer, dispose of or encumber any of the Purchased Interests or agree, in writing or otherwise, to the foregoing and (c) Seller shall cause Antero Midstream not to:

 

(i)            amend its Organizational Documents;

 

(ii)           liquidate, dissolve, recapitalize or otherwise wind up its business;

 

(iii)          (A) grant or increase any bonus, salary, severance, termination or other compensation or benefits or other enhancement to the terms or conditions of employment to any employee of Antero Midstream (other than bonuses that are taken into account in the calculation of Net Working Capital) or (B) adopt, enter into or amend in any material respect any employee benefit plan or collective bargaining agreement;

 

(iv)          change its accounting methods, policies or practices, except as required by GAAP or applicable Laws;

 

(v)           change any Tax method of accounting for any material item except as required by Law, or consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment;

 

(vi)          sell, assign, transfer, lease or otherwise dispose of any assets except in the ordinary course of business or pursuant to the terms of a Material Contract or pursuant to the Centrahoma Purchase Agreement;

 

(vii)         make any capital expenditure in excess of $250,000 other than capital expenditures reflected on Schedule 6.1 and other than reasonable capital expenditures in connection with any emergency or force majeure events affecting a Company;

 

(viii)        merge or consolidate with, or purchase substantially all of the assets or business of, or equity interests in, or make any loans, advances or capital contributions to, or investments in, any Person (other than in a Company or extensions of credit to customers in the ordinary course of business);

 

(ix)          issue or sell any equity interests, notes, bonds or other securities of Antero Midstream (except for intercompany loans from or to Seller or its Affiliates in the ordinary course of business that will be eliminated at or prior to Closing), or any option, warrant or right to acquire the same;

 

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(x)           declare, set aside or pay any dividend or other distribution with respect to any of its equity interests, or repurchase or redeem any of its equity interests;

 

(xi)          adopt any profit sharing, compensation, savings, insurance, pension, retirement or other benefit plan or otherwise hire any employees;

 

(xii)         incur, create or assume or modify the terms of any Indebtedness, including a Company Guarantee, or subject any asset of Antero Midstream to any Lien other than a Permitted Lien;

 

(xiii)        terminate or close any facility, business or operation of Antero Midstream except in the ordinary course of business;

 

(xiv)        except to the extent fully accrued in the Financial Statements, compromise, settle, grant any waiver or release any claims relating to any Proceeding other than compromises, settlements, waivers or releases (to the extent not already described in Schedule 6.1) that result in Antero Midstream incurring any costs or foregoing any benefits that individually are less than $50,000 and in the aggregate are less than $250,000, in each case net of any amounts recovered or reasonably expected to be recovered from insurance;

 

(xv)         materially modify the terms of any Material Contract or enter into any (A) revenue-generating Contract that has a term longer than 30 days, (B) Contract involving expenditures in excess of $250,000 or (C) Contract that would constitute a Material Contract; or

 

(xvi)        agree, whether in writing or otherwise, to do any of the foregoing.

 

Section 6.2             Investigation; Access; No Other Representations and Warranties.

 

(a)           Buyer acknowledges and agrees that it has made its own inquiry and investigation into, and, based thereon, has formed an independent judgment concerning Antero Midstream and the Business, and Buyer has been furnished with or given full access to such information about Antero Midstream and the Business as it requested.  In connection with Buyer’s investigation of Antero Midstream and the Business, Buyer and its Representatives have received from Seller, Antero Midstream or their respective Representatives certain projections and other forecasts for Antero Midstream and certain estimates, plans and budget information.  Buyer acknowledges and agrees that (i) there are uncertainties inherent in attempting to make such projections, forecasts, estimates, plans and budgets; (ii) Buyer is familiar with such uncertainties; and (iii) Buyer is taking full responsibility for making its own evaluations of the adequacy and accuracy of all estimates, projections, forecasts, plans and budgets so furnished to it or its Representatives.

 

(b)    Buyer agrees that, except for the representations and warranties made by Seller in Article III and Article IV, none of Seller or any of its Affiliates or Representatives has made and shall not be deemed to have made to Buyer or its Affiliates or Representatives any representation or warranty of any kind.  Without limiting the generality of the foregoing, and notwithstanding any otherwise express representations and warranties made by Seller in Article III and Article IV, Buyer agrees that none of Seller or any of its Affiliates or

 

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Representatives makes or has made any representation or warranty to Buyer or any of its Representatives or Affiliates with respect to:

 

(i)            any projections, forecasts, estimates, plans or budgets of future revenue, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of Antero Midstream or the future business or affairs of Antero Midstream heretofore or hereafter delivered to or made available to Buyer or its Representatives or Affiliates;

 

(ii)           any other information, statements or documents heretofore or hereafter delivered to or made available to Buyer or its Representatives or Affiliates, including the information contained in the data room, with respect to Antero Midstream or the Business or affairs of Antero Midstream, except as expressly covered by representations and warranties made by Seller in Article IV.

 

(c)    Seller acknowledges and agrees that, except for the representations and warranties made by Buyer in Article V, none of Buyer or any of its Affiliates or Representatives makes or has made to Seller or any of its Affiliates or Representatives any representation or warranty of any kind.

 

(d)           From the date hereof through the Closing, Seller shall (i) afford to Buyer and its authorized Representatives reasonable access, during normal business hours and in such manner as not to unreasonably interfere with normal operation of the Business, to the properties, books, contracts, records and appropriate officers and employees of Antero Midstream, (ii) facilitate access to any such books, contracts and records in the possession of third parties who provide services to Antero Midstream, (iii) facilitate access to third party producers and service providers, and (iv) furnish such authorized Representatives of Buyer with all financial and operating data and other information concerning the affairs of Antero Midstream as Buyer and such Representatives may reasonably request.  Seller, at no additional cost to Buyer, shall have the right to have one or more of its Representatives present at all times during any such inspections, interviews, and examinations.  Notwithstanding the foregoing, Buyer shall have no right of access to, and Seller shall have no obligation to provide to Buyer, information relating to (A) any information the disclosure of which would jeopardize any privilege available to Antero Midstream or Seller relating to such information or (B) any information the disclosure of which would result in a violation of Law.

 

(e)           Commencing promptly after the execution of this Agreement, Seller will provide Representatives of Buyer during normal business hours, at no cost or expense to Seller and at the sole cost and expense of Buyer, with access to (and, in the case of clauses (ii) and (iii), reasonable assistance from) (i) data, including accounting and other books and records and (ii) the accountants responsible for the financial statements of Antero Midstream. Seller agrees to authorize Buyer’s independent auditors to have access to the working papers associated with the financial statements of Antero Midstream.

 

Section 6.3             Third-Party Approvals.  Buyer and Seller shall (and shall each cause their respective Affiliates to) use Reasonable Efforts to obtain all material consents

 

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and approvals of third parties, including Governmental Authorities, that any of Buyer, Seller or their respective Affiliates are required to obtain in order to consummate the transactions contemplated hereby.

 

Section 6.4             Regulatory Filings.  From the date of this Agreement until the Closing, each of Buyer and Seller shall, and shall cause their respective Affiliates to, (i) make or cause to be made the filings required of such Party or any of its Affiliates under any Laws with respect to the transactions contemplated by this Agreement and to pay any fees due of it in connection with such filings, as promptly as is reasonably practicable, and in any event within ten Business Days after the date of this Agreement, except that Seller shall pay one-half of the filing fee due in connection with any one filing pursuant to the HSR Act as a result of this Agreement and the Centrahoma Purchase Agreement and Buyer shall pay any remaining filing fees due in connection with all filings pursuant to the HSR Act, (ii) cooperate with the other Party and furnish all information in such Party’s possession that is necessary in connection with such other Party’s filings, (iii) use Reasonable Efforts to cause the expiration of the notice or waiting periods under the HSR Act and any other Laws with respect to the transactions contemplated by this Agreement as promptly as is reasonably practicable, (iv) promptly inform the other Party of any communication from or to, and any proposed understanding or agreement with, any Governmental Authority in respect of such filings, (v) consult and cooperate with the other Party in connection with any analyses, appearances, presentations, memoranda, briefs, arguments and opinions made or submitted by or on behalf of any Party in connection with all meetings, actions and proceedings with Governmental Authorities relating to such filings, (vi) comply, as promptly as is reasonably practicable, with any requests received by such Party or any of its Affiliates under the HSR Act and any other Laws for additional information, documents or other materials, (vii) use Reasonable Efforts to resolve any objections as may be asserted by any Governmental Authority with respect to the transactions contemplated by this Agreement, and (viii) use Reasonable Efforts to contest and resist any action or proceeding instituted (or threatened in writing to be instituted) by any Governmental Authority challenging the transactions contemplated by this Agreement as violative of any Law.  If a Party intends to participate in any meeting with any Governmental Authority with respect to such filings, it shall give the other Party reasonable prior notice of, and an opportunity to participate in, such meeting.

 

Section 6.5             Company Guarantees.  A list of Company Guarantees as of the date hereof is set forth in Schedule 6.5 hereto, and Seller shall update such schedule as of the Closing Date, provided, however, that any such updates must be approved in writing by Buyer in accordance with the provisions of Section 6.1(xii).  Buyer shall obtain from the respective beneficiary, in form and substance reasonably satisfactory to Seller, on or before the Closing, valid and binding termination of Company Guarantees or releases of Seller and its Affiliates (other than the Companies), as applicable, from any liability or obligation, whether arising before, on or after the Closing Date, under any Company Guarantees in effect as of the Closing, including by providing substitute guarantees with terms that are as favorable to the counterparty as the terms of the applicable Company Guarantees and by furnishing letters of credit, instituting escrow arrangements, posting surety or performance bonds or making other arrangements as the counterparty may reasonably request.  Buyer shall indemnify and hold harmless Seller and its Affiliates from and after the Closing for any Losses arising out of or relating to any Company Guarantees.

 

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Section 6.6             Books and Records.  Within three Business Days after Closing, Seller shall, and shall cause its Affiliates to, transfer to Buyer copies of the books and records of the Companies (including electronic copies of all information in the data room), other than such books and records as are necessary for the Seller to perform its obligations under the Transition Services Agreement, which books and records the Seller shall, and shall cause its Affiliates to, transfer to Buyer within five Business Days of the termination of the Transition Services Agreement.  From and after the Closing, Buyer shall preserve and keep a copy of all books and records (other than Tax Records which are addressed in Article VIII) relating to the business or operations of the Companies on or before the Closing Date in Buyer’s possession for a period of at least seven years after the Closing Date.  After such seven-year period, before Buyer shall dispose of any such books and records, Buyer shall give Seller at least 90 days prior notice to such effect, and Seller shall be given an opportunity, at its cost and expense, to remove and retain all or any part of such books and records as Seller may select.  Buyer shall provide to Seller, at no cost or expense to Seller, reasonable access during business hours to such books and records as remain in Buyer’s possession and reasonable access during business hours to the properties and employees of Buyer and the Companies in connection with matters relating to the business or operations of the Companies on or before the Closing Date and any disputes relating to this Agreement.

 

Section 6.7             Permits. Seller and Buyer shall cooperate to provide all notices and otherwise take all actions required to transfer or reissue any Permits, including Environmental Permits, as a result of or in furtherance of the transactions contemplated by this Agreement.

 

Section 6.8             Indemnification of Officers and Directors, Employees and Agents.  For a period of not less than six years after the Closing Date, Buyer shall cause the Organizational Documents of Antero Midstream to continue to include the same provisions concerning the exculpation, indemnification, advancement of expenses to and holding harmless of, all past and present employees, officers, agents and directors of Antero Midstream for acts or omissions occurring at or prior to the Closing as are contained in such Organizational Documents as of the date of execution of this Agreement, and Buyer shall cause Antero Midstream (and any successors thereto) to jointly and severally honor all such provisions, including making any indemnification payments and expense advancements thereunder. If any indemnifiable claim is asserted or made within such six-year period, all rights to indemnification and advancement of expenses in respect of such claim shall continue to the extent currently permitted under Antero Midstream’s Organizational Documents until such claim is disposed of or all orders in connection with such claim are fully satisfied.

 

Section 6.9             Name Change.  Buyer agrees that (a) within ninety (90) days after the Closing Date, it will cause Antero Midstream to take all necessary steps to change its name so as not to include, and cease doing business in each jurisdiction under any name that includes, the word “Antero,” or any derivative, (b) at any time after the Closing Date, Seller and its Affiliates may engage in business in the oil and gas industry or any other activity using a name that includes the word “Antero,” and (c) after the Closing Date, Buyer will, and will cause Antero Midstream to, take all necessary steps to consent to the formation by Seller or its Affiliates of any entity under a name, and the use of a name by that entity, that includes the word “Antero” in any jurisdiction, to the extent contemplated by clause (b).

 

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Section 6.10           Interim Audited Financials. Seller shall cause KPMG LLP, or another nationally recognized accounting firm reasonably acceptable to Buyer, to conduct an audit of Antero Midstream’s consolidated financial statements for the period beginning January 1, 2010 and ending on the Effective Time, prepared in accordance with GAAP, consistently applied, and containing audited consolidated balance sheets of Antero Midstream as of the Effective Time, together with related statements of income and comprehensive income, changes in capital and cash flows, appropriate footnotes and audit opinions related thereto (the “Interim Financial Statements”), and shall deliver the Interim Financial Statements to Buyer on or before December 15, 2010.  Buyer shall be responsible for the payment of all of the fees charged by such external accounting firm for the audits of the Interim Financial Statements (such 2010 audit fees are already an accrued liability, 50% of which will be included in Current Liabilities).

 

Section 6.11           No Shop.

 

(a)           Seller shall not, shall cause the Companies and their respective Representatives not to, and shall not permit the Affiliates and Representatives of Seller or the Companies to directly or indirectly, (i) discuss, encourage, negotiate, undertake, initiate, authorize, recommend, propose or enter into, whether as the proposed surviving, merged, acquiring or acquired corporation or otherwise, any transaction involving a merger, consolidation, business combination, purchase or disposition of any material amount of the assets of the Companies or any capital stock or other ownership interests of the Companies other than the transactions contemplated by this Agreement or otherwise not expressly prohibited by Section 6.1 hereof (an “Acquisition Transaction”), (ii) facilitate, encourage, solicit or initiate discussions, negotiations or submissions of proposals or offers in respect of an Acquisition Transaction, (iii) furnish or cause to be furnished, to any Person, any information concerning the business, operations, properties or assets of the Companies in connection with an Acquisition Transaction, or (iv) otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to do or seek any of the foregoing.

 

(b)           Seller shall notify Buyer orally and in writing promptly (but in no event later than 24 hours) after receipt by any of the Seller, the Companies or any of the Representatives thereof of any proposal or offer from any Person other than Buyer to effect an Acquisition Transaction or any request for non-public information relating to the Companies or for access to the properties, books or records of the Companies by any Person other than Buyer.  Such notice shall indicate the identity of the Person making the proposal or offer, or intending to make a proposal or offer or requesting non-public information or access to the books and records of the Companies, the material terms of any such proposal or offer, or modification or amendment to such proposal or offer and copies of any written proposals or offers or amendments or supplements thereto.  Seller shall keep Buyer informed, on a current basis, of any material changes in the status and any material changes or modifications in the material terms of any such proposal, offer, indication or request.

 

(c)           Seller shall (and Seller shall cause its Representatives and shall cause the Companies and their Representatives to) immediately cease and cause to be terminated

 

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any existing discussions or negotiations with any Persons (other than Buyer) conducted heretofore with respect to any Acquisition Transaction.  Seller agrees not to (and agrees to cause the Companies not to) release any third party from the confidentiality and standstill provisions of any agreement to which either of the Companies is a party.

 

Section 6.12           Non-Compete.  For a period beginning on the date hereof and ending on the date that is two (2) years from the Effective Time, Seller agrees that it will not, and Seller shall cause each of its respective Subsidiaries, whether now or hereafter existing, not to, on its own behalf or as a partner, stockholder, member, principal, agent or consultant of, or in any other capacity for, any other Person (other than prior to the Closing Date by continuing to own and operate the Companies):

 

(a)           engage or invest in, own, manage, operate, control or participate in the ownership, management, operation, or control of, lend its credit to, or render services to, any Person that is engaged in or assets that involve the natural gas or natural gas liquids gathering, transportation, processing, or treating within the dedication areas covered by the ARC Agreements (the “Non-Compete Business”); provided, however, that (i) the Non-Compete Business shall not be construed to include Seller’s business activities (other than natural gas or natural gas liquids midstream activities) relating to the leasing, exploration, production and development of oil and gas properties and other upstream activities or the marketing or sale of Hydrocarbons therefrom, (ii) Seller may render services to any Person engaged in the Non-Compete Business as long as such services rendered by Seller do not directly relate to the Non-Compete Business and (iii) to the extent Seller and its Subsidiaries have complied with their respective obligations under the ARC Agreements (to the extent applicable), Seller and its Subsidiaries may engage in the ownership and/or operation of natural gas or natural gas liquids gathering or transportation systems for the purpose of transporting Hydrocarbons from wells operated by Seller or its Affiliates.

 

(b)           Seller acknowledges that the restrictions imposed by this Section 6.12 are fair and reasonable in light of the consideration paid by Buyer for the Purchased Interests and further acknowledges and agrees that, in the event of any breach or threatened breach by Seller of this Section 6.12, Buyer shall be entitled to temporary and/or permanent injunctive relief, without the necessity of posting a bond or proving damages, to enforce said provisions.  Buyer, in its sole discretion, may also seek to obtain temporary and/or permanent injunctive relief or to recover monetary damages as a result of a breach of this Section 6.12.

 

Section 6.13           Execution of Agreements.  To the extent so requested in writing by Buyer, Seller shall use its reasonable best efforts to cause Antero Midstream, Antero Resources Corporation and Centrahoma JV, as applicable, to enter into the Transition Services Agreement, the ONEOK Tupelo Proposal, and each of the Proposed Centrahoma Agreements, in each case so long as each of such agreements, documents and instruments shall not be effective until, and shall be subject to the occurrence of, the Closing.

 

Section 6.14           Further Assurances.  After the Closing, Seller shall execute and deliver, and shall otherwise cause to be executed and delivered, from time to time, such further documents (including corrections to any exhibits or conveyances that are not accepted as being in recordable form), and do such other and further acts and things, as may be

 

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reasonably necessary to more fully and effectively grant, convey and assign the Property and the Business to Buyer.  Furthermore, without limitation of the foregoing, it is expressly understood that the Property is to include all the assets and properties from which the net revenues of the Business were derived from the inlet flange of the meter connected to the applicable pipeline which is owned by Antero Midstream to the plant owned and operated by Antero Midstream and all Material Contracts; and if it should be discovered, from time to time, that such assets and properties were not granted, conveyed, and assigned to Buyer at the Closing, Seller shall execute and deliver, and shall otherwise cause to be executed and delivered, from time to time, such further documents and do such further act and things as may be reasonably necessary to fully and effectively grant, convey and assign such assets and properties to Buyer, including all meters utilized in connection with the Midstream Facilities.

 

Section 6.15           Section 382 Study.  Seller and Buyer shall cooperate in the preparation of an analysis of whether Antero Midstream has undergone one or more ownership changes under Section 382 of the Code and, if such an ownership change has occurred, a determination of the amount of the “section 382 limitation” and “net unrealized built-in gain” as of the date or dates of such ownership change or changes (as those terms are defined in Section 382 of the Code), and the amount, if any, by which (i) the federal, state and local income Tax due from Antero Midstream for the taxable year that includes the Closing Date as a result of the sale contemplated by the Centrahoma Purchase Agreement, exceeds (ii) the federal, state and local income Tax that would have been due from Antero Midstream as a result of such sale absent any such ownership change (such excess, subject to the reduction described in Section 9.2(l), is referred to as the “Centrahoma Section 382 Tax”).  Seller shall provide to Buyer a written report of the results of such analysis (the “Draft Section 382 Study”) for Buyer’s review and comment, and if the Centrahoma Section 382 Tax would exceed $1,000,000 (prior to the application of the reduction described in Section 9.2(l)), Seller shall also provide to Buyer written notice indicating whether or not Seller waives the application of the condition to Seller’s obligation to consummate the transactions contemplated by this Agreement pursuant to Section 9.2(l), no later than 5 Business Days before the Closing Date.  Seller shall give due consideration to any comments to the Draft Section 382 Study received from Buyer and deliver a final Section 382 Study (the “Section 382 Study”) to Buyer prior to the Closing Date.

 

ARTICLE VII
DUE DILIGENCE EXAMINATION

 

Section 7.1             Assertion of Defects.  Buyer may, to the extent it deems appropriate, conduct, at its sole cost, such title, environmental, or other examination or investigation as it may choose to conduct with respect to the Property or the operation of the Business; provided, however, that Buyer shall not perform any invasive sampling or subsurface investigation without the prior written consent of the Seller, which consent shall not be unreasonably withheld.  Buyer agrees to indemnify Seller for any costs or liabilities incurred by Seller (including, in the event the Closing does not occur, costs or liabilities incurred by Antero Midstream) as a direct result of any verifiable Property damages arising from Buyer’s examination or investigation (including any invasive sampling or subsurface investigation); provided that such Property damages shall not include any Remediation that might be required as a result of the underlying Environmental Condition that prompted the invasive sampling or subsurface investigation.  Should, as a result of such examination and investigation, or otherwise,

 

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matters come to Buyer’s attention which would constitute Defects (as below defined), and should there be one or more of such Defects which Buyer determines it is unwilling to waive and close the transaction contemplated hereby notwithstanding the fact that such Defects exist, Buyer shall or cause its Representatives to, notify Seller in writing (a “Defects Notice”) of such Defects at least five (5) Business Days prior to the Closing (the “Claim Date”).  Such Defects of which Buyer so provides notice are herein called “Asserted Defects”.  In the event that Buyer notifies Seller of Asserted Defects, Seller shall have the right (but not the obligation) to attempt to cure, such Asserted Defects to the reasonable satisfaction of Buyer.  For all purposes of this Agreement and notwithstanding anything herein to the contrary, Buyer shall be deemed to have waived, and Seller shall have no liability for, any Defect that Buyer fails to assert as a Defect by a Defect Notice received by Seller on or before the Claim Date.  The representations and warranties regarding title to, or the sufficiency of, the Property, including any required third party consents required under the terms of the rights-of-way or surface agreements included among the Property or other Defects shall terminate and expire on the Claim Date, and following such termination, no claim may be brought against Seller with respect to such matters unless a claim for an Asserted Defect has been properly brought pursuant to this Article VII prior to such termination.  To be effective, each Defect Notice shall be in writing, and shall include (i) a description of the alleged Asserted Defect(s), (ii) the relevant Property or operation of the Business affected by the Asserted Defect (each a “Defect Property” or a “Defect Operation,” as applicable), (iii) the estimated value of each Defect Property or each Defect Operation, (iv) to the extent available, a description of the supporting documents reasonably necessary for Seller to verify the existence of the alleged Asserted Defect(s) and (v) Buyer’s reasonable estimate of the Defect Amount.  The Seller shall have the right, but not the obligation (at its sole cost) to cure any Asserted Defects on or before one-hundred twenty (120) days after the Closing Date (the “Cure Period”).

 

Section 7.2             Defects Defined.  The term “Defect” as used in this Section shall mean either “Title Defects” or “Environmental Defects”.

 

(a)           A “Title Defect” means that Antero Midstream’s ownership of the: (i) Midstream Facilities is such that it does not entitle Antero Midstream to own, operate, maintain, repair, replace or use all or a portion of the Midstream Facilities in accordance with the prudent practices of the gas pipeline industry; (ii) Property does not entitle Antero Midstream to own, locate, operate, maintain, repair, replace or use all or a portion of the Midstream Facilities in accordance with the prudent practices of the natural gas pipeline industry; (iii) Property is such that, when the Property is transferred to Buyer pursuant to this Agreement, Buyer will not receive good and marketable title to all or a portion of the Property free and clear of all adverse Liens, other than Permitted Liens; or (iv) any Property is subject to a Lien other than a Permitted Lien; provided that the following shall not be considered Title Defects:

 

(i)            defects in the chain of title consisting of the failure to recite marital status in a document or omissions of successions of heirship or estate proceedings;

 

(ii)           defects based solely on (i) lack of information in Antero Midstream’s files or (ii) references to a document(s) if such document(s) is not in Antero

 

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Midstream’s file so long as such information or document is on file in the applicable public record;

 

(iii)          defects based on a gap in Antero Midstream’s chain of title in the county records, unless such gap is affirmatively shown to exist in such records by an abstract of title, title opinion or landman’s title chain, which documents shall be included in a Defect Notice;

 

(iv)          defects arising out of lack of survey, unless a survey is expressly required by applicable Laws; and

 

(v)           defects or such other imperfections of title that Seller can show by a preponderance of the evidence would normally be waived or accepted by persons, advised of the facts and their legal significance, engaged in the gas pipeline industry when purchasing rights-of-way.

 

(b)           An “Environmental Defect” is (i) any violation of, or noncompliance with, any applicable Environmental Laws or Environmental Permits that adversely affects the Property or the operation of the Business, (ii) a condition, including an Environmental Condition, upon or under a Property, which requires investigation, Remediation or corrective action under applicable Environmental Laws, (iii) any other Environmental Liability with respect to which Remediation or corrective action is currently required under applicable Environmental Laws or (iv) any potential environmental condition that has been identified by Buyer or Buyer’s environmental consultant but, with respect to which, Seller did not consent to Buyer conducting invasive sampling or a subsurface investigation.

 

Section 7.3             Remedies for Defects.  Subject to Seller’s continuing right to dispute the existence of a Defect or the Defect Amount asserted with respect thereto, if any Asserted Defect is not waived in writing by Buyer or cured by the Cure Period with respect to such Defect, Seller shall, at its sole option and subject to the Defect Deductible and the Defect Cap, elect to:

 

(a)           return to Buyer by wire transfer in immediately payable funds the amount determined pursuant to Section 7.6 as being the value of such Defect (the “Defect Amount”); or

 

(b)           indemnify Buyer against all Losses resulting from such Asserted Defect pursuant to an indemnity agreement (the “Indemnity Agreement”) in substantially the form attached hereto as Exhibit G.

 

For avoidance of doubt, Seller may elect a different remedy permitted under this Section 7.3 with respect to each Defect.

 

Section 7.4             Dispute of Defect or Defect Amount.  If the existence of the Asserted Defect or the Defect Amount is timely asserted prior to Claim Date, but is disputed, no reduction shall be made in the Purchase Price at Closing and instead such adjustment, if any, shall be made as part of the final settlement pursuant to Section 2.5, or if not yet then resolved, thereafter when resolved in accordance with this Article VII.  Upon such resolution and a

 

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conclusion pursuant thereto that a Defect exists, if Seller elects the option set forth in clause (a) of Section 7.3 above, then Buyer shall be deemed to have assumed responsibility for all of the costs and expenses attributable to the respective Asserted Defect and all liabilities with respect thereto and the foregoing shall be deemed to constitute obligations of Buyer.  If Seller is unable to cure any Defect within the Cure Period, then Seller shall within five Business Days after the expiration of the Cure Period, select one of the remedies set forth in clauses (a) or (b) of Section 7.3 as the remedy for such Defect.

 

Section 7.5             Exclusive Remedy.  This Article VII shall be the sole and exclusive right and remedy of Buyer with respect to Defects with respect to any of the Property or any other Environmental Liability.

 

Section 7.6             Defect Amount.  The Defect Amount resulting from a Defect shall be the amount by which the value of the affected Defect Property or the value of the Business, whichever is greater, is reasonably reduced as a result of the existence of such Defect and shall be determined in accordance with the following terms and conditions:

 

(a)           if Buyer and Seller agree on the Defect Amount, then that amount shall be the Defect Amount;

 

(b)           if an Environmental Defect, the reasonable cost necessary to investigate, Remediate and take any corrective action in the most cost-effective manner, incorporating the least stringent clean-up standards that, based upon the use classification of the subject Property, are allowed under applicable Environmental Law and using the least costly methods that are allowed under applicable Environmental Law, and for Environmental Defects not involving clean-up of contamination, the reasonable cost necessary to investigate, Remediate and take corrective action;

 

(c)           if a Title Defect is a Lien that is undisputed and liquidated in amount, then the Defect Amount shall be the amount necessary to be paid to remove the Title Defect from the Defect Property;

 

(d)           if a Title Defect represents an obligation or Lien upon or other defect in title to the Defect Property of a type not described above, the Defect Amount shall be determined by taking into account the portion of the Defect Property affected by the Title Defect, the legal effect of the Title Defect, the reasonably estimated potential economic effect of the Title Defect over the life of the Defect Property, the values and estimated cost to cure placed upon the Title Defect by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation; provided, however, that if such Title Defect is reasonably capable of being cured, the Defect Amount shall not be greater than the reasonable cost and expense of curing such Title Defect;

 

(e)           if a Title Defect relates to an ownership gap in a right-of-way included in the Property, the Defect Amount shall be the reasonable estimated costs and expenses necessary to cure such gap, or alternatively, to construct an alternative route for the pipeline system around such gap, including the cost of acquiring any necessary real property right-of-way and related capital expenditures; and

 

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(f)            the Defect Amount with respect to a Defect Property shall be determined without duplication of any costs or losses included in another Defect Amount hereunder.

 

Section 7.7             Limitations on Adjustment.  Notwithstanding anything to the contrary, there shall not be any remedies provided by Seller for any Defect Amount unless all Defect Amounts in the aggregate (excluding any Defects cured by Seller or which it has elected to cure and the Cure Period has not expired with respect to such election) pursuant to this Agreement and pursuant to Article VII of the Centrahoma Purchase Agreement (with respect to “Defects,” “Defect Amounts” and “Cure Period” as defined therein) collectively exceed $250,000 (the “Defect Deductible”), after which point, Buyer shall be entitled to the remedies provided for in Section 7.3 only with respect to such Defects in excess of such Defect Deductible, and in no event shall Seller’s aggregate liabilities and obligations relating to Defects in accordance with this Article VII (including for purposes of this calculation, amounts spent by Seller to cure any Defect) and in accordance with Article VII of the Centrahoma Purchase Agreement (with respect to “Defects” as defined therein) collectively exceed $13,400,000 (the “Defect Cap”).

 

Section 7.8             Arbitration.

 

(a)           The Parties agree that any and all disputes or claims by either Party arising from or related to this Article VII that cannot be amicably settled, shall be determined solely and exclusively by arbitration in accordance with the Federal Arbitration Act and using the rules of the American Arbitration Association or any successor thereof when not in conflict with such act and under the choice of law clause contained in this agreement.  Arbitration shall take place at an appointed time and place in Denver County, Colorado.

 

(b)           Each Party shall select one impartial arbitrator, and the two so designated shall select a third impartial arbitrator.  If either Party shall fail to designate an arbitrator within fourteen (14) days after arbitration is requested, or if the two arbitrators shall fail to select a third arbitrator within thirty (30) days after arbitration is requested, then an arbitrator shall be selected by the Senior U.S. District Judge for the District of Colorado.  Judgment upon an award of the majority of the arbitrators shall be final and binding upon the Parties.

 

(c)           Discovery shall be made pursuant to the Federal Rules of Civil Procedure and completed within forty-five (45) days of selection of the third arbitrator.  Final hearing on the matter shall be had within sixty (60) days of the selection of the third arbitrator and a final decision (which is based on the law and the facts and may include the award of attorney’s fees and costs) with a written opinion stating the reasons therefor shall be rendered within seventy-five (75) days of said date.

 

(d)           The arbitration process shall be kept confidential and such conduct, statements, promises, offers, views and opinions shall not be used by either Party in any legal proceeding or for any other purpose, except to the extent reasonably necessary to enforce the final decision of the arbitrators.

 

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ARTICLE VIII
TAX MATTERS

 

Section 8.1             Tax Returns Due After the Closing Date.  Buyer shall cause Antero Midstream to prepare and duly file all Tax Returns that are required to be filed after the Closing Date by or with respect to Antero Midstream, including any such Tax Return covering any Taxable year or Taxable period commencing before and ending after the Effective Time (the “Straddle Period”).  Buyer shall provide drafts of Tax Returns for a Straddle Period (or any period ending on or before the Effective Time that Buyer is required to file) to Seller for Seller’s review no later than 10 days prior to the due date of such Tax Returns, and Buyer shall consider in good faith any comments provided by Seller.  With respect to Taxes for a Straddle Period (or any period ending on or before the Effective Time that Buyer is required to file), upon notice from Buyer, Seller shall pay to Buyer, prior to the due date for any such Tax Return, an amount equal to Seller’s share of such Taxes, except to the extent that such Taxes have been taken into account as a Current Liability in the determination of Net Working Capital.  For purposes of this section, Seller’s share of Taxes for a Straddle Period shall (i) in the case of Taxes not based upon or related to income or receipts, be deemed to be the amount of such Tax for the entire Straddle Period multiplied by a fraction the numerator of which is the number of days in the Straddle Period ending on the Effective Time and the denominator of which is the number of days in the entire Straddle Period, and (ii) in the case of any Tax based upon or related to income or receipts, be deemed to be the amount which would be payable if (A) the Straddle Period ended on the Effective Time, and (B) any net operating losses (existing as of the Effective Time) of Antero Midstream could be and were used first to offset income or receipts attributable to the portion of the Straddle Period ending on the Effective Time.  For the avoidance of doubt, notwithstanding anything else in this Agreement, Seller shall not be liable for any Tax liabilities of Antero Midstream resulting from the transactions contemplated by this Agreement.

 

Section 8.2             Tax Cooperation.  Buyer and Seller shall cooperate fully, and Buyer shall cause each of the Companies to cooperate fully, as and to the extent reasonably requested by the other Party, in connection with requests for the provision of any information or documentation within the Knowledge or possession of the other Party, or any information or documentation that can be reasonably obtained from the appropriate Person by the other Party, as reasonably necessary to facilitate compliance with financial reporting obligations arising under FASB Statement No. 109 (including compliance with Financial Accounting Standards Board Interpretation No. 48), the filing of any Tax Return, and any audit, litigation, administrative or other proceeding with respect to Taxes.  Seller shall provide reasonable assistance and cooperation to Buyer to obtain adequate support for the position described in the Section 382 Study.

 

Section 8.3             Transfer Taxes.  Buyer shall be responsible for and indemnify Seller for the payment of all state and local transfer, sales, use, stamp, registration or other similar Taxes resulting from the transactions contemplated by this Agreement.

 

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ARTICLE IX
CONDITIONS TO OBLIGATIONS

 

Section 9.1             Conditions to the Obligations of Buyer.  The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by Buyer:

 

(a)           The waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or shall have been terminated or any applicable approval shall have been obtained;

 

(b)           (i) The Fundamental Representations and Warranties shall be true in all respects as of the date of this Agreement and as of the Closing and (ii) the representations and warranties of Seller contained in this Agreement (other than the Fundamental Representations and Warranties) (considered without regard to any qualification by, or reference to, materiality, material respects or Material Adverse Effect set forth therein) shall be true in all respects as of the date of this Agreement and as of the Closing (other than such representations and warranties that expressly address matters only as of a certain date, which need only be true as of such certain date), except for such failures to be true as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Antero Midstream;

 

(c)           Seller shall have performed or complied in all material respects with all of the covenants and agreements required by this Agreement to be performed or complied with by it at or before the Closing;

 

(d)           There shall have not occurred since the date of this Agreement any event or circumstance that would reasonably be likely to result in a Material Adverse Effect on Antero Midstream;

 

(e)           Seller shall have delivered to Buyer a certificate, dated as of the Closing Date, certifying that the conditions specified in Section 9.1(b), (c) and (d) have been fulfilled;

 

(f)            Seller shall have delivered to Buyer such documents as shall have been required by Buyer, including full and unconditional releases, evidencing that all intercompany debt owed by Antero Midstream has been paid;

 

(g)           No statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction, judgment or other order shall have been enacted, entered, promulgated, enforced or issued by any Governmental Authority, or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect, and no investigation, action or proceeding before a Governmental Authority shall have been instituted or threatened challenging or seeking to restrain or prohibit the transactions contemplated hereby or to recover damages in connection therewith;

 

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(h)           Buyer shall have received a true and complete copy, certified by the secretary of Seller, of resolutions duly and validly adopted by the board of directors of Seller, evidencing its authorization of the execution and delivery of this Agreement and the consummation of transactions contemplated hereby;

 

(i)            Seller shall have delivered to Buyer all of the documents, certificates and other instruments required to be delivered under, and otherwise complied with the provisions of, Section 2.3(b);

 

(j)            Buyer shall have received all Seller Approvals and Antero Midstream Approvals, in form and substance satisfactory to Buyer;

 

(k)           Buyer shall have received a fully executed copy of each of the Proposed Centrahoma Agreements and the ARC Agreements;

 

(l)            Antero Resources Corporation shall have delivered to Buyer a duly executed copy of the Transition Services Agreement;

 

(m)          The closing of the Centrahoma Purchase Agreement shall have occurred;

 

(n)           There shall have not occurred since the date of this Agreement any event that has caused ONEOK to cease purchasing all plant products from the Coalgate and Atoka plants of Centrahoma JV as a result of any shutdown, interruption or declaration of force majeure by ONEOK, which cessation of purchasing of all such production is reasonably likely to continue for a period of not less than 60 consecutive days;

 

(o)           There shall have not occurred events or circumstances that would result in or give rise to claims by Buyer Indemnified Parties for indemnification under Article X of this Agreement (assuming the Closing actually had occurred) and under Article X of the Centrahoma Purchase Agreement (assuming the Closing thereunder actually had occurred) and that would be reasonably likely to result in aggregate Losses incurred by such Buyer Indemnified Parties in excess of $26,800,000 (which individual claims for which Buyer believes it would be entitled to indemnification if the Closing had occurred and the resulting reasonable good faith estimate of Losses shall be identified and described in writing delivered by Buyer to Seller prior to the Closing); and

 

(p)           Buyer’s comments to the Draft 382 Study shall have been addressed in a manner reasonably satisfactory to Buyer.

 

Section 9.2             Conditions to the Obligations of Seller.  The obligation of Seller to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by Seller:

 

(a)           The Seller Approvals set forth on Schedule 3.4 shall have been duly made, given or obtained and shall be in full force and effect;

 

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(b)           (i) The representations and warranties contained in Sections 5.1, 5.2 and 5.3 of this Agreement shall be true in all respects as of the date of this Agreement and as of the Closing and (ii) the representations and warranties of Buyer contained in this Agreement (other than those representations and warranties set forth in Sections 5.1, 5.2 and 5.3 of this Agreement) (considered without regard to any qualification by, or reference to, materiality, material respects or Material Adverse Effect set forth therein) shall be true in all respects as of the date of this Agreement and as of the Closing (other than such representations and warranties that expressly address matters only as of a certain date, which need only be true as of such certain date), except for such failures to be true as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Buyer;

 

(c)           Buyer shall have performed or complied in all material respects with all of the covenants and agreements required by this Agreement to be performed or complied with by Buyer on or before the Closing;

 

(d)           Buyer shall have delivered to Seller a certificate, dated as of the Closing Date, certifying that the conditions specified in Section 9.2(b) and (c) have been fulfilled;

 

(e)           No statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction, judgment or other order shall have been enacted, entered, promulgated, enforced or issued by any Governmental Authority, or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect, and no investigation, action or proceeding before a court or any other governmental agency or body shall have been instituted or threatened challenging or seeking to restrain or prohibit the consummation of the transactions contemplated by this Agreement or to recover damages in connection therewith;

 

(f)            Buyer shall have delivered to Seller all of the documents, certificates and other instruments required to be delivered under, and otherwise complied with the provisions of, Section 2.3(c);

 

(g)           Seller shall have received all Buyer Approvals, in form and substance satisfactory to Seller;

 

(h)           Seller and its Affiliates shall have received a full and unconditional release in form and substance reasonably satisfactory to Seller of the Company Guarantees;

 

(i)            Seller shall have received a true and complete copy, certified by the secretary of Buyer, of resolutions duly and validly adopted by the board of directors of Buyer, evidencing authorization of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby;

 

(j)            The closing of the Centrahoma Purchase Agreement shall have occurred;

 

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(k)           The waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or shall have been terminated or any applicable approval shall have been obtained; and

 

(l)            Unless Seller has waived the application of this Section 9.2(l) pursuant to Section 6.15, the Centrahoma Section 382 Tax does not exceed $1,000,000; provided that, in the event the Centrahoma Section 382 Tax would exceed $1,000,000 (prior to the application of the reduction described in this Section 9.2(l)), Buyer may elect to treat the Centrahoma Section 382 Tax as equal to $1,000,000 by providing written notice to Seller of this election no later than 3 Business Days before the Closing Date, in which case the Centrahoma Section 382 Tax shall be deemed to be equal to $1,000,000 for purposes of this Section 9.2(l) and for all other purposes under this Agreement.

 

ARTICLE X
INDEMNIFICATION

 

Section 10.1           Survival.  The representations and warranties in this Agreement and all covenants contained in this Agreement shall survive the Closing until 6 months after the Closing Date, except that (a) the representations and warranties in Section 4.12 (Environmental Matters), the first sentence in Section 4.17(b) and all of Section 4.17(d) (Title to Properties and Related Matters) shall expire on the Closing Date, and (b) the covenants in Section 6.12 (Non-Compete) and Section 6.14 (Further Assurances) shall survive until two years after the Closing Date.  No Party shall have any liability for indemnification claims made under this Article X with respect to any representations, warranty or covenant in this Agreement unless a notice of such indemnification claim is provided by the claiming Buyer Indemnified Party or Seller Indemnified Party, as applicable, to the Indemnifying Party prior to the expiration of the applicable survival period for such representations, warranty or covenant.  Notwithstanding the preceding sentence, any representation or warranty in respect of which indemnity may be sought under this Agreement will survive the time at which it would otherwise terminate pursuant to the preceding sentence if written notice of the inaccuracy or breach thereof giving rise to such right of indemnity has been given to the Party against whom such indemnification may be sought prior to such time; provided that such right of indemnity shall continue to survive and shall remain a basis for indemnification hereunder only until the related claim for indemnification is resolved or disposed of in accordance with the terms of this Article X.

 

Section 10.2           Indemnification.

 

(a)           From and after the Closing, Seller will indemnify, defend and hold harmless Buyer and its officers, members, directors, employees and Affiliates (the “Buyer Indemnified Parties”) against any and all Losses incurred or suffered as a result of, relating to or arising out of (i) any failure of any representation or warranty made by Seller in this Agreement or any closing certificate delivered pursuant to Section 9.1(b) to be true and correct as of the Closing (as if made anew at and as of the Closing); provided, however, that for purposes of determining under this Section 10.2 the amount of Losses incurred or suffered, any reference to “materiality” or “Material Adverse Effect” in such representation or warranty shall be disregarded, or (ii) the breach of any covenant or agreement made or to be performed by Seller pursuant to this Agreement.  Notwithstanding anything herein to the contrary, (x) Seller will not

 

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be liable except to the extent the aggregate amount of Losses with respect to such matters under Article X of this Agreement and Article X of the Centrahoma Purchase Agreement (with respect to “Losses” as defined therein) collectively exceed $1,340,000, in which case Seller shall be liable only for Losses above and beyond such amount and (y) in no event shall Seller’s aggregate liabilities and obligations arising under Article X of this Agreement and Article X of the Centrahoma Purchase Agreement collectively exceed $26,800,000; provided, however, that the limitations set forth in this Section 10.2(a) shall not apply in the case of claims based upon intentional misrepresentation or fraud by Seller.

 

(b)           From and after the Closing, Buyer will indemnify, defend and hold harmless Seller and its officers, members, directors, employees and Affiliates (the “Seller Indemnified Parties”) against any and all Losses incurred or suffered as a result of, relating to or arising out of (i) any failure of any representation or warranty made by Buyer in this Agreement or any closing certificate delivered pursuant to Section 9.2(b) to be true and correct as of the Closing (as if made anew at and as of the Closing), and (ii) the breach of any covenant or agreement made or to be performed by Buyer pursuant to this Agreement.

 

(c)           Except for the provisions of Section 10.1, nothing in this Article X shall apply to Losses with respect to any and all Defects (including the representations and warranties set forth in Sections 4.12 and 4.17(d)), the Losses with respect to which shall be as set forth in Article VII.

 

(d)           Notwithstanding anything to the contrary in this Agreement, the Buyer Indemnified Parties shall be deemed not to have suffered any Losses under this Section 10.2 arising from claims based on specific types of assets and liabilities included in determining the Final Net Working Capital.  It is the intent of the Parties that (i) the procedures set forth in Section 2.5 and the dispute resolution procedures referenced therein shall provide the sole and exclusive remedies for claims relating to the calculation of Final Net Working Capital and (ii) Buyer shall not have recourse pursuant to Section 10.2 for breaches of representations and warranties contained in this Agreement to the extent that the facts constituting any such breaches are taken into account in determining Final Net Working Capital pursuant to Section 2.5.

 

(e)           THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE X SHALL BE ENFORCEABLE REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.

 

Section 10.3           Procedures.

 

(a)           If any Person who or which is entitled to seek indemnification under Section 10.2 (an “Indemnified Party”) receives notice of the assertion or commencement of any claim asserted against an Indemnified Party by a third party (“Third Party Claim”) in respect of any matter that is subject to indemnification under Section 10.2, the Indemnified Party shall promptly (i) notify the party against whom indemnification is sought (the “Indemnifying Party”) of the Third Party Claim and (ii) transmit to the Indemnifying Party a written notice (“Claim

 

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Notice”) describing in reasonable detail the nature of the Third Party Claim, a copy of all papers served with respect to such claim (if any), the Indemnified Party’s best estimate of the amount of Losses attributable to the Third Party Claim and the basis of the Indemnified Party’s request for indemnification under this Agreement. Failure to timely provide such Claim Notice shall not affect the right of the Indemnified Party’s indemnification hereunder, except to the extent the Indemnifying Party is prejudiced by such delay or omission.

 

(b)           The Indemnifying Party shall have the right to defend the Indemnified Party against such Third Party Claim. If the Indemnifying Party notifies the Indemnified Party that the Indemnifying Party elects to assume the defense of the Third Party Claim (such election to be without prejudice to the right of the Indemnified Party to dispute whether such claim is an identifiable Loss under this Article X), then the Indemnifying Party shall have the right to defend such Third Party Claim with counsel selected by the Indemnifying Party (who shall be reasonably satisfactory to the Indemnified Party), by all appropriate proceedings, to a final conclusion or settlement at the discretion of the Indemnifying Party in accordance with this Section 10.3(b). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided that the Indemnifying Party shall not enter into any settlement agreement without the written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed); provided further, that such consent of the Indemnified Party shall not be required if (i) the settlement agreement contains a complete and unconditional general release by the third party asserting the claim to all Indemnified Parties affected by the claim and (ii) the settlement agreement does not contain any sanction or restriction upon the conduct of any business by the Indemnified Party or its Affiliates. If requested by the Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense of the Indemnifying Party, to cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim which the Indemnifying Party elects to contest, including the making of any related counterclaim against the Person asserting the Third Party Claim or any cross complaint against any Person. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this Section 10.3(b), and the Indemnified Party shall bear its own costs and expenses with respect to such participation.

 

(c)           If the Indemnifying Party does not notify the Indemnified Party that the Indemnifying Party elects to defend the Indemnified Party pursuant to Section 10.3(b), then the Indemnified Party shall have the right to defend, and be reimbursed for its reasonable cost and expense (but only if the Indemnified Party is actually entitled to indemnification hereunder) in regard to the Third Party Claim with counsel selected by the Indemnified Party (who shall be reasonably satisfactory to the Indemnifying Party), by all appropriate proceedings, which proceedings shall be prosecuted diligently by the Indemnified Party. In such circumstances, the Indemnified Party shall defend any such Third Party Claim in good faith and have full control of such defense and proceedings; provided, however, that the Indemnified Party may not enter into any compromise or settlement of such Third Party Claim if indemnification is to be sought hereunder, without the Indemnifying Party’s consent (which consent shall not be unreasonably withheld, conditioned or delayed). The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this Section 10.3(c), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.

 

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(d)           Any claim by an Indemnified Party on account of Losses that does not result from a Third Party Claim (a “Direct Claim) will be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. Such notice by the Indemnified Party will describe the Direct Claim in reasonable detail, will include copies of all available material written evidence thereof and will indicate the estimated amount, if reasonably practicable, of Damages that has been or may be sustained by the Indemnified Party. The Indemnifying Party will have a period of five (5) Business Days within which to respond in writing to such Direct Claim. If the Indemnifying Party does not so respond within such five Business Day period, the Indemnifying Party will be deemed to have rejected such claim, in which event the Indemnified Party will be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

 

(e)           Any indemnification payment made pursuant to this Agreement shall be net of any insurance proceeds and any indemnification reimbursement proceeds realized by and paid to the Indemnified Party in respect of such claim, and the amount of any Loss shall take into account any net Tax benefits attributable to the circumstance or event giving rise to such Loss.

 

Section 10.4           Exclusive Remedy and Release.  Except for the right to indemnification provided in Section 7.1, the indemnification and remedies set forth in this Article X shall, from and after the Closing, constitute the sole and exclusive remedies of the Parties with respect to any breach of representation or warranty or non-performance, partial or total, of any covenant or agreement contained in this Agreement; provided, however, that nothing in this Section 10.4 shall prevent either Party from seeking injunctive or equitable relief in pursuit of its indemnification claims under this Article X.

 

ARTICLE XI
TERMINATION

 

Section 11.1           Termination.  At any time prior to the Closing, this Agreement may be terminated and the transactions contemplated hereby abandoned:

 

(a)           by either Seller or Buyer if the Closing shall not have occurred by December 15, 2010 (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 11.1(a) shall not be available to any Party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;

 

(b)           by Buyer if a breach of any representation or warranty or a failure to perform or comply with any covenant or agreement on the part of Seller set forth in this Agreement (including an obligation to consummate the Closing) shall have occurred that would, if occurring or continuing on the Closing Date, cause the conditions set forth in Section 9.1(b) or (c) not to be satisfied, and such breach or failure is not cured, or is not reasonably capable of being cured, within 30 days (but no later than the Termination Date) of receipt of written notice by Buyer to Seller of such breach; provided, that the right to terminate this Agreement under this Section 11.1(b) shall not be available to Buyer if Buyer is in breach of this Agreement at the time of termination of this Agreement such that any of

 

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the conditions set forth in Section 9.2(b) and (c) would not be satisfied if the date of such termination were the Closing Date;

 

(c)           by Seller if a breach of any representation or warranty or a failure to perform or comply with any covenant or agreement on the part of Buyer set forth in this Agreement (including an obligation to consummate the Closing) shall have occurred that would, if occurring or continuing on the Closing Date, cause the conditions set forth in Section 9.2(b) or (c) not to be satisfied, and such breach or failure is not cured, or is not reasonably capable of being cured, within 30 days (but no later than the Termination Date) of receipt of written notice by Seller to Buyer of such breach; provided, that the right to terminate this Agreement under this Section 11.1(c) shall not be available to Seller if Seller is in breach of this Agreement at the time of termination of this Agreement such that any of the conditions set forth in Section 9.1(b), (c) and (d) would not be satisfied if the date of such termination were the Closing Date;

 

(d)           by Seller in the event that the Centrahoma Purchase Agreement is terminated in accordance with Section 11.1(c) or Section 11.1(f) of the Centrahoma Purchase Agreement;

 

(e)           by Buyer or Seller in the event that any Governmental Order, enjoining or otherwise prohibiting the purchase of the Purchased Interests contemplated by this Agreement shall have become final and non-appealable; provided, however, that the applicable Party’s right to terminate this Agreement under this Section 11.1(d) shall not be available to such Party if such Party has failed in any material respect to fulfill any of its obligations under Section 6.2(a) of this Agreement; or

 

(f)            by Buyer or Seller in the event that the Centrahoma Purchase Agreement is terminated pursuant to any subclause of Section 11.1 of the Centrahoma Purchase Agreement other than Section 11.1(c), Section 11.1(f) or Section 11.1(g) of the Centrahoma Purchase Agreement.

 

Section 11.2           Procedure and Effect of Termination.  In the event of termination of this Agreement as provided in Section 11.1, written notice thereof shall be given by the Party so terminating to the other Parties, and this Agreement shall forthwith become void and there shall be no liability on the part of any Party hereto (or any of its Representatives, financing sources or Affiliates), except that (i) Section 12.2 and Section 12.4 shall survive any termination, and (ii) nothing herein shall relieve any Party from liability for any knowing and intentional breach of this Agreement occurring prior to such termination.

 

Section 11.3           Return of Information.  Within ten Business Days following termination of this Agreement in accordance with Section 11.1, Buyer shall, and shall cause its Affiliates and Representatives to, return to Seller, or destroy, all Confidential Information (as defined in the Confidentiality Agreement) furnished or made available to Buyer and its Affiliates and Representatives by or on behalf of Seller, and all analyses, compilations, data, studies, notes, interpretations, memoranda or other documents prepared by Buyer or any of its Affiliates or Representatives (including electronic copies thereof) that refer to, relate to, discuss or contain, or are based on, in whole or in part, any such Confidential Information. 

 

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Buyer shall deliver a certificate signed by its Chief Executive Officer, which certificate shall provide evidence reasonably substantiating the return or destruction of the Confidential Information as required under this Section 11.3.

 

ARTICLE XII
MISCELLANEOUS

 

Section 12.1           Notices.  All notices and other communications between the Parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) five days after posting in the United States mail having been sent registered or certified mail return receipt requested, (iii) the next Business Day when delivered via overnight courier or (iv) when delivered by fax and promptly confirmed by delivery in person, post or overnight courier as aforesaid in each case, with postage prepaid, addressed as follows:

 

(a)           If to Buyer, to:

 

Cardinal Arkoma, Inc.

8150 N. Central Expressway, Suite 1725

Dallas, Texas  75206

Attn:  Douglas E. Dormer, Jr.

Fax: (214) 468-0701

 

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

 

Thompson & Knight LLP

1722 Routh St., Suite 1500

Dallas, Texas 75201

Attn: Arthur J. Wright

Fax: (214) 999-1695

 

(b)           If to Seller or Antero Midstream, to:

 

Antero Resources LLC

1625 17th Street, Suite 300

Denver, Colorado 80202

Attn:  General Counsel

Fax: (303) 357-7315

 

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

 

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002

Attn:  W. Matthew Strock

Fax: (713) 615-5650

 

or to such other address or addresses as the Parties may from time to time designate in writing.

 

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Section 12.2           Assignment.  No Party shall assign this Agreement or any part hereof without the prior written consent of the other Party.  Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.

 

Section 12.3           Rights of Third Parties.  Except for the provisions of Section 6.8, which are intended to be enforceable by the Persons respectively referred to therein, nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties, any right or remedies under or by reason of this Agreement.

 

Section 12.4           Expenses.  Except as otherwise provided herein, each Party shall bear its own expenses incurred in connection with this Agreement and the transactions herein contemplated hereby whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisers and accountants.

 

Section 12.5           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any facsimile or electronic .pdf copies hereof or signature hereon shall, for all purposes, be deemed originals.

 

Section 12.6           Entire Agreement.  This Agreement and the Disclosure Schedules and exhibits hereto constitute the entire agreement among the Parties and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the Parties or any of their respective Affiliates relating to the transactions contemplated hereby.

 

Section 12.7           Amendments.  Except as provided in Section 2.3(a), this Agreement may be amended or modified in whole or in part, and terms and conditions may be waived, only by a duly authorized agreement in writing which makes reference to this Agreement executed by each Party.

 

Section 12.8           Publicity.  All press releases or other public communications of any nature whatsoever relating to the transactions contemplated by this Agreement, and the method of the release for publication thereof, shall be subject to the prior consent of Buyer and Seller, which consent shall not be unreasonably withheld, conditioned or delayed by any Party; provided, however, that nothing herein shall restrict or prevent a Party from publishing such press releases or other public communications (including the filing of this Agreement with the Securities and Exchange Commission) as such Party may consider necessary in order to satisfy such Party’s obligations at Law or under the rules of any stock or commodities exchange after consultation with the other Party as is reasonable under the circumstances.

 

Section 12.9           Severability.  If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect.  The Parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining

 

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provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the Parties to the greatest extent legally permissible.

 

Section 12.10        Governing Law; Jurisdiction.

 

(a)           This Agreement shall be governed and construed in accordance with the Laws of the State of Delaware without regard to the Laws that might be applicable under conflicts of laws principles.

 

(b)           The Parties agree that except as specifically otherwise provided in this Agreement, the appropriate, exclusive and convenient forum for any disputes between any of the Parties hereto arising out of this Agreement or the transactions contemplated hereby shall be in any state or federal court in Denver, Colorado, and each of the Parties hereto irrevocably submits to the jurisdiction of such courts solely in respect of any legal proceeding arising out of or related to this Agreement.  The Parties further agree that the Parties shall not bring suit with respect to any disputes arising out of this Agreement or the transactions contemplated hereby in any court or jurisdiction other than the above specified courts; provided, however, that the foregoing shall not limit the rights of the Parties to obtain execution of judgment in any other jurisdiction.  The Parties further agree, to the extent permitted by Law, that a final and unappealable judgment against a Party in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and amount of such judgment.  Except to the extent that a different determination or finding is mandated due to the applicable law being that of a different jurisdiction, the Parties agree that all judicial determinations or findings by a state or federal court in Denver, Colorado with respect to any matter under this Agreement shall be binding.

 

(c)           To the extent that any Party hereto has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, each such Party hereby irrevocably (i) waives such immunity in respect of its obligations with respect to this Agreement and (ii) submits to the personal jurisdiction of any court described in Section 12.10(b).

 

(d)           THE PARTIES HERETO AGREE THAT THEY HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION TO ENFORCE OR INTERPRET THE PROVISIONS OF THIS AGREEMENT.

 

Section 12.11        Affiliate Liability.  Each of the following is herein referred to as an “Antero Affiliate”:  (a) any direct or indirect holder of equity interests or securities in Antero Midstream (whether limited or general partners, members, stockholders or otherwise), (b) any director, officer, employee, representative or agent of (i) Antero Midstream or (ii) any Person who controls Antero Midstream or (c) any Person who is under common control with Antero Midstream.  No Antero Affiliate shall have any liability or obligation to Buyer of any

 

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nature whatsoever in connection with or under this Agreement, any of the ancillary documents required hereby or the transactions contemplated herein or therein except to the extent any such Antero Affiliate is a party to this Agreement or any such ancillary document and then only with respect to the express obligations of such Antero Affiliate under this Agreement or such ancillary document (the “Express Affiliate Obligations”), and Buyer hereby waives and releases any and all claims against any Antero Affiliate arising out of or related to any such liability or obligation (such waiver and release to not apply to the Express Affiliate Obligations).

 

Section 12.12        Specific Performance.  The Parties acknowledge and agree that they would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached and that any non-performance or breach of this Agreement by any Party could not be adequately compensated by monetary damages alone and that the Parties would not have any adequate remedy at law.  Accordingly, in addition to any other right or remedy to which any Party may be entitled, at law or in equity (including monetary damages), such Party shall be entitled to enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement without posting any bond or other undertaking.

 

[Remainder of Page Intentionally Left Blank.]

 

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

 

 

 

ANTERO RESOURCES LLC

 

 

 

 

 

By:

/s/ Alvyn A. Schopp

 

Name:

Alvyn A. Schopp

 

Title:

Vice President & Treasurer

 

 

 

 

 

CARDINAL ARKOMA, INC.

 

 

 

 

 

By:

/s/ R. Mack Lawrence

 

Name:

R. Mack Lawrence

 

Title:

President

 

SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT