Treatment of RMP Phantom Units
At the effective time, each RMP Phantom Unit Award that is outstanding immediately prior to the effective time will be fully vested and
converted into the right to receive the merger consideration, subject to applicable tax withholding, in respect of each RMP common unit subject thereto. As of June 14, 2018, the RMP independent
directors held the following numbers of outstanding RMP Phantom Unit Awards:
|
|
|
|
|
|
|
|
Name
|
|
Number of
RMP Phantom
Units
|
|
Value of
RMP Phantom
Units(1)
|
|
D. Mark Leland
|
|
|
9,190
|
|
$
|
168,728.40
|
|
James H. Lytal
|
|
|
9,190
|
|
$
|
168,728.40
|
|
Stephanie C. Hildebrandt
|
|
|
8,920
|
|
$
|
163,771.20
|
|
Robert F. Vagt
|
|
|
8,920
|
|
$
|
163,771.20
|
|
-
(1)
-
Based
on a price per RMP common unit of $18.36, which was the closing price of RMP common units on the New York Stock Exchange on June 19, 2018.
Compensation of Members of the RMP Conflicts Committee
The members of the RMP Conflicts Committee are each are entitled to the following fee payments, in addition to the regular compensation payable
to such members in their capacity as
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directors,
in consideration of the incremental time and effort incurred in connection with the evaluation and negotiation of the merger:
-
-
$10,000 per month (plus an additional $5,000 per month for the committee chairman) payable monthly beginning April 1, 2018 until the
filing date of this proxy statement/prospectus;
-
-
$5,000 per month (plus an additional $2,500 per month for the committee chairman) payable monthly after the filing date of this proxy
statement/prospectus until the closing of the merger or termination of the merger agreement; provided that aggregate amounts payable under (1) and (2) may not exceed $80,000, in the case
of fees payable to the committee chairman, or $70,000, in the case of fees payable to other members of the RMP Conflicts Committee; and
-
-
if any litigation continues following the closing of the merger, a $1,000 fee per hour for time spent in connection with such litigation.
This
compensation was in no way contingent on the members of the RMP Conflicts Committee approving the merger agreement or the merger.
Indemnification and Insurance
The RMP partnership agreement requires RMP, among other things, to indemnify the directors and executive officers of RMP GP, the general
partner of RMP, against certain liabilities that may arise by reason of their service as directors or officers.
In
addition, the merger agreement provides that, for a period of six years from the effective time, EQM and EQM GP will indemnify, defend and hold harmless each officer or
director of RMP, RMP GP or any of their subsidiaries and also with respect to any such person, in their capacity as a director, officer, employee, member, trustee or fiduciary of another
corporation, foundation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise (whether or not such other entity or enterprise is affiliated with RMP) serving at the
request of or on behalf of RMP, RMP GP or any of their subsidiaries and together with such person's heirs, executors or administrators against any cost or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages or liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative, investigative or otherwise and whether or not such claim, action, suit, proceeding or investigation results in a formal civil or criminal litigation or regulatory action.
In
addition, pursuant to the terms of the merger agreement, RMP's and RMP GP's directors and executive officers will be entitled to certain ongoing indemnification and coverage
under directors' and officers' liability insurance policies from the surviving entity. Such indemnification and insurance coverage is further described in the section entitled "The Merger
AgreementIndemnification; Directors' and Officers' Insurance."
Interests of EQT in the Merger
EQT holds a controlling ownership interest in RMP. EQT controls RMP through EQT's ownership of RMP GP, which is the general partner of
RMP. RMP GP owns 100% of the general partner interest in RMP. EQT also owns approximately 28.1% of the outstanding RMP common units. In addition, EQT indirectly owns an approximately 6.7%
limited partner interest in EQM through Rice Midstream Holdings, 100% of the outstanding limited liability company interests in the EQGP general partner, and an approximately 91.3% limited partner
interest in EQGP, and EQGP owns 100% of the outstanding limited liability company interests in EQM GP which owns an approximately 1.6% general partner interest in EQM, an approximately 24.8%
limited partner interest in EQM and all of the EQM IDRs and RMP IDRs. EQT has different economic interests in the merger than RMP unitholders generally due to, among other things, EQT's ongoing
ownership of the general partner interest and
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incentive
distribution rights through EQGP in EQM following the merger. In addition, EQT and/or wholly owned subsidiaries of EQT are party to the IDR purchase and the drop-down transactions, each of
which was completed on May 22, 2018, such completion having been a condition to the parties' obligations to complete the merger (see "The IDR Purchase Agreement" and "The Drop-Down Agreement").
Under
the terms of the merger agreement, EQT has agreed to vote all of the RMP common units owned beneficially or of record by EQT and its subsidiaries in favor of the approval of the
merger agreement and the merger and the approval of any actions required in furtherance thereof.
No Dissenters' Rights or Appraisal Rights
Neither appraisal rights nor dissenters' rights are available in connection with the merger under the Delaware LP Act, the merger
agreement or the RMP partnership agreement.
No EQM Unitholder Approval Required
EQM unitholders are not required to approve the merger agreement or approve the merger or the issuance of EQM common units in connection with
the merger.
Directors and Executive Officers of EQM GP After the Merger
No changes are anticipated to the identity of the directors and executive officers of EQM GP as a result of the merger.
Financing of the Transactions
The
merger is not subject to a financing condition. On April 25, 2018, EQM entered into a 364-Day Term Loan Agreement among EQM, Wells Fargo Bank, National Association, as
Administrative Agent, and the lenders and agents parties thereto, providing for a $2.5 billion 364-day unsecured multi-draw term loan facility.
The
Term Loan Agreement provides for borrowings by EQM of (i) up to $300 million of the commitments under the Term Loan Facility in connection with, and to fund, the
consummation of the merger, (ii) up to $1 billion of the commitments under the Term Loan Facility in connection with, and to fund, the consummation of the drop-down transactions, and
(iii) up to an additional $1.2 billion of commitments under the Term Loan Facility for a variety of specified purposes, including to fund the consummation of the merger and/or the
drop-down transactions. The Lenders' obligation to fund such commitments under the Term Loan Facility is subject to several conditions as set forth in the Term Loan Agreement, including, in the case
of certain borrowings in connection with the merger, delivery of a certificate certifying that EQM expects the merger to be consummated within one business day.
As
of May 17, 2018, the General Availability was reduced by $825 million, of which $513 million was used to repay borrowings outstanding under EQM's existing
$1 billion revolving credit facility. On May 22, 2018, substantially concurrently with the consummation of the drop-down transactions, EQM borrowed all $1 billion of the Drop-Down
Availability. As of June 14, 2018, $375 million of the General Availability and all $300 million of the Merger Availability remained available for borrowing pursuant to the terms
of the Term Loan Agreement. Unused commitments under the Term Loan Facility will terminate automatically on December 31, 2018. The Term Loan Agreement includes mandatory prepayment and
commitment reduction requirements related to the receipt by EQM of net cash proceeds from certain debt transactions, equity issuances, asset sales, and joint venture distributions.
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EQM
expects to use proceeds from future borrowings under the Term Loan Facility to, among other things, (i) substantially concurrently with the closing of the merger, refinance
all existing debt for borrowed money of RMP and its subsidiaries, including to repay and terminate, as applicable, all amounts and commitments outstanding under the RMP existing credit facility, and
(ii) pay any fees, commissions and expenses incurred in connection with the foregoing.
Accounting Treatment of the Merger
In accordance with the guidance under Accounting Standards Codification Topic 805: Business Combinations, the merger will be accounted for as a
reorganization of entities under common control. The assets and liabilities of RMP will be recorded by EQM at EQT's historical cost basis, which includes a step-up in basis resulting from EQT's
preliminary purchase price accounting for its acquisition of Rice Energy.
Regulatory Approvals and Clearances Required for the Merger
The completion of the merger may be subject to antitrust review in the United States. Under the HSR Act, if applicable, the merger cannot be
completed until EQT (as the ultimate parent entity of EQM) and RMP have given notification and furnished certain information to the FTC and the DOJ, and until the applicable waiting period has expired
or been terminated. A transaction requiring notification under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties' filing of their
respective Notification and Report Forms, unless the FTC grants early termination of that waiting period. If the FTC or DOJ issues a Request for Additional Information and Documents (a Second Request)
to the parties prior to the expiration of the initial waiting period, the parties must observe a second 30-day waiting period, which would begin to run only after both parties have substantially
complied with the Second Requests, unless the waiting period is terminated earlier or the parties otherwise consent not to close the transaction. Both EQT and RMP made their HSR filings on
June 1, 2018. Early termination of the waiting period was granted on June 19, 2018.
At
any time before or after the effective time, notwithstanding the expiration or termination of the waiting period under the HSR Act, the DOJ or the FTC could take action under the
antitrust laws, including seeking to enjoin the completion of the merger, to rescind the merger or to conditionally approve the merger upon the divestiture of assets of the parties or their respective
subsidiaries, or subject to other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest including
without limitation seeking to enjoin the completion of the merger or permitting completion subject to regulatory concessions or conditions. Private parties may also seek to take legal action under the
antitrust laws under some circumstances. There can be no assurance that a challenge to the merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be
successful.
EQM
and RMP have agreed to (including to cause their respective subsidiaries to) use their reasonable best efforts to resolve any objections that a governmental authority may assert
under antitrust laws with respect to the transactions contemplated by the merger agreement, including the merger, and to avoid or eliminate each and every impediment under any antitrust law that may
be asserted by any governmental authority with respect to the merger, in each case, so as to enable the closing of the merger to occur as promptly as practicable and in any event no later than the
outside date, and including agreeing to dispose or hold separate certain assets or agreeing to a non-compete or other restriction. Notwithstanding the foregoing, RMP has agreed not to commit to any
disposal, hold separate of other restriction related to it or its subsidiaries businesses, operations or assets without EQM's prior written consent.
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In
connection with the issuance of EQM common units in the merger, EQM must file a registration statement with the SEC under the Exchange Act that is declared effective by the
SEC.
Listing of EQM Common Units; Delisting and Deregistration of RMP Common Units
EQM common units are currently listed on the NYSE under the ticker symbol "EQM." It is a condition to closing that the EQM common units to be
issued in the merger to RMP unitholders be approved for listing on the NYSE, subject to official notice of issuance.
RMP
common units are currently listed on the NYSE under the ticker symbol "RMP." If the merger is completed, RMP common units will cease to be listed on the NYSE and will be deregistered
under the Exchange Act.
Ownership of EQM After the Merger
EQM will issue approximately 34.0 million EQM common units to former RMP unitholders pursuant to the merger. Further, the number of EQM
common units outstanding will increase after the date of this proxy statement/prospectus if EQM sells additional common units to the public. Based on the number of EQM common units outstanding as of
the date of this proxy statement/prospectus, immediately following the completion of the merger, EQM expects to have approximately 120.5 million common units outstanding. RMP unitholders are
therefore expected to hold approximately 28.2% of the aggregate number of EQM common units outstanding immediately after the merger and approximately 27.9% of EQM's total units of all classes. Holders
of EQM common units (similarly to holders of RMP common units) are not entitled to elect EQM's general partner or the directors of the EQM Board and have only limited voting rights on matters
affecting EQM's business. Please read "Comparison of Rights of EQM Unitholders and RMP Unitholders" for additional information.
Restrictions on Sales of EQM Common Units Received in the Merger
EQM common units issued in the merger will not be subject to any restrictions on transfer arising under the Securities Act or the Exchange Act,
except for EQM common units issued to any RMP unitholder who may be deemed to be an "affiliate" of EQM after the completion of the merger. This proxy statement/prospectus does not cover resales of EQM
common units received by any person upon the completion of the merger, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale.
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THE MERGER AGREEMENT
The following describes the material provisions of the merger agreement, a copy of which is attached as Annex A
to this proxy statement/prospectus and incorporated by reference herein. The description in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to
the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. You are encouraged to read the merger
agreement carefully and in its entirety before making any decisions regarding the merger as it is the legal document governing the merger.
The merger agreement and this summary of its terms have been included to provide you with information regarding the terms of the merger agreement. Factual
disclosures about EQM, RMP or any of their respective subsidiaries or affiliates contained in this proxy statement/prospectus or their respective public reports filed with the SEC may supplement,
update or modify the factual disclosures about EQM, RMP or their respective subsidiaries or affiliates contained in the merger agreement and described in this summary. The
representations, warranties and covenants made in the merger agreement by EQM and RMP were qualified and subject to important limitations agreed to by EQM and RMP in connection with negotiating the
terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that
the representations and warranties were negotiated with the principal purposes of allocating risk between the parties to the merger agreement, rather than establishing matters as facts. The
representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to unitholders and reports and documents filed with the SEC and in
some cases were qualified by confidential disclosures that were made by each party to the other, which disclosures are not reflected in the merger agreement or otherwise publicly disclosed. Moreover,
information concerning the subject matter of the representations and warranties may have changed since the date of the merger agreement and subsequent developments or new information qualifying a
representation or warranty may have been included in this proxy statement/prospectus. For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions
should not be read alone.
The Mergers
Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, the merger agreement provides for the merger of
Merger Sub with and into RMP, with RMP surviving the merger as a wholly owned subsidiary of EQM, but RMP will cease to be a publicly traded limited partnership. We refer to this merger as the merger.
RMP, which is sometimes referred to following the merger as the surviving entity, will survive the merger, and the separate limited liability company existence of Merger Sub will cease. After the
completion of the merger, the certificate of limited partnership of RMP in effect immediately prior to the effective time of the merger shall continue as the certificate of limited partnership of the
surviving entity. In addition, after the completion of the merger, the certificate of limited partnership of RMP will continue as the certificate of limited partnership of the surviving entity and the
RMP partnership agreement will continue as the limited partnership agreement of the surviving entity until thereafter amended as provided therein or by applicable law, in each case consistent with the
indemnification obligations provided in the merger agreement; RMP GP shall continue as the sole general partner of, and with a non-economic general partner interest in, the surviving entity;
the limited liability company interests in Merger Sub will be converted into a single RMP common unit; EQM Gathering shall be admitted as the sole limited partner of the surviving entity; and all
limited partners of RMP immediately prior to the merger will cease to be limited partners of RMP.
The
merger agreement also provides, subject to the terms and conditions of the merger agreement and in accordance with Delaware law, for the merger of GP Merger Sub with and into
RMP GP, with RMP GP surviving the GP merger as the general partner of RMP. RMP GP, which is sometimes
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referred
to following the GP merger as the surviving GP entity, will survive the GP merger, and the separate limited liability company existence of GP Merger Sub will
cease. Upon the completion of the GP merger, the certificate of formation of RMP GP in effect immediately prior to the GP merger effective time will be the certificate of
formation of the surviving GP entity. In addition, upon the completion of the GP merger, the certificate of formation of RMP GP will continue as the certificate of formation of
the surviving GP entity and the limited liability company agreement of RMP GP in effect immediately prior to the GP merger effective time will continue as the limited liability
company agreement of the surviving GP entity, all limited liability company interests of GP Merger Sub issued and outstanding immediately prior to the GP merger effective time
will be converted into 100% of the limited liability company interests of the surviving GP entity, EQM Gathering shall be admitted as the sole member of the surviving GP entity and the
sole member of RMP GP immediately prior to the GP merger effective time will cease to be a member of the surviving GP entity.
Following
the consummation of the merger, it is expected that EQM common units will continue to be listed on the NYSE under the symbol "EQM," and that RMP common units will cease to be
listed on the NYSE and will be deregistered under the Exchange Act.
Effective Time; Closing
The effective time of the merger will be at such time that RMP files with the Secretary of State of the State of Delaware a certificate of
merger, executed in accordance with the relevant provisions of the Delaware LP Act and the Delaware Limited Liability Company Act, which we refer to as the Delaware LLC Act, or at such
other date or time as is agreed to by EQM and RMP and specified in such certificate of merger. The effective time of the GP merger will be at such time that RMP GP files with the
Secretary of State of the State of Delaware a certificate of merger, executed in accordance with the relevant provisions of the Delaware LLC Act, or such other date or time as is agreed to by
EQM and RMP and specified in such certificate of merger.
Unless
the parties agree otherwise, the closing of the merger will occur at 8:00 a.m., Eastern Time, on the second business day after the satisfaction or waiver of the conditions
to the merger provided in the merger agreement (other than conditions that by their nature are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of those
conditions), or at such other date or time as EQM and RMP agree. For further discussion of the conditions to the merger, see "Conditions to Consummation of the Merger."
EQM
and RMP currently expect to complete the merger shortly following the conclusion of the special meeting, subject to receipt of required unitholder and regulatory approvals and to the
satisfaction or waiver of the other conditions to the transactions contemplated by the merger agreement described below.
Conditions to Consummation of the Merger
EQM and RMP may not complete the merger unless each of the following conditions is satisfied or waived, if waiver is permitted by applicable
law:
-
-
the merger agreement and the merger must have been adopted by the affirmative vote or consent of the holders of at least a majority of the
outstanding RMP common units;
-
-
any waiting period applicable to the merger and the GP merger under the HSR Act must have been terminated or expired;
-
-
no law, injunction, judgment or ruling enacted, promulgated, issued, entered, amended or enforced by any governmental authority will be in
effect enjoining, restraining, preventing or prohibiting the consummation of the transactions contemplated by the merger agreement or making the consummation of such transactions illegal;
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-
-
the registration statement of which this proxy statement/prospectus forms a part must have been declared effective by the SEC and must
not be subject to any stop order or proceedings initiated or threatened by the SEC;
-
-
the EQM common units to be issued in the merger must have been approved for listing on the NYSE, subject to official notice of issuance;
-
-
RMP having received an opinion of its tax counsel, Baker Botts L.L.P., to the effect that at least 90% of the gross income of RMP for
all of the calendar year that immediately precedes the calendar year that includes the closing date and each calendar quarter of the calendar year that includes the closing date for which the
necessary financial information is available is from sources treated as "qualifying income" within the meaning of Section 7704(d) of the Code;
-
-
EQM having received an opinion of its tax counsel, Baker Botts L.L.P., to the effect that (i) at least 90% of the gross income of
EQM for all of the calendar year that immediately precedes the calendar year that includes the closing date and each calendar quarter of the calendar year that includes the closing date for which the
necessary financial information is available is from sources treated as "qualifying income" within the meaning of Section 7704(d) of the Code and (ii) at least 90% of the combined gross
income of each of EQM and RMP for all of the calendar year that immediately precedes the calendar year that includes the closing date and each calendar quarter of the calendar year that includes the
closing date for which the necessary financial information is available is from sources treated as "qualifying income" within the meaning of Section 7704(d) of the Code;
-
-
all conditions precedent to the drop-down transactions having been fulfilled or waived in accordance with the terms of the drop-down agreement
as in effect as of the date of the merger agreement;
-
-
the closing of the drop-down transactions having occurred or the parties to the drop-down agreement being ready, willing and able to close the
drop-down transactions substantially at the same time as the closing of the merger (which closing did occur on May 22, 2018);
-
-
all conditions precedent to the IDR purchase having been fulfilled or waived in accordance with the terms of the IDR purchase agreement as in
effect as of the date of the merger agreement; and
-
-
the closing of such IDR purchase having occurred in accordance with the terms of the IDR purchase agreement as in effect as of the date of the
merger agreement (which closing did occur on May 22, 2018).
The
obligations of EQM, GP Merger Sub and Merger Sub to effect the merger are subject to the satisfaction or waiver, if waiver is permitted by applicable law, of the following
additional conditions:
-
-
the representations and warranties of RMP and RMP GP in the merger agreement being true and correct in all respects both when made and
at and as of the date of the closing of the merger, except to the extent expressly made as of an earlier date, in which case as of such date, except where the failure of such representations and
warranties to not be so true and correct (without giving effect to any limitation as to material adverse effect or materiality contained in any individual representation or warranty, except in the
case of those representations and warranties related to (1) documents filed with the SEC, financial statements included in those documents and regulatory reports filed with governmental
authorities, (2) information supplied in connection with this proxy statement/prospectus and (3) the definition of material contract), does not have and would not reasonably be expected
to have, individually or in the aggregate, a material adverse effect on RMP (apart from certain identified representations and warranties (i) that there will not have been a material adverse
effect on RMP from the date of the merger
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agreement
through the closing date, with respect to the authority to execute the merger agreement and consummate the transactions contemplated thereby and that the approval of the merger agreement by
the affirmative vote or consent of the holders of at least a majority of the outstanding RMP common
units is the only approval of the holders of any outstanding equity interests in RMP that is required for approval of the transactions contemplated by the merger agreement, which in each case must be
true and correct in all respects, and (ii) with respect to RMP's capitalization, which must be true and correct except for any
de minimis
inaccuracies);
-
-
RMP and RMP GP having performed, in all material respects, all obligations required to be performed by them under the merger agreement;
-
-
the receipt of an officer's certificate executed by an executive officer of RMP GP certifying that the two preceding conditions have
been satisfied; and
-
-
EQM having received an opinion of its counsel, Baker Botts L.L.P., to the effect that for U.S. federal income tax purposes
(i) EQM should not recognize any income or gain as a result of the merger and (ii) no gain or loss should be recognized by holders of EQM common units or other partnership interests in
EQM as a result of the merger (other than any gain resulting from any decrease in partnership liabilities pursuant to Section 752 of the Code).
The
obligations of RMP and RMP GP to effect the merger are subject to the satisfaction or waiver of the following additional conditions:
-
-
the representations and warranties of EQM, EQM GP, GP Merger Sub and Merger Sub in the merger agreement being true and correct in
all respects both when made and at and as of the date of the closing of the merger, except to the extent expressly made as of an earlier date, in which case as of such date, except where the failure
of such representations and warranties to be so true and correct (without giving effect to any limitation as to material adverse effect or materiality contained in any individual representation or
warranty, except in the case of those representations and warranties related to (1) documents filed with the SEC, financial statements included in those documents and regulatory reports filed
with governmental authorities, (2) information supplied in connection with this proxy statement/prospectus and (3) the definition of material contract), does not have and would not
reasonably be expected to have, individually or in the aggregate, a material adverse effect on EQM (apart from certain identified representations and warranties (i) providing that there will
not have been a material adverse effect on EQM from the date of the merger agreement through the closing date and with respect to the authority to execute the merger agreement and consummate the
transactions contemplated thereby, which must be true and correct in all respects, and (ii) with respect to EQM's capitalization, which must be true and correct except for any
de minimis
inaccuracies);
-
-
EQM, EQM GP, GP Merger Sub and Merger Sub having performed, in all material respects, all obligations required to be performed by
them under the merger agreement;
-
-
the receipt of an officer's certificate executed by an executive officer of EQM GP certifying that the two preceding conditions have
been satisfied; and
-
-
RMP having received an opinion of its counsel, Baker Botts L.L.P., to the effect that for U.S. federal income tax purposes
(i) RMP should not recognize any income or gain as a result of the merger and (ii) no gain or loss should be recognized by holders of RMP common units or other partnership interests in
RMP as a result of the merger, other than gain resulting from (A) any actual or constructive distribution of cash or other property or (B) any decrease in partnership liabilities
pursuant to Section 752 of the Code.
For
purposes of the merger agreement, the term "material adverse effect" means, when used with respect to a party to the merger agreement, any change, effect, event or occurrence that,
individually or
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in
the aggregate, (x) has had or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of such party or its subsidiaries,
taken as a whole, or (y) prevents or materially impedes, interferes with or hinders the consummation of the transactions contemplated by the merger agreement, including the merger and
the GP merger, on or before the outside date;
provided
,
however
, that any adverse changes,
effects, events or occurrences resulting from or due to any of the following will be disregarded in determining whether there has been a material adverse effect: (i) changes, effects, events or
occurrences generally affecting the United States or global economy, the financial, credit, debt, securities or other capital markets or political, legislative or regulatory conditions or changes in
the industries in which such party operates; (ii) the announcement or pendency of the merger agreement or the transactions contemplated thereby or the performance of the merger agreement
(including, for the avoidance of doubt, performance of the parties' obligations under the merger agreement in connection with obtaining regulatory approval) (provided that the exception in this
clause (ii) shall not be deemed to apply to references to a material adverse effect in the representations and warranties regarding RMP's, RMP GP's, EQM's, EQM GP's, Merger Sub's
and GP Merger Sub's need to obtain governmental approvals in connection with the merger); (iii) any change in the market price or trading volume of the partnership interests, shares of
common stock or other equity securities of such party (it being understood and agreed that the foregoing will not preclude any other party to the merger agreement from asserting that any facts or
occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of material adverse effect should be deemed to constitute, or be taken into account in
determining whether there has been, or would reasonably be expected to be, a material adverse effect); (iv) acts of war or terrorism (or the escalation of the foregoing) or natural disasters or
other force majeure events; (v) changes in any laws or regulations applicable to such party or applicable accounting regulations or principles or the interpretation thereof; (vi) any
legal proceedings commenced by or involving any current or former member, partner or shareholder of such party (on their own or on behalf of such party) arising out of or related to the merger
agreement or the transactions contemplated thereby; (vii) changes, effects, events or occurrences generally affecting the prices of oil, natural gas, natural gas liquids or other commodities;
(viii) any failure of a party to meet any internal or external projections, forecasts or estimates of revenues, earnings or other financial or operating metrics for any period (it being
understood and agreed that the foregoing will not preclude any other party to the merger agreement from asserting that any facts or occurrences giving rise to or contributing to such failure that are
not otherwise excluded from the definition of "material adverse effect" should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected
to be, a material adverse effect); and (ix) the taking of any action required by the merger agreement;
provided
,
however
, that changes, effects,
events or occurrences referred to in clauses (i), (iv), (v) and (vii) above will be considered for
purposes of determining whether there has been or would reasonably be expected to be a material adverse effect if and to the extent such state of affairs, changes, effects, events or occurrences has
had or would reasonably be expected to have a disproportionate adverse effect on such party and its subsidiaries, taken as a whole, as compared to other companies operating in the industries in which
such party and its subsidiaries operate.
RMP Unitholder Approval
RMP has agreed to hold a special meeting of its unitholders as soon as is practicable after the date of the merger agreement for the purpose of
such unitholders voting on the approval of the merger agreement and the merger. Unless terminated pursuant to its terms, the merger agreement requires RMP to submit the merger agreement and the merger
to a unitholder vote (i) even if the RMP Board and the RMP Conflicts Committee no longer recommend approval of the merger agreement and the merger and (ii) irrespective of the
commencement, public proposal, public disclosure or communication to RMP of any alternative proposal (as described below). In addition, unless the RMP Board and the RMP Conflicts Committee have
effected an adverse recommendation change in accordance with the
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merger
agreement as described in "Change in RMP Board Recommendation," RMP has agreed to use its reasonable best efforts to solicit from its unitholders proxies in favor of the approval
of the merger agreement and the merger and the approval of any actions required in furtherance thereof. The RMP Board has approved the merger agreement as recommended by the RMP Conflicts Committee
and the transactions contemplated thereby and authorized that the merger agreement be submitted to the unitholders of RMP for their consideration.
For
purposes of the merger agreement, the term "alternative proposal" means any inquiry, proposal or offer from, or indication of interest in seeking a proposal or offer by, any person
or "group" (as defined in Section 13(d) of the Exchange Act), other than EQM, its subsidiaries and their respective affiliates, relating to any (i) direct or indirect acquisition
(whether in a single transaction or a series of related transactions) of assets of RMP and its subsidiaries (including the securities of such subsidiaries) equal to 20% or more of RMP's consolidated
assets or to which 20% or more of RMP's revenues or earnings on a consolidated basis are attributable, (ii) direct or indirect acquisition (whether in a single transaction or a series of
related transactions) of beneficial ownership (within the meaning of Section 13 of the Exchange Act) of 20% or more of any class of equity securities of RMP, (iii) tender offer or
exchange offer that if consummated would result in any person or "group" (as defined in Section 13(d) of the Exchange Act) beneficially owning 20% or more of any class of equity securities of
RMP or (iv) merger, consolidation, unit exchange, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving RMP or any of its
subsidiaries which is structured to permit any person or "group" (as defined in Section 13(d) of the Exchange Act) to acquire beneficial ownership of at least 20% of RMP's consolidated assets,
net income, net expenses, revenue or equity interests; in each case, other than the transactions contemplated by the merger agreement.
No Solicitation by RMP of Alternative Proposals
The merger agreement contains detailed provisions prohibiting RMP from seeking an alternative proposal to the merger. Under these "no
solicitation" provisions, RMP has agreed that it will not, and will cause its subsidiaries not to, and use its reasonable best efforts to cause its and its subsidiaries' directors, officers,
employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives not to, directly or indirectly:
-
-
solicit, initiate, knowingly facilitate, knowingly encourage (including by way of furnishing confidential information) or knowingly induce or
take any other action intended to lead to any inquiries or any proposals that constitute or could reasonably be expected to lead to an alternative proposal;
-
-
grant any waiver or release of any standstill or similar agreement with respect to any units of RMP or of any of its subsidiaries;
-
-
except as permitted by the merger agreement, enter into any confidentiality agreement, merger agreement, letter of intent, agreement in
principle, unit purchase agreement, asset purchase agreement or unit exchange agreement, option agreement or other similar agreement relating to an alternative proposal;
-
-
file a proxy statement that does not include the recommendation of the RMP Board and the RMP Conflicts Committee that RMP's unitholders
approve the merger agreement and the merger; or
-
-
withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in a manner adverse to EQM, the recommendation of the RMP
Board and the RMP Conflicts Committee that RMP's unitholders approve the merger agreement and the merger or publicly recommend any alternative proposal, or fail to recommend against acceptance of any
tender offer or
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In
addition, RMP has agreed in the merger agreement to, and to cause its subsidiaries and use its reasonable best efforts to cause its and its subsidiaries' directors, officers,
employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives to (i) cease and cause to be terminated any discussions or negotiations with any
persons conducted prior to the execution of the merger agreement regarding an alternative proposal, (ii) request the return or destruction of all confidential information previously provided to
any such persons and (iii) immediately prohibit any access by any persons (other than EQM and its representatives) to any physical or electronic data room relating to a possible alternative
proposal.
Notwithstanding
these restrictions, the merger agreement provides that, under specified circumstances at any time prior to RMP unitholders voting in favor of approving the merger
agreement, RMP may furnish information, including confidential information under certain circumstances, with respect to it and its subsidiaries to, and participate in discussions or negotiations with,
any third party that makes an unsolicited, written alternative proposal that the RMP Board (upon the recommendation of the RMP Conflicts Committee) believes is bona fide so long as (after consultation
with its financial advisors and outside legal counsel) the RMP Board (upon the recommendation of the RMP Conflicts Committee) determines in good faith that (i) such alternative proposal
constitutes or would reasonably be expected to lead to or result in a superior proposal (as described below), (ii) failure to take such action would be inconsistent with the RMP Board's duties
under applicable law as modified by the RMP partnership agreement and (iii) such alternative proposal did not result from a willful breach of the no solicitation provisions in the merger
agreement.
RMP
has also agreed in the merger agreement that it will promptly advise EQM, orally and in writing, and in no event later than 24 hours after receipt, if any proposal, offer,
inquiry or other contact is received by, any information is requested from, or any discussions or negotiations are sought to be initiated or continued with, RMP in respect of any alternative proposal,
and thereafter shall promptly keep EQM reasonably informed of all material developments affecting the status and terms of any such proposal (and RMP shall promptly provide EQM with copies of any
additional written materials
received by RMP or that RMP has delivered to any third party making an alternative proposal that relate thereto) and of the status of any such discussions or negotiations.
The
merger agreement permits RMP or the RMP Board to issue a "stop, look and listen" communication pursuant to Rule 14d-9(f) under the Exchange Act or comply with
Rule 14d-9 and Rule 14e-2 under the Exchange Act if the RMP Board determines in good faith (after consultation with outside legal counsel) that the failure to take such action would be
reasonably likely to constitute a violation of applicable law.
For
purposes of the merger agreement, a "superior proposal" means a
bona fide
unsolicited written offer, obtained after the date of the
merger agreement and not in breach of RMP's no solicitation obligations described above (other than an immaterial breach), to acquire, directly or indirectly, more than 50% of the outstanding equity
securities of RMP or more than 50% of the assets of RMP and its subsidiaries on a consolidated basis, made by a third party (other than EQT or any of its affiliates), which is on terms and conditions
that the RMP Board determines in its good faith to be (i) reasonably capable of being consummated in accordance with its terms, taking into account legal, regulatory, financial, financing and
timing aspects of the proposal, and (ii) if consummated, more favorable to RMP's unitholders (in their capacity as RMP unitholders) from a financial point of view than the transactions
contemplated by the merger agreement, taking into account at the time of such determination any changes to the terms of the merger agreement that as of that time had been proposed by EQM in writing.
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Change in RMP Board Recommendation
The merger agreement provides that RMP will not, and will cause its subsidiaries and use its reasonable best efforts to cause its and its
subsidiaries' directors, officers, employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives not to, directly or indirectly, withdraw, modify or
qualify, propose publicly to withdraw, modify or qualify, in a manner adverse to EQM, or file with the SEC a proxy statement that does not include, the recommendation of the RMP Board and the RMP
Conflicts Committee that its unitholders approve the merger agreement or publicly recommend the approval of, or publicly approve or adopt, or propose to publicly recommend, approve or adopt, any
alternative proposal, or fail to recommend against acceptance of any tender offer or exchange offer for RMP common units within ten business days after commencement of such offer, or resolve or agree
to take any of the foregoing actions. In addition, if RMP receives an alternative proposal it will, within five business days of receipt of a written request
from EQM, publicly reconfirm the recommendation of the RMP Board and the RMP Conflicts Committee, but EQM will not be able to make such request on more than one occasion in respect of each alternative
proposal and each material modification to an alternative proposal, if any.
RMP's
taking or failing to take, as applicable, any of the actions described above is referred to as an "adverse recommendation change."
Notwithstanding
the terms described above or any other term of the merger agreement to the contrary, subject to the conditions described below, the RMP Board and the RMP Conflicts
Committee may, at any time prior to the approval of the merger agreement by the RMP unitholders, effect an adverse recommendation change in response to either (i) an unsolicited alternative
proposal or (ii) an intervening event (as defined below), in each case if the RMP Board, upon the recommendation of the RMP Conflicts Committee and after consultation with its outside legal
counsel and financial advisors, determines in good faith that the failure to take such action would be inconsistent with its duties under applicable law as modified by the RMP partnership agreement,
and the following conditions have been met:
-
-
if the RMP Board (upon the recommendation of the RMP Conflicts Committee) intends to effect such adverse recommendation change in response to
an alternative proposal:
-
-
such alternative proposal is
bona fide
, in writing and has not been withdrawn or
abandoned;
-
-
the RMP Board (upon the recommendation of the RMP Conflicts Committee) has determined, after consultation with its outside legal
counsel and financial advisors, that such alternative proposal constitutes a superior proposal after giving effect to the adjustments offered by EQM pursuant to the fourth sub-bullet below;
-
-
RMP has provided prior written notice to EQM of the intention of the RMP Board to effect an adverse recommendation change, and
such notice has specified the identity of the person making such alternative proposal, the material terms and conditions of such alternative proposal, and complete copies of any written proposal or
offers (including proposed agreements) received by RMP in connection with such alternative proposal;
-
-
during the period that commences on the date of delivery of the above-described notice and ends at 11:59 p.m. Eastern Time
on the date that is the fourth calendar day following the date of such delivery, RMP must have (1) negotiated with EQM in good faith to make such adjustments to the terms and conditions of the
merger agreement so that the failure to effect such adverse recommendation change would not be inconsistent with its duties under applicable law, as modified by the RMP partnership agreement and
(2) kept EQM reasonably informed with respect to the status and changes in the material terms and conditions of such alternative proposal or other change in circumstances related thereto;
provided
,
that any material revisions to such alternative proposal (including any change in
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the
purchase price) will require delivery of a subsequent notice and a subsequent notice period, except that such subsequent notice period will expire upon the later of (x) the end of the
initial notice period in respect of such revised alternative proposal and (y) 11:59 p.m. Eastern Time on the date that is the second calendar day following the date of the delivery of
such subsequent notice; and
-
-
the RMP Board must have considered all revisions to the terms of the merger agreement offered in writing by EQM and, at the end of
the notice period, must have determined in good faith that (i) such alternative proposal continues to constitute a superior proposal and (ii) failure to effect an adverse recommendation
change would be inconsistent with its duties under applicable law as modified by the RMP partnership agreement, in each case even if such revisions were to be given effect; or
-
-
if the RMP Board (upon the recommendation of the RMP Conflicts Committee) intends to effect such adverse recommendation change in response to
an intervening event:
-
-
RMP has provided prior written notice to EQM of the intention of the RMP Board to effect an adverse recommendation change, and
such notice has specified the details of such intervening event and the reasons for the adverse recommendation change;
-
-
during the period that commences on the date of delivery of the above-described notice and ends at 11:59 p.m. Eastern Time
on the date that is the fifth calendar day following the date of such delivery, RMP must have (i) negotiated with EQM in good faith to make such adjustments to the terms and conditions of the
merger agreement so that the failure to effect such adverse recommendation change would not be inconsistent with its duties under applicable law, as modified by the RMP partnership agreement, and
(ii) kept EQM reasonably informed of any change in circumstances related thereto; and
-
-
the RMP Board must have considered all revisions to the terms of the merger agreement offered in writing by EQM and, at the end of
the notice period, must have determined in good faith (upon the recommendation of the RMP Conflicts Committee) that the failure to effect an adverse recommendation change would be inconsistent with
its duties under applicable law as modified by the RMP partnership agreement even if such revisions were to be given effect.
As
used in the merger agreement, an "intervening event" means a material event, circumstance, effect, condition, change or development, in each case that arises or occurs after the date
of the merger agreement and was not, prior to the date of the merger agreement, known to or reasonably foreseeable by the RMP Board and did not result from or arise out of the announcement or pendency
of, or any actions required to be taken by (or to be refrained from being taken by) RMP pursuant to the merger agreement;
provided
,
however
, that in no
event shall the following events, circumstances, or changes in circumstances constitute an intervening event: (i) the
receipt, existence or terms of an alternative proposal or any matter relating thereto or consequence thereof, (ii) any change in the price, or change in trading volume, of the common units of
RMP or the fact that RMP meets or exceeds internal or published projections, budgets, forecasts or estimates of revenues, earnings or other financial results for any period
(
provided
,
however
, that the exception to this clause (ii) shall not apply to the underlying
causes giving rise to or contributing to such change or prevent any of such underlying causes from being taken into account in determining whether an intervening event has occurred) or
(iii) any matters generally affecting the industry in which RMP operates as a whole that have not had or would not reasonably be expected to have a disproportionate effect on RMP and/or its
subsidiaries.
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Merger Consideration
The merger agreement provides that, at the effective time, by virtue of the merger and without any action on the part of the parties to the
merger agreement or the holder of any securities or interests in such parties, each RMP common unit issued and outstanding or deemed issued and outstanding as of immediately prior to the effective
time will be converted into the right to receive 0.3319 EQM common units, which we refer to as the merger consideration, subject to any adjustments described below in "Adjustments to
Prevent Dilution."
EQM
will not issue any fractional common units in the merger. Instead, all fractional EQM common units that a holder of RMP common units would otherwise be entitled to receive as
consideration for the merger will be aggregated and then, if a fractional EQM common unit results from that aggregation, be rounded up to the nearest whole EQM common unit.
Treatment of RMP Phantom Units
Under the merger agreement, each award of phantom units in respect of RMP common units that is outstanding immediately prior to the effective
time of the merger will, as of the effective time, by virtue of the merger and without any action on the part of the holder of any such phantom unit award, be fully vested and converted into the right
to receive the merger consideration, subject to applicable tax withholding, in respect of each RMP common unit subject to such award. The merger agreement provides that the RMP Board (or, if
appropriate, any committee administering the RMP equity plans) and the EQM Board (or the appropriate committee thereof) will approve resolutions and take any other actions that may be reasonably
necessary to effect the foregoing.
Treatment of Incentive Distribution Rights
Under the merger agreement, the incentive distribution rights in RMP outstanding immediately prior to the effective time of the merger will be
automatically cancelled at the
effective time by virtue of the merger and without any action on the part of the parties to the merger agreement or the holder of any securities or interests in such parties and shall cease to exist.
Adjustments to Prevent Dilution
Prior to the effective time, the exchange ratio will be appropriately adjusted to reflect fully the effect of any unit dividend, subdivision,
reclassification, recapitalization, split, split-up, unit distribution, combination, exchange of units or similar transaction to provide the holders of RMP common units the same economic effect as
contemplated by the merger agreement prior to such event.
Withholding
EQM, RMP and the exchange agent will be entitled to deduct and withhold from the merger consideration otherwise payable to any person pursuant
to the merger agreement such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of applicable U.S. federal, state,
local or non-U.S. tax law. To the extent that deduction and withholding is required, such deduction and withholding may be taken in EQM common units. To the extent withheld, such withheld EQM common
units will be treated as having been paid to the person in respect of whom such withholding was made.
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Distributions
No distributions with respect to EQM common units issued in the merger will be paid to the holder of any unsurrendered certificates (or
effective affidavits of loss in lieu thereof) or book-entry units until such certificates (or effective affidavits of loss in lieu thereof) or book-entry units are surrendered. Following such
surrender, there will be paid, without interest, to the record holder of EQM common units issued in exchange therefor (i) at the time of such surrender, all distributions payable in respect of
any such EQM common units with a record date after the effective time of the merger and a payment date on or prior to the date of such surrender and not previously paid and (ii) at the
appropriate payment date, the distributions payable with respect to such EQM common units with a record date after the effective time of the merger but with a payment date subsequent to such
surrender. For purposes of distributions in respect of EQM common units, all EQM common units to be issued pursuant to the merger will be entitled to distributions as if issued and outstanding as of
the effective time.
Regulatory Matters
See "The MergerRegulatory Approvals and Clearances Required for the Merger" for a description of the material regulatory
requirements for the completion of the merger.
EQM,
EQM GP, Merger Sub, GP Merger Sub, RMP GP and RMP have agreed to (including to cause their respective subsidiaries to) use their reasonable best efforts to
resolve any objections that a governmental authority or any other person may assert under antitrust laws with respect to the transactions contemplated in the merger agreement, and avoid or eliminate
each and every impediment under any antitrust law that may be asserted by any governmental authority with respect to the transactions contemplated by the merger agreement, in each case, so as to
enable the closing of the mergers to occur as promptly as practicable and in any event no later than December 31, 2018. Notwithstanding the foregoing, EQM, EQM GP, Merger Sub, GP
Merger Sub, RMP GP and RMP have agreed not to offer, negotiate, accept or agree to any remedial action (as described below) or other action or agreement related to their respective businesses,
operations or assets or any restrictions on their businesses without the other parties' prior written consent.
As
used in the merger agreement, a "remedial action" means (i) offering, negotiating, accepting and agreeing to dispose or hold separate any part of the EQM, EQM GP, Merger
Sub, GP Merger Sub, RMP, RMP GP or their respective subsidiaries' businesses, operations or assets (or a combination thereof) or (ii) offering, negotiating, accepting and agreeing
to restrict the manner in which the EQM, EQM GP, Merger Sub, GP Merger Sub, RMP, RMP GP or any of their respective subsidiaries may carry on business in any part of the world.
Termination of the Merger Agreement
EQM or RMP may terminate the merger agreement at any time prior to the effective time by mutual written consent.
In
addition, either EQM or RMP may terminate the merger agreement at any time prior to the effective time by written notice to the other party:
-
-
if the closing of the mergers has not been consummated on or before the outside date, which is December 31, 2018;
provided
, that the right to
terminate the merger agreement if the mergers have not been consummated on or before the outside date will not be available
to RMP or EQM (i) if the inability to satisfy the conditions to closing was due to the failure of, in the case of RMP, RMP or RMP GP, and, in the case of EQM, EQM, EQM GP, Merger
Sub or GP Merger Sub, to perform any of its obligations under the merger agreement or (ii) if in the case of RMP, EQM, EQM GP, Merger Sub or GP Merger Sub, and in the case
of EQM, RMP or
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In
addition, EQM may terminate the merger agreement (which termination may be effected by the EQM Conflicts Committee with the consent, authorization or approval of the EQM
Board):
-
-
if an adverse recommendation change by the RMP Board has occurred prior to the special meeting of the RMP unitholders called for the purpose of
voting on the merger agreement;
-
-
if prior to the approval of the merger agreement by a majority of RMP unitholders, RMP is in willful breach of its obligations to
(i) duly call, give notice of and hold a special meeting of RMP unitholders for the purpose of obtaining unitholder approval of the merger agreement, use its reasonable best efforts to solicit
proxies from the RMP unitholders in favor of such approval and, through the RMP Board and the RMP Conflicts Committee, recommend the approval of the merger agreement to RMP unitholders or
(ii) comply with the requirements described under "No Solicitation by RMP of Alternative Proposals" other than in the case where (x) such willful breach is a result of an
isolated action by a person that is a representative (as defined in the merger agreement) of RMP (other than a director or officer of RMP or RMP GP), (y) such willful breach was not
caused by, or within the knowledge of, RMP and (z) RMP takes appropriate actions to remedy such willful breach upon discovery thereof;
provided
,
that the right to terminate the merger agreement for this reason will not be available to EQM if it is then in material breach of any of its representations, warranties, covenants or agreements under
the merger agreement; or
-
-
if there is a breach by RMP of any of its representations, warranties, covenants or agreements in the merger agreement (or if any of the
representations or warranties of RMP and RMP GP in the merger agreement fails to be true) such that certain closing conditions would not be satisfied, or if capable of being cured, such breach
has not been cured within 30 days following delivery of written notice from EQM of such breach;
provided
that EQM will not have the right to
terminate the merger agreement for this reason if EQM, EQM GP, Merger Sub or GP Merger Sub is then in material breach of any of its representations, warranties, covenants or agreements
contained in the merger agreement.
In
addition, RMP may terminate the merger agreement (which termination may be effected by the RMP Conflicts Committee with the consent, authorization or approval of the RMP Board) if
there is a breach by EQM of any of its representations, warranties, covenants or agreements in the merger agreement (or if any of the representations or warranties of EQM in the merger agreement fails
to be true) such that certain closing conditions would not be satisfied, or if capable of being cured, such
breach has not been cured within 30 days following delivery of written notice from RMP of such breach;
provided
that RMP will not have the right
to terminate the merger agreement for this reason if
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RMP
is then in material breach of any of its representations, warranties, covenants or agreements contained in the merger agreement.
In
some cases, termination of the merger agreement will require EQM to reimburse up to $5,000,000 of RMP's expenses, or RMP to reimburse up to $5,000,000 of EQM's expenses and pay a
termination fee to EQM (less any expenses of EQM and its affiliates previously reimbursed by RMP), as described below under "Termination Fee" and "Expenses." Following
payment of the termination fee, if applicable, RMP will not be obligated to pay any additional expenses incurred by EQM or its affiliates.
Termination Fee
The merger agreement provides that RMP is required to pay a termination fee to EQM of $63,400,000, subject to the restrictions described below
under "Cap on Termination Fee and Reimbursements" and less any expenses of EQM previously reimbursed by RMP, as described below under "Expenses," to
EQM:
-
-
if (i) an alternative proposal was publicly proposed or publicly disclosed prior to, and not withdrawn at the time of, the date of the
special meeting of RMP unitholders called for the purpose of approving the merger agreement (or, if the special meeting of RMP unitholders did not occur, prior to the date on which the merger
agreement was terminated as a result of the failure to consummate the merger prior to the outside date), (ii) the merger agreement is terminated by either party (A) as a result of the
failure to consummate the merger prior to the outside date or (B) because the merger agreement was not adopted at the special meeting of RMP unitholders called for such purpose and
(iii) RMP enters into a definitive agreement with respect to, or consummates, any alternative proposal during the 12-month period following the date on which the merger agreement is terminated
(whether or not such alternative proposal is the same alternative proposal referred to in clause (i));
provided
, that for purposes of the payment
of the termination fee described above, the term "alternative proposal" has the meaning provided under "RMP Unitholder Approval" above, except that the references to "20% or more" will be
deemed to be references to "50% or more";
-
-
if EQM terminates the merger agreement due to:
-
-
an adverse recommendation change having occurred;
-
-
RMP being, prior to the approval of the merger agreement by RMP unitholders, in willful breach of its obligations to
(i) duly call, give notice of and hold a special meeting of its unitholders for the purpose of obtaining unitholder approval of the merger agreement, use its reasonable best efforts to solicit
proxies from unitholders in favor of such approval and, through the RMP Board and RMP Conflicts Committee, recommend the approval of the merger agreement to RMP unitholders or (ii) comply with
the requirements described under "No Solicitation by RMP of Alternative Proposals";
-
-
the merger agreement not being adopted by the RMP unitholders at a special meeting called for such purpose where an adverse
recommendation change has occurred; or
-
-
if RMP terminates the merger agreement because the merger agreement was not approved by RMP unitholders at a special meeting of RMP unitholders
called for such purpose in a case where an adverse recommendation change has occurred.
Expenses
Generally, all fees and expenses incurred in connection with the merger including all legal, accounting, financial advisory, consulting and all
other fees and expenses of third parties, shall be the
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obligation
of the respective party incurring such fees and expenses (other than the filing fee payable to the SEC in connection with the filing of the registration statement of which this proxy
statement/prospectus forms a part, and the printing and mailing of this proxy statement/prospectus, which shall be borne by EQM). EQM shall have sole responsibility for the payment of all
filing fees under applicable antitrust laws, including the filing fee payable under the HSR Act, if applicable.
Notwithstanding
the foregoing, EQM or RMP, as applicable, is required to pay the expenses of the other party in the event that the merger agreement is terminated because there is a
breach by RMP or EQM, as applicable, of any of its representations, warranties, covenants or agreements in the merger agreement (or if any of the representations or warranties of such party in the
merger agreement fails to be true) such that certain closing conditions would not be satisfied, or if capable of being cured, such breach has not been cured within 30 days following delivery of
written notice from the other party of such breach.
In
such case, the breaching party promptly, but in no event later than three business days after receipt of an invoice therefor from the other party, will be required to pay all of the
reasonably documented out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financing sources, hedging counterparties, experts and consultants) incurred
by the other party in connection with the merger agreement and the transactions contemplated thereby, up to a maximum amount of $5,000,000 and subject to the restrictions described below under
"Cap on Termination Fee and Reimbursements." In no event will either party be required to make any such payment if, at the time of such termination, the merger agreement was terminable by
it because there is a breach by the other party of any of its representations, warranties, covenants or agreements in the merger agreement such that certain closing conditions would not be satisfied,
or if capable of being cured, such breach has not been cured within 30 days following delivery of written notice of such breach.
Cap on Termination Fee and Reimbursements
If RMP is required under the merger agreement to pay the termination fee, as described above under "Termination Fee" or reimburse
EQM for its expenses as described above under "Expenses," RMP will pay to EQM an amount equal to the lesser of (i) the sum of such termination fee and the amount of EQM expenses
that have not previously been paid and (ii) the maximum amount, if any, that can be paid to EQM without causing EQM to fail the gross income requirement in Section 7704(c)(2) of the
Code, treating such payment from RMP as non-qualifying income and after taking into consideration all other sources of non-qualifying income (computed by treating as non-qualifying income any income
that is not of the type that Baker Botts L.L.P. has opined or will opine is qualifying income as defined in Section 7704(d) of the Code), as determined by EQM's independent accountants.
In the event that RMP pays an amount equal to clause (ii) above and EQM receives an opinion from outside counsel or a ruling from the IRS providing that EQM's receipt of the amount in
clause (i) would either constitute qualifying income (as defined in Section 7704(d) of the Code) or be excluded from gross income for purposes of Section 7704 of the Code, RMP
will pay to EQM any unpaid portion of the amount in clause (i) within five business days. In the event that EQM is not able to receive the amount in clause (i) due to the above
limitations, RMP shall place the unpaid portion in escrow by wire transfer within three days of termination and shall not release any portion thereof to EQM unless and until certain requirements are
met.
If
EQM is required under the merger agreement to reimburse RMP for its expenses as described above under "Expenses," EQM will pay to RMP an amount equal to the lesser of
(i) the amount of such RMP expenses and (ii) the maximum amount, if any, that can be paid to RMP without causing RMP to fail the gross income requirement in Section 7704(c)(2) of
the Code, treating such payment from EQM as non-qualifying income and after taking into consideration all other sources of non-qualifying income (computed by treating as non-qualifying income any
income that is not of the type that Baker Botts L.L.P. has opined or will opine is qualifying income as defined in Section 7704(d)
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of
the Code), as determined by RMP's independent accountants. In the event that EQM pays an amount equal to clause (ii) above and RMP receives an opinion from outside counsel or a ruling from
the IRS providing that RMP's receipt of the amount in clause (i) would either constitute qualifying income (as defined in Section 7704(d) of the Code) or be excluded from gross income
for purposes of Section 7704 of the Code, EQM will pay to RMP any unpaid portion of the amount in clause (i) within five business days. In the event that RMP is not able to receive the
amount in clause (i) due to the above limitations, EQM shall place the unpaid portion in escrow by wire transfer within three days of termination and shall not release any portion thereof to
RMP unless and until certain requirements are met.
The
obligation of EQM or RMP to pay any unpaid portions described above will terminate on December 31 following the date that is five years from the date of the merger agreement.
Any amounts remaining in escrow after the obligation of either EQM or RMP to pay the other's expenses terminates shall be retained by EQM or RMP, as applicable.
Conduct of Business Pending the Consummation of the Merger
Under the merger agreement, each of EQM, EQM GP, RMP GP and RMP has undertaken certain covenants that place restrictions on it and
its respective subsidiaries (except in the case of each of EQM and EQM GP, it and its consolidated subsidiaries) from the date of the merger agreement until the earlier of the termination of
the merger agreement in accordance with its terms and the effective time, unless RMP or EQM, as applicable, gives its prior written consent (not to be unreasonably withheld, delayed or conditioned).
In general, each party has agreed to (i) cause its respective business to be conducted in the ordinary course of business consistent with past practice, (ii) use commercially reasonable
efforts to preserve intact its respective business organization, (iii) use commercially reasonable efforts to keep in full force and effect all material permits and insurance policies
maintained by it and its subsidiaries (except in the case of EQM, it and its consolidated subsidiaries), other than changes to such policies made in the ordinary course of business and (iv) use
commercially reasonable efforts to comply in all material respects with all applicable laws and the requirements of its respective material contracts.
Subject
to certain exceptions set forth in the merger agreement and the disclosure schedules delivered by RMP to EQM in connection with the merger agreement, unless EQM consents in
writing, RMP and RMP GP will not, and will not permit any of their subsidiaries to, among other things, undertake the following actions:
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issue, sell, grant, dispose of, accelerate the vesting of or modify, any ownership or other limited partner interests in RMP, voting securities
or equity interests, or any securities convertible into or exchangeable for ownership or other interests in RMP, voting securities or equity interests, other than (i) in connection with the
vesting or settlement of any equity or equity-based award that is outstanding on, or granted after, the date of the merger agreement in accordance with the terms of such award and (ii) in
connection with the granting of any awards under the RMP equity plans in the ordinary course of business;
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redeem, purchase or otherwise acquire any of RMP's partnership interests, voting securities or equity interests, other than tax withholding
with respect to any equity or equity-based award that is outstanding on, or granted after, the date of the merger agreement and in accordance with the terms of such awards;
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declare, set aside for payment or pay any distribution on any RMP common units or other partnership interests, or otherwise make any payments
to RMP unitholders in their capacity as such, other than (i) distributions by a direct or indirect subsidiary of RMP to its parent and (ii) subject to the requirement under the merger
agreement to coordinate distributions with EQM such that no holders of RMP common units receive distributions in respect of both RMP
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Subject
to certain exceptions set forth in the merger agreement and the disclosure schedules delivered by EQM to RMP in connection with the merger agreement, unless RMP consents in
writing, EQM and EQM GP will not, and will not permit any of their consolidated subsidiaries to, among other things, undertake the following actions:
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issue, sell, grant, dispose of, accelerate the vesting of or modify any limited partner interests in EQM, voting securities or equity
interests, or any securities convertible into or exchangeable for limited partner interests in EQM, other than (i) any such actions involving equity or equity-based awards that are outstanding
on the date of the merger agreement or thereafter granted and (ii) issuances of up to 5,889,282 EQM common units as consideration in the drop-down transactions;
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redeem, purchase or otherwise acquire any of EQM's outstanding partnership interests, voting securities or equity interests, other than tax
withholding with respect to, equity or equity-based awards outstanding on the date of the merger agreement or thereafter granted in accordance with their terms;
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declare, set aside for payment or pay any distribution on any EQM common units, or otherwise make any payments to EQM's unitholders in their
capacity as such other than (i) distributions by a direct or indirect subsidiary of EQM to its parent, (ii) subject to the requirement under the merger agreement to coordinate
distributions with RMP such that no holders of RMP common units receive distributions in respect of both RMP common units and EQM common units for the same period, EQM's regular quarterly
distributions and associated distributions to EQM GP and in respect of the incentive distribution rights of EQM in amounts consistent with publicly issued guidance as of the date of the merger
agreement;
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split, combine, subdivide or reclassify any EQM partnership units or other interests;
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issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of EQM or any of its subsidiaries
in an aggregate principal amount exceeding $2.5 billion, other than any debt securities or options, warrants, calls or other rights to acquire any debt securities issued or sold by Mountain
Valley Pipeline, LLC or its subsidiaries;
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amend the charter documents of EQM GP, EQM's certificate of limited partnership or the EQM partnership agreement (other than amendments
that are approved by EQM GP or an EQM unit majority);
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adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization (other than
transactions exclusively between wholly owned subsidiaries of EQM);
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engage in any activity or conduct its business in a manner that would cause less than 90% of the gross income of EQM for any calendar quarter
since its formation and prior to the effective time of the merger to be treated as "qualifying income" within the meaning of Section 7704(d) of the Code or that would otherwise cause EQM to be
taxable as a corporation under Section 7704 of the Code;
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make, or permit any of its subsidiaries to make, any acquisition of any other entity or business or merge, consolidate or enter into any other
business combination transaction or agreement with any entity, in each case, that would reasonably be expected to prevent, materially impede or materially delay the consummation of the merger or
the GP merger;
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file a registration statement relating to the primary offering, issuance and sale of EQM common units by EQM; or
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agree, in writing or otherwise, to take any of the above actions.
Indemnification; Directors' and Officers' Insurance
The merger agreement provides that, from and after the effective time, EQM and EQM GP will, to the fullest extent permitted by law,
indemnify and hold harmless, and provide advancement and reimbursement of expenses to, all past and present directors and officers of RMP, RMP GP or any of their respective subsidiaries and
also with respect to any such person, in their capacity as a director, officer, employee, member, trustee or fiduciary of another corporation, foundation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise serving at the request of or on behalf of RMP or RMP GP or any of their respective subsidiaries (the indemnified persons), to the fullest extent that
RMP, RMP GP or any of their respective subsidiaries would be permitted to indemnify such persons.
In
addition, from and after the effective time and as provided by the merger agreement, EQM and EQM GP will honor the provisions regarding the elimination of liability of
directors, indemnification of officers, directors and employees and advancement of expenses contained in the governing instruments of RMP or RMP GP and any subsidiary of RMP or RMP GP
immediately prior to the effective time
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and
ensure that the organizational documents of RMP and RMP GP will, for a period of six years following the effective time, contain provisions no less favorable with respect to
indemnification, advancement of expenses and exculpation than are presently set forth in such governing instruments. The surviving entity and the surviving GP entity will maintain in effect for
six years from the effective time of the merger the current directors' and officers' liability insurance policies covering acts or omissions occurring at or prior to the effective time with respect to
the indemnified persons, so long as the surviving entity or the surviving GP entity is not required to expend more than an amount per year equal to 300% of current annual premiums paid by RMP
or RMP GP for such insurance. RMP or RMP GP may, in its sole discretion prior to the effective time, purchase a "tail policy" with respect to acts or omissions occurring or alleged to
have occurred prior to the effective time that were committed or alleged to have been committed by the indemnified persons of RMP, RMP GP or any of their respective subsidiaries in their
capacity as such, so long as the cost of such policy does not exceed six times an amount equal to 300% of the current annual premiums paid by RMP and RMP GP for directors' and officers'
liability insurance policies and, if such a "tail policy" is purchased, EQM, the surviving entity or the surviving GP entity will have no further obligations with respect to maintaining
directors' and officers' liability insurance.
Financing Matters
The merger agreement provides that RMP consents to EQM's use of and reliance on any audited or unaudited financial statements relating to RMP
and its consolidated subsidiaries or entities or businesses acquired by RMP reasonably requested by EQM to be used in any financing or other activities of EQM, including any filings that EQM desires
to make with the SEC. In addition, RMP will use commercially reasonable efforts, at EQM's sole cost and expense, to obtain the consents of any auditor to the inclusion of the financial statements
referenced above in appropriate filings with the SEC. Prior to the closing, RMP will provide such assistance (and will cause its subsidiaries and its and their respective personnel and advisors to
provide such assistance), as EQM may reasonably request in order to assist EQM in connection with financing activities, including any public offerings to be registered under the Securities Act or
private offerings. Such assistance will include, but not be limited to, the following: (i) providing such information, and making available such personnel as EQM may reasonably request;
(ii) participation in, and assistance with, any marketing activities related to such financing; (iii) participation by senior management of RMP in, and their assistance with, the
preparation of rating agency presentations and meetings with rating agencies; (iv) taking such actions as are reasonably requested by EQM or its financing sources to facilitate the satisfaction
of all conditions precedent to obtaining such financing; and (v) taking such actions as may be required to permit any cash and marketable securities of RMP or EQM to be made available to
finance the transactions contemplated by the merger agreement at the effective time.
In
addition, RMP must, and must cause its subsidiaries, to deliver at the closing of the merger lien and guarantee terminations and releases, as applicable, and instruments of release
and discharge (including a customary payoff letter) with respect to (i) the RMP existing credit facility and (ii) at EQM's request, any other indebtedness of RMP, and to give any other
notices requested by EQM in order to facilitate repayment of the aforementioned credit facility and any such other indebtedness. In addition, RMP shall use reasonable best efforts to assist EQM, at
EQM's request, in facilitating the termination, amendment, or assumption of any derivative transactions of RMP or any subsidiary thereof in connection with the consummation of the transactions
contemplated in the merger agreement.
Amendment and Waiver
At any time prior to the effective time, whether before or after approval of the merger agreement by RMP unitholders, the parties may, by
written agreement and by action taken or authorized by the
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RMP
Board and the EQM Board, amend or supplement the merger agreement; provided, however, that the RMP Board and the EQM Board may not take or authorize any such action unless it has first been
approved in writing by the RMP Conflicts Committee or the EQM Conflicts Committee, as applicable; provided, further, that following approval of the merger and merger agreement by RMP unitholders, no
amendment or change to the provisions of the merger agreement will be made which by law or stock exchange rule would require further approval by RMP unitholders, without such approval.
Unless
otherwise expressly set forth in the merger agreement, whenever a determination, decision, approval or consent of RMP or the RMP Board or of EQM or the EQM Board is required
pursuant to the merger agreement, such determination, decision, approval or consent must be authorized by the RMP Board and the EQM Board, as applicable; provided, however, that the RMP Board and the
EQM Board, as applicable, may not take or authorize any such action unless such action has first been approved in writing by the RMP Conflicts Committee or the EQM Conflicts Committee, as applicable.
At
any time prior to the effective time, any party to the merger agreement may, subject to applicable law: (i) waive any inaccuracies in the representations and warranties of any
other party contained in the merger agreement; (ii) extend the time for the performance of any of the obligations or acts of any other party provided for in the merger agreement;
(iii) waive compliance by any other party with any of the agreements or conditions contained in the merger agreement, as permitted under the merger agreement or (iv) make or grant any
consent under the merger agreement; provided, however, that the RMP Board or the EQM Board may not authorize any action or otherwise grant any consent under the merger agreement unless it has first
been approved in writing by the RMP Conflicts Committee or EQM Conflicts Committee, as applicable.
In
the event the RMP Board or the EQM Board, as applicable, authorizes any amendment, waiver or consent that is counter to any action or recommendation by the RMP Conflicts Committee or
the EQM Conflicts Committee, as applicable, or was not approved in writing by such conflicts committee as required, then the RMP Conflicts Committee or the EQM Conflicts Committee, as applicable, may
rescind its approval of the merger agreement, with such rescission resulting in the rescission of "special approval" under Section 7.9 of the RMP partnership agreement or the EQM partnership
agreement, as applicable. Any such rescission of special approval under the RMP partnership agreement pursuant to the above does not constitute an adverse recommendation change.
Specific Enforcement
The merger agreement, subject to certain exceptions, provides that, in the event RMP pays the termination fee (described under
"Termination Fee") to EQM when required, RMP will have no further liability to EQM, Merger Sub, GP Merger Sub or EQM GP. Notwithstanding any termination of the merger
agreement, the merger agreement provides that nothing in the agreement (other than payment of the termination fee) will relieve any party from any liability for any failure to consummate the
transactions when required pursuant to the merger agreement or any party from liability for fraud or a willful breach of any covenant or agreement contained in the merger agreement. The merger
agreement also provides that the parties are entitled to obtain an injunction to prevent breaches of the merger agreement and to specifically enforce the merger agreement. In the event that EQM
receives the termination fee, EQM may not seek any award of specific performance under the merger agreement.
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Representations and Warranties
The merger agreement contains representations and warranties made by RMP and EQM. These representations and warranties have been made solely for
the benefit of the other parties to the merger agreement and:
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may be intended not as statements of fact or of the condition of the parties to the merger agreement or their respective subsidiaries, but
rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
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have been qualified by disclosures that were made to the other party in connection with the negotiation of the merger agreement, which
disclosures may not be reflected in the merger agreement and may not be publicly available;
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may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
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were made only as of the date of the merger agreement or such other date or dates as may be specified in the merger agreement and are subject
to more recent developments.
The
representations and warranties made by both RMP and EQM relate to, among other things:
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organization, standing, power and similar matters;
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capital structure;
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approval and authorization of the merger agreement and the transactions contemplated by the merger agreement and any conflicts created by such
transactions and voting requirements;
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required consents and approvals of governmental authorities in connection with the transactions contemplated by the merger agreement;
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documents filed with the SEC, financial statements included in those documents and regulatory reports filed with governmental authorities;
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absence of certain changes or events from December 31, 2017 through the date of the merger agreement and from the date of the merger
agreement through the closing date;
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legal proceedings;
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compliance with applicable laws and permits;
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information supplied in connection with this proxy statement/prospectus;
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tax matters;
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employee benefits;
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labor matters;
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environmental matters;
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contracts of each party;
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property;
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intellectual property;
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insurance;
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brokers and other advisors;
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state takeover statutes;
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regulatory matters;
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the Investment Company Act of 1940; and
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absence of additional representations and warranties.
Additional
representations and warranties made only by RMP relate to, among other things, the opinion of its financial advisor.
Distributions
The merger agreement provides that, from the date of the merger agreement until the effective time, each of EQM and RMP will coordinate with the
other regarding the declaration of any distributions in respect of EQM common units and RMP common units. The merger agreement also provides that holders of RMP common units will receive, for any
quarter, either: (i) only distributions in respect of RMP common units or (ii) only distributions in respect of EQM common units that they receive as merger consideration.
EQT's Representations, Warranties and Obligation
Under the terms of the merger agreement, EQT has agreed to vote all RMP limited partner interests then owned beneficially or of record by it or
any of its subsidiaries, as of the record date, in favor of the approval of the merger agreement and the merger and the approval of any actions required in furtherance thereof. EQT consents to, and
has caused or will cause, to the extent necessary and to the extent permitted by the organizational documents thereof, each of its subsidiaries to consent to, the merger agreement and the transactions
contemplated by the merger agreement. As of June 7, 2018, EQT and its subsidiaries collectively held 28,757,246 RMP common units, representing approximately 28.1% of the RMP units
entitled to vote on the merger.
EQT
has also agreed not to, and to cause its subsidiaries not to, without the consent of the relevant conflicts committee, eliminate the RMP Conflicts Committee or the EQM Conflicts
Committee, revoke or diminish the authority of such committee or remove any director of the RMP Board or EQM Board that is a member of a conflicts committee without the affirmative vote of the
applicable conflicts committee. EQT has also made certain representations and warranties regarding providing the IDR purchase agreement to each of the RMP Conflicts Committee and the EQM Conflicts
Committee.
Additional Agreements
The merger agreement also contains covenants relating to cooperation in the preparation of this proxy statement/prospectus and additional
agreements relating to, among other things, access to information, notice of specified matters, efforts to be used to obtain the required tax-related opinions of counsel and public announcements. The
merger agreement also obligates EQM to have EQM common units to be issued in connection with the merger approved for listing on the NYSE, subject to official notice of issuance, prior to the date of
the consummation of the merger.
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THE DROP-DOWN AGREEMENT
This discussion of the drop-down agreement is qualified in its entirety by reference to the drop-down agreement, a copy
of which is included as an exhibit to the registration statement of which this proxy statement/prospectus forms a part. This summary does not purport to be complete and may not contain all of
the information about the drop-down agreement that is important to you. EQM and RMP encourage you to read carefully the drop-down agreement in its entirety before making any decisions regarding the
merger contemplated by the merger agreement.
The drop-down agreement and this summary of its terms have been included to provide you with information regarding the terms of the drop-down agreement. Factual
disclosures about EQT, EQM, or any of their respective subsidiaries or affiliates contained in this proxy statement/prospectus or their respective public reports filed with the SEC may supplement,
update or modify the factual disclosures about EQT, EQM or their respective subsidiaries or affiliates contained in the drop-down agreement and described in this summary. The representations,
warranties and covenants made in the drop-down agreement by the
parties thereto were qualified and subject to important limitations agreed to by such parties in connection with negotiating the terms of the drop-down agreement. In particular, in your review of the
representations and warranties contained in the drop-down agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the
principal purpose of allocating risk between the parties to the drop-down agreement, rather than establishing matters as fact. The representations and warranties may also be subject to a contractual
standard of materiality different from those generally applicable to unitholders and reports and documents filed with the SEC, and in some cases were qualified by confidential disclosures that were
made by each party to the other, which disclosures are not reflected in the drop-down agreement or otherwise publicly disclosed. Moreover, information concerning the subject matter of the
representations and warranties may have changed since the date of the drop-down agreement and subsequent developments or new information qualifying a representation or warranty may not have been
included in this proxy statement/prospectus. For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read
alone.
As used in this description of the drop-down agreement, unless the context otherwise explicitly requires, references to the "subject companies" refer to,
individually or collectively, as the context requires, the drop-down entities, Strike Force Midstream, Strike Force East LLC, a wholly-owned subsidiary of Strike Force Midstream, and Strike
Force South LLC, a wholly-owned subsidiary of Strike Force Midstream.
The Drop-Down Transactions
Subject to the terms and conditions of the drop-down agreement, the drop-down agreement provides for the contribution by Rice Midstream
Holdings LLC (Rice Midstream) of all of the limited liability company interests in each of the drop-down entities to EQM Gathering. The interests held by Rice Midstream in all of the drop-down
entities are referred to as the "subject interests."
The
drop-down transactions were completed on May 22, 2018. In addition, on May 1, 2018, EQM Gathering acquired 25% of the limited liability company interests of Strike Force
Midstream from a subsidiary of Gulfport. As a result, each of the subject companies are now wholly-owned subsidiaries of EQM Gathering.
Effective Date
The drop-down transactions are deemed to have become effective at 12:01 a.m. on May 1, 2018.
Drop-Down Transaction Consideration
The total consideration for the contribution of Rice Midstream's interests in Rice West Virginia and Rice Olympus was $700,000,000 in cash and
5,889,282 EQM common units, and the consideration
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for
the contribution of Rice Midstream's interest in Strike Force Holdings was $450,000,000 in cash, in each case subject to customary purchase price adjustments.
Conditions to Closing of the Drop-Down Transactions
Rice Midstream and EQM Gathering could not have completed any of the drop-down transactions unless each of the following conditions was
satisfied or waived, if waiver was permitted by applicable law and/or the drop-down agreement, with respect to such drop-down transaction:
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no law (whether temporary, preliminary or permanent) can be in effect that enjoins, restrains, conditions or prohibits the consummation of such
drop-down transaction or makes the consummation of such drop-down transaction illegal;
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no suit, action or proceeding by or before any governmental authority can be pending that challenges or seeks to restrain or prohibit the
consummation of such drop-down transaction or the ancillary agreement(s) relating to such drop-down transaction, or that seeks damages in connection therewith;
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all authorizations, consents, orders and approvals of all governmental authorities or other persons required to be obtained or given prior to
the completion of such drop-down transaction must have been received or waived, and must be reasonably satisfactory in form and substance to EQT and EQM, and all notices required to be given prior to
the completion of such Drop-Down Transaction must have been delivered and all notice periods with respect thereto must have expired or been waived; and
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one or more debt or equity financings effected by EQM or its subsidiaries after April 25, 2018 must have been consummated and EQM must
have received not less than the lesser of (i) $1,150,000,000 of aggregate net proceeds therefrom or (ii) 100% of the cash amount to be paid by EQM in connection with such drop-down
transaction.
The
obligations of EQT and Rice Midstream to effect each of the drop-down transactions were subject to the satisfaction or waiver (such waiver to be given by EQT), if waiver was
permitted by applicable law and/or the drop-down agreement, of the following additional conditions with respect to such drop-down transaction:
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the representations and warranties of EQM and EQM Gathering contained in the drop-down agreement or any ancillary agreement or any schedule,
certificate or other document delivered pursuant thereto or in connection with such drop-down transaction must be true and correct in all material respects (other than representations and warranties
that are qualified as to materiality or material adverse effect, which must be true in all respects) both when made and as of the applicable closing date, except that representations and warranties
that are made as of a specified date must be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or material adverse effect, which
must be true in all respects) as of such specified date;
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EQM and EQM Gathering must have performed in all material respects all obligations and agreements and complied in all material respects with
all covenants and conditions required by the drop-down agreement or any ancillary agreement to be performed or complied with by them prior to or at the applicable closing;
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there must not have occurred any change, event or development that, individually or in the aggregate, has had or is reasonably likely to have a
material adverse effect on EQM or its subsidiaries, including EQM Gathering;
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EQT and Rice Midstream must have received from EQM (on behalf of itself and EQM Gathering) a certificate signed by a duly authorized officer of
EQM GP certifying as to the matters set forth above; and
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EQT and Rice Midstream must have received satisfactory evidence that all conditions precedent to the merger have been fulfilled or waived in
accordance with the merger agreement, and the merger must have been consummated.
The
obligations of EQM and EQM Gathering to effect each of the drop-down transactions were subject to the satisfaction or waiver, if waiver was permitted by applicable law and/or the
drop-down agreement, of the following additional conditions with respect to such drop-down transaction:
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the representations and warranties of EQT and Rice Midstream contained in the drop-down agreement or any ancillary agreement or any schedule,
certificate or other document delivered pursuant thereto or in connection with such drop-down transaction must be true and correct in all material respects (other than representations and warranties
that are qualified as to materiality or material adverse effect, which must be true in all respects) both when made and as of the applicable closing date, except that representations and warranties
that are made as of a specified date, must be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or material adverse effect,
which must be true in all respects) as of such specified date;
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EQT and Rice Midstream must have performed in all material respects all obligations and agreements and complied in all material respects with
all covenants and conditions required by the drop-down agreement or any ancillary agreement to be performed or complied with by them prior to or at the applicable closing;
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there must not have occurred any change, event or development that, individually or in the aggregate, has had or is reasonably likely to have a
material adverse effect on a subject company to which the applicable closing relates;
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EQM must have received from EQT a certificate signed by a duly authorized officer of EQT certifying as to the matters set forth above; and
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EQM must have received from Rice Midstream an affidavit of Rice Midstream (or its regarded owner) demonstrating non-foreign status meeting the
requirements of Sections 1445 and 1446 of the Code with respect to such drop-down transaction.
Conduct of Business Prior to Closing
From the date of execution of the drop-down agreement until the earlier of (x) the termination of the drop-down agreement in accordance
with its terms and (y) the applicable closing, unless EQM gave its prior written consent, the drop-down agreement required EQT and Rice Midstream to (i) use commercially reasonable
efforts to conduct the respective businesses of the subject companies in the ordinary course of business consistent with past practice, (ii) spend capital in material compliance with the
currently effective capital expenditures budget for each subject company, (iii) use commercially reasonable efforts to preserve intact certain material contracts to which they and/or the
subject companies are a party and (iv) use commercially reasonable efforts to preserve intact the respective businesses of the subject companies and the current relationships of each subject
company with its distributors, customers, suppliers and other persons with which it has significant business relations.
Further,
(x) except as set forth in disclosure schedules delivered by EQT and Rice Midstream or (y) unless EQM consents in writing, EQT or Rice Midstream could not, and
could not propose to,
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directly
or indirectly, take or authorize any of the following actions with respect to any of the subject companies:
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enter into any joint venture, strategic alliance, exclusive dealing, noncompetition or similar contract or arrangement that affects the subject
companies, their respective assets or the subject interests;
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dispose of or otherwise subject to any lien (other than a permitted lien) the subject companies, their respective assets or the subject
interests;
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incur any indebtedness or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of
any other person or entity, in each case, that affect the subject companies, their respective assets or the subject interests;
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(i) (A) amend, waive, or modify in any material respect any material contract, (B) consent to the termination of any material
contract or (C) amend, waive, modify or consent to the termination of any rights of Rice Midstream or any subject company, as applicable, under any material contract, except for
(x) amendments in the ordinary course of business consistent with past practice and (y) terminations upon the expiration of a material contract in accordance with its terms or
(ii) enter into any contract relating to the subject companies, their respective assets or the subject interests other than in the ordinary course of business consistent with past practice;
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enter into any lease of real or personal property or any renewals thereof involving a term of more than one year or rental obligation exceeding
$250,000 per year in any single case which relates to the subject companies or their respective assets;
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permit the lapse of any right relating to the intellectual property constituting part of the assets of the subject companies or any other
material intangible asset used in the respective businesses of the subject companies, as applicable, other than in the ordinary course of business consistent with past practice;
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settle any claim, action, suit, inquiry, proceeding, audit or investigation by or before any governmental authority, other than cash
settlements that do not involve any covenants or other agreements limiting the activities of any subject company relating to the assets of such subject company or Rice Midstream's interest in such
subject company and that do not involve payments individually or in the aggregate in excess of $25,000;
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with respect to the businesses of any subject company, accelerate the collection of or discount any accounts receivable, delay the payment of
accounts payable or deferred expenses, reduce inventories or otherwise increase cash on hand, except, in each case, in the ordinary course of business consistent with past practice;
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take any action, or intentionally fail to take any action, that would result in a breach of any covenant made by a subject company, as
applicable, in a contract relating to a gas gathering system and/or water distribution system owned by such subject company, as applicable, or that has or would reasonably be expected to have a
material adverse effect (as defined below in "Representations and Warranties") with respect to EQT, Rice Midstream and the subject companies; and
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announce an intention, enter into any formal or informal agreement, or otherwise make a commitment to do any of the foregoing.
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Representations and Warranties
The drop-down agreement contains representations and warranties made by the parties. These representations and warranties were made solely for
the benefit of the parties to the drop-down agreement and:
-
-
may be intended not as statements of fact or of the condition of the parties to the drop-down agreement or their respective subsidiaries, but
rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
-
-
have been qualified by disclosures that were made to the other party in connection with the negotiation of the drop-down agreement, which
disclosures may not be reflected in the drop-down agreement and may not be publicly available;
-
-
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
-
-
were made only as of the date of the drop-down agreement or such other date or dates as may be specified in the drop-down agreement and are
subject to more recent developments.
The
representations and warranties made by all parties to the drop-down agreement relate to, among other things:
-
-
organization, existence and similar matters;
-
-
approval and authorization of the drop-down agreement and the drop-down transactions and any conflicts created by such transactions;
-
-
the absence of required consents and approvals of governmental authorities in connection with the transactions contemplated by the drop-down
agreement;
-
-
the existence of certain legal proceedings;
-
-
the use of brokers and other advisors; and
-
-
investment intent with respect to the drop-down transactions.
Additional
representations and warranties made only by EQM and EQM Gathering relate to, among other things:
-
-
the due authorization and issuance, when issued, of EQM common units to be issued in connection with the drop-down transactions;
-
-
the timeliness and accuracy of EQM's periodic reports filed with the SEC; and
-
-
the absence of registration requirements with respect to the issuance of EQM common units in connection with the drop-down transactions.
Additional
representations and warranties made only by EQT and Rice Midstream relate to, among other things:
-
-
financial statements and undisclosed liabilities of the subject companies;
-
-
certain matters related to internal control over financial reporting;
-
-
the absence of certain changes since December 31, 2017;
-
-
capitalization of the subject companies and Rice Midstream's title to the subject interests;
-
-
the subject companies' title to real property;
-
-
the subject companies' title to personal property and the condition of assets;
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-
-
certain intellectual property matters;
-
-
certain tax matters;
-
-
certain environmental matters; and
-
-
certain matters related to material contracts to which the subject companies are party.
Many
of the representations and warranties in the drop-down agreement provide that such representation and warranty does not extend to matters where the failure of the representation and
warranty to be accurate would not result in a material adverse effect on the party giving the representation and warranty. For purposes of the drop-down agreement, the term "material adverse effect"
means:
-
-
when used with respect to EQM and EQM Gathering, a material adverse effect on or material adverse change in:
-
-
the assets, liabilities, financial condition or results of operations of EQM and its subsidiaries, taken as a whole; or
-
-
the ability of EQM and EQM Gathering to perform their respective obligations under the drop-down agreement or to consummate the
transactions contemplated by the drop-down agreement; and
-
-
When used with respect to EQT and Rice Midstream, a material adverse effect on or material adverse change in:
-
-
the businesses of the subject companies, taken as a whole; or
-
-
the ability of EQT and Rice Midstream to perform their respective obligations under the drop-down agreement or to consummate the
transactions contemplated by the drop-down agreement.
A
material adverse effect does not include the following effects, changes, events, facts, conditions or developments (either alone or in combination) with respect to EQM or EQM
Gathering, or with respect to the businesses or assets of the subject companies, as applicable:
-
-
conditions affecting the natural gas gathering and transportation industry generally (including any change in the prices of natural gas or
other hydrocarbon products, industry margins or any regulatory changes or changes in applicable law), except to the extent disproportionately affecting such party, such business or such assets, as
applicable, as compared with other similarly situated parties, businesses or assets, as applicable, in the natural gas gathering and transportation industry;
-
-
any adverse change, event or effect affecting the United States or global economic or political conditions (including any affect or change as a
result of any engagement in hostilities or the occurrence of any military or terrorist attack) or financial markets in general, except to the extent disproportionately affecting such party, such
business or such assets, as applicable, as compared with other similarly situated parties, businesses or assets, as applicable, in the natural gas gathering and transportation industry;
-
-
any change or effect relating to seasonal reductions in revenues or earnings of such party or such assets, as applicable, in the ordinary
course of business; or
-
-
any change or effect resulting from the entry into or announcement of the drop-down agreement, the IDR purchase agreement or the merger
agreement, actions contemplated thereby or under the drop-down agreement, or the consummation of transactions contemplated thereby.
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Termination of the Drop-Down Agreement
The drop-down agreement was subject to termination with respect to a particular drop-down transaction at any time prior to the closing of such
drop-down transaction:
-
-
by mutual written consent of EQT, Rice Midstream, EQM and EQM Gathering;
-
-
with respect to such drop-down transaction:
-
-
by EQM, if either of EQT or Rice Midstream breaches or fails to perform in any respect any of its representations, warranties or
covenants contained in the drop-down agreement or any ancillary agreement and such breach or failure to perform (i) would give rise to the failure of a condition relating to the truth and
accuracy of EQT and Rice Midstream's representations, warranties and covenants, (ii) cannot be or has not been cured within 15 days following delivery of written notice of such breach or
failure to perform and (iii) has not been waived by EQM;
-
-
by EQT or Rice Midstream, if either of EQM or EQM Gathering breaches or fails to perform in any respect any of its
representations, warranties or covenants contained in the drop-down agreement or any ancillary agreement and such breach or failure to perform (i) would give rise to the failure of a condition
relating to the truth and accuracy of EQM and EQM Gathering's representations, warranties and covenants, (ii) cannot be or has not been cured within 15 days following delivery of written
notice of such breach or failure to perform and (iii) has not been waived by Rice Midstream;
-
-
by any of EQM, EQM Gathering, EQT or Rice Midstream, if any of the conditions to closing applicable to EQT or Rice Midstream (if
EQM or EQM Gathering is requesting termination) or EQM or EQM Gathering (if EQT or Rice Midstream is requesting termination) shall have become incapable of fulfillment prior to December 31,
2018, provided that the right to terminate the drop-down agreement will not be available if the failure of the party so requesting termination to fulfill any obligation under the drop-down agreement
was the cause of the failure of such condition to be satisfied on or prior to such date;
-
-
by any of EQM, EQM Gathering, EQT or Rice Midstream, in the event that any governmental authority issues an order, decree or
ruling or takes any other action restraining, enjoining or otherwise prohibiting the drop-down transactions and such order, decree, ruling or other action has become final and nonappealable, provided
that the party so requesting termination must use its commercially reasonable efforts to have such order, decree, ruling or other action vacated; or
-
-
by either of EQT or Rice Midstream, if the merger agreement is terminated in accordance with its terms.
In
the event that the drop-down agreement had been terminated with respect to a particular drop-down transaction by EQT or Rice Midstream because the merger agreement was terminated,
then EQT would have paid to EQM, within two business days after such termination, a cash amount equal to the actual, documented out-of-pocket costs and expenses paid by EQM in connection with the
negotiation, execution and performance of the drop-down agreement with respect to such drop-down transaction (without duplication for the other drop-down transaction), such amount not to exceed
$7,500,000 in the aggregate. EQM was not entitled to receive more than one payment of expense reimbursement for a particular transaction.
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Indemnification
The drop-down agreement provides that, from and after the effective date, EQT will indemnify EQM from all adverse consequences incurred by EQM,
its subsidiaries and their respective officers, directors, employees, consultants and agents (the EQM Protected Parties), as a result of (i) breach of a representation or warranty of EQT or
Rice Midstream set forth in the drop-down agreement, (ii) breach of a covenant or agreement of EQT or Rice Midstream set forth in the drop-down agreement or (iii) any taxes for which
Rice Midstream is liable pursuant to the tax-related provisions in the drop-down agreement.
In
addition, from and after the effective date, EQM will indemnify EQT and Rice Midstream from all adverse consequences incurred by EQT or Rice Midstream, their respective affiliates
(other than EQM and its subsidiaries) and their respective officers, directors, employees, consultants and agents (the EQT Protected Parties), as a result of (i) breach of a representation or
warranty of EQM or EQM Gathering set forth in the drop-down agreement, (ii) breach of a covenant or agreement of EQM or EQM Gathering set forth in the drop-down agreement or (iii) any
taxes for which EQM is liable pursuant to the tax-related covenants in the drop-down agreement.
The
following limitations on indemnification apply to the parties' indemnification obligations provided above:
-
-
indemnification obligations related to breaches of certain representations and warranties by either party will terminate on the 18-month
anniversary of the applicable closing date, except that indemnification obligations related to breaches of representations and warranties with respect to capitalization, title to the subject
interests, title to real property and title to personal property and condition of assets will terminate on the third anniversary of the applicable closing date;
-
-
indemnification obligations related to breaches of certain covenants or agreements by either party will terminate on the 60th day after
the termination of the applicable statute of limitations;
-
-
the aggregate liability of EQT related to breaches of representations and warranties will not exceed $172,500,000 (which is equal to 15% of the
aggregate cash amount to be paid for the drop-down transactions), except that the aggregate liability of EQT related to breaches of representations and warranties with respect to title to the subject
interests, organization and existence, authority and approval and the use of brokers and other advisors will not exceed $1,150,000,000;
-
-
the aggregate liability of EQM related to breaches of representations or warranties will not exceed $172,500,000 (15% of the aggregate cash
amount to be paid for the drop-down transactions), except that the aggregate liability of EQM related to breaches of representations or warranties with respect to organization and existence, authority
and approval, due authorization and issuance, when issued, of EQM common units and the use of brokers and other advisors will not exceed $1,150,000,000;
-
-
no claims may be made against EQT for indemnification relating to a breach of representations and warranties made unless the aggregate dollar
amount of the adverse consequence suffered by the EQM Protected Parties exceeds $250,000, after which EQT will be liable for the full amount in excess of $250,000, subject to the ceiling mentioned
above;
-
-
no claims may be made against EQM for indemnification relating to a breach of representations and warranties made unless the aggregate dollar
amount of the adverse consequence suffered by the EQT Protected Parties exceeds $250,000, after which EQT will be liable for the full amount in excess of $250,000, subject to the ceiling mentioned
above;
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-
-
neither party will be liable to the other party for adverse consequences to the extent (i) any insurance proceeds are realized by such
party (net of any incremental insurance premium or tax that becomes due and payable as a result of the claim) or (ii) any amounts are recovered by such party from third persons; and
-
-
in no event will EQM be obligated to the EQT Protected Parties after the applicable effective date for any adverse consequences owed by EQT
prior to the applicable effective date.
Amendment and Waiver
The drop-down agreement may be amended, modified or supplemented by the parties at any time. The drop-down agreement may not, however, be
amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except in writing signed by each of the parties and, to the extent such amendment is made prior to the
transaction intended to qualify as tax free under Section 355 of the Code, the result of which is that EQT and EQM are no longer affiliates (the spin-off transaction), only after the EQM
Conflicts Committee has approved such amendment.
At
any time prior to the applicable closing date, the parties were entitled to, to the extent legally allowed: (i) waive any inaccuracies in the representations and warranties of
any other party contained in the drop-down agreement; (ii) extend the time for the performance of any of the obligations or acts of any other party provided for in the drop-down agreement; or
(iii) waive compliance by any other party with any of the agreements or conditions contained in the drop-down agreement, as permitted under the drop-down agreement; provided, however, that in
the event EQM or EQM Gathering took or authorized any action described in this paragraph, such action must have been evidenced in writing and signed by an authorized officer of EQM or EQM Gathering
and to the extent such action was taken prior to the spin-off transaction (the result of which is that EQT and EQM are no longer affiliates), only after the EQM Conflicts Committee has approved such
action.
Expenses
Generally, all fees and expenses incurred in connection with the transactions contemplated by the drop-down agreement are the obligation of the
party incurring such fees and expenses.
Governing Law
The drop-down agreement is governed by the law of the Commonwealth of Pennsylvania.
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THE IDR PURCHASE AGREEMENT
This discussion of the IDR purchase agreement is qualified in its entirety by reference to the IDR purchase agreement, a
copy of which is included as an exhibit to the registration statement of which this proxy statement/prospectus forms a part. This summary does not purport to be complete and may not contain all
of the information about the IDR purchase agreement that is important to you. EQM and RMP encourage you to read carefully the IDR purchase agreement in its entirety before making any decisions
regarding the merger contemplated by the merger agreement. The IDR purchase agreement and this summary of its terms have been included to provide you with information regarding the terms of the IDR
purchase agreement. The representations, warranties and covenants made in the IDR purchase agreement by EQT, RMGH and EQGP were qualified and subject to important limitations agreed to by EQT, RMGH
and EQGP in connection with negotiating the terms of the IDR purchase agreement. In particular, in your review of the representations and warranties contained in the IDR purchase agreement and
described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of allocating risk between the parties to the IDR purchase
agreement, rather than establishing matters as fact. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to
unitholders and reports and documents
filed with the SEC. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the IDR purchase agreement and subsequent developments
or new information qualifying a representation or warranty may not have been included in this proxy statement/prospectus. For the foregoing reasons, the representations, warranties and covenants or
any descriptions of those provisions should not be read alone.
The IDR Purchase
Pursuant to the IDR purchase agreement, subject to the terms and conditions thereof, on May 22, 2018, EQGP acquired all of the issued and
outstanding RMP IDRs from RMGH in exchange for 36,293,766 common units of EQGP.
Representations and Warranties
The parties to the IDR purchase agreement made certain representations and warranties regarding, as applicable, their legal status,
authorization, absence of conflicts, ownership of the RMP IDRs, securities law matters and brokers or finders. EQT and RMGH also made certain representations and warranties in connection with the
information each of them provided to the conflicts committee of the board of directors of the EQGP general partner.
Closing Conditions to the IDR Purchase
Under the IDR purchase agreement, the parties were not obligated to consummate the IDR purchase unless there was no order or other legal
restraint in effect preventing the consummation of the transactions contemplated by the IDR purchase agreement.
The
obligation of RMGH to complete the IDR purchase was subject to the satisfaction of each of the following additional conditions:
-
-
the representations and warranties of EQGP set forth in the IDR purchase agreement being true and correct and EQGP having performed all
obligations required under the IDR purchase agreement, in each case, in all material respects;
-
-
all conditions to the merger having been fulfilled or waived in accordance with the merger agreement, and the merger parties being ready,
willing and able to consummate the merger promptly following the closing of the IDR purchase; and
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-
-
all conditions to the drop-down transactions having been fulfilled or waived in accordance with the drop-down agreement, and closing of the
drop-down transactions having occurred or the parties to the drop-down agreement being ready, willing and able to consummate the drop-down transactions promptly following the closing of the IDR
purchase.
The
obligation of EQGP to complete the IDR purchase was subject to the satisfaction of each of the following additional conditions:
-
-
the representations and warranties of RMGH set forth in the IDR purchase agreement being true and correct and RMGH and EQT having performed all
obligations required under the IDR purchase agreement, in each case, in all material respects; and
-
-
an RMP material adverse effect (as defined in the merger agreement) not having occurred and continued since the date of the IDR purchase
agreement.
Conditional Forfeiture of Certain EQGP Common Units in Specified Circumstances
The IDR purchase agreement provides that if the closing of the IDR purchase occurs and either (1) the merger is not subsequently
consummated on or prior to December 31, 2018 or (2) the merger agreement is terminated after such closing but before December 31, 2018, 8,539,710 EQGP common units owned by EQT
will be forfeited and returned to EQGP and cancelled and EQT will pay to EQGP an amount in cash equal to the aggregate amount of any distributions paid by EQGP related to the forfeited EQGP common
units. Similarly, if the merger agreement had been terminated before the closing of the IDR purchase, EQGP would have issued 27,754,056 (rather than 36,293,766) EQGP common units to RMGH in exchange
for the RMP IDRs.
Termination
The IDR purchase agreement was subject to termination at any time prior to the closing of the IDR purchase by the mutual written consent of the
parties or by EQT and/or RMGH, with notice to EQGP, if either the merger agreement or the drop-down agreement had been terminated in accordance with its terms. If the IDR purchase agreement was
terminated as a result of the termination of the merger agreement or drop-down agreement, EQGP would have been entitled to reimbursement of all of its reasonable and documented out-of-pocket expenses
incurred in connection with the IDR purchase agreement.
Certain Covenants
Prior to the consummation of the IDR purchase, EQT was not permitted to cause or permit RMP to issue, or RMGH to sell, any RMP IDRs to any
person other than RMGH. In addition, after the consummation of the IDR purchase but before the merger is consummated, EQGP must retain, directly or indirectly, ownership of at least 8,539,710 common
units of EQGP.
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EQT MIDSTREAM PARTNERS, LP
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Introduction
The unaudited pro forma condensed combined financial statements (the pro forma financial statements) of EQM as of and for the three months ended
March 31, 2018 and for the year ended December 31, 2017 are derived from the historical audited and unaudited financial statements of EQM as recast for the drop-down transactions, the
historical audited and unaudited financial statements of RMP and the historical audited financial statements of the drop-down entities. EQT's interests in RMP and the drop-down entities were acquired
in a merger with Rice Energy on November 13, 2017 (the Rice Merger).
The
pro forma financial statements have been prepared to reflect the effects of the mergers, the drop-down transactions and the Gulfport transaction on the financial statements of EQM.
The
unaudited pro forma statements of combined operations (the pro forma statements of operations) for the three months ended March 31, 2018 and for the year ended
December 31, 2017, and the unaudited pro forma condensed combined balance sheet (the pro forma balance sheet) as of March 31, 2018, are based upon the historical consolidated financial
statements of EQM and RMP and the historical combined financial statements of the drop-down entities. The pro forma statements of operations have been prepared as if the mergers, the drop-down
transactions and the Gulfport transaction occurred on January 1, 2017. The pro forma balance sheet has been prepared as if the mergers, the drop-down transactions and the Gulfport transaction
occurred on March 31, 2018.
The
pro forma financial statements also reflect the expected financing of the mergers, the drop-down transactions and the Gulfport transaction
including:
-
-
the issuance of 33,973,289 EQM common units, valued at $1,896.7 million based on the closing price as of May 31, 2018 of $55.83
per unit, to RMP's unitholders in connection with the merger, which reflects the exchange ratio in the merger agreement of 0.3319 EQM common units for each RMP common unit;
-
-
EQM's entering into the Term Loan Agreement on April 25, 2018, which provides for the Term Loan Facility;
-
-
the borrowing of $325.0 million under the Term Loan Facility to complete the announced plan to repay amounts outstanding under RMP's
revolving credit facility at the time of the merger;
-
-
the borrowing of $317.0 million under the Term Loan Facility to repay amounts outstanding under EQM's revolving credit facility as EQM
completed this borrowing and repayment in May 2018 and thus this amount will be part of the refinancing of the Term Loan Facility described in the last bullet of this section;
-
-
the borrowing of $1,150.0 million under the Term Loan Facility to fund the cash consideration for the drop-down transactions;
-
-
the issuance to EQT of 5,889,282 EQM common units, valued at approximately $330.5 million based on the closing price as of
May 22, 2018 of $56.12 per unit, to fund the equity consideration for the drop-down transactions;
-
-
the borrowing of $175.0 million under the Term Loan Facility to fund the Gulfport transaction; and
-
-
the planned issuance of $2.5 billion in new EQM senior notes (the EQM Senior Notes) to repay the foregoing amounts borrowed on the Term
Loan Facility and for general partnership purposes. The Term Loan Facility is a 364-day facility and EQM will be required to refinance
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borrowings
under this facility prior to its expiration. EQM expects to complete a debt offering for this purpose prior to the completion of the mergers. Proceeds from this debt offering will be used
to repay the Term Loan Facility in full, at which time the commitments under the Term Loan Facility will terminate.
The
pro forma financial statements have been prepared based on the assumption that EQM will not be subject to U.S. federal and state income taxes as it will continue to be treated as a
partnership for U.S. federal and state income tax purposes. The pro forma financial statements should be read in conjunction with the accompanying notes and with the underlying historical audited and
unaudited financial statements and related notes.
The
adjustments to the historical audited and unaudited financial statements are based on currently available information and certain estimates and assumptions. Actual effects of these
transactions will differ from the pro forma adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as
contemplated and that the pro forma adjustments are factually supportable, give appropriate effect to the expected impact of the events that are directly attributable to the transactions and, with
respect to the pro forma statements of operations only, reflect those items expected to have a continuing impact on EQM.
EQM,
RMP and the drop-down entities are controlled by EQT; therefore, the merger of RMP with a wholly owned subsidiary of EQM and the contribution of the drop-down entities to EQM are
transactions between entities under common control. As a result, the assets and liabilities of RMP and the drop-down entities will be recorded by EQM at EQT's historical cost basis, which includes a
step
up in basis resulting from EQT's preliminary purchase price accounting for the Rice Merger. The pro forma balance sheet reflects this common control accounting as of March 31, 2018.
As
the drop-down transactions were completed on May 22, 2018, EQM recast its historical financial statements to record the assets and liabilities of the drop-down entities at
EQT's basis as of November 13, 2017, the date that common control was established, and to reflect the operations of the drop-down entities from that date. Assuming the mergers are completed,
EQM will recast its historical financial statements to record the assets and liabilities of RMP at EQT's basis as of November 13, 2017, the date that common control was established, and to
reflect the operations of RMP from that date. The period subsequent to November 13, 2017 is identified in the historical financial statements of RMP and the drop-down entities as the successor
period. The period prior to November 13, 2017 is identified in the historical financial statements of RMP and the drop-down entities as the predecessor period. EQM has not presented any pro
forma periods prior to January 1, 2017 as common control did not occur until November 13, 2017.
The
pro forma financial statements are not necessarily indicative of the results that actually would have occurred if the mergers, the drop-down transactions and the Gulfport transaction
had occurred on the dates indicated or which will be obtained in the future.
The
pro forma financial statements should be read in conjunction with:
-
-
The accompanying notes to the pro forma financial statements;
-
-
The audited combined financial statements of EQM as of and for the year ended December 31, 2017 and the unaudited combined financial
statements of EQM as of and for the three months ended March 31, 2018, both as recast for the drop-down transactions, filed as Exhibits 99.4 and 99.5, respectively, in EQM's Current
Report on Form 8-K filed with the SEC on June 12, 2018;
-
-
The audited consolidated financial statements of RMP contained in its Annual Report on Form 10-K for the year ended December 31,
2017, as filed with the SEC on February 15, 2018;
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-
-
The unaudited consolidated financial statements and accompanying notes of RMP contained in its Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2018, as filed with the SEC on April 26, 2018; and
-
-
The audited combined financial statements of the drop-down entities as of and for the year ended December 31, 2017 filed as
Exhibit 99.2 in EQM's Current Report on Form 8-K filed with the SEC on May 22, 2018.
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EQT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
Pro Forma Adjustments
|
|
Combined
|
|
(in thousands)
|
|
EQT
Midstream
Partners, LP
|
|
Rice
Midstream
Partners LP
|
|
Rice
Midstream
Partners LP
Merger
|
|
Notes
|
|
Drop-Down
Transactions
and Gulfport
Transaction
|
|
Notes
|
|
EQT
Midstream
Partners, LP
Pro Forma
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
34,899
|
|
$
|
46,518
|
|
$
|
|
|
|
|
|
$
|
(2,600
|
)
|
|
(d
|
)
|
$
|
588,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,476,937
|
|
|
(e
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,967,000
|
)
|
|
(f
|
)
|
|
|
|
Accounts receivable, net
|
|
|
55,948
|
|
|
7,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,153
|
|
Accounts receivableaffiliate
|
|
|
100,154
|
|
|
76,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
176,696
|
|
Other current assets
|
|
|
17,325
|
|
|
2,208
|
|
|
|
|
|
|
|
|
2,600
|
|
|
(d
|
)
|
|
19,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,600
|
)
|
|
(h
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
208,326
|
|
|
132,473
|
|
|
|
|
|
|
|
|
507,337
|
|
|
|
|
|
848,136
|
|
Property and equipment
|
|
|
4,202,406
|
|
|
1,461,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,663,811
|
|
Less: accumulated depreciation
|
|
|
(423,359
|
)
|
|
(21,209
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(444,568
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
|
3,779,047
|
|
|
1,440,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,219,243
|
|
Investment in unconsolidated entity
|
|
|
546,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
546,428
|
|
Intangible assets, net
|
|
|
607,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
607,274
|
|
Goodwill
|
|
|
37,954
|
|
|
1,346,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,384,872
|
|
Other assets
|
|
|
135,537
|
|
|
6,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,314,566
|
|
$
|
2,925,710
|
|
$
|
|
|
|
|
|
$
|
507,337
|
|
|
|
|
$
|
8,747,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the unaudited pro forma condensed combined financial statements.
109
Table of Contents
EQT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
Pro Forma Adjustments
|
|
Combined
|
|
(in thousands)
|
|
EQT
Midstream
Partners, LP
|
|
Rice
Midstream
Partners LP
|
|
Rice
Midstream
Partners LP
Merger
|
|
Notes
|
|
Drop-Down
Transactions
and Gulfport
Transaction
|
|
Notes
|
|
EQT
Midstream
Partners, LP
Pro Forma
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
71,967
|
|
$
|
22,312
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
94,279
|
|
Due to related party
|
|
|
23,769
|
|
|
18,743
|
|
|
|
|
|
|
|
|
|
|
|
|
42,512
|
|
Term loan facility
|
|
|
|
|
|
|
|
|
325,000
|
|
(a)
|
|
|
317,000
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,150,000
|
|
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,967,000
|
)
|
(f)
|
|
|
|
|
Capital contribution payable to Mountain Valley Pipeline, LLC
|
|
|
65,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,786
|
|
Accrued interest
|
|
|
11,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,376
|
|
Accrued liabilities
|
|
|
15,156
|
|
|
4,530
|
|
|
|
|
|
|
|
|
|
|
|
|
19,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
188,054
|
|
|
45,585
|
|
|
325,000
|
|
|
|
|
(325,000
|
)
|
|
|
|
233,639
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit facility borrowings
|
|
|
317,000
|
|
|
325,000
|
|
|
(325,000
|
)
|
(a)
|
|
|
(317,000
|
)
|
(a)
|
|
|
|
|
Senior notes
|
|
|
987,756
|
|
|
|
|
|
|
|
|
|
|
2,476,937
|
|
(e)
|
|
|
3,464,693
|
|
Other long-term liabilities
|
|
|
20,880
|
|
|
9,465
|
|
|
|
|
|
|
|
|
|
|
|
|
30,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,513,690
|
|
|
380,050
|
|
|
|
|
|
|
|
1,834,937
|
|
|
|
|
3,728,677
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor equity
|
|
|
1,422,245
|
|
|
|
|
|
|
|
|
|
|
(1,422,245
|
)
|
(j)
|
|
|
|
|
Noncontrolling interest
|
|
|
175,215
|
|
|
|
|
|
|
|
|
|
|
(175,215
|
)
|
(j)
|
|
|
|
|
Common
|
|
|
2,198,127
|
|
|
2,198,570
|
|
|
(2,198,570
|
)
|
(j)
|
|
|
272,460
|
|
(j)
|
|
|
5,013,647
|
|
|
|
|
|
|
|
|
|
|
2,545,660
|
|
(j)
|
|
|
(2,600
|
)
|
(j)
|
|
|
|
|
General partner
|
|
|
5,289
|
|
|
347,090
|
|
|
(347,090
|
)
|
(j)
|
|
|
|
|
|
|
|
5,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
3,800,876
|
|
|
2,545,660
|
|
|
|
|
|
|
|
(1,327,600
|
)
|
|
|
|
5,018,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
5,314,566
|
|
$
|
2,925,710
|
|
$
|
|
|
|
|
$
|
507,337
|
|
|
|
$
|
8,747,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the unaudited pro forma condensed combined financial statements.
110
Table of Contents
EQT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF COMBINED OPERATIONS
THREE MONTHS ENDED MARCH 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
Combined
|
|
|
|
Historical
|
|
|
|
Rice
Midstream
Partners LP
Merger
|
|
|
|
Drop-Down
Transactions
and Gulfport
Transaction
|
|
|
|
EQT
Midstream
Partners, LP
Pro Forma
|
|
(in thousands)
|
|
EQT
Midstream
Partners, LP
|
|
Rice
Midstream
Partners LP
|
|
Notes
|
|
Notes
|
|
Operating revenues
|
|
$
|
286,562
|
|
$
|
84,464
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
371,026
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation and maintenance
|
|
|
19,460
|
|
|
7,900
|
|
|
|
|
|
|
|
|
|
|
|
|
27,360
|
|
Selling, general and administrative
|
|
|
18,998
|
|
|
7,204
|
|
|
(476
|
)
|
(k)
|
|
|
|
|
|
|
|
25,726
|
|
Depreciation and amortization
|
|
|
27,385
|
|
|
13,895
|
|
|
|
|
|
|
|
|
|
|
|
|
41,280
|
|
Amortization of intangible assets
|
|
|
10,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
76,229
|
|
|
28,999
|
|
|
(476
|
)
|
|
|
|
|
|
|
|
|
104,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
210,333
|
|
|
55,465
|
|
|
476
|
|
|
|
|
|
|
|
|
|
266,274
|
|
Equity income
|
|
|
8,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,811
|
|
Other income
|
|
|
898
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
904
|
|
Net interest expense
|
|
|
10,716
|
|
|
1,954
|
|
|
|
|
|
|
|
26,499
|
|
(g)
|
|
|
39,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
209,326
|
|
$
|
53,517
|
|
$
|
476
|
|
|
|
$
|
(26,499
|
)
|
|
|
$
|
236,820
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
2,493
|
|
|
|
|
|
|
|
|
|
|
(2,493
|
)
|
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to EQT Midstream Partners, LP
|
|
$
|
206,833
|
|
$
|
53,517
|
|
$
|
476
|
|
|
|
$
|
(24,006
|
)
|
|
|
$
|
236,820
|
|
Less: General partner interest in net incomegeneral partner units
|
|
|
3,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,804
|
|
Less: General partner interest in net incomeincentive distribution rights
|
|
|
44,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited partners' interest in net income
|
|
$
|
159,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
189,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unitbasic
|
|
$
|
1.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.58
|
|
Net income per limited partner unitdiluted
|
|
$
|
1.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.58
|
|
Weighted average limited partner units outstandingbasic
|
|
|
80,607
|
|
|
|
|
|
33,973
|
|
(j)
|
|
|
5,889
|
|
(j)
|
|
|
120,469
|
|
Weighted average limited partner units outstandingdiluted
|
|
|
80,607
|
|
|
|
|
|
33,973
|
|
(j)
|
|
|
5,889
|
|
(j)
|
|
|
120,469
|
|
See
accompanying notes to the unaudited pro forma condensed combined financial statements.
111
Table of Contents
EQT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF COMBINED OPERATIONS
YEAR ENDED DECEMBER 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
Predecessor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rice Midstream
Partners LP for
the period from
November 13,
2017 to
December 31,
2017
|
|
Rice Midstream
Partners LP for
the period from
January 1, 2017
to November 12,
2017
|
|
Drop-Down
Entities for the
period from
January 1, 2017
to November 12,
2017
|
|
Pro Forma Adjustments
|
|
Combined
|
|
(in thousands)
|
|
EQT
Midstream
Partners, LP
|
|
Rice
Midstream
Partners LP
Merger
|
|
Notes
|
|
Drop-Down
Transactions and
Gulfport
Transaction
|
|
Notes
|
|
EQT
Midstream
Partners, LP
Pro Forma
|
|
Operating revenues
|
|
$
|
851,339
|
|
$
|
44,219
|
|
$
|
250,474
|
|
$
|
118,672
|
|
$
|
|
|
|
|
$
|
|
|
|
|
$
|
1,264,704
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation and maintenance
|
|
|
77,649
|
|
|
7,182
|
|
|
33,768
|
|
|
4,077
|
|
|
|
|
|
|
|
|
|
|
|
|
122,676
|
|
Selling, general and administrative
|
|
|
73,709
|
|
|
3,612
|
|
|
22,252
|
|
|
21,022
|
|
|
529
|
|
(l)
|
|
|
313
|
|
(l)
|
|
|
121,437
|
|
Depreciation and amortization
|
|
|
99,681
|
|
|
7,480
|
|
|
26,420
|
|
|
6,174
|
|
|
21,818
|
|
(o)
|
|
|
7,988
|
|
(o)
|
|
|
169,561
|
|
Incentive unit expense
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
|
|
|
|
|
|
(313
|
)
|
(l)
|
|
|
|
|
Acquisition costs
|
|
|
|
|
|
|
|
|
529
|
|
|
|
|
|
(529
|
)
|
(l)
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
5,540
|
|
|
|
|
|
1,413
|
|
|
|
|
|
(1,413
|
)
|
(m)
|
|
|
36,007
|
|
(n)
|
|
|
41,547
|
|
Other expenses
|
|
|
|
|
|
|
|
|
2,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
256,579
|
|
|
18,274
|
|
|
86,996
|
|
|
31,586
|
|
|
20,405
|
|
|
|
|
43,995
|
|
|
|
|
457,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
594,760
|
|
|
25,945
|
|
|
163,478
|
|
|
87,086
|
|
|
(20,405
|
)
|
|
|
|
(43,995
|
)
|
|
|
|
806,869
|
|
Other income
|
|
|
26,595
|
|
|
15
|
|
|
56
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
26,701
|
|
Net interest expense
|
|
|
36,129
|
|
|
826
|
|
|
7,053
|
|
|
4,647
|
|
|
|
|
|
|
|
116,847
|
|
(h)
|
|
|
169,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,642
|
|
(l)
|
|
|
|
|
Amortization of deferred finance costs
|
|
|
|
|
|
|
|
|
3,642
|
|
|
|
|
|
|
|
|
|
|
(3,642
|
)
|
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
585,226
|
|
$
|
25,134
|
|
$
|
152,839
|
|
$
|
82,474
|
|
$
|
(20,405
|
)
|
|
|
$
|
(160,842
|
)
|
|
|
$
|
664,426
|
|
Less: Net income attributable to noncontrolling interest
|
|
|
734
|
|
|
|
|
|
|
|
|
7,410
|
|
|
|
|
|
|
|
(8,144
|
)
|
(i)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to EQT Midstream Partners, LP
|
|
$
|
584,492
|
|
$
|
25,134
|
|
$
|
152,839
|
|
$
|
75,064
|
|
$
|
(20,405
|
)
|
|
|
$
|
(152,698
|
)
|
|
|
$
|
664,426
|
|
Less: General partner interest in net incomegeneral partner units
|
|
|
10,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,867
|
|
Less: General partner interest in net incomeincentive distribution rights
|
|
|
143,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited partners' interest in net income
|
|
$
|
430,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
513,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unitbasic
|
|
$
|
5.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4.26
|
|
Net income per limited partner unitdiluted
|
|
$
|
5.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4.26
|
|
Weighted average limited partner units outstandingbasic
|
|
|
80,603
|
|
|
|
|
|
|
|
|
|
|
|
33,973
|
|
(j)
|
|
|
5,889
|
|
(j)
|
|
|
120,465
|
|
Weighted average limited partner units outstandingdiluted
|
|
|
80,603
|
|
|
|
|
|
|
|
|
|
|
|
33,973
|
|
(j)
|
|
|
5,889
|
|
(j)
|
|
|
120,465
|
|
See
accompanying notes to the unaudited pro forma condensed combined financial statements.
112
Table of Contents
EQT MIDSTREAM PARTNERS, LP
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The pro forma financial statements are based upon the historical combined financial statements of EQM as recast for the drop-down transactions, the historical
consolidated financial statements of RMP and the historical combined financial statements of the drop-down entities. The pro forma adjustments have been prepared as if the mergers, the drop-down
transactions, the Gulfport transaction and related financing occurred on (i) January 1, 2017 in the case of the pro forma statements of operations and
(ii) March 31, 2018 in the case of the pro forma balance sheet. These transactions are between entities under common control and are recorded at EQT's historical cost.
2. Pro Forma Adjustments
The adjustments are based on currently available information and certain estimates and assumptions. The actual effects of these transactions will differ from the
pro forma adjustments. A general description of the adjustments is provided as follows:
-
(a)
-
The
borrowing of $642.0 million under the Term Loan Facility to complete the announced plan to repay the $325.0 million outstanding balance of RMP's
revolving credit facility and $317.0 million of outstanding borrowings on the EQM revolving credit facility. EQM repaid its revolving credit facility with proceeds from the Term Loan Facility
in May 2018. As a result, this borrowing will be refinanced with long-term debt as described in (g).
-
(b)
-
The
borrowing of $1,150.0 million under the Term Loan Facility to finance the cash consideration for the drop-down transactions.
-
(c)
-
The
borrowing of $175.0 million under the Term Loan Facility to finance the Gulfport transaction.
-
(d)
-
The
payment of $2.6 million of issuance costs for the establishment of the Term Loan Facility.
-
(e)
-
A
$2,476.9 million increase to long-term debt and cash for the planned issuance of the $2.5 billion EQM Senior Notes, net of expected issuance costs of
$23.1 million.
-
(f)
-
The
payment of $1,967.0 million of borrowings under the Term Loan Facility with proceeds received from the anticipated issuance of the EQM Senior Notes.
-
(g)
-
A
$26.5 million increase in interest expense for the three months ended March 31, 2018 consisting of interest expense of $31.5 million on the
anticipated issuance of $2.5 billion of EQM Senior Notes at an assumed weighted average annual interest rate of 5.0427% based on indicative pricing from potential underwriters for the EQM
Senior Notes and amortization of associated deferred financing costs on the EQM Senior Notes of $0.6 million, partially offset by the elimination of $5.6 million in historical interest
expense associated with the EQM and RMP revolving credit facilities. A one percent change in the assumed interest rate would change pro forma interest expense by approximately $6.3 million for
the three months ended March 31, 2018.
-
(h)
-
A
$116.8 million increase in interest expense for the year ended December 31, 2017 consisting of interest expense of $126.1 million on the
anticipated issuance of $2.5 billion of EQM Senior Notes at an assumed weighted average annual interest rate of 5.0427% based on indicative pricing from potential underwriters for the EQM
Senior Notes, amortization of associated deferred financing costs on the EQM Senior Notes of $2.4 million and $2.6 million for the write-off of issuance costs under the Term Loan
Facility as a result of its repayment, partially offset by the elimination of $14.3 million in historical interest expense associated with
113
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
EQM
Predecessor
Equity
|
|
EQM
Noncontrolling
Interest
|
|
EQM
Limited
Partner
|
|
EQM
General
Partner
|
|
RMP
Limited
Partner
|
|
RMP
General
Partner
|
|
Book balance as of March 31, 2018
|
|
$
|
1,422
|
|
$
|
175
|
|
$
|
2,198
|
|
$
|
5
|
|
$
|
2,199
|
|
$
|
347
|
|
The Merger:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To recognize the exchange of EQM common units for RMP common units(1)
|
|
|
|
|
|
|
|
|
2,546
|
|
|
|
|
|
(2,199
|
)
|
|
(347
|
)
|
The Gulfport transaction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To eliminate noncontrolling interest(2)
|
|
|
|
|
|
(175
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
The drop-down transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To recognize cash consideration transferred and issuance of common units to EQT in exchange for drop-down entities(3)
|
|
|
(1,422
|
)
|
|
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
To adjust retained earnings for the write-off of the Term Loan Facility issuance costs
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma equity balance as of March 31, 2018
|
|
$
|
|
|
$
|
|
|
$
|
5,014
|
|
$
|
5
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Pursuant
to the merger agreement, EQM will issue 0.3319 of an EQM common unit for each RMP common unit outstanding at the effective time of the merger, which would
result in the issuance of 33,973,289 EQM common units valued at approximately $1,896.7 million based on the closing price as of May 31, 2018 of $55.83 per unit. Under common control
accounting, if the receiving entity issues equity interests in the exchange, the equity interests issued are recorded at an amount equal to the carrying amount of net assets transferred, even if the
equity issued has a readily determinable fair value.
-
(2)
-
The
acquisition of the Strike Force Midstream noncontrolling interest through the Gulfport transaction results in adjustments for the elimination of the
noncontrolling interest of $175.2 million. The $0.2 million difference between the consideration paid in the Gulfport transaction and the value of the noncontrolling interest is
reflected as an equity transaction because EQT and EQM, following the drop-down transactions, hold the controlling financial interest in Strike Force Midstream.
-
(3)
-
Pursuant
to the drop-down agreement, EQM received EQT's interests in the drop-down entities in exchange for (i) 5,889,282 EQM common units and
(ii) aggregate cash consideration of $1,150.0 million. The 5,889,282 EQM common units have a value of $330.5 million based on the closing price as of May 22, 2018 of $56.12
per unit. Under common control accounting, any difference between cash transferred and the net assets received at historical cost is recorded as an equity transaction. In addition, equity issued in a
common control transaction is recorded at an amount equal to the carrying amount of the net assets transferred, even if the equity issued has a
114
Table of Contents
readily
determinable fair value. As a result, the EQM common units issued in the drop-down transactions are valued at the excess of the net assets received by EQM over the cash consideration.
-
(k)
-
The
elimination of nonrecurring transaction expenses of $0.5 million incurred during the three months ended March 31, 2018 that are directly related to
the merger.
-
(l)
-
The
following reclassifications were made to conform to EQM's presentation:
-
(1)
-
Reclassification
on the December 31, 2017 pro forma statement of operations of $0.3 million of the drop-down entities' incentive unit expense to
selling, general and administrative expense.
-
(2)
-
Reclassification
on the December 31, 2017 pro forma statement of operations of $0.5 million of RMP's acquisition expense to selling, general and
administrative expense.
-
(3)
-
Reclassification
on the December 31, 2017 pro forma statement of operations of $3.6 million of RMP's amortization of deferred finance costs to net
interest expense.
-
(m)
-
The
elimination of the RMP amortization of intangibles for the period prior to November 13, 2017 (the predecessor period).
-
(n)
-
The
increase in amortization of the fair value of customer relationships, acquired as a result of the Rice Merger, to reflect a full year of expense for the year
ended December 31, 2017, using a 15-year estimated life and straight line method of amortization.
-
(o)
-
The
adjustment for the predecessor period depreciation and amortization expense related to the step up of property, plant and equipment to estimated fair value at
the time of the Rice Merger. In addition, this adjustment includes a pro forma adjustment to depreciation and amortization to adjust the depreciation to EQM's policy to depreciate gathering pipelines
over a 50-year useful life and to depreciate compression and measurement assets over a 25-year useful life.
3. Pro Forma Net Income per Limited Partner Unit
Pro forma net income per limited partner unit is determined by dividing the pro forma net income that would have been allocated, in accordance with the net income
and loss allocation provisions of the partnership agreement, to the common unitholders under the two-class method, after deducting the pre-acquisition income allocated to parent and the general
partner's interest in the pro forma net income in addition to giving effect to incentive distributions allocable to the general partner, by the weighted average number of common units outstanding for
the period, assuming the closing of the transactions described in Note 2 occurred on January 1, 2017. As a result of the pro forma adjustments described in Note 2, the adjusted
general partner's interest is 1.2% for the three months ended March 31, 2018 and for the year ended December 31, 2017.
Pursuant
to the partnership agreement, to the extent that the quarterly distributions exceed certain targets, the general partner is entitled to receive certain incentive distributions
that will result in more net income proportionately being allocated to the general partner than to the holders of common units. The pro forma net income per limited partner unit calculations include
actual incentive distributions declared to the general partner in the amount of $44.2 million for the three months ended March 31, 2018 and $143.5 million for the year ended
December 31, 2017. The impact of the pro forma issuance of 33,973,289 EQM common units for the Merger and 5,889,282 EQM common units for the drop-down transactions would have increased the
incentive distributions declared by $21.1 million for the three months ended March 31, 2018 and $68.6 million for the year ended December 31, 2017.
115
Table of Contents
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material U.S. federal income tax consequences of the merger that may be relevant to RMP unitholders that
are U.S. holders (as defined below). This discussion is based upon current provisions of the Code, existing and proposed Treasury regulations promulgated under the Code (the Treasury Regulations),
current administrative rulings of the IRS and court decisions, all of which are subject to change and differing interpretation, possibly with retroactive effect. Any such change or interpretation may
cause the tax consequences to vary substantially from the consequences described below. Neither EQM nor RMP has sought a ruling from the IRS with respect to any of the tax consequences discussed
below, and the IRS will not be precluded from taking positions contrary to those described herein. As a result, no assurance can be given that the IRS will agree with all of the tax characterizations
and the tax consequences described below. Some tax aspects of the merger are not certain, and no assurance can be given that the tax characterizations and consequences set forth in the below-described
opinions of counsel and/or this discussion would be sustained by a court if contested by the IRS. Furthermore, the tax treatment of the merger may be significantly modified by future legislative or
administrative changes or court decisions. Any
modifications may or may not be retroactively applied. This discussion does not apply to any RMP unitholder who acquired RMP common units from RMP in exchange for property other than cash.
This
discussion does not purport to be a complete discussion of all U.S. federal income tax consequences of the merger or the ownership of EQM common units that may be relevant to
specific holders in light of their particular circumstances. This discussion is limited to beneficial owners of RMP common units who are individual citizens or residents of the United States for U.S.
federal income tax purposes (U.S. holders), who receive EQM common units pursuant to the merger, whose functional currency is the U.S. dollar and who hold their units as capital assets within the
meaning of Section 1221 of the Code (generally, property held for investment) at the time of the merger. This discussion does not apply to other persons, including corporations, partnerships
(or entities or arrangements treated as corporations or partnerships for U.S. federal income tax purposes), estates or trusts, nonresident aliens or other individuals that are not U.S. holders, U.S.
expatriates and former citizens or long-term residents of the United States or other unitholders who are subject to special rules under the U.S. federal income tax laws, including, without limitation,
banks, insurance companies and other financial institutions, tax-exempt organizations, foreign persons (including, without limitation, controlled foreign corporations, passive foreign investment
companies and non-U.S. persons whether or not eligible for the benefits of an applicable income tax treaty with the United States), individual retirement accounts, or IRAs, holders liable for the
alternative minimum tax, real estate investment trusts, or REITs, employee benefit plans, mutual funds, dealers in securities, traders in securities, EQM's general partner or its affiliates, persons
who hold RMP common units or EQM common units as part of a "hedge," "straddle" or "conversion transaction" or other integrated or risk reduction transaction, persons deemed to sell their units under
the constructive sale provisions of the Code, persons who acquired RMP common units by gift, or persons that received (or are deemed to receive) RMP common units as compensation.
Each RMP unitholder is encouraged to consult such unitholder's own tax advisor to determine the particular U.S. federal, state, local and foreign tax consequences
of the merger to such unitholder.
Tax Opinions Required as a Condition to Closing
For U.S. federal income tax purposes, the merger is intended to qualify as a "merger" of RMP and EQM within the meaning of Treasury Regulations
promulgated under Section 708 of the Code, with EQM treated as the continuing partnership and RMP as the terminated partnership for U.S. federal income tax purposes following the merger.
It
is a condition to the parties' respective obligations to complete the merger that (1) EQM receive an opinion of Baker Botts L.L.P., dated as of the date of the closing
of the merger, to the effect that
116
Table of Contents
(i) at
least 90% of the gross income of EQM for all of the calendar year that immediately precedes the calendar year that includes the date of the closing of the merger and each calendar
quarter of the calendar year that includes the date of the closing of the merger for which the necessary financial information is available is from sources treated as "qualifying income" within the
meaning of Section 7704(d) of the Code and (ii) at least 90% of the combined gross income of each of EQM and RMP for all of the calendar year that immediately precedes the calendar year
that includes the date of the closing of the merger and each calendar quarter of the calendar year that includes the date of the closing of the merger for which the necessary financial information is
available is from sources treated as "qualifying income" within the meaning of Section 7704(d) of the Code and (2) RMP receive an opinion of Baker Botts L.L.P., dated as of the
date of the closing of the merger, to the effect that at least 90% of the gross income of RMP for all of the calendar year that immediately precedes the calendar year that includes the date of the
closing of the merger and each calendar quarter of the calendar year that includes the date of the closing of the merger for which the necessary financial information is available is from sources
treated as "qualifying income" within the meaning of Section 7704(d) of the Code.
It
is a condition to EQM's obligation to complete the merger that it receive a written opinion of Baker Botts L.L.P., dated as of the date of the closing of the merger, to the
effect that for U.S. federal income tax purposes (i) EQM should not recognize any income or gain as a result of the merger, and (ii) no gain or loss should be recognized by holders of
EQM common units or other partnership interests in EQM as a result of the merger (other than any gain resulting from any decrease in partnership liabilities pursuant to Section 752 of the
Code).
It
is a condition to RMP's obligation to complete the merger that it receive an opinion of Baker Botts L.L.P., dated as of the date of the closing of the merger, to the effect
that for U.S. federal income tax purposes (i) RMP should not recognize any income or gain as a result of the merger and (ii) no gain or loss should be recognized by holders of RMP common
units or other partnership interests in RMP as a result of the merger (other than any gain resulting from (A) any actual or constructive distribution of cash or other property or (B) any
decrease in partnership liabilities pursuant to Section 752 of the Code).
These
opinions will be based on representations and warranties made by RMP, EQM and others, and on customary factual assumptions, as well as certain covenants and undertakings of RMP,
EQM and others. If any of such representations, assumptions, covenants or undertakings is or becomes incorrect, incomplete, inaccurate or is violated, the validity of the opinions described above may
be affected and the U.S. federal income tax consequences of the merger could differ materially from those described below. In addition, none of the opinions described above will be binding on the IRS
or any court. Accordingly, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below. The following
discussion is based on the receipt and accuracy of the above described opinions.
Tax Consequences of the MergerGeneral
For U.S. federal income tax purposes, the merger is intended to qualify as a "merger" of RMP and EQM within the meaning of Treasury Regulations
promulgated under Section 708 of the Code, with EQM expected to be treated as the continuing partnership and RMP expected to be treated as the terminated partnership for U.S. federal income tax
purposes. As a result, EQM and RMP intend to take the position that the merger will be treated as an "assets over" merger of RMP into EQM, whereby the following is deemed to occur for U.S. federal
income tax purposes: (1) RMP is deemed to contribute all of its assets (subject to its liabilities) to EQM in exchange for newly issued partnership interests in EQM and (2) RMP is deemed
to liquidate immediately thereafter, distributing all of the newly issued EQM partnership interests to its partners in respect of their partnership interests in RMP (the Assets-Over Form).
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The
remainder of this discussion, except as otherwise noted, proceeds on the basis that (1) EQM will be classified as a partnership for U.S. federal income tax purposes at the
time of the merger (please read the discussion below regarding EQM's classification as a partnership for U.S. federal income tax purposes under "Material U.S. Federal Income Tax Consequences of EQM
Common Unit OwnershipTaxation of EQMPartnership Status" below), (2) RMP will be classified as a partnership for U.S. federal income tax purposes at the time of the
merger, (3) the merger and the transactions contemplated thereby will be treated for U.S. federal income tax purposes in the manner described above, and (4) all of the liabilities of RMP
that are deemed assumed by EQM in the merger qualify for an exception from the "disguised sale" rules.
Tax Consequences of the Merger to U.S. Holders
On the basis that the merger is treated under the Assets-Over Form, RMP unitholders will be deemed to receive distributions in liquidation of
RMP consisting of EQM common units. In general, the receipt of EQM common units in respect of their RMP common units should not result in the recognition of taxable gain or loss to RMP unitholders.
Any actual or deemed receipt of cash by an RMP unitholder (including, as discussed below, as the result of a net reduction in the
amount of nonrecourse liabilities allocated to such RMP unitholder) will result in the recognition of taxable gain if such receipt exceeds the adjusted tax basis in the RMP common units surrendered in
the merger.
Possible Taxable Gain to Certain U.S. Holders from Reallocation of Nonrecourse Liabilities
As a member in RMP, an RMP unitholder is entitled to include the nonrecourse liabilities (within the meaning of applicable Treasury Regulations)
of RMP attributable to its RMP common units in the tax basis of its RMP common units. As a partner in EQM after the merger, a former RMP unitholder will be entitled to include the nonrecourse
liabilities of EQM attributable to the EQM common units received in the merger in the tax basis of such common units received. The nonrecourse liabilities of EQM after the merger will include the
nonrecourse liabilities of RMP. The amount of nonrecourse liabilities attributable to an RMP unit or an EQM unit is determined under complex Treasury Regulations under Section 752 of the Code.
If
the nonrecourse liabilities attributable to the EQM common units received by an RMP unitholder in the merger exceed the nonrecourse liabilities attributable to the RMP common units
surrendered by such RMP unitholder in the merger, such RMP unitholder's tax basis in the EQM common units received will be correspondingly higher than such RMP unitholder's tax basis in the EQM common
units surrendered. If the nonrecourse liabilities attributable to the EQM common units received by an RMP unitholder in the merger are less than the nonrecourse liabilities attributable to the RMP
common units surrendered by such RMP unitholder in the merger, such RMP unitholder's tax basis in the EQM common units received will be correspondingly lower than such RMP unitholder's tax basis in
the RMP common units surrendered. Please read "Tax Basis and Holding Period of EQM Common Units Received" below.
Any
reduction in liabilities described in the preceding paragraph will be treated as a deemed cash distribution to an RMP unitholder. If the amount of any actual or deemed distributions
of cash to an RMP unitholder exceeds such RMP unitholder's tax basis in the RMP units surrendered, such RMP unitholder will recognize taxable gain in an amount equal to such excess. While there can be
no assurance, EQM and RMP expect that RMP unitholders generally will not recognize gain in this manner. However, the application of the rules governing the allocation of nonrecourse liabilities in the
context of the merger is complex and subject to uncertainty. There can be no assurance that an RMP unitholder will not recognize gain as a result of the distributions deemed received by such RMP
unitholder as a result of a net decrease in the amount of nonrecourse liabilities allocable to such RMP unitholder as a result of the merger. The amount and effect of any gain that may be recognized
by an affected RMP unitholder will depend on the affected RMP unitholder's particular situation, including
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the
ability of the affected RMP unitholder to utilize any suspended passive losses. Depending on these factors, any particular affected RMP unitholder may, or may not, be able to offset all or a
portion of any gain recognized. Each RMP unitholder should consult such RMP unitholder's own tax advisor to determine whether the merger causes such RMP unitholder to recognize actual and/or deemed
distributions in excess of the tax basis of its RMP units surrendered in the merger.
Tax Basis and Holding Period of EQM Common Units Received
An RMP unitholder's aggregate tax basis in the EQM common units received in the merger (and any EQM common units held by such unitholder
immediately prior to the merger) as of immediately after the merger generally will be equal to such RMP's unitholder's adjusted tax basis in the RMP common units exchanged therefor (and any EQM common
units held by such unitholder immediately prior to the merger) as of immediately prior to the merger, decreased by any basis attributable to such RMP unitholder's share of RMP's nonrecourse
liabilities and increased by such RMP unitholder's share of EQM's nonrecourse liabilities immediately after the merger attributable to the EQM common units received in the merger. In addition, the tax
basis in the EQM common units received in the merger by a holder of RMP common units will be increased by the amount of any income or gain recognized by such RMP unitholder pursuant to the
transactions contemplated by the merger.
On
the basis that the merger is characterized under the Assets-Over Form, a holder of RMP common units will have a holding period in the EQM common units received in the merger that will
not be determined by reference to its holding period in the RMP common units exchanged therefor. Instead, such RMP unitholder's holding period in the EQM common units received in the merger that are
attributable to RMP's capital assets or assets used in its business as defined in Section 1231 of the Code will include RMP's holding period in those assets. The holding period for EQM common
units received by a holder of RMP common units attributable to other assets of RMP, such as inventory and receivables, will begin on the day following the merger.
Effect of Termination of RMP's Tax Year at Closing of Merger
RMP uses the year ending December 31 as its taxable year and the accrual method of accounting for U.S. federal income tax purposes. As a
result of the merger, RMP's taxable
year will end as of the effective date of the merger, and RMP will be required to file a final U.S. federal income tax return for the taxable year ending upon the effective date of the merger.
Each RMP unitholder will be required to include in income its share of income, gain, loss and deduction for this period.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF EQM COMMON UNIT OWNERSHIP
This section is a summary of the material U.S. federal income tax consequences that may be relevant to U.S. holders (as defined above) with
respect to the ownership of EQM common units received in the merger. This discussion is based upon current provisions of the Code, existing and proposed Treasury Regulations, current administrative
rulings of the IRS and court decisions, all of which are subject to change and differing interpretation, possibly with retroactive effect. Any such change or interpretation may cause the tax
consequences to vary substantially from the consequences described below. Neither EQM nor RMP has sought a ruling from the IRS with respect to any of the tax consequences discussed below, and the IRS
will not be precluded from taking positions contrary to those described herein. As a result, no assurance can be given that the IRS will agree with all of the tax characterizations and the tax
consequences described below. Some tax aspects of the ownership of EQM common units are not certain, and no assurance can be given that the tax characterizations and consequences set forth in the
below described opinions of counsel and/or this discussion would be sustained by a court if contested by the IRS. Furthermore, the tax treatment of EQM and of ownership of EQM common units may be
significantly modified by future legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied. This discussion applies solely to RMP unitholders
that receive EQM common units in exchange for their RMP common units pursuant to the merger and does not apply to any RMP unitholder who acquired such RMP common units from RMP in exchange for
property other than cash.
This
discussion does not purport to be a complete discussion of all U.S. federal income tax matters that affect EQM or its unitholders nor of all U.S. federal income tax consequences of
the ownership of EQM common units that may be relevant to specific holders in light of their particular circumstances. This discussion is limited to beneficial owners of RMP common units who receive
EQM common units in the merger, who are individual citizens or residents of the United States for U.S. federal income tax purposes whose functional currency is the U.S. dollar and who hold their RMP
common units surrendered in the merger and their EQM common units received in the merger as capital assets within the meaning of Section 1221 of the Code (generally, property held for
investment). This discussion does not apply to other persons, including corporations, partnerships (or entities or arrangements treated as corporations or partnerships for U.S. federal income tax
purposes), estates or trusts, nonresident aliens
or other individuals that are not U.S. holders, U.S. expatriates and former citizens or long-term residents of the United States or other unitholders who are subject to special rules under the U.S.
federal income tax laws, including, without limitation, banks, insurance companies and other financial institutions, tax-exempt organizations, foreign persons (including, without limitation,
controlled foreign corporations, passive foreign investment companies and non-U.S. persons whether or not eligible for the benefits of an applicable income tax treaty with the United States),
individual retirement accounts, or IRAs, holders liable for the alternative minimum tax, real estate investment trusts, or REITs, employee benefit plans, mutual funds, dealers in securities, traders
in securities, EQM GP or its affiliates (including EQGP), persons who hold RMP common units or EQM common units received in the merger as part of a "hedge," "straddle" or "conversion
transaction" or other integrated or risk reduction transaction, persons deemed to sell their units under the constructive sale provisions of the Code, persons who acquired RMP common units by gift, or
persons that received (or are deemed to receive) RMP common units or EQM common units as compensation.
Each unitholder is encouraged to consult, and depend on, such unitholder's own tax advisor in analyzing the U.S. federal, state, local and non-U.S. tax
consequences particular to that unitholder of the ownership or disposition of EQM common units and potential changes in applicable tax laws, including the impact of recently enacted U.S. tax reform
legislation.
Unless
otherwise noted herein, statements as to matters of U.S. federal income tax and legal conclusions with respect thereto, but not as to factual matters, contained in this discussion
are the
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opinion
of Baker Botts L.L.P., counsel to EQM. Such statements and opinion are, and the opinions to be delivered in connection with the closing of the merger described above will be, based on
representations and warranties made by RMP, EQM and others, and on customary factual assumptions, as well as certain covenants and undertakings of RMP, EQM and others. If any of such representations,
assumptions, covenants or undertakings is or becomes incorrect, incomplete, inaccurate or is violated, the validity of such statements and opinions may be affected and the U.S. federal income tax
consequences could differ materially from those described below.
No
ruling has been or will be requested from the IRS regarding any matter described above or herein, or otherwise affecting EQM or its unitholders following the merger. Instead, EQM will
rely on opinions of Baker Botts L.L.P. Unlike a ruling, an opinion of counsel represents only that counsel's best legal judgment and does not bind the IRS or the courts. Accordingly, the
opinions described above and the statements made herein may not be sustained by a court if contested by the IRS. Any contest of this sort with the IRS may materially and adversely impact EQM, its
unitholders, the market for the EQM common units and the prices at which EQM common units trade. In addition, the costs of any contest with the IRS, principally legal, accounting and related fees,
will result in a reduction in cash available for distribution to unitholders and EQM GP and thus will be borne indirectly by EQM unitholders and EQM GP. Furthermore, the tax treatment of
EQM, or of the ownership or disposition of EQM common
units, may be significantly modified by future legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied.
For
the reasons described below, Baker Botts L.L.P. has not rendered an opinion with respect to the following specific U.S. federal income tax issues: (i) the treatment of
a unitholder whose common units are loaned to a short seller to cover a short sale of common units (please read "Tax Consequences of EQM Common Unit OwnershipTreatment of
Securities Loans"); (ii) whether EQM's monthly convention for allocating taxable income and losses is permitted by existing Treasury Regulations (please read "Disposition of EQM
Common UnitsAllocations Between Transferors and Transferees"); and (iii) whether EQM's method for depreciating Section 743 adjustments is sustainable in certain cases
(please read "Tax Consequences of EQM Common Unit OwnershipSection 754 Election" and "Uniformity of EQM Common Units").
Taxation of EQM
Partnership Status
A partnership is not a taxable entity and incurs no U.S. federal income tax liability. Instead, each partner of a partnership is required to
take into account such partner's share of items of income, gain, loss and deduction of the partnership in computing such partner's U.S. federal income tax liability, regardless of whether cash
distributions are made to such partner by the partnership. Pursuant to Section 731 of the Code, distributions by a partnership to a partner are generally not taxable to the partnership or the
partner unless the amount of cash distributed to such partner exceeds the partner's adjusted basis in his partnership interest.
Section 7704
of the Code provides that publicly traded partnerships will, as a general rule, be taxed as corporations. However, an exception, referred to as the "Qualifying Income
Exception," exists with respect to publicly traded partnerships 90.0% or more of the gross income of which for every taxable year consists of "qualifying income." Qualifying income includes income and
gains derived from the transportation, storage, processing and marketing of crude oil, natural gas and other products thereof. Other types of qualifying income include interest (other than from a
financial business), dividends, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes
qualifying income. EQM estimates that less
than 5% of its current gross income is not qualifying income; however, this estimate could change from time to time. Based upon and subject to this estimate, the factual representations made by EQM,
and its general partner and a review of the applicable legal authorities, Baker Botts L.L.P. is of
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the
opinion that at least 90.0% of EQM's current gross income (taking into account the merger) constitutes qualifying income. The portion of EQM's income that is qualifying income may change from time
to time.
No
ruling has been or will be sought from the IRS and the IRS has made no determination as to EQM's status or the status of its operating subsidiaries for U.S. federal income tax
purposes or whether EQM's operations generate "qualifying income" under Section 7704 of the Code. Instead, EQM will rely on the opinion of Baker Botts L.L.P. on such matters. It is the
opinion of Baker Botts L.L.P. that, based upon the Code, the Treasury Regulations promulgated thereunder, published revenue rulings and court decisions and the representations described below
that:
-
-
EQM will be classified as a partnership for U.S. federal income tax purposes; and
-
-
Each of EQM's operating subsidiaries, other than EQT Midstream Finance Corporation, will be disregarded as an entity separate from EQM or will
be treated as a partnership for U.S. federal income tax purposes.
In
rendering its opinion, Baker Botts L.L.P. has relied on factual representations made by EQM and its general partner. The representations made by EQM and its general partner upon which Baker
Botts L.L.P. has relied are:
-
-
Neither EQM nor any of its operating subsidiaries (other than EQT Midstream Finance Corporation) has elected or will elect to be treated as a
corporation; and
-
-
For every taxable year, more than 90.0% of EQM's gross income has been and will be income of the type that Baker Botts L.L.P. has opined
or will opine is "qualifying income" within the meaning of Section 7704(d) of the Code.
EQM
believes that these representations have been true in the past and expects that these representations will continue to be true in the future.
If
EQM fails to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery (in
which case the IRS may also require EQM to make adjustments with respect to its unitholders or pay other amounts), EQM will be treated as if it had transferred all of its assets, subject to
liabilities, to a newly formed corporation, on the first day of the year in which EQM fails to meet the Qualifying Income Exception, in return for stock in that corporation, and then distributed that
stock to the unitholders in liquidation of their interests in EQM. This deemed contribution and liquidation should be tax-free to unitholders and EQM so long as EQM, at that time, does not have
liabilities in excess of the tax basis of its assets. Thereafter, EQM would be treated as a corporation for U.S. federal income tax purposes.
If
EQM were taxed as a corporation for U.S. federal income tax purposes in any taxable year, either as a result of a failure to meet the Qualifying Income Exception or otherwise, its
items of income, gain, loss and deduction would be reflected only on its tax return rather than being passed through to unitholders, and EQM's net income would be taxed to it at corporate rates. In
addition, pursuant to Code Section 301, any distribution made to a unitholder would be treated as taxable dividend income to the extent of EQM's current and accumulated earnings and profits,
or, in the absence of earnings and profits, a nontaxable return of capital, to the extent of the unitholder's tax basis in such unitholder's common units, or taxable capital gain, after the
unitholder's tax basis in such unitholder's common units is reduced to zero. Accordingly, taxation as a corporation would result in a material reduction in a unitholder's cash flow and after-tax
return and thus would likely result in a substantial reduction of the value of the units.
The
discussion below is based on Baker Botts L.L.P.'s opinion that EQM will be classified as a partnership for U.S. federal income tax purposes.
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Limited Partner Status
RMP unitholders who receive EQM common units in the merger and are admitted as limited partners of EQM, as well as RMP unitholders whose EQM
common units received in the merger are held in street name or by a nominee and who have the right to direct the nominee in the exercise of all substantive rights attendant to the ownership of their
EQM common units, will be treated as partners of EQM for U.S. federal income tax purposes.
A
beneficial owner of EQM common units whose units are the subject of a securities loan would appear to lose his status as a partner with respect to those units for U.S. federal income
tax purposes. Please read "Tax Consequences of EQM Common Unit OwnershipTreatment of Securities Loans."
Items
of EQM's income, gain, loss and deduction would not appear to be reportable by a unitholder who is not a partner for U.S. federal income tax purposes, and any cash distributions
received by a unitholder who is not a partner for U.S. federal income tax purposes would therefore be fully taxable as ordinary income. These unitholders are urged to consult their own tax advisors
with respect to the tax consequences of holding common units in EQM. The references to "unitholders" in the discussion that follows are to RMP unitholders who are U.S. holders that receive EQM common
units in the merger and who are treated as partners in EQM for U.S. federal income tax purposes.
Tax Consequences of EQM Common Unit Ownership
Flow-through of Taxable Income
Subject to the discussion below under "Entity-Level Collections," and "Administrative MattersInformation
Returns and Audit Procedures," EQM will not pay any U.S. federal income tax. Instead, each unitholder is required to report on such unitholder's income tax return such unitholder's share of EQM's
income, gains, losses
and deductions without regard to whether EQM makes cash distributions to such unitholder. Consequently, EQM may allocate income to a unitholder even if such unitholder has not received a cash
distribution. The income EQM allocates to unitholders will generally be taxable as ordinary income. Each unitholder will be required to include in income such unitholder's allocable share of EQM's
income, gains, losses and deductions for EQM's taxable year or years ending with or within such unitholder's taxable year. EQM's taxable year ends on December 31.
Treatment of Distributions
Pursuant to Section 731 of the Code, distributions by EQM to a unitholder generally will not be taxable to the unitholder for U.S.
federal income tax purposes, except to the extent the amount of any such cash distribution exceeds such unitholder's tax basis in EQM common units immediately before the distribution. EQM's cash
distributions to a unitholder in an amount in excess of such unitholder's tax basis in EQM common units generally will be considered to be gain from the sale or exchange of such common units, taxable
in accordance with the rules described under "Disposition of EQM Common Units" below. Any reduction in a unitholder's share of EQM's liabilities for which no partner, including EQM's
general partner, bears the economic risk of loss, known as "nonrecourse liabilities," will be treated as a distribution by EQM of cash to that unitholder. To the extent EQM's distributions cause a
unitholder's "at-risk" amount to be less than zero at the end of any taxable year, Section 465 of the Code requires the recapture of any losses deducted in previous years. Please read
"Tax Consequences of EQM Common Unit OwnershipLimitations on Deductibility of Losses."
A
decrease in a unitholder's percentage interest in EQM because of EQM's issuance of additional common units will decrease such unitholder's share of EQM's nonrecourse liabilities under
Section 752 of the Code, and thus will result in a corresponding deemed distribution of cash. This deemed distribution may constitute a non-pro rata distribution. A non-pro rata distribution of
money or property may result in ordinary income to a unitholder, regardless of such unitholders tax basis in EQM common units, if the distribution reduces the unitholder's share of EQM's "unrealized
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receivables,"
including depreciation recapture, depletion recapture and/or substantially appreciated "inventory items," each as defined in the Code, and collectively, "Section 751 Assets." To
that extent, an EQM unitholder will be treated as having been distributed such unitholder's proportionate share of the Section 751 Assets and then having exchanged those assets with EQM in
return for the non-pro rata portion of the actual distribution made to such unitholder. This latter deemed exchange will generally result in the unitholder's realization of ordinary income, which will
equal the excess of the non-pro rata
portion of that distribution over the unitholder's tax basis for the share of Section 751 Assets deemed relinquished in the exchange.
Basis of Common Units
The initial tax basis of EQM common units received by an RMP unitholder in the merger will be determined as described above under
"Material U.S. Federal Income Tax Consequences of the MergerTax Consequences of the Merger to U.S. HoldersTax Basis and Holding Period of EQM Common Units
Received." That basis will be increased under Section 705 of the Code by the unitholder's share of EQM's income, by any increases in such unitholder's share of EQM's nonrecourse liabilities
and, on the disposition of a common unit, by the unitholder's share of certain items related to business interest not yet deductible by the unitholder due to the applicable limitations; and decreased,
but not below zero, by distributions from EQM, by the unitholder's share of EQM's losses, by any decreases in such unitholder's share of EQM's nonrecourse liabilities, by the unitholder's share of
EQM's excess business interest (generally, the excess of EQM's business interest over the amount that is deductible) and by such unitholder's share of EQM's expenditures that are not deductible in
computing taxable income and are not required to be capitalized. A unitholder will have no share of EQM's debt that is "recourse" to EQM's general partner to the extent of the EQM general partner's
"net value," each as defined in Treasury Regulations under Section 752 of the Code, but will have a share, generally based on such unitholder's share of profits, of EQM's nonrecourse
liabilities. Please read "Disposition of EQM Common UnitsRecognition of Gain or Loss."
Limitations on Deductibility of Losses
The deduction by a unitholder of such unitholder's share of EQM's losses will be limited to the tax basis in such unitholder's EQM common units
and the amount for which the unitholder is considered to be "at-risk" with respect to EQM's activities, if that is less than such unitholder's tax basis. A unitholder subject to these limitations must
recapture losses deducted in previous years to the extent that distributions cause the unitholder's at-risk amount to be less than zero at the end of any taxable year. Losses disallowed to a
unitholder or recaptured as a result of these limitations will carry forward and will be allowable as a deduction to the extent that the unitholder's at-risk amount is subsequently increased, provided
such losses do not otherwise exceed the unitholder's tax basis in EQM common units. Upon the taxable disposition of an EQM common unit, any gain recognized by a unitholder can be offset by losses that
were previously suspended by the at-risk limitation but may not be offset by losses suspended by the basis limitation. Any loss previously suspended by the at-risk limitation in excess of that gain
would no longer be utilizable.
In
general, a unitholder will be at-risk to the extent of the tax basis of EQM common units, excluding any portion of that basis attributable to such unitholder's share of EQM's
nonrecourse liabilities, reduced by (1) any portion of that basis representing amounts otherwise protected against loss because of a guarantee, stop loss agreement or other similar arrangement
and (2) any amount of money the unitholder borrows to acquire or hold such unitholder's EQM common units, if the lender of those borrowed funds owns an interest in EQM, is related to another
unitholder, or can look only to the EQM common units for repayment. A unitholder's at-risk amount will increase or decrease as the tax basis of the unitholder's EQM common units increases or
decreases, other than tax basis increases or decreases attributable to increases or decreases in such unitholder's share of EQM's nonrecourse liabilities.
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In
addition to the basis and at-risk limitations on the deductibility of losses, the passive loss limitations of Section 469 of the Code generally provide that individuals are
permitted to deduct losses from passive activities, which are generally defined as trade or business activities in which the taxpayer does not materially participate, only to the extent of the
taxpayer's income from those passive activities. The passive loss limitations are applied separately with respect to each publicly traded partnership. Consequently, any passive losses EQM generates
will only be available to offset EQM's passive income generated in the future and will not be available to offset income from other passive activities or investments, including EQM's investments or
the unitholder's investments in other publicly traded partnerships, or a unitholder's salary or active business income. Passive losses that are not deductible because they exceed a unitholder's share
of income EQM generates may be deducted in full when the unitholder disposes of such unitholder's entire investment in it in a fully taxable transaction with an unrelated party. The passive loss
limitations are applied after other applicable limitations on deductions, including the at-risk rules and the basis limitation.
A
unitholder's share of EQM's net income may be offset by any of its suspended passive losses, but it may not be offset by any other current or carryover losses from other passive
activities, including those attributable to other publicly traded partnerships. There is no guidance as to whether suspended passive activity losses of RMP common units will be available to offset
passive activity income that is allocated to a former RMP unitholder from EQM after the merger. The IRS may contend that EQM is not the same partnership as RMP and, accordingly, the passive loss
limitation rules would not allow use of such losses until such time as all of such unitholder's common units are sold. Because of the lack of guidance with respect to this issue, Baker
Botts L.L.P. is unable to opine as to whether suspended passive activity losses arising from RMP activities will be available to offset EQM taxable income allocated to a former RMP unitholder
following the merger. Any unitholder who has losses with respect to RMP common units is urged to consult such unitholder's own tax advisor.
For
unitholders (other than corporations) in taxable years beginning after December 31, 2017, and before January 1, 2026, an "excess business loss" limitation further
limits the deductibility of losses by such taxpayers. An excess business loss is the excess (if any) of a taxpayer's aggregate deductions for the taxable year that are attributable to the trades or
businesses of such taxpayer (determined without
regard to the excess business loss limitation) over the aggregate gross income or gain of such taxpayer for the taxable year that is attributable to such trades or businesses plus a threshold amount.
The threshold amount is equal to $250,000 or $500,000 for taxpayers filing a joint return and will be indexed for inflation after December 31, 2018. Disallowed excess business losses are
treated as a net operating loss carryover to the following tax year. Any losses EQM generates that are allocated to a unitholder and not otherwise limited by the basis, at-risk, or passive loss
limitations will be included in the determination of such unitholder's aggregate trade or business deductions. Consequently, any losses EQM generates that are not otherwise limited will only be
available to offset a unitholder's other trade or business income plus an amount of non-trade or business income equal to the applicable threshold amount. Thus, except to the extent of the threshold
amount, EQM's losses that are not otherwise limited may not offset a unitholder's non-trade or business income (such as salaries, fees, interest, dividends and capital gains). This excess business
loss limitation will be applied after the passive activity loss limitation.
Limitations on Interest Deductions
In general, a partnership is entitled to a deduction for interest paid or accrued on indebtedness properly allocable to the partnership's trade
or business during its taxable year. However, the partnership's deduction for this "business interest" is limited to the sum of its business interest income and 30% of its "adjusted taxable income."
For the purposes of this limitation, adjusted taxable income is computed without regard to any business interest expense or business interest income, and, in the case of taxable years beginning before
January 1, 2022, any deduction allowable for depreciation, amortization, or depletion. This limitation is applied at the partnership level and any deduction for
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business
interest is taken into account in determining the partnership's non-separately stated taxable income or loss. This limitation also applies to unitholders who are entitled to a deduction for
interest paid or accrued on indebtedness properly allocable to such unitholder's trade or business. The adjusted taxable income of each such unitholder is determined without regard to such
unitholder's distributive share of any of EQM's items of income, gain, deduction, or loss and is increased by such unitholder's distributive share of EQM's excess taxable income, which is generally
equal to the excess of 30% of EQM's adjusted taxable income over the amount of EQM's deduction for business interest for a taxable year.
To
the extent the deduction for business interest is not limited, EQM will allocate the full amount of the deduction for business interest among its unitholders in accordance with their
percentage interests in EQM. To the extent the deduction for business interest is limited, the amount of any disallowed deduction for business interest will also be allocated to each unitholder in
accordance with his
percentage interest in EQM, but such amount of "excess business interest" will not be currently deductible. Should EQM's ability to deduct business interest be limited, the amount of taxable income
allocated to EQM's unitholders in the taxable year in which the limitation is in effect may increase. However, subject to certain limitations and adjustments to a unitholder's basis in its common
units, this excess business interest may be carried forward and deducted by a unitholder in a future taxable year. Unitholders should consult their tax advisors regarding the impact of this business
interest deduction limitation.
In
addition, Section 163 of the Code generally limits the deductibility of a non-corporate taxpayer's "investment interest expense" to the amount of that taxpayer's "net
investment income." Investment interest expense includes:
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interest on indebtedness properly allocable to property held for investment;
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EQM's interest expense attributed to portfolio income; and
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the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable to portfolio income.
The
computation of a unitholder's investment interest expense will take into account interest on any margin account borrowing or other loan incurred to purchase or carry a unit. Net
investment income includes gross income from property held for investment and amounts treated as portfolio income under the passive loss rules, less deductible expenses, other than interest, directly
connected with the production of investment income, but generally does not include gains attributable to the disposition of property held for investment or, if applicable, qualified dividend income.
The IRS has indicated that net passive income earned by a publicly traded partnership will be treated as investment income to its unitholders. In addition, the unitholder's share of EQM's portfolio
income will be treated as investment income.
Entity-Level Collections
If EQM is required or elects under applicable law to pay any federal, state, local or foreign income tax on behalf of any unitholder (including
EQM's general partner or any former unitholder), it is authorized to pay those taxes from EQM's funds. That payment, if made, will be treated as a distribution of cash to the unitholder on whose
behalf the payment was made. If the payment is made on behalf of a person whose identity cannot be determined, EQM is authorized to treat the payment as a distribution to all current unitholders. EQM
is authorized to amend its partnership agreement in the manner necessary to maintain uniformity of intrinsic tax characteristics of units and to adjust later distributions, so that after giving effect
to these distributions, the priority and characterization of distributions otherwise applicable under the partnership agreement is maintained as nearly as is practicable. Payments by EQM as described
above could give rise to an overpayment of tax on behalf of an individual unitholder in which event the unitholder would be required to file a claim in order to obtain a credit or refund.
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Allocation of Income, Gain, Loss and Deduction
In general, under Section 704 of the Code, if EQM has a net profit, items of income, gain, loss and deduction will be allocated among
EQM's general partner and the unitholders in accordance with their percentage interests in EQM. At any time that incentive distributions are made to EQM's general partner, gross income will be
allocated to the general partner to the extent of those distributions. If EQM has a net loss, that loss will be allocated first to EQM's general partner and the unitholders in accordance with their
percentage interests in EQM to the extent of their positive capital accounts and, second, to EQM's general partner.
Section 704(c)
of the Code and related rules require EQM to assign to each asset it owns immediately prior to the merger, and to each asset of RMP, a "book" basis equal to the
fair market value of the asset at the time of the merger. The pre-merger owners of EQM are entitled to calculate future tax depreciation and amortization deductions and other relevant tax items with
respect to assets of RMP
based upon the "book" basis of the RMP assets, which may reduce the amount of such future items allocable to former owners of RMP who receive EQM units in the merger or cause such former RMP owners to
recognize "remedial income." Similarly, the former owners of RMP who receive EQM units in the merger are entitled to calculate future tax depreciation and amortization deductions and other relevant
tax items with respect to the pre-merger assets of EQM based upon the "book" basis of the pre-merger assets of EQM. In this context, we use the term "book" as that term is used in Treasury Regulations
under Section 704 of the Code. The "book" basis assigned to any assets for this purpose may not be the same as the book value of such property for financial reporting purposes.
Additionally,
under these rules, all or a portion of any gain recognized following the merger as a result of any divestitures of assets of RMP that may be required in connection with
obtaining any regulatory approvals or clearances for the merger may be allocated to the former RMP unitholders.
Upon
any issuance of units by EQM for cash after the merger, rules similar to those described above will apply, and will generally entitle purchasers of units in such subsequent issuance
to calculate tax depreciation and amortization deductions and other relevant tax items with respect to EQM's assets based upon the "book" basis of EQM's assets at the time of such offering, which will
effectively put such subsequent purchasers in the same position as if EQM's tax assets had a tax basis equal to their fair market value at the time of purchase. This may have the effect of decreasing
the amount of EQM's tax depreciation or amortization deductions thereafter allocated to former RMP unitholders who receive EQM common units in the merger or of requiring such RMP unitholders to
thereafter recognize "remedial income" rather than depreciation and amortization deductions.
In
addition, items of recapture income will be allocated to the extent possible to the unitholder who was allocated the deduction giving rise to the treatment of that gain as recapture
income in order to minimize the recognition of ordinary income by some unitholders. Furthermore, although EQM does not expect that its operations will result in the creation of negative capital
accounts to individual holders of EQM common units, if negative capital accounts nevertheless result, items of EQM's income and gain will be allocated in an amount and manner sufficient to eliminate
the negative balance as quickly as possible. Finally, under section 704(c) of the Code, all or a portion of any gain recognized following the merger as a result of any divestitures of assets of
RMP that may be required in connection with obtaining any regulatory approvals or clearances for the merger may be allocated to the former RMP unitholders.
An
allocation of items of EQM's income, gain, loss or deduction, other than an allocation required under the Section 704(c) principles described above, will generally be given
effect for U.S. federal income tax purposes in determining a partner's share of an item of income, gain, loss or deduction only if the allocation has "substantial economic effect." In any other case,
a partner's share of an item will
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be
determined on the basis of such partner's interest in EQM, which will be determined by taking into account all the facts and circumstances, including:
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such partner's relative contributions to EQM;
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the interests of all the partners in profits and losses;
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the interests of all the partners in cash flows; and
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the rights of all the partners to distributions of capital upon liquidation.
Baker
Botts L.L.P. is of the opinion that, with the exception of the issues described in "Section 754 Election," "Disposition of EQM Common
UnitsAllocations Between Transferors and Transferees," and "Uniformity of EQM Common Units," allocations under EQM's partnership agreement will be given effect under Section 704 of
the Code for U.S. federal income tax purposes in determining a partner's share of an item of income, gain, loss or deduction.
Treatment of Securities Loans
A unitholder whose units are the subject of a securities loan (for example, a loan to a "short seller" to cover a short sale of units) may be
considered as having disposed of those units. If so, such unitholder would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may
recognize gain or loss from the disposition. As a result, during this period:
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-
any of EQM's income, gain, loss or deduction with respect to those units would not be reportable by the lending unitholder;
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any cash distributions received by the lending unitholder as to those units would be fully taxable; and
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all of these distributions would appear to be ordinary income.
Because
there is no direct or indirect controlling authority on this issue relating to partnership interests, Baker Botts L.L.P. has not rendered an opinion regarding the tax
treatment of a unitholder whose EQM common units are the subject of a securities loan (for example, a loan to a "short seller" to cover a short sale of units); therefore unitholders desiring to assure
their status as partners and avoid the risk of income recognition from a loan of their units are urged to modify any applicable brokerage account agreements to prohibit their brokers from borrowing
and lending their units. The IRS has previously announced that it is studying issues relating to the tax treatment of short sales of partnership interests. Please also read "Disposition
of EQM Common UnitsRecognition of Gain or Loss."
Tax Rates
Under current law, the highest marginal U.S. federal income tax rate applicable to ordinary income of individuals is 37% and the highest
marginal U.S. federal income tax rate applicable to long-term capital gains (generally, capital gains on certain assets held for more than twelve months) of individuals is 20%. Furthermore, for
taxable years beginning after December 31, 2017 and ending on or before December 31, 2025, subject to certain limitations, an individual unitholder generally is entitled to a deduction
equal to 20% of his or her allocable share of (i) the net amount of EQM's items of income, gain, deduction, and loss which are attributable to EQM's conduct of a trade or business within the
United States (excluding, however, certain specified types of passive investment income, such as capital gains and dividends) and (ii) gain recognized upon a disposition of EQM's units to the
extent such gain is attributable to Section 751 Assets, such as depreciation recapture and EQM's "inventory
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items,"
and is thus treated as ordinary income under Section 751 of the Code as discussed in "Disposition of Common UnitsRecognition of Gain or Loss" below.
These
rates, and the deduction, are subject to change by new legislation at any time. Former RMP unitholders who receive EQM common units in connection with the merger should consult
their tax advisors regarding the application of the deduction for qualified business income.
In
addition, a 3.8% net investment income tax, or NIIT, applies to certain net investment income earned by individuals, estates and trusts. For these purposes, net investment income
generally includes a unitholder's allocable share of EQM's income and gain realized by a unitholder from a sale of EQM common units (without taking into account the 20% deduction discussed above). In
the case of an individual, the tax is imposed on the lesser of (1) the unitholder's net investment income and (2) the amount by which the unitholder's modified adjusted gross income
exceeds $250,000 (if the unitholder is married and filing jointly or a surviving spouse), $125,000 (if the unitholder is married and filing separately) or $200,000 (in any other case).
Section 754 Election
EQM has made the election permitted by Section 754 of the Code. That election is irrevocable without the consent of the IRS. The election
will generally permit EQM to adjust the tax basis of a purchaser of EQM common units in EQM's assets, or inside basis, under Section 743(b) of the Code to reflect such purchaser's purchase
price. This election does not apply with respect to a person who purchases EQM common units directly from EQM. The Section 743(b) adjustment belongs to the purchaser and not to other
unitholders. For purposes of this discussion, the inside basis in EQM's assets with respect to a unitholder will be considered to have two components: (i) the unitholder's share of EQM's tax
basis in its assets, or common basis, and (ii) such unitholder's Section 743(b) adjustment to that basis.
The
timing of deductions attributable to a Section 743(b) adjustment to EQM's common basis will depend upon a number of factors, including the nature of the assets to which the
adjustment is allocable, the extent to which the adjustment offsets any Section 704(c) type gain or loss with respect to an asset and certain elections EQM makes as to the manner in which EQM
applies Section 704(c) principles with respect to an asset with respect to which the adjustment is allocable. Please read "Allocation of Income, Gain, Loss and Deduction." The
timing of these deductions may affect the uniformity of EQM's units. Please read "Uniformity of EQM Common Units."
A
Section 754 election is advantageous if the transferee's tax basis in such transferee's units is higher than the units' share of the aggregate tax basis of EQM's assets
immediately prior to the transfer. In that case, as a result of the election, the transferee would have, among other items, a greater amount of depreciation deductions and such transferee's share of
any gain or loss on a sale of EQM's assets would be less. Conversely, a Section 754 election is disadvantageous if the transferee's tax basis in such transferee's units is lower than those
units' share of the aggregate tax basis of EQM's assets immediately prior to the transfer. Thus, the fair market value of the EQM common units may be affected either favorably or unfavorably by the
election. A basis adjustment is required regardless of whether a Section 754 election is made in the case of a transfer of an interest in EQM if EQM has a "substantial built-in loss" (or if the
transferee would be allocated a substantial built-in loss upon a hypothetical disposition by EQM of all of its assets in a fully taxable transaction for cash equal to the assets' fair market value)
immediately after the transfer, or if EQM distributes property and has a "substantial basis reduction." Generally a built-in loss or a basis reduction is substantial if it exceeds $250,000.
The
calculations involved in the Section 754 election are complex and will be made on the basis of assumptions as to the value of EQM's assets and other matters. For example, the
allocation of the Section 743(b) adjustment among EQM's assets must be made in accordance with the Code. The IRS
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could
seek to reallocate some or all of any Section 743(b) adjustment EQM allocates to its tangible assets to goodwill instead. Goodwill, as an intangible asset, is generally nonamortizable or
amortizable over a longer period of time or under a less accelerated method than EQM's tangible assets. EQM cannot assure any unitholder that the determinations it makes will not be successfully
challenged by the IRS or that the resulting deductions will not be reduced or disallowed altogether. Should the IRS require a different tax basis adjustment to be made, and should, in EQM's opinion,
the expense of compliance exceed the benefit of the election, EQM may seek permission from the IRS to revoke its Section 754 election. If permission is granted, a subsequent purchaser of units
may be allocated more income than it would have been allocated had the election not been revoked.
Tax Treatment of Operations
Accounting Method and Taxable Year
EQM uses the year ending December 31 as its taxable year and the accrual method of accounting for U.S. federal income tax purposes. Each
unitholder will be required to include in income such unitholder's share of EQM's income, gain, loss and deduction for each taxable year ending within or with such unitholder's taxable year. In
addition, a unitholder who has a taxable year ending on a date other than December 31 and who disposes of all of such unitholder's units following the close of EQM's taxable year but before the
close of such unitholder's taxable year must include such unitholder's share of EQM's income, gain, loss and deduction in income for such unitholder's taxable year, with the result that such
unitholder will be required to include in income for such unitholder's taxable year such unitholder's share of more than twelve months of EQM's income, gain, loss and deduction. Please read
"Disposition of EQM Common UnitsAllocations Between Transferors and Transferees."
Tax Basis, Depreciation and Amortization
The tax bases of EQM's assets will be used for purposes of computing depreciation and cost recovery deductions and, ultimately, gain or loss on
the disposition of those assets. Under Section 704 of the Code, the federal income tax burden associated with the difference between the fair market value of EQM's assets and their tax basis
immediately prior to an offering of EQM units will be borne by EQM's general partner and all of EQM's unitholders as of that time. Please read "Tax Consequences of EQM Common Unit
OwnershipAllocation of Income, Gain, Loss and Deduction."
To
the extent allowable, EQM may elect to use the depreciation and cost recovery methods, including bonus depreciation to the extent available, that will result in the largest deductions
being taken in the early years after assets subject to these allowances are placed in service. Part or all of the goodwill, going concern value and other intangible assets EQM has acquired or will
acquire may not produce any amortization deductions because of the application of the anti-churning restrictions of Code Section 197. Please read "Uniformity of Units." Property
EQM subsequently acquires or constructs may be depreciated using accelerated methods permitted by the Code. If EQM disposes of depreciable property by sale, foreclosure or otherwise, all or a portion
of any gain, determined by reference to the amount of depreciation previously deducted and the nature of the property, may be subject to the recapture rules under Section 1245 or
Section 1250 of the Code and taxed as ordinary income rather than capital gain. Similarly, a unitholder who has taken cost recovery or depreciation deductions with respect to property EQM owns
will likely be required to recapture some or all of those deductions as ordinary income upon a sale of such unitholder's interest in EQM. Please read "Tax Consequences of EQM Common Unit
OwnershipAllocation of Income, Gain, Loss and Deduction" and "Disposition of EQM Common UnitsRecognition of Gain or Loss."
The
costs EQM incurs in offering and selling its units (called "syndication expenses") must be capitalized and cannot be deducted currently, ratably or upon EQM's termination. While
there are
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uncertainties
regarding the classification of costs as organization expenses, which may be amortized by EQM, and as syndication expenses, which may not be amortized by EQM, any underwriting discounts
and commissions EQM incurs will be treated as syndication expenses.
Valuation and Tax Basis of EQM's Properties
The U.S. federal income tax consequences of the ownership and disposition of units will depend in part on EQM's estimates of the relative fair
market values and the initial tax bases of its assets. Although EQM may from time to time consult with professional appraisers regarding valuation matters, EQM will make many of the relative fair
market value estimates itself. These estimates and determinations of tax basis are subject to challenge and will not be binding on the IRS or the courts. If the estimates of fair market value or basis
are later found to be incorrect, the character and amount of items of income, gain, loss or deduction previously reported by unitholders could change, and unitholders could be required to adjust their
tax liability for prior years and incur interest and penalties with respect to those adjustments.
Disposition of EQM Common Units
Recognition of Gain or Loss
Gain or loss will be recognized on a sale of units equal to the difference between the unitholder's amount realized and the unitholder's tax
basis for the units sold. A unitholder's amount realized will be measured by the sum of the cash or the fair market value of other property received plus such unitholder's share of EQM's nonrecourse
liabilities. Because the amount realized includes a unitholder's share of EQM's nonrecourse liabilities, the gain recognized on the sale of units could result in a tax liability in excess of any cash
received from the sale.
Prior
distributions from EQM that in the aggregate were in excess of cumulative net taxable income for a common unit and, therefore, decreased a unitholder's tax basis in that common
unit will, in effect, become taxable income if the common unit is sold at a price greater than the unitholder's tax basis in that common unit.
Except
as noted below, gain or loss recognized by a unitholder, other than a "dealer" in units, on the sale or exchange of a unit will generally be taxable as capital gain or loss.
Capital gain recognized by an individual on the sale of units held more than twelve months will generally be taxed at the U.S. federal income tax rate applicable to long-term capital gains. However, a
portion of this gain or loss, which will likely be substantial, will be separately computed and taxed as ordinary income or loss under Section 751 of the Code to the extent attributable to
assets giving rise to depreciation recapture or other "unrealized receivables" or to "inventory items" that EQM owns. The term "unrealized receivables" includes potential recapture items, including
depreciation recapture. Ordinary income attributable to unrealized receivables, inventory items and depreciation recapture may exceed net taxable gain realized on the sale of a unit and may be
recognized even if there is a net taxable loss realized upon the sale of a unit. Thus, a unitholder may recognize both ordinary income and a capital loss upon a sale of units. Capital losses may
offset capital gains and no more than $3,000 of ordinary income each year in the case of individuals. Both ordinary income and capital gain recognized on a sale of units may be subject to the NIIT in
certain circumstances. Please read "Tax Consequences of EQM Common Unit OwnershipTax Rates."
The
IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all those
interests. Upon a sale or other disposition of less than all of those interests, a portion of that tax basis must be allocated to the interests sold using an "equitable apportionment" method, which
generally means that the tax basis allocated to the interest sold equals an amount that bears the same relation to the partner's tax basis in such partner's entire interest in EQM as the value of the
interest sold bears to the value of the
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partner's
entire interest in EQM. Treasury Regulations under Section 1223 of the Code allow a selling unitholder who can identify common units transferred with an ascertainable holding period
to elect to use the actual holding period of the common units transferred. Thus, according to the ruling discussed above, a unitholder will be unable to select high or low basis EQM common units to
sell as would be the case with corporate stock, but, according to the Treasury Regulations, may designate specific EQM common units sold for purposes of determining the holding period of units
transferred. A unitholder electing to use the actual holding period of EQM common units transferred must consistently use that identification method for all subsequent sales or exchanges of EQM common
units. A unitholder considering the purchase of additional units or a sale of units purchased in separate transactions is urged to consult such unitholder's tax advisor as to the possible consequences
of this ruling and application of the Treasury Regulations.
Specific
provisions of the Code affect the taxation of some financial products and securities, including partnership interests, by treating a taxpayer as having sold an "appreciated"
partnership interest, one in which gain would be recognized if it were sold, assigned or terminated at its fair market value, if the taxpayer or related persons enter(s)
into:
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a short sale;
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an offsetting notional principal contract; or
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a futures or forward contract; in each case, with respect to the partnership interest or substantially identical property.
Moreover,
if a taxpayer has previously entered into a short sale, an offsetting notional principal contract or a futures or forward contract with respect to the partnership interest, the
taxpayer will be treated as having sold that position if the taxpayer or a related person then acquires the partnership interest or substantially identical property. The Secretary of the Treasury is
also authorized to issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively
sold the financial position.
Allocations Between Transferors and Transferees
In general, EQM's taxable income and losses will be determined annually, will be prorated on a monthly basis and will be subsequently
apportioned among the EQM unitholders in proportion to the number of EQM common units owned by each of them as of the opening of the applicable exchange on the first business day of the month, which
we refer to as the "Allocation Date." However, gain or loss realized on a sale or other disposition of EQM's assets other than in the ordinary course of business will be allocated among the
unitholders on the Allocation Date in the month in which that gain or loss is recognized. As a result, a unitholder transferring common units may be allocated income, gain, loss and deduction realized
after the date of transfer.
Although
simplifying conventions are contemplated by the Code and most publicly traded partnerships use similar simplifying conventions, the use of this method may not be permitted under
existing Treasury Regulations. The Department of the Treasury and the IRS issued final Treasury Regulations under Section 706 of the Code pursuant to which a publicly traded partnership may use
a similar monthly simplifying convention to allocate tax items among transferor and transferee unitholder. Nonetheless, the regulations do not specifically authorize all aspects of the proration
method EQM has
currently adopted. Accordingly, Baker Botts L.L.P. is unable to opine on the validity of this method of allocating income and deductions between transferor and transferee unitholders. If this
method is not allowed under the Treasury Regulations, EQM's taxable income or losses might be reallocated among the unitholders. EQM is authorized to revise its method of allocation between transferor
and transferee unitholders, as well as among unitholders whose interests vary during a taxable year, to conform to a method permitted or required by Section 706 of the Code and the Treasury
Regulations or rulings
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promulgated
thereunder. A unitholder who disposes of units prior to the record date set for a cash distribution for any quarter will be allocated items of income, gain, loss and deductions
attributable to the month of sale but will not be entitled to receive that cash distribution.
Notification Requirements
A unitholder who sells any EQM common units generally is required to notify EQM in writing of that sale within 30 days after the sale
(or, if earlier, January 15 of the year following the sale). A purchaser of units who purchases units from another unitholder is also generally required to notify EQM in writing of that
purchase within 30 days after the purchase. Upon receiving such notifications, EQM is required to notify the IRS of that transaction and to furnish specified information to the transferor and
transferee. Failure to notify EQM of a transfer of units may, in some cases, lead to the imposition of penalties. However, these reporting requirements do not apply to a sale by an individual who is a
citizen of the U.S. and who effects the sale or exchange through a broker who will satisfy such requirements.
Uniformity of EQM Common Units
Because EQM cannot match transferors and transferees of units, EQM must maintain uniformity of the economic and tax characteristics of the units
to a purchaser of these units. In the absence of uniformity, EQM may be unable to completely comply with a number of U.S. federal income tax requirements, both statutory and regulatory. Any
non-uniformity could have an impact upon the value of EQM's units. The timing of deductions attributable to Section 743(b) adjustments to the common basis of EQM's assets with respect to
persons purchasing units from another unitholder may
affect the uniformity of EQM's units. Please read "Tax Consequences of EQM Common Unit OwnershipSection 754 Election."
For
example, some types of depreciable assets are not subject to the typical rules governing depreciation (under Section 168 of the Code) or amortization (under Section 197
of the Code). If EQM were to acquire any assets of that type, the timing of a unit purchaser's deductions with respect to Section 743(b) adjustments to the common basis of those assets might
differ depending upon when and to whom the purchased unit was originally issued. EQM does not currently expect to acquire any assets of that type. However, if EQM were to acquire a material amount of
assets of that type, EQM would intend to adopt tax positions as to those assets that would not result in any such lack of uniformity. Any such tax positions taken by EQM might result in allocations to
some unitholders of smaller depreciation deductions than they would otherwise be entitled to receive. Baker Botts L.L.P. has not rendered an opinion with respect to those types of tax
positions. Moreover, the IRS might challenge those tax positions. If EQM took such a tax position and the IRS successfully challenged the position, the uniformity of EQM's units might be affected, and
the gain from the sale of EQM's units might be increased without the benefit of additional deductions. Please read "Disposition of EQM Common UnitsRecognition of Gain or
Loss."
Tax-Exempt Organizations and Other Investors
Ownership of EQM common units by employee benefit plans and other tax-exempt organizations, as well as non-resident aliens, foreign
corporations, and other foreign persons (collectively, Non-U.S. unitholders) raises issues unique to those investors and, as described below to a limited extent, may have substantially adverse tax
consequences to them. Unitholders that are tax exempt entities or Non-U.S. unitholders should consult their tax advisors.
Employee
benefit plans and most other tax-exempt organizations, including individual retirement accounts and other retirement plans, are subject to U.S. federal income tax on unrelated
business taxable income. Virtually all of EQM's income allocated to a unitholder that is a tax-exempt
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organization
will be unrelated business taxable income and will be taxable to it. Tax-exempt unitholders with more than one unrelated trade or business (including by attribution from investment in EQM
to the extent EQM is engaged in one or more unrelated trades or businesses) are required to separately compute their unrelated business taxable income with respect to each trade or business (including
for
purposes of determining any net operating loss deduction). As a result, it may not be possible for tax-exempt unitholders to utilize losses from an investment in EQM to offset unrelated business
taxable income from another unrelated trade or business and vice versa.
Non-U.S.
unitholders will be considered under Section 875 of the Code to be engaged in business in the United States because of the ownership of EQM common units. As a
consequence, they will be required to file U.S. federal tax returns to report their share of EQM's income, gain, loss or deduction and pay U.S. federal income tax at regular rates on their
share of EQM's net income or gain. Moreover, under rules applicable to publicly traded partnerships, EQM will withhold at the highest applicable effective tax rate from cash distributions made
quarterly to Non-U.S. unitholders. Each Non-U.S. unitholder must obtain a taxpayer identification number from the IRS and submit that number to EQM's transfer agent on a Form W-8BEN or
applicable substitute form in order to obtain credit for these withholding taxes. A change in applicable law may require EQM to change these procedures.
In
addition, because a foreign corporation that owns units will be treated as engaged in a U.S. trade or business, that corporation may be subject to the U.S. branch profits tax under
Section 884 of the Code at a rate of 30%, in addition to regular U.S. federal income tax, on its share of EQM's income and gain, as adjusted for changes in the foreign corporation's "U.S. net
equity," which is effectively connected with the conduct of a U.S. trade or business. That tax may be reduced or eliminated by an income tax treaty between the U.S. and the country in which the
foreign corporate unitholder is a "qualified resident." In addition, this type of unitholder is subject to special information reporting requirements under Section 6038C of the Code.
Gain
realized by a Non-U.S. unitholder from the sale of its interest in a partnership that is engaged in a trade or business in the United States will be considered to be "effectively
connected" with a U.S. trade or business to the extent that gain that would be recognized upon a sale by the partnership of all its assets would be "effectively connected" with a U.S. trade or
business. It is expected that, under this rule, all or substantially all of a Non-U.S. unitholder's gain from the sale or other disposition of EQM units would be treated as effectively connected with
a unitholder's indirect U.S. trade or business constituted by its investment in EQM and would be subject to U.S. federal income tax. As a result of these effectively connected income rules, the
exclusion from U.S. taxation under the Foreign Investment in Real Property Tax Act for gain from the sale of partnership units regularly traded on an established securities market will not prevent a
Non-U.S. unitholder from being subject to U.S. federal income tax on gain from the sale or disposition of its units to the extent such gain is effectively connected with a U.S. trade or business.
Under
the recently enacted U.S. tax reform law, if a unitholder sells or otherwise disposes of an EQM common unit, the transferee is required to withhold 10% of the amount realized by
the transferor unless the transferor certifies that it is not a foreign person, and EQM is required to deduct and withhold from the transferee amounts that should have been withheld by the transferee
but were not withheld. Because the "amount realized" would include a unitholder's share of EQM's nonrecourse liabilities, 10% of the amount realized could exceed the total cash purchase price for the
common units. However, the Department of the Treasury and the IRS have announced that this withholding requirement will not apply to any disposition of a publicly traded interest in a publicly traded
partnership (such as the EQM) until Treasury Regulations or other guidance have been issued
clarifying the application of this withholding requirement to dispositions of interests in publicly traded partnerships. Accordingly, while this new withholding requirement does not currently apply to
sales or
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dispositions
of EQM common units, there can be no assurance that such requirement will not apply in the future.
Administrative Matters
Information Returns and Audit Procedures
EQM intends to furnish to each unitholder, within 90 days after the close of each taxable year, specific tax information, including a
Schedule K-1, which describes each unitholder's share of EQM's income, gain, loss and deduction for EQM's preceding taxable year. In preparing this information, which will not be reviewed by
counsel, EQM will take various accounting and reporting positions, some of which have been mentioned earlier, to determine each unitholder's share of income, gain, loss and deduction. EQM cannot
provide any assurance that those positions will yield a result that conforms to the requirements of the Code, Treasury Regulations or administrative interpretations of the IRS.
Neither
EQM nor Baker Botts L.L.P. can assure unitholders that the IRS will not successfully challenge the positions EQM adopts, and such a challenge could negatively affect the
value of the EQM common units. Adjustments resulting from an IRS audit may require each unitholder to adjust a prior year's tax liability, and possibly may result in an audit of such unitholder's own
return. Any audit of a unitholder's return could result in adjustments not related to EQM's returns as well as those related to EQM's returns.
Partnerships
generally are treated as separate entities for purposes of U.S. federal tax audits, judicial review of administrative adjustments by the IRS and tax settlement proceedings.
The tax treatment of partnership items of income, gain, loss and deduction are determined in a partnership proceeding rather than in separate proceedings with the partners. For taxable years beginning
prior to January 1, 2018, the Code requires that one partner be designated as the "Tax Matters Partner" for these purposes. The EQM partnership agreement named EQM's general partner as EQM's
Tax Matters Partner.
The
Tax Matters Partner has made (and may make) some elections on EQM's behalf and on behalf of EQM's unitholders. In addition, the Tax Matters Partner can extend the statute of
limitations for assessment of tax deficiencies against unitholders for items in EQM's returns. The Tax Matters Partner may bind a unitholder with less than a 1.0% profits interest in EQM to a
settlement with the IRS unless that unitholder elects, by filing a statement with the IRS, not to give that authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial review, by
which all the unitholders are bound, of a final partnership administrative adjustment and, if the Tax Matters Partner fails to seek judicial review, judicial review may be sought by any unitholder
having at least a 1.0% interest in profits or by any group of unitholders having in the aggregate at least a 5% interest in profits. However, only one action for judicial review will go forward, and
each unitholder with an interest in the outcome may participate in that action.
A
unitholder must file a statement with the IRS identifying the treatment of any item on such unitholder's U.S. federal income tax return that is not consistent with the treatment
of the item on EQM's return. Intentional or negligent disregard of this consistency requirement may subject a unitholder to substantial penalties.
Pursuant
to the Bipartisan Budget Act of 2015, for taxable years beginning after December 31, 2017, if the IRS makes audit adjustments to EQM's income tax returns, it may assess
and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from EQM, unless EQM elects to have its unitholders and former unitholders take
any audit adjustment into account in accordance with their interests in EQM during the taxable year under audit. Similarly, for such taxable years, if the IRS makes audit adjustments to income tax
returns filed by an
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entity
in which EQM is a member or partner, it may assess and collect any taxes (including penalties and interest) resulting from such audit adjustment directly from such entity.
Generally,
EQM expects to elect to have its unitholders and former unitholders take any material audit adjustment into account in accordance with their interests in EQM during the
taxable year under audit, but there can be no assurance that such election, if made, will be effective in all circumstances. With
respect to audit adjustments as to an entity in which EQM is a member or partner, EQM may not be able to have its unitholders take such audit adjustment into account. If EQM is unable or if it is not
economical to have its unitholders take such audit adjustment into account in accordance with their interests in EQM during the taxable year under audit, EQM's then current unitholders may bear some
or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own units during the taxable year under audit. If, as a result of any such audit adjustment, EQM is
required to make payments of taxes, penalties, or interest, EQM may require its unitholders and former unitholders to reimburse EQM for such taxes (including any applicable penalties or interest) or,
if EQM is required to bear such payment, its cash available for distribution to EQM's unitholders might be substantially reduced.
In
the event the IRS makes an audit adjustment to EQM's income tax returns and EQM does not or cannot shift the liability to its unitholders in accordance with their interests in EQM
during the taxable year under audit, EQM will generally have the ability to request that the IRS reduce the determined underpayment by reducing the suspended passive loss carryovers of its unitholders
(without any compensation from EQM to such unitholders), to the extent such underpayment is attributable to a net decrease in passive activity losses allocable to certain partners. Such reduction, if
approved by the IRS, will be binding on any affected unitholders.
Additionally,
pursuant to the Bipartisan Budget Act of 2015, EQM is no longer required to designate a Tax Matters Partner. Instead, for taxable years beginning after December 31,
2017, EQM is required to designate a partner, or other person, with a substantial presence in the United States as the partnership representative (Partnership Representative). The Partnership
Representative has the sole authority to act on behalf of EQM for purposes of, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS.
EQM
has designated EQM's general partner (or the designee of EQM's general partner) as the Partnership Representative. Further, any actions taken by EQM or by the Partnership
Representative on behalf of EQM with respect to, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS, will be binding on EQM and all of its
unitholders.
The
U.S. Department of the Treasury has issued proposed regulations interpreting these rules, and accordingly, the manner in which these rules may apply to EQM in the future is
uncertain.
Additional Withholding Requirements
Withholding taxes may apply to certain types of payments made to "foreign financial institutions" (as specially defined in the Code) and certain
other non-U.S. entities. Specifically,
a 30% withholding tax may be imposed on interest, dividends and other fixed or determinable annual or periodical gains, profits and income from sources within the U.S. (FDAP Income), or gross proceeds
from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the U.S. (Gross Proceeds) paid to a foreign financial institution or to a
"non-financial foreign entity" (as specially defined in the Code), unless (i) the foreign financial institution undertakes certain diligence and reporting, (ii) the non-financial foreign
entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner or (iii) the foreign financial institution or
non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in
clause (i) above, it must enter into an agreement with the U.S. Treasury
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requiring,
among other things, that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold
30% on payments to noncompliant foreign financial institutions and certain other account holders. An intergovernmental agreement between the United States and an applicable foreign country, or future
Treasury Regulations, may modify these requirements
These
rules generally apply to payments of FDAP Income currently and will apply to payments of relevant Gross Proceeds from sales or dispositions occurring on or after January 1,
2019. Thus, to the extent EQM has FDAP Income or will have Gross Proceeds on or after January 1, 2019 that are not treated as effectively connected with a U.S. trade or business (please read
"Tax-Exempt Organizations and Other Investors"), unitholders who are foreign financial institutions or certain other non-US entities may be subject to withholding on distributions they
receive from EQM, or their distributive share of EQM's income, pursuant to the rules described above.
Unitholders
should consult their own tax advisors regarding the potential application of these withholding provisions to their interest in EQM.
Nominee Reporting
Persons who hold an interest in EQM as a nominee for another person are required to furnish the following information to it:
(1) the
name, address and taxpayer identification number of the beneficial owner and the nominee;
(2) a
statement regarding whether the beneficial owner is
(A) a
person that is not a U.S. person,
(B) a
foreign government, an international organization or any wholly-owned agency or instrumentality of either of the foregoing, or
(C) a
tax-exempt entity;
(3) the
amount and description of units held, acquired or transferred for the beneficial owner; and
(4) specific
information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisition cost for purchases, as well as the amount of
net proceeds from sales.
Brokers
and financial institutions are required to furnish additional information, including whether they are U.S. persons and specific information on units they acquire, hold or
transfer for their own account. A penalty of $270 per failure, up to a maximum of $3,282,500 per calendar year in 2018 (which maximum will be $3,275,500 in 2019), is imposed by the Code for failure to
report that information to EQM. The nominee is required to supply the beneficial owner of the units with the information furnished to EQM.
Accuracy-Related Penalties
Certain penalties may be imposed on taxpayers as a result of an underpayment of tax that is attributable to one or more specified causes,
including negligence or disregard of rules or regulations, substantial understatements of income tax and substantial valuation misstatements. No penalty will be imposed, however, for any portion of
any such underpayment if it is shown that there was a reasonable cause for the underpayment of that portion and that the taxpayer acted in good faith regarding the underpayment of that portion. For
individuals, a substantial understatement of income
tax in any taxable year exists if the amount of the understatement exceeds the greater of 10.0% of the tax
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required
to be shown on the return for the taxable year or $5,000. The amount of any understatement subject to penalty generally is reduced if any portion is attributable to a position adopted on the
return:
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for which there is, or was, "substantial authority"; or
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as to which there is a reasonable basis and the pertinent facts of that position are disclosed on the return.
If
any item of income, gain, loss or deduction included in the distributive shares of unitholders might result in that kind of an "understatement" of income for which no "substantial
authority" exists, EQM must disclose the pertinent facts on EQM's return. In addition, EQM will make a reasonable effort to furnish sufficient information for unitholders to make adequate disclosure
on their returns and to take other actions as may be appropriate to permit unitholders to avoid liability for this penalty. More stringent rules apply to "tax shelters," which EQM does not believe
includes it, or any of its investments, plans or arrangements.
A
substantial valuation misstatement exists if (a) the value of any property, or the adjusted basis of any property, claimed on a tax return is 150.0% or more of the amount
determined to be the correct amount of the valuation or adjusted basis, (b) the price for any property or services (or for the use of property) claimed on any such return with respect to any
transaction between persons described in Section 482 of the Code is 200.0% or more (or 50.0% or less) of the amount determined under Code Section 482 to be the correct amount of such
price, or (c) the net Section 482 transfer price adjustment for the taxable year exceeds the lesser of $5 million or 10.0% of the taxpayer's gross receipts.
No
penalty is imposed unless the portion of the underpayment attributable to a substantial valuation misstatement exceeds $5,000. If the valuation claimed on a return is 200.0% or more
than the correct
valuation or certain other thresholds are met, the penalty imposed increases to 40.0%. EQM does not anticipate making any valuation misstatements.
In
addition, the 20.0% accuracy-related penalty also applies to any portion of an underpayment of tax that is attributable to transactions lacking economic substance. To the extent that
such transactions are not disclosed, the penalty imposed is increased to 40.0%. Additionally, there is no reasonable cause defense to the imposition of this penalty to such transactions.
Reportable Transactions
If EQM was to engage in a "reportable transaction," EQM (and possibly other parties) would be required to make a detailed disclosure of the
transaction to the IRS. A transaction may be a reportable transaction based upon any of several factors, including the fact that it is a type of tax avoidance transaction publicly identified by the
IRS as a "listed transaction" or that it produces certain kinds of losses for partnerships, individuals, S corporations, and trusts in excess of $2.0 million in any single year, or
$4.0 million in any combination of six successive tax years. EQM's participation in a reportable transaction could increase the likelihood that its U.S. federal income tax information return
(and possibly EQM's unitholders' tax returns) would be audited by the IRS. Please read "Administrative MattersInformation Returns and Audit Procedures."
Moreover,
if EQM were to participate in a reportable transaction with a significant purpose to avoid or evade tax, or in any listed transaction, EQM unitholders may be subject to the
following additional consequences:
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accuracy-related penalties with a broader scope, significantly narrower exceptions, and potentially greater amounts than described above at
"Administrative MattersAccuracy-Related Penalties";
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for those unitholders otherwise entitled to deduct interest on U.S. federal tax deficiencies, non-deductibility of interest on any resulting
tax liability; and
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in the case of a listed transaction, an extended statute of limitations.
EQM
does not expect to engage in any "reportable transactions."
Recent Legislative Developments
The present U.S. federal income tax treatment of publicly traded partnerships, including EQM, or of the ownership and disposition of EQM common
units may be modified by administrative or legislative action or judicial interpretation at any time. For example, from time to time, members of Congress and the President propose and consider
substantive changes to the existing U.S. federal income tax laws that affect publicly traded partnerships, including the elimination of the Qualifying Income Exception upon which EQM relies for
treatment as a partnership for U.S. federal income tax purposes.
On
December 22, 2017, the President signed into law U.S. federal tax reform legislation that significantly altered the Code. This legislation, among other things, contains
significant changes to the taxation of EQM's operations and the ownership and disposition of EQM common units, including a partial limitation on the deductibility of certain business interest
expenses, a deduction for EQM unitholders relating to certain income, immediate deductions for certain new investments instead of deductions for depreciation over time and the modification or repeal
of many business deductions and credits. EQM continues to examine the impact of this tax reform legislation and its overall impact on EQM or the ownership or disposition of EQM common units is
uncertain. EQM's unitholders are urged to consult their tax advisors regarding the impact of this tax reform legislation.
Additional
modifications to the U.S. federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible to meet
the exception for EQM to be treated as a partnership for U.S. federal income tax purposes. Please read
"Partnership Status." EQM is unable to predict whether any such changes will ultimately be enacted. However, it is possible that a change in law could affect EQM, and any such changes
could negatively impact the value of the EQM common units.
State, Local, Non-U.S. and Other Tax Considerations
In addition to U.S. federal income taxes, unitholders may be subject to other taxes, including state and local and non-U.S. income taxes,
unincorporated business taxes, and estate, inheritance or intangibles taxes that may be imposed by the various jurisdictions in which EQM conducts business or own property now or in the future or in
which the unitholder is a resident. EQM currently conducts business or owns property in several states. Some or all of these states may impose an income or gross receipts tax on nonresident partners
of partnerships doing business within the state, and EQM may also own property or do business in other states in the future that impose income or similar taxes on nonresident persons owning an
interest in EQM. Although an analysis of those various taxes is not presented here, each unitholder should consider their potential impact. A unitholder may be required to file income tax returns and
to pay income taxes in many of these jurisdictions in which EQM does business or owns property and may be subject to penalties for failure to comply with those requirements. In some jurisdictions, tax
losses may not produce a tax benefit in the year incurred and may not be available to offset income in subsequent taxable years. Some of the jurisdictions may require EQM, or EQM may elect, to
withhold a percentage of income from amounts to be distributed to a unitholder who is not a resident of the jurisdiction. Withholding, the amount of which may be greater or less than a particular
unitholder's income tax liability to the jurisdiction, generally does not relieve a nonresident unitholder from the obligation to file an income tax return. Amounts withheld will be treated as if
distributed to unitholders for purposes of determining the amounts distributed by EQM. Please read "Tax Consequences of EQM Common Unit OwnershipEntity-Level
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Collections."
Based on current law and EQM's estimate of its future operations, EQM GP anticipates that any amounts required to be withheld will not be material.
It is the responsibility of each unitholder to investigate the legal and tax consequences, under the laws of pertinent jurisdictions, of the ownership and
disposition of EQM common units. EQM recommends that each unitholder consult, and depend on, its own tax counsel or other advisor with regard to those matters. Further, it is the responsibility of
each unitholder to file all state, local, and non-U.S., as well as U.S. federal tax returns that may be required of it. Baker Botts L.L.P. has not rendered an opinion
on the state, local, alternative minimum tax or non-U.S. tax consequences of the ownership or disposition of EQM common units.
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DESCRIPTION OF EQM COMMON UNITS
EQM common units represent limited partner interests in EQM. EQM common units entitle the holders to participate in partnership distributions
and to exercise the rights and privileges available to limited partners under the EQM partnership agreement.
Where Common Units Are Traded
EQM's outstanding common units are listed on the NYSE under the symbol "EQM." The EQM common units received by RMP unitholders in the merger
will also be listed on the NYSE.
Quarterly Distributions
The EQM partnership agreement requires that EQM distribute 100% of its "Available Cash" (as defined in the EQM partnership agreement) to its
partners within 45 days following the end of each quarter. Available cash generally means, for any quarter, all cash and cash equivalents on hand at the end of that quarter less, the amount of
cash reserves established by EQM GP to:
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provide for the proper conduct of EQM's business (including reserves for EQM's future capital expenditures, anticipated future debt service
requirements and refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing related to Federal Energy Regulatory Commission (FERC) rate proceedings or rate
proceedings under applicable law subsequent to that quarter);
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comply with applicable law, any of EQM's debt instruments or other agreements; or
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provide funds for distributions to EQM's unitholders and to EQM GP for any one or more of the next four quarters (provided that
EQM GP may not establish cash reserves for distributions if the effect of the establishment of such reserves will prevent EQM from distributing the minimum quarterly distribution on all EQM
common units);
plus,
if EQM GP so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made
subsequent to the end of such quarter. Please see "Comparison of Rights of EQM Unitholders and RMP UnitholdersDistributions of Available Cash" for a further discussion of EQM's quarterly
distributions.
Transfer Agent and Registrar
EQM's transfer agent and registrar for the EQM common units is American Stock Transfer and Trust Company, LLC.
Summary of Partnership Agreement
A summary of the important provisions of the EQM partnership agreement is included under the caption "Comparison of Rights of EQM Unitholders
and RMP Unitholders" in this proxy statement/prospectus.
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COMPARISON OF RIGHTS OF EQM UNITHOLDERS AND RMP UNITHOLDERS
The rights of RMP unitholders are currently governed by the RMP partnership agreement and the Delaware LP Act. The rights of EQM's
unitholders are governed by the EQM partnership agreement, which, together with the Delaware LP Act, will govern the rights of RMP unitholders and the current EQM unitholders following the
consummation of the merger. Unless the context otherwise requires, the descriptions of the rights of EQM unitholders appearing in this section describe the rights provided for in the EQM partnership
agreement.
There
are certain differences between the rights of RMP unitholders and the rights of EQM unitholders. Some of these rights, such as distribution and voting rights, are significant. The
following description summarizes the material differences that may affect the rights of RMP unitholders and EQM unitholders but does not purport to be a complete statement of all those differences, or
a complete description of the specific provisions referred to in this summary. The identification of
specific differences is not intended to indicate that other equally significant or more significant differences do not exist. RMP unitholders should read carefully the relevant provisions of the EQM
partnership agreement and the RMP partnership agreement, copies of which may be obtained as described under "Where You Can Find More Information."
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RMP
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EQM
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Purpose
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RMP's stated purpose is to (a) engage directly in, or enter into or form, hold and dispose of any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in,
any business activity that is approved by its general partner, in its sole discretion, and that lawfully may be conducted by a limited partnership organized pursuant to the Delaware LP Act and, in connection therewith, to exercise all of the
rights and powers conferred upon RMP pursuant to the agreements relating to such business activity, and (b) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to its subsidiaries;
provided, however, that its general partner shall not cause RMP to engage, directly or indirectly, in any business activity that its general partner determines would be reasonably likely to cause RMP to be treated as an association taxable as a
corporation or otherwise taxable as an entity for U.S. federal income tax purposes.
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EQM's stated purpose is to (a) engage directly in, or enter into or form, hold and dispose of any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in,
any business activity that is approved by its general partner, in its sole discretion, and that lawfully may be conducted by a limited partnership organized pursuant to the Delaware LP Act and, in connection therewith, to exercise all of the
rights and powers conferred upon EQM pursuant to the agreements relating to such business activity, and (b) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to its subsidiaries;
provided, however, that its general partner shall not cause EQM to engage, directly or indirectly, in any business activity that its general partner determines would be reasonably likely to cause EQM to be treated as an association taxable as a
corporation or otherwise taxable as an entity for U.S. federal income tax purposes.
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Outstanding Units
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As of June 15, 2018, RMP had outstanding approximately 102,323,796 common units and no subordinated units.
On February 15, 2018, all of the 28,753,623
subordinated units then outstanding converted into common units.
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As of June 15, 2018, EQM had outstanding 86,480,648 common units, 1,443,015 general partner units and no subordinated units.
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RMP
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EQM
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Issuance of Additional Securities
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The RMP partnership agreement authorizes RMP to issue an unlimited number of additional limited partner and other equity interests and derivative instruments related to such interests for such consideration and on
such terms and conditions determined by RMP's general partner without the approval of RMP's unitholders.
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The EQM partnership agreement authorizes EQM to issue an unlimited number of additional limited partner and other equity interests and derivative instruments related to such interests for the consideration and on the
terms and conditions determined by EQM's general partner without the approval of EQM's unitholders.
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It is possible that RMP will fund acquisitions through the issuance of additional common units or other partnership interests. Holders of any additional common units RMP issues will be entitled to share equally with
the then-existing holders of common units in RMP's distributions. In addition, the issuance of additional common units or other partnership interests may dilute the value of the interests of the then-existing holders of common units in RMP's net
assets.
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It is possible that EQM will fund acquisitions through the issuance of additional common units or other partnership interests. Holders of any additional common units EQM issues will be entitled to share equally with
the then-existing holders of common units in EQM's distributions of available cash. In addition, the issuance of additional common units or other partnership interests may dilute the value of the interests of the then-existing holders of common units
in EQM's net assets.
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In accordance with Delaware law and the provisions of the RMP partnership agreement, RMP may also issue additional partnership interests that, as determined by RMP's general partner, have rights to distribution or
special voting rights to which the then-existing holders of common units are not entitled. In addition, the RMP partnership agreement does not prohibit RMP's subsidiaries from issuing equity interests, which may effectively rank senior to RMP's
common units.
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In accordance with Delaware law and the provisions of the EQM partnership agreement, EQM may also issue additional partnership interests that, as determined by EQM's general partner, have rights to distribution or
special voting rights to which the then-existing holders of common units are not entitled. In addition, the EQM partnership agreement does not prohibit EQM's subsidiaries from issuing equity interests, which may effectively rank senior to EQM's
common units.
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RMP
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EQM
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Distributions of Available Cash
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General
. The RMP partnership agreement does not require RMP to pay distributions at any time or in any amount. Instead, the board of directors of RMP's general partner has adopted
a cash distribution policy that sets forth the RMP general partner's intention with respect to the distributions to be made to unitholders. Pursuant to its cash distribution policy, after the end of each quarter, RMP plans to distribute to the
holders of its units on a quarterly basis at least the minimum quarterly distribution of $0.1875 per unit, or $0.75 on an annualized basis, to the extent it has sufficient cash after establishment of cash reserves and payment of fees and expenses,
including payments to its general partner and its affiliates.
Any distributions RMP makes are characterized as made from "operating surplus" or "capital surplus."
Distributions from operating surplus are made differently than cash distributions that would be made from capital surplus. Except in limited circumstances, operating surplus distributions will be made to RMP unitholders and, if RMP makes quarterly
distributions above the first target distribution level described below, to the holder of RMP incentive distribution rights. RMP does not anticipate that RMP will make any distributions from capital surplus. In such an event, however, any capital
surplus distribution would be made pro rata to all unitholders, but the holder of the incentive distribution rights would generally not participate in any capital surplus distributions with respect to those rights.
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General
. Within 45 days after the end of each quarter, EQM will distribute all available cash to unitholders of record on the applicable record date.
Any distributions EQM makes are characterized as made from "operating surplus" or "capital surplus." Distributions from operating surplus are made differently than cash distributions that would
be made from capital surplus. Except in limited circumstances, operating surplus distributions will be made to the EQM general partner and the EQM unitholders and, if EQM makes quarterly distributions above the first target distribution level
described below, to the holder of EQM incentive distribution rights. EQM does not anticipate that EQM will make any distributions from capital surplus. In such an event, however, any capital surplus distribution would be made pro rata to the EQM
general partner and the EQM unitholders, but the holder of the incentive distribution rights would generally not participate in any capital surplus distributions with respect to those rights.
Definition of Available Cash
. Available cash is defined in the EQM partnership agreement and generally means, for any
quarter, all cash and cash equivalents of EQM and its subsidiaries on hand at the end of that quarter:
less the amount of cash reserves established by EQM's general partner
to:
provide for the proper conduct of EQM's and its subsidiaries' businesses (including reserves for future capital expenditures, anticipated future debt service requirements and
refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing related to FERC rate proceedings) subsequent to that quarter;
comply with applicable law,
any of EQM's or its subsidiaries' debt instruments or their other agreements; or
provide funds for distributions to EQM unitholders and its general
partner for any one or more of the next four quarters (provided that EQM's general partner may not establish cash reserves for such distributions if the effect of the establishment of such reserves will prevent EQM from distributing the minimum
quarterly distribution on all common units);
plus, if EQM's general partner so determines, all or any portion of the cash and cash equivalents of EQM and its subsidiaries on hand on the date
of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter.
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RMP
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EQM
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The purpose and effect of the last bullet point above is to allow EQM's general partner, if it so decides, to use cash from working capital borrowings made after the end of the quarter but on or before the date of
determination of available cash for that quarter to pay distributions to unitholders. Under the EQM partnership agreement, working capital borrowings are generally borrowings that are made under a credit facility, commercial paper facility or similar
financing arrangement, and in all cases are used solely for working capital purposes or to pay distributions to partners, and with the intent of the borrower to repay such borrowings within 12 months with funds other than from additional working
capital borrowings.
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Definition of Operating Surplus
. Operating surplus for any period generally means:
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Definition of Operating Surplus
. Operating surplus for any period generally means:
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$35.0 million; plus
all of RMP's and its subsidiaries' cash receipts after the closing of RMP's IPO, excluding cash from interim capital transactions, provided that cash receipts from the
termination of any hedge contract prior to its stipulated settlement or termination date will be included in equal quarterly installments over the remaining scheduled life of such hedge contract had it not been terminated; plus
the amount of cash distributions (including incremental distributions on incentive distribution rights) paid in respect of equity issued, other than equity issued in RMP's IPO, to finance all or a portion of expansion
capital expenditures in respect of the period from such financing until the earlier to occur of the date the asset commences commercial service and the date that it is abandoned or disposed of; plus
the amount of cash distributions (including incremental distributions on incentive distribution rights) paid in respect of equity issued, other than equity issued in RMP's IPO, to pay the construction period interest on
debt incurred, or to pay construction period distributions on equity issued, to finance the expansion capital expenditures referred to above, in each case, in respect of the period from such financing until the earlier to occur of the date the asset
commences commercial service and the date that it is abandoned or disposed of; less
all of RMP's and its subsidiaries' operating expenditures after RMP's
IPO; less
the amount of cash reserves established by RMP's general partner to provide funds for future operating expenditures; less
all working capital borrowings not repaid within twelve months after having been incurred, or repaid within such twelve-month period with the proceeds of additional working capital borrowings; less
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$30.0 million; plus
all of EQM's and its subsidiaries' cash receipts after the closing of EQM's IPO, excluding cash from interim capital transactions, provided that cash receipts from the
termination of any hedge contract prior to its scheduled settlement or termination date shall be included in equal quarterly installments over the remaining scheduled life of such hedge contract; plus
all of EQM's and its subsidiaries' cash receipts from working capital borrowings made after the end of a quarter but on or before the date of determination of operating surplus for that quarter; plus
the amount of cash distributions (including incremental distributions on incentive distribution rights) paid in respect of equity issued, other than equity issued in EQM's IPO, to finance all or a portion of expansion
capital expenditures in respect of the period from the date that EQM or its subsidiaries enter into a binding obligation to commence the construction, development, replacement, improvement or expansion of a capital asset and ending on the earlier to
occur of the date the capital asset commences commercial service and the date that it is abandoned or disposed of; plus
the amount of cash distributions (including incremental distributions
on incentive distribution rights) paid in respect of equity issued, other than equity issued in EQM's IPO, to pay the construction period interest on debt incurred, or to pay construction period distributions on equity issued, to finance the
expansion capital expenditures referred to above, in each case, in respect of the period from the date that EQM or its subsidiaries enter into a binding obligation to commence the construction, development, replacement, improvement or expansion of a
capital asset and ending on the earlier to occur of the date the capital asset commences commercial service and the date that it is abandoned or disposed of; less
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RMP
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EQM
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any cash loss realized on
disposition of an investment capital expenditure.
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all of EQM's and its
subsidiaries' operating expenditures after the closing of EQM's IPO; less
the amount of cash reserves established by EQM's general partner to
provide funds for future operating expenditures; less
all working capital borrowings not repaid within 12 months after having been incurred, or repaid within such 12-month period with the
proceeds of additional working capital borrowings; less
any cash loss realized on disposition of an investment capital expenditure.
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Definition of Capital Surplus
. Capital surplus is defined in the RMP partnership agreement as any distribution of available cash in excess of RMP's cumulative operating surplus.
Accordingly, except as described above, capital surplus would generally be generated by:
borrowings other than working capital borrowings;
sales of debt and equity securities; and
sales or other dispositions of assets for cash, other than inventory,
accounts receivable and other assets sold in the ordinary course of business or as part of ordinary course retirement or replacement of assets.
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Definition of Capital Surplus.
Capital surplus is defined in the EQM partnership agreement as any distribution of available cash in excess of EQM's cumulative operating surplus. Accordingly, except as
described above, capital surplus would generally be generated by:
borrowings other than working capital borrowings;
sales of debt and equity securities; and
sales or other dispositions of assets, other than inventory, accounts
receivable and other assets sold in the ordinary course of business or as part of ordinary course retirement or replacement of assets.
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Distributions from Operating Surplus to Unitholders.
RMP plans to distribute to the holders of RMP's common units cash from
operating surplus each quarter in an amount equal to $0.1875 per common unit (the minimum quarterly distribution) and RMP's common units are not entitled to any arrearages in the payment of the minimum quarterly distribution on RMP's common units
from prior quarters. RMP will make distributions of cash from operating surplus for any quarter in the following manner:
first, to all unitholders, pro rata, until RMP distributes for each
common unit an amount equal to the minimum quarterly distribution for that quarter;
thereafter, in the manner described in "Incentive Distribution
Rights" below.
RMP's general partner owns a non-economic general partner interest in RMP, which does not entitle it to receive cash distributions. However, its general
partner may in the future own common units or other equity interests in RMP and will be entitled to receive distributions on any such interests.
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Distributions of Available Cash from Operating Surplus to Unitholders.
EQM's common units have the right to receive distributions of available cash
from operating surplus each quarter in an amount equal to $0.3500 per common unit (the minimum quarterly distribution) and are not entitled to any arrearages in the payment of the minimum quarterly distribution on EQM's common units from prior
quarters. EQM will make distributions of available cash from operating surplus for any quarter in the following manner:
first, to EQM's general partner in a percentage equal to its percentage
interest and 100.0% to all unitholders, pro rata, until EQM distributes for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter; and
thereafter, in the
manner described in the below paragraph and in "Incentive Distribution Rights" below.
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RMP
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EQM
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EQM's general partner is entitled to a percentage of all quarterly distributions equal to its then current general partner interest in EQM. As of June 7, 2018, EQM's general partner owns an approximately 1.6% general
partner interest in EQM. EQM's general partner has the right, but not the obligation, to contribute a proportionate amount of capital to EQM in order to maintain its then current general partner interest if EQM issues additional limited partner
interests. EQM's general partner's general partner interest, and the percentage of EQM's cash distributions to which it is entitled from such interest, will be proportionately reduced if EQM issues additional limited partner interests in the future
and EQM's general partner does not contribute a proportionate amount of capital to EQM in order to maintain its general partner interest immediately prior to such issuance. The EQM partnership agreement does not require that EQM's general partner
fund its capital contribution with cash. It may instead fund its capital contribution by the contribution to EQM of common units or other property.
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Distributions from Capital Surplus
.
How Distributions from Capital Surplus Will Be
Made
. RMP is required to make distributions from capital surplus, if any, in the following manner:
first, to all unitholders, pro rata, until the minimum quarterly
distribution is reduced to zero, as described below; and
thereafter, RMP will make all distributions from capital surplus as if they were from operating surplus.
Effect of a Distribution from Capital Surplus
. RMP's partnership agreement treats a distribution of capital surplus as the
repayment of the initial unit price from RMP's IPO, which is a return of capital. Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion as the
distribution of capital surplus to the fair market value of RMP's common units prior to the announcement of the distribution. Because distributions of capital surplus will reduce the minimum quarterly distribution and target distribution levels after
any of these distributions are made, it may be easier for the holder of RMP's incentive distribution rights to receive incentive distributions. However, any distribution of capital surplus before the minimum quarterly distribution is reduced to zero
cannot be applied to the payment of the minimum quarterly distribution.
Once the minimum quarterly distribution and target distribution levels are reduced to zero and any
arrearages are eliminated, all future distributions will be made such that 50% is paid to all unitholders, pro rata, and 50% is paid to the holder or holders of incentive distribution rights, pro rata.
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Distributions from Capital Surplus
.
How Distributions from Capital Surplus Will Be Made
. EQM will
make distributions of available cash from capital surplus, if any, in the following manner:
first, to EQM's general partner and all unitholders, pro rata, until
the minimum quarterly distribution is reduced to zero, as described below under "Effect of a Distribution from Capital Surplus"; and
thereafter, as if such distributions were from operating
surplus.
Effect of a Distribution from Capital Surplus
. The EQM partnership agreement treats a
distribution of capital surplus as the repayment of the initial unit price from EQM's IPO, which is a return of capital. The initial unit price less any distributions of capital surplus per unit is referred to as the "unrecovered initial unit price."
Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion as the corresponding reduction in the unrecovered initial unit price.
Once EQM distributes capital surplus on a unit in an amount equal to the initial unit price:
the minimum quarterly distribution and
the target distribution levels will be reduced to zero for subsequent quarters;
all distributions of available cash will be treated as operating
surplus; and
distributions of available cash will be made to EQM's general partner in a percentage equal to its percentage interest, 48.0% will be made to EQM's general partner as the holder
of the incentive distribution rights, and the remainder will be made to all unitholders, pro rata.
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RMP
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EQM
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Distributions of capital surplus will reduce the minimum quarterly distribution. Because distributions of capital surplus will reduce the minimum quarterly distribution and target distribution levels after any of these
distributioins are made, it may be easier for EQM's general partner, as the holder of EQM's incentive distribution rights, to receive incentive distributions. However, any distribution of capital surplus before the unrecovered initial unit price is
reduced to zero cannot be applied to the payment of the minimum quarterly distribution.
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Incentive Distribution Rights
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Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. The target
distribution levels are based on the amounts of available cash from operating surplus distributed above the minimum quarterly distribution. Rice Midstream GP Holdings LP, an indirect, wholly owned subsidiary of EQT, currently holds the
incentive distribution rights, and has agreed to sell them to EQGP in the IDR purchase, as described in more detail elsewhere in this proxy statement/prospectus.
If, for
any quarter, RMP has distributed cash from operating surplus to its unitholders in an amount equal to the minimum quarterly distribution, then RMP will make additional distributions from operating surplus for that quarter to the unitholders and the
holders of the incentive distribution rights in the following manner:
first, to all unitholders, pro rata, until each unitholder receives a
total of $0.2156 per unit for that quarter (the first target distribution);
second, 85% to all unitholders, pro rata, and 15% to the holders of
RMP's incentive distribution rights, until each unitholder receives a total of $0.2344 per unit for that quarter (the second target distribution);
third, 75% to all unitholders, pro rata, and 25%
to the holders of RMP's incentive distribution rights, until each unitholder receives a total of $0.2813 per unit for that quarter (the third target distribution); and
thereafter, 50% to all
unitholders, pro rata, and 50% to the holders of RMP's incentive distribution rights.
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Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved.
The target distribution levels are based on the amounts of available cash from operating surplus distributed above the minimum quarterly distribution, and the related distribution to EQM's general partner with respect to its general partner interest
in EQM. EQM's general partner currently holds the incentive distribution rights, but may transfer these rights separately from its general partner interest, subject to restrictions in the EQM partnership agreement.
For any quarter that EQM has distributed available cash from operating surplus to its unitholders in an amount equal to the minimum quarterly distribution, EQM will distribute any additional
available cash from operating surplus for that quarter among the unitholders and EQM's general partner in the following manner:
first, 100.0% to EQM's general partner and all unitholders, in
accordance with their respective percentage interests, until each unitholder receives a total of $0.4025 per unit for that quarter (the first target distribution);
second, to EQM's general
partner in a percentage equal to its percentage interest, 13.0% to EQM's general partner as the holder of the incentive distribution rights, and the remainder to all unitholders, pro rata, until each unitholder receives a total of $0.4375 per unit
for that quarter (the second target distribution);
third, to EQM's general partner in a percentage equal to its percentage interest, 23.0% to EQM's general partner as the holder of the incentive
distribution rights, and the remainder to all unitholders, pro rata, until each unitholder receives a total of $0.5250 per unit for that quarter (the third target distribution); and
thereafter, to
EQM's general partner in a percentage equal to its percentage interest, 48.0% to EQM's general partner as the holder of the incentive distribution rights, and the remainder to all unitholders, pro rata.
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RMP
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EQM
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The preceding assumes that EQM's general partner does not transfer its incentive distribution rights.
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Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels
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If RMP combines its common units into fewer common units or subdivides its common units into a greater number of common units, it will proportionately adjust:
the minimum quarterly distribution;
the target distribution levels; and
the initial unit price.
For example, if a two-for-one split of RMP's common units should occur, the minimum quarterly distribution, the target distribution levels and the initial unit price would each be reduced to 50%
of its initial level. RMP will not make any adjustment by reason of the issuance of additional units for cash or property.
In addition, if, as a result of a change in law
or interpretation thereof, RMP or any of its subsidiaries is treated as an association taxable as a corporation or is otherwise subject to additional taxation as an entity for U.S. federal, state, local or non-U.S. income or withholding tax purposes,
RMP's general partner may, in its sole discretion, reduce the minimum quarterly distribution and the target distribution levels for each quarter by multiplying each distribution level by a fraction, the numerator of which is cash for that quarter
(after deducting RMP's general partner's estimate of RMP's additional aggregate liability for the quarter for such income and withholding taxes payable by reason of such change in law or interpretation) and the denominator of which is the sum of
(1) cash for that quarter, plus (2) RMP's general partner's estimate of RMP's additional aggregate liability for the quarter for such income and withholding taxes payable by reason of such change in law or interpretation thereof. To the
extent that the actual tax liability differs from the estimated tax liability for any quarter, the difference will be accounted for in distributions with respect to subsequent quarters.
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If EQM combines its units into fewer units, subdivides its units into a greater number of units or makes a pro rata distribution of additional limited partner interests to its unitholders (but not if EQM issues additional limited partner interests
for cash or property), it will proportionately adjust:
the minimum quarterly distribution;
the target distribution levels;
the unrecovered initial unit price; and
the number of general partner units comprising the general partner
interest.
For example, in the event of a two-for-one split of EQM's common units, the minimum quarterly distribution, the target distribution levels and the unrecovered
initial unit price would each be reduced to 50.0% of their initial levels.
In addition, if legislation is enacted or if existing law is modified or interpreted by the
relevant governmental authority so that EQM or any of its subsidiaries becomes taxable as a corporation or otherwise subject to taxation as an entity for U.S. federal, state, local or non-U.S. income or withholding tax purposes, EQM may, at its
option, reduce the minimum quarterly distribution and the target distribution levels for each quarter by multiplying each distribution level by a fraction, the numerator of which is the available cash for that quarter (after deducting EQM's general
partner's estimate of EQM's additional aggregate liability for the quarter for such income and withholding taxes payable by reason of such change in law or interpretation) and the denominator of which is the sum (1) of available cash for that
quarter, plus (2) EQM's general partner's estimate of EQM's aggregate liability for the quarter for such income and withholding taxes payable by reason of such change in legislation or interpretation. To the extent that the actual tax liability
differs from the estimated tax liability for any quarter, the difference may be accounted for in subsequent quarters.
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RMP
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EQM
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Distributions of Cash Upon Liquidation
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If RMP dissolves in accordance with the RMP partnership agreement, it will sell or otherwise dispose of its assets in a process called a liquidation. RMP will first apply the proceeds of liquidation to the payment of
its creditors. RMP will distribute any remaining proceeds to the unitholders and the holders of the incentive distribution rights, in accordance with their capital account balances, as adjusted to reflect any gain or loss upon the sale or other
disposition of RMP's assets in liquidation.
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If EQM were to dissolve, it would sell its assets or otherwise dispose of its assets in a process called liquidation. It would first apply the proceeds of liquidation to the payment of its creditors in the order of
priority provided in the EQM partnership agreement and by law, and thereafter, distribute any remaining proceeds to the unitholders and EQM's general partner, in accordance with their capital account balances, as adjusted to reflect any gain or loss
upon the sale or other disposition of EQM's assets in liquidation.
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Merger, Consolidation, Conversion, Sale or Other Disposition of Assets
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A merger, consolidation or conversion of RMP requires the prior consent of RMP's general partner. However, RMP's general partner will have no duty or obligation to consent to any merger, consolidation or conversion and may decline to do so in its
sole discretion and free of any duty or obligation whatsoever to RMP or the limited partners, including any duty to act in the best interest of RMP or the limited partners to the fullest extent permitted by applicable law.
In addition, the RMP partnership agreement generally prohibits RMP's general partner, without the prior approval of the holders of a majority of RMP's common units, which we refer to as a unit
majority, from causing RMP to sell, exchange or otherwise dispose of all or substantially all of RMP's or its subsidiaries' assets (taken as a whole) in a single transaction or a series of related transactions, including by way of merger,
consolidation or other combination. RMP's general partner may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of RMP's or its subsidiaries' assets without that approval. RMP's general partner may also
sell all or substantially all of RMP's or its subsidiaries' assets under a foreclosure or other realization upon those encumbrances without such approval. Finally, RMP's general partner may consummate any merger without the prior approval of RMP's
unitholders if RMP is the surviving entity in the transaction, RMP's general partner has received an opinion of counsel regarding limited liability and tax matters, the transaction would not result in a material amendment to the RMP partnership
agreement (other than an amendment that RMP's general partner could adopt without the consent of other partners), each of RMP's units will be an identical unit of RMP following the transaction and the partnership interests to be issued do not exceed
20% of its outstanding partnership interests (other than incentive distribution rights) immediately prior to the transaction.
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A merger, consolidation or conversion of EQM requires the prior consent of EQM's general partner. However, EQM's general partner will have no duty or obligation to consent to any merger, consolidation or conversion and may decline to do so in its
sole discretion and free of any duty or obligation whatsoever to EQM or its limited partners, including any duty to act in the best interest of EQM or its limited partners or otherwise in good faith, to the fullest extent permitted by applicable law.
In addition, the EQM partnership agreement generally prohibits EQM's general partner without the prior approval of the holders of a majority of EQM's common units, which we
refer to as a unit majority, from causing EQM to, among other things, sell, exchange or otherwise dispose of all or substantially all of EQM's or its subsidiaries' assets (taken as a whole) in a single transaction or a series of related transactions,
including by way of merger, consolidation or other combination. EQM's general partner may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of EQM's or its subsidiaries' assets without that approval.
EQM's general partner may also sell any or all of EQM's or its subsidiaries' assets under a foreclosure or other realization upon those encumbrances without that approval. Finally, EQM's general partner may consummate any merger with another limited
liability entity without the prior approval of EQM unitholders if EQM is the surviving entity in the transaction, EQM's general partner has received an opinion of counsel regarding limited liability and tax matters, the transaction would not result
in an amendment to the partnership agreement requiring unitholder approval, each of EQM's units will be an identical unit of EQM following the transaction, and the partnership interests to be issued by EQM in such merger do not exceed 20% of its
outstanding partnership interests (other than incentive distribution rights) immediately prior to the transaction.
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RMP
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EQM
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If the conditions specified in the RMP partnership agreement are satisfied, RMP's general partner may convert RMP or any of its subsidiaries into a new limited liability entity or merge RMP or any of its subsidiaries into, or convey all of RMP's
assets to, a newly formed entity that has no assets, liabilities or operations at such time, if the sole purpose of that conversion, merger or conveyance is to effect a change in RMP's legal form into another limited liability entity, RMP's general
partner has received an opinion of counsel regarding limited liability and tax matters and the governing instruments of the new entity provide the limited partners and RMP's general partner with substantially the same rights and obligations as
contained in the RMP partnership agreement.
RMP's unitholders are not entitled to dissenters' rights of appraisal under the RMP partnership agreement or applicable Delaware
law in the event of a conversion, merger or consolidation, a sale of substantially all of RMP's assets or any other similar transaction or event.
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If the conditions specified in the EQM partnership agreement are satisfied, EQM's general partner may convert EQM or any of its subsidiaries into a new limited liability entity or merge EQM or any of its subsidiaries into, or convey all of EQM's
assets to, a newly formed entity that has no assets, liabilities or operations at such time, if the sole purpose of that conversion, merger or conveyance is to effect a change in EQM's legal form into another limited liability entity, EQM's general
partner has received an opinion of counsel regarding limited liability and tax matters, and EQM's general partner determines that the governing instruments of the new entity provide the limited partners and EQM's general partner with substantially
the same rights and obligations as contained in the EQM partnership agreement.
EQM unitholders are not entitled to dissenters' rights of appraisal under the partnership
agreement or applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of EQM's assets or any other similar transaction or event.
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Election of General Partner and Directors of the General Partner
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Unitholders are not entitled to elect the directors of RMP's general partner.
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Unitholders are not entitled to elect the directors of EQM's general partner.
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Meetings; Voting
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Except as described below regarding a person or group owning 20% or more of any class of units then outstanding, record holders of units on the record date will be entitled to notice of, and to vote at, meetings of RMP's unitholders and to act upon
matters for which approvals may be solicited.
Any action that is required or permitted to be taken by RMP's unitholders may be taken either at a meeting of the unitholders
or, if authorized by RMP's general partner, without a meeting if consents in writing describing the action so taken are signed by holders of the number of units necessary to authorize or take that action at a meeting where all unitholders were
present and voted. Meetings of RMP's unitholders may be called by RMP's general partner or by unitholders owning at least 20% of the outstanding units of the class for which a meeting is proposed. Unitholders may vote either in person or by proxy at
meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has been called, represented in person or by proxy, will constitute a quorum, unless any action by the unitholders requires approval by holders
of a greater percentage of the units, in which case the quorum will be the greater percentage. RMP's general partner may postpone any meeting of RMP's unitholders one or more times for any reason by giving notice to the unitholders entitled to vote
at such meeting. RMP's general partner may also adjourn any meeting of the unitholders one or more times for any reason, including the absence of a quorum, without a vote of the unitholders.
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Except as described below regarding a person or group owning 20% or more of any class of units then outstanding, record holders of units on the record date will be entitled to notice of, and to vote at, meetings of EQM's unitholders and to act upon
matters for which approvals may be solicited.
Any action that is required or permitted to be taken by EQM's unitholders may be taken either at a meeting of the unitholders
or, if authorized by EQM's general partner, without a meeting if consents in writing describing the action so taken are signed by holders of the number of units that would be necessary to authorize or take that action at a meeting where all
unitholders were present and voted. Meetings of EQM's unitholders may be called by EQM's general partner or by unitholders owning at least 20% of the outstanding units of the class for which a meeting is proposed. Unitholders may vote either in
person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has been called represented in person or by proxy will constitute a quorum unless any action by the unitholders requires
approval by holders of a greater percentage of the units, in which case the quorum will be the greater percentage. EQM's general partner may postpone any meeting of EQM's unitholders one or more times for any reason by giving notice to the
unitholders entitled to vote at such meeting. EQM's general partner may also adjourn any meeting of the unitholders one or more times for any reason, including the absence of a quorum, without a vote of the unitholders.
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RMP
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EQM
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Each record holder of a unit has a vote according to his percentage interest in RMP, although additional limited partner interests having special voting rights could be issued. Please read "Issuance of Additional Securities." However, if at
any time any person or group, other than (i) RMP's general partner and its affiliates (including EQT), (ii) a direct transferee of RMP's general partner or its affiliates, (iii) a transferee of such direct transferee who is notified by
RMP's general partner that it will not lose its voting rights, or (iv) any person or group who is notified by RMP's general partner that it will not lose its voting rights, acquires, in the aggregate, beneficial ownership of 20% or more of any
class of units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of RMP's unitholders,
calculating required votes, determining the presence of a quorum or for other similar purposes.
Common units held in nominee or street name account will be voted by the
broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and its nominee provides otherwise.
Any notice, demand, request, report or proxy material required or permitted to be given or made to record holder under the RMP partnership agreement will be delivered to the record holder by RMP or by the transfer agent.
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Each record holder of a unit has a vote according to his percentage interest in EQM, although additional limited partner interests having special voting rights could be issued. Please read "Issuance of Additional Securities." However, if at
any time any person or group, other than (i) EQM's general partner and its affiliates, (ii) a direct transferee of EQM's general partner and its affiliates, (iii) a transferee of such direct transferee who is notified by EQM's general
partner that it will not lose its voting rights or (iv) any person or group with the prior approval of the board of directors of EQM's general partner, acquires, in the aggregate, beneficial ownership of 20% or more of any class of units then
outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of EQM's unitholders, calculating required votes,
determining the presence of a quorum or for other similar purposes. Common units held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement
between the beneficial owner and its nominee provides otherwise.
Any notice, demand, request, report or proxy material required or permitted to be given or made to record
holders under the EQM partnership agreement will be delivered to the record holder by EQM or by the transfer agent.
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Advance Notice Requirements for Nominations and Other Proposals
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Not applicable.
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Not applicable.
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RMP
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EQM
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Withdrawal or Removal of the General Partner
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RMP's general partner may withdraw as general partner in compliance with RMP's partnership agreement after giving 90 days' written notice to RMP's unitholders.
Upon
withdrawal of RMP's general partner under any circumstances, other than as a result of a transfer by RMP's general partner of all or a part of its general partner interest in RMP, the holders of a unit majority may select a successor to that
withdrawing general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability and tax matters cannot be obtained, RMP will be dissolved, wound up and liquidated, unless within a specified period after
that withdrawal the holders of a unit majority agree in writing to continue RMP's business and to appoint a successor general partner. Please read "Dissolution."
RMP's general partner may not be removed unless that removal is for cause and is approved by the vote of the holders of not less than 66
2
/
3
% of RMP's outstanding units, voting together as a single class, including units held
by RMP's general partner and its affiliates, and RMP receives an opinion of counsel regarding limited liability and tax matters. Any removal of RMP's general partner is also subject to the approval of a successor general partner by the vote of the
holders of a majority of the outstanding common units. The ownership of more than 33
1
/
3
% of the outstanding units by RMP's general partner and its affiliates gives them the ability to prevent RMP's general partner's removal.
In the event of the removal of RMP's general partner or withdrawal of RMP's general partner where that withdrawal violates the RMP partnership agreement, a successor
general partner will have the option to purchase the general partner interest and incentive distribution rights of the departing general partner and its affiliates for a cash payment equal to the fair market value of those interests. Under all other
circumstances where RMP's general partner withdraws, the departing general partner will have the option to require the successor general partner to purchase the general partner interest and the incentive distribution rights of the departing general
partner and its affiliates for a cash payment equal to the fair market value of those interests. In each case, this fair market value will be determined by agreement between the departing general partner and the successor general partner. If no
agreement is reached, an independent investment banking firm or other independent expert selected by the departing general partner and the successor general partner will determine the fair market value. Or, if the departing general partner and the
successor general partner cannot agree upon an expert, then an expert chosen by agreement of the experts selected by each of them will determine the fair market value.
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Except as described below, EQM's general partner has agreed not to withdraw voluntarily as EQM's general partner prior to June 30, 2022 without obtaining the approval of the holders of at least a majority of EQM's outstanding common units,
excluding common units held by EQM's general partner and its affiliates, and furnishing an opinion of counsel regarding limited liability and tax matters. On or after June 30, 2022, EQM's general partner may withdraw as general partner without
first obtaining approval of any unitholder by giving 90 days' written notice to EQM's unitholders, and that withdrawal will not constitute a violation of the EQM partnership agreement. Notwithstanding the foregoing, EQM's general partner may
withdraw without unitholder approval upon 90 days' notice to EQM's unitholders if at least 50% of the outstanding units are held or controlled by one person and its affiliates other than EQM's general partner and its affiliates. In addition, the
EQM partnership agreement permits EQM's general partner in some instances to sell or otherwise transfer all of its general partner interest in EQM without the approval of EQM's unitholders. Please read "Transfer of General Partner Interests"
and "Transfer of Incentive Distribution Rights."
Upon voluntary withdrawal of EQM's general partner by giving written notice to the other partners, the holders of a
unit majority may select a successor to that withdrawing general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability and tax matters cannot be obtained, EQM will be dissolved, wound up and
liquidated, unless within a specified period after that withdrawal, the holders of a unit majority agree to continue EQM's business by appointing a successor general partner. Please read "Dissolution."
EQM's general partner may not be removed unless that removal is approved by the vote of the holders of not less than 66
2
/
3
% of EQM's outstanding units, voting together
as a single class, including units held by EQM's general partner and its affiliates, and EQM receives an opinion of counsel regarding limited liability and tax matters. Any removal of EQM's general partner is also subject to the approval of a
successor general partner by the vote of the holders of a majority of EQM's outstanding common units. The ownership of more than 33
1
/
3
% of EQM's outstanding units by EQM's general partner and its affiliates would give them
the practical ability to prevent EQM's general partner's removal.
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If the options described above are not exercised by either the departing general partner or the successor general partner, the departing general partner's general partner interest and all its and its affiliates' incentive distribution rights will
automatically be converted into common units pursuant to a valuation of those interests as determined by an investment banking firm or other independent expert selected in the manner described above.
In addition, RMP will be required to reimburse the departing general partner for all amounts due the departing general partner, including, without limitation, all employee-related liabilities,
including severance liabilities, incurred as a result of the termination of any employees employed for RMP's benefit by the departing general partner or its affiliates.
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The EQM partnership agreement also provides that if EQM's general partner is removed as EQM's general partner under circumstances where cause does not exist and units held by EQM's general partner and its affiliates are not voted in favor of that
removal, EQM's general partner will have the right to convert its general partner interest and its incentive distribution rights into common units or to receive cash in exchange for those interests based on the fair market value of those interests as
of the effective date of its removal.
In the event of removal of a general partner under circumstances where cause exists or withdrawal of a general partner where that
withdrawal violates the EQM partnership agreement, a successor general partner will have the option to purchase the general partner interest and incentive distribution rights of the departing general partner for a cash payment equal to the fair
market value of those interests. Under all other circumstances where a general partner withdraws or is removed by the unitholders, the departing general partner will have the option to require the successor general partner to purchase the general
partner interest of the departing general partner and its incentive distribution rights for fair market value. In each case, this fair market value will be determined by agreement between the departing general partner and the successor general
partner. If no agreement is reached, an independent investment banking firm or other independent expert selected by the departing general partner and the successor general partner will determine the fair market value. Or, if the departing general
partner and the successor general partner cannot agree upon an expert, then an expert chosen by agreement of the experts selected by each of them will determine the fair market value.
If the option described above is not exercised by either the departing general partner or the successor general partner, the departing general partner will become a limited partner and its general partner interest and its incentive
distribution rights will automatically convert into common units pursuant to a valuation of those interests as determined by an investment banking firm or other independent expert selected in the manner described in the preceding paragraph.
In addition, EQM will be required to reimburse the departing general partner for all amounts due the departing general partner, including, without limitation, all employee-related
liabilities, including severance liabilities, incurred for the termination of any employees employed by the departing general partner or its affiliates for EQM's benefit.
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Transfer of General Partner Interests
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At any time, RMP's general partner may transfer all or any of its general partner interest to another person without the approval of RMP's unitholders. As a
condition of this transfer, the transferee must, among other things, assume the rights and duties of RMP's general partner, agree to be bound by the provisions of the RMP partnership agreement and furnish an opinion of counsel regarding limited
liability and tax matters.
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Except for the transfer by EQM's general partner of all, but not less than all, of its general partner interest to:
an affiliate of EQM's general partner (other than an individual); or
another entity as part of the merger or consolidation of EQM's general partner with or into such entity or the transfer by EQM's general partner of all or substantially all of
its assets to such entity;
EQM's general partner may not transfer all or any of its general partner interest to another person prior to June 30, 2022 without the
approval of the holders of at least a majority of EQM's outstanding common units, excluding common units held by EQM's general partner and its affiliates. As a condition of this transfer, the transferee must, among other things, assume the rights and
duties of EQM's general partner, agree to be bound by the provisions of the EQM partnership agreement, and furnish an opinion of counsel regarding limited liability and tax matters.
On or after June 30, 2022, EQM's general partner may at any time transfer all or any of its general partner interest to one or more persons, without unitholder approval.
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Transfer of Incentive Distribution Rights
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At any time, RMP's general partner may sell or transfer its incentive distribution rights to an affiliate or third party without the approval of RMP's unitholders.
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At any time, EQM's general partner may sell or transfer its incentive distribution rights to an affiliate or third party without the approval of EQM's unitholders.
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Limited Preemptive Right
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Except as provided in the following sentences or as otherwise provided in a separate agreement by RMP, no person shall have any preemptive, preferential or other similar right with respect to the issuance of any
limited partner interest, whether unissued, held in the treasury or hereafter created. RMP's general partner shall have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase partnership interests
from RMP whenever, and on the same terms that, RMP issues limited partner interests to persons other than RMP's general partner and its affiliates, to the extent necessary to maintain the percentage interests of RMP's general partner and its
affiliates equal to that which existed immediately prior to the issuance of such limited partner interests. The determination by RMP's general partner to exercise (or refrain from exercising) its right pursuant to the immediately preceding sentence
shall be a determination made in its individual capacity.
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Except as provided in the following sentences or as otherwise provided in a separate agreement by EQM, no person shall have any preemptive, preferential or other similar right with respect to the issuance of any
limited partner interest, whether unissued, held in the treasury or hereafter created. EQM's general partner shall have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase partnership interests
from EQM whenever, and on the same terms that, EQM issues limited partner interests to persons other than EQM's general partner and its affiliates, to the extent necessary to maintain the percentage interests of EQM's general partner and its
affiliates equal to that which existed immediately prior to the issuance of such limited partner interests. The determination by EQM's general partner to exercise (or refrain from exercising) its right pursuant to the immediately preceding sentence
shall be a determination made in its individual capacity.
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Additionally, upon the issuance of additional limited partner interests (other than the issuance of common units in connection with a reset of the incentive distribution target levels or the issuance of common units upon
conversion of outstanding partnership interests), EQM's general partner will be entitled, but not required, to elect to maintain its general partner interest in EQM immediately prior to such issuance, which election will be immediately effective. In
the event of such an election, EQM's general partner will be required, upon EQM's demand, but in any case no later than the record date for the distribution of available cash with respect to the quarter in which such election is made, to contribute a
proportionate amount of capital to EQM to the extent necessary to maintain its general partner interest in EQM immediately prior to such issuance. EQM's general partner's interest in EQM will be reduced if EQM issues additional limited partner
interests in the future and EQM's general partner does not elect to maintain its then general partner interest in EQM.
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Limited Call Right
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If at any time RMP's general partner and its affiliates (including EQT) own more than 80% of the then-issued and outstanding limited partner interests of any class, RMP's general partner will have the right, which it may assign in whole or in part
to any of its affiliates or to RMP, to acquire all, but not less than all, of the limited partner interests of such class held by unaffiliated persons, as of a record date to be selected by RMP's general partner, on at least 10, but not more than 60,
days' notice.
The purchase price in the event of this purchase is the greater of:
the highest price paid by RMP's general
partner or any of its affiliates for any limited partner interests of the class purchased within the 90 days preceding the date on which RMP's general partner first mails notice of its election to purchase those limited partner interests; and
the average of the daily closing prices of limited partner interests of the class purchased over the 20 trading days preceding the date that is three days before the date the
notice is mailed.
As a result of RMP's general partner's right to purchase outstanding limited partner interests, a holder of limited partner interests may have his limited
partner interests purchased at a price that may be lower than market prices at various times prior to such purchase or lower than a unitholder may anticipate the market price to be in the future.
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If at any time EQM's general partner and its affiliates own more than 80% of the then-issued and outstanding limited partner interests of any class, EQM's general partner will have the right, which it may assign in whole or in part to any of its
affiliates or to EQM, to acquire all, but not less than all, of the limited partner interests of such class held by unaffiliated persons as of a record date to be selected by EQM's general partner, on at least 10, but not more than 60 days'
notice.
The purchase price in the event of this purchase is the greater of:
the highest price paid by either of EQM's
general partner or any of its affiliates for any limited partner interests of the class purchased within the 90 days preceding the date on which EQM's general partner first mails notice of its election to purchase those limited partner
interests; and
the average of the daily closing prices of limited partner interests of the class purchased over the 20 trading days preceding the date that is three business days before the
date the notice is mailed.
As a result of EQM's general partner's right to purchase outstanding limited partner interests, a holder of limited partner interests may have
his limited partner interests purchased at a price that may be lower than market prices at various times prior to such purchase or lower than a unitholder may anticipate the market price to be in the future.
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Amendment of Partnership Agreement
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General
. Amendments to the RMP partnership agreement may be proposed only by RMP's general partner. However, RMP's general partner will have no duty or obligation to propose any
amendment and may decline to do so in its sole discretion and, to the fullest extent permitted by applicable law, free of any duty or obligation whatsoever to RMP or the limited partners, including any duty to act in the best interest of RMP or the
limited partners. In order to adopt a proposed amendment, other than the amendments discussed below, RMP's general partner is required to seek written approval of the holders of the number of units required to approve the amendment or to call a
meeting of the unitholders to consider and vote upon the proposed amendment. Except as described below, an amendment must be approved by a unit majority.
Prohibited Amendments
. No amendment may be made that would:
enlarge the obligations of any limited partner without its consent,
unless approved by at least a majority of the type or class of limited partner interests so affected; or
enlarge the obligations of, restrict in any way any action by or
rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by RMP to its general partner or any of its affiliates without the consent of RMP's general partner, which consent may be given or withheld at its option.
The provision of RMP's partnership agreement preventing the amendments having the effects described in the clauses above can be amended upon the approval of the holders of
at least 90% of RMP's outstanding units, voting as a single class (including units owned by RMP's general partner and its affiliates).
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General
. Amendments to the EQM partnership agreement may be proposed only by EQM's general partner. However, EQM's general partner will have no duty or obligation to propose any amendment and may
decline to do so, to the fullest extent permitted by applicable law, free of any duty or obligation whatsoever to EQM or the limited partners, including any duty to act in the best interest of EQM or the limited partners or otherwise in good faith.
In order to adopt a proposed amendment, other than the amendments discussed below, EQM's general partner is required to seek written approval of the holders of the number of units required to approve the amendment or call a meeting of the unitholders
to consider and vote upon the proposed amendment. Except as described below, an amendment must be approved by a unit majority.
Prohibited
Amendments
. No amendment may be made that would:
enlarge the obligations of any limited partner without its consent,
unless approved by at least a majority of the type or class of limited partner interests so affected; or
enlarge the obligations of, restrict in any way any action by or
rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by EQM to EQM's general partner or any of its affiliates without its consent, which consent may be given or withheld at its option.
The provisions of the EQM partnership agreement preventing the amendments having the effects described in either of the clauses above can be amended upon the approval of the holders of at least
90% of EQM's outstanding units voting together as a single class (including units owned by EQM's general partner and its affiliates).
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No Unitholder Approval
. The general partner may generally make amendments to the RMP partnership agreement without the approval of any limited partner to reflect:
a change in RMP's name, the location of its principal place of business, its registered agent or its registered office;
the admission, substitution, withdrawal or removal of partners in accordance with the RMP partnership agreement;
a change that
RMP's general partner determines to be necessary or appropriate to qualify or continue RMP's qualification as a limited partnership or other entity in which the limited partners have limited liability under the laws of any state or to ensure that
neither RMP nor any of its subsidiaries will be treated as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes (to the extent not already so treated or taxed);
an amendment that is necessary, in the opinion of RMP's counsel, to prevent RMP or RMP's general partner or its directors, officers, agents or trustees from in any manner being
subjected to the provisions of the Investment Company Act of 1940, the Investment Advisers Act of 1940 or "plan asset" regulations adopted under the Employee Retirement Income Security Act of 1974 (ERISA), whether or not substantially similar to plan
asset regulations currently applied or proposed by the United States Department of Labor;
an amendment that RMP's general partner determines to be necessary or
appropriate in connection with the creation, authorization or issuance of additional partnership interests, derivative instruments relating to partnership interests or the right to acquire partnership interests;
an amendment expressly permitted in the RMP partnership agreement to be made by RMP's general partner acting alone;
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No Unitholder Approval
. EQM's general partner may generally make amendments to the EQM partnership agreement without the approval of any limited partner to reflect:
a change in EQM's name, the location of its principal office, its registered agent or its registered office;
the admission,
substitution, withdrawal or removal of partners in accordance with the EQM partnership agreement;
a change that EQM's general partner determines to be necessary or
appropriate to qualify or continue to qualify EQM as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or to ensure that neither EQM nor any of its subsidiaries will be treated as
an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes (to the extent not already so treated or taxed);
an amendment that is necessary, in the
opinion of EQM's counsel, to prevent EQM or its general partner or its directors, officers, agents or trustees from, in any manner, being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisors Act of 1940, or "plan
asset" regulations adopted under ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor;
an amendment that
EQM's general partner determines to be necessary or appropriate for the authorization or issuance of additional partnership interests;
an amendment expressly permitted in EQM's partnership
agreement to be made by EQM's general partner acting alone;
an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of the EQM partnership
agreement;
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an amendment effected,
necessitated or contemplated by a merger agreement that has been approved under the terms of the RMP partnership agreement;
any amendment that RMP's general partner determines to be necessary or
appropriate for the formation by RMP of, or RMP's investment in, any corporation, partnership, joint venture, limited liability company or other entity, in connection with RMP's conduct of activities permitted by the RMP partnership agreement;
a change in RMP's fiscal year or taxable year and any other changes that RMP's general partner determines to be necessary or appropriate as a result of such change;
conversions into, mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the
conversion, merger or conveyance other than those it receives by way of the conversion, merger or conveyance; or
any other amendments substantially similar to any of the matters
described above.
In addition, RMP's general partner may make amendments to the RMP partnership agreement, without the approval of any limited partner, if RMP's general
partner determines that those amendments:
do not adversely affect in any material respect the limited partners, considered as a whole, or any particular class of partnership interests as
compared to other classes of partnership interests;
are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any U.S. federal or state agency or judicial authority or contained in any U.S. federal or state statute;
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an amendment that EQM's
general partner determines to be necessary or appropriate to reflect and account for the formation by EQM of, or EQM's investment in, any corporation, partnership, joint venture, limited liability company or other entity, in connection with EQM's
conduct of activities permitted by the EQM partnership agreement;
a change in EQM's fiscal year or taxable year and any other changes
that EQM's general partner determines to be necessary or appropriate as a result of such change;
conversions into, mergers with or conveyances to another limited
liability entity that is newly formed and has no assets, liabilities or operations at the time of the conversion, merger or conveyance other than those it receives by way of the conversion, merger or conveyance; or
any other amendments substantially similar to any of the matters described in the clauses above.
In addition, EQM's general partner may make any amendment to the EQM partnership agreement without the approval of any limited partner if EQM's general partner determines that the amendment:
does not adversely affect in any material respect the limited partners considered as a whole or any particular class of partnership interests as compared to other classes of
partnership interests;
is necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any U.S. federal or state
agency or judicial authority or contained in any U.S. federal or state statute;
is necessary or appropriate to facilitate the trading of common units
or to comply with any rule, regulation, guideline or requirement of any securities exchange on which EQM's common units are or will be listed or admitted to trading;
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are necessary or
appropriate to facilitate the trading of RMP's common units or to comply with any rule, regulation, guideline or requirement of any securities exchange on which RMP's common units are or will be listed for trading;
are necessary or appropriate for any action taken by RMP's general partner relating to splits or combinations of units under the provisions of the RMP partnership agreement; or
are required to effect the intent of the provisions of the RMP partnership agreement or are otherwise contemplated by the RMP partnership agreement.
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is necessary or
appropriate for any action taken by EQM's general partner relating to distributions in kind, splits or combinations of units under the provisions of the EQM partnership agreement; or
is required
to effect the intent of the provisions of the EQM partnership agreement or is otherwise contemplated by the EQM partnership agreement.
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Opinion of Counsel and Unitholder Approval
. Any amendment that RMP's general partner determines adversely affects in any material respect one or more particular classes of limited
partners, and is not permitted to be adopted by RMP's general partner without limited partner approval, will require the approval of at least a majority of the type or class of partnership interests so affected, but no vote will be required by any
class or classes of limited partners that RMP's general partner determines are not adversely affected in any material respect.
Any such amendment that would have a material
adverse effect on the rights or preferences of any type or class of outstanding partnership interests in relation to other classes of partnership interests will require the approval of at least a majority of the type or class of partnership interests
so affected. Any such amendment that would reduce the voting percentage required to take any action other than to remove RMP's general partner or call a meeting of RMP's unitholders is required to be approved by the affirmative vote of unitholders
whose aggregate outstanding units constitute not less than the voting requirement sought to be reduced. Any such amendment that would increase the percentage of units required to remove RMP's general partner or call a meeting of RMP's unitholders
must be approved by the affirmative vote of unitholders whose aggregate outstanding units constitute not less than the percentage sought to be increased.
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Opinion of Counsel and Unitholder Approval
. In addition to the above restrictions, any amendment that would have a material adverse effect on the rights or preferences of any type or class of
partnership interests in relation to other classes of partnership interests will require the approval of at least a majority of the type or class of partnership interests so affected.
Any amendment that would reduce the percentage of units required to take any action, other than to remove EQM's general partner or call a meeting of EQM's unitholders, must be approved by the affirmative vote of unitholders whose
aggregate outstanding units constitute not less than the percentage sought to be reduced. Any amendment that would increase the percentage of units required to remove EQM's general partner must be approved by the affirmative vote of unitholders whose
aggregate outstanding units constitute not less than 90% of EQM's outstanding units. Any amendment that would increase the percentage of units required to call a meeting of EQM's unitholders must be approved by the affirmative vote of unitholders
whose aggregate outstanding units constitute at least a majority of EQM's outstanding units.
For amendments of the type not requiring unitholder approval, EQM's general
partner will not be required to obtain an opinion of counsel that an amendment will neither result in a loss of limited liability to the limited partners nor result in EQM being treated as a taxable entity for U.S. federal income tax
purposes.
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For amendments of the type not requiring unitholder approval, RMP's general partner will not be required to obtain an opinion of counsel that an amendment will neither result in a loss of limited liability to the limited partners nor result in RMP
being treated as a taxable entity for U.S. federal income tax purposes.
No other amendments to RMP's partnership agreement will become effective without the approval of
holders of at least 90% of RMP's outstanding units, voting as a single class, unless RMP first obtains an opinion of counsel to the effect that the amendment will not affect the limited liability under applicable law of any of RMP's limited
partners.
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No other amendments to the EQM partnership agreement will become effective without the approval of holders of at least 90% of EQM's outstanding units voting as a single class unless EQM first obtains an opinion of counsel
to the effect that the amendment will not affect the limited liability under applicable law of any of EQM's limited partners.
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Indemnification
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Under the RMP partnership agreement, in most circumstances, RMP will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages or similar events:
RMP's general partner;
any departing general partner;
any person who is or was an affiliate of a general partner or any departing general partner;
any person who is or was a
manager, managing member, general partner, director, officer, employee, agent, fiduciary or trustee of RMP, its subsidiaries, its general partner, any departing general partner or any of their affiliates;
any person who is or was serving as a manager, managing member, general partner, officer, director, employee, agent, fiduciary or trustee of another person owing a fiduciary
duty to RMP or its subsidiaries at the request of RMP's general partner, any departing general partner or any of their affiliates;
any person who controls RMP's general partner or any
departing general partner; and
any other person designated by RMP's general partner.
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Under the EQM partnership agreement, in most circumstances, EQM will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages or similar events:
EQM's general partner;
any departing general partner;
any person who is or was an affiliate of EQM's general partner or any departing general partner;
any person who is or was a
director, officer, managing member, manager, general partner, fiduciary or trustee of EQM, its subsidiaries, its general partner, any departing general partner or any of their affiliates;
any person who is or was serving as director, officer, managing member, manager, general partner, fiduciary or trustee of another person owing a fiduciary duty to EQM or any of
its subsidiaries at the request of EQM's general partner or any departing general partner or any of their affiliates; and
any other person designated by EQM's general partner.
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Any indemnification under these provisions will only be out of RMP's assets. Unless it otherwise agrees, RMP's general partner will not be personally liable for, or have any obligation to contribute or lend funds or
assets to RMP to enable RMP to effectuate, indemnification. RMP may purchase, and has purchased, insurance against liabilities asserted against and expenses incurred by persons for RMP's activities, regardless of whether it would have the power to
indemnify the person against liabilities under the RMP partnership agreement.
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Any indemnification under these provisions will only be out of EQM's assets. Unless it otherwise agrees, EQM's general partner will not be personally liable for, or have any obligation to contribute or lend funds or
assets to EQM to enable it to effectuate, indemnification. EQM's general partner may purchase, and has purchased insurance against liabilities asserted against and expenses incurred by persons for EQM's activities, regardless of whether EQM would
have the power to indemnify the person against such liabilities under the EQM partnership agreement.
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Conflicts of Interest
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Whenever a potential conflict of interest exists or arises between RMP's general partner or any of its affiliates, on the one hand, and RMP, its subsidiaries or any RMP partner, any other person who acquires an interest in a parnership interest of
RMP or any other person who is bound by the RMP partnership agreement, on the other hand, RMP's general partner may in its discretion submit any resolution, course of action with respect to or causing such conflict of interest or transaction:
for approval by a majority of the members of the RMP Conflicts Committee, or, if the RMP Conflicts Committee has only one member, the sole member of the RMP Conflicts
Committee; or
for approval by the vote of a majority of RMP's common units (excluding common units owned by RMP's general partner or its affiliates).
If any resolution, course of action or transaction:
receives the approval of the RMP Conflicts Committee described above;
or
receives approval of a majority of RMP's outstanding common units (excluding common units owned by RMP's general partner or its affiliates);
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Unless otherwise expressly provided in the EQM partnership agreement or any of its subsidiaries' governing documents, whenever a potential conflict of interest exists or arises between EQM's general partner or any of its affiliates, on the one hand,
and EQM, any of its subsidiaries or any EQM partner, on the other, any resolution or course of action by the EQM's general partner or its affiliates in respect of such conflict of interest shall be permitted and deemed approved by all of EQM's
partners, and shall not constitute a breach of the EQM partnership agreement, of any subsidiary governing document, of any agreement contemplated therein, or of any duty stated or implied by law or equity, if the resolution or course of action in
respect of such conflict of interest is:
approved by a majority of the members of the EQM Conflicts Committee acting in good faith;
approved by the vote of a majority of EQM's outstanding common units (excluding common units owned by EQM's general partner and its affiliates);
determined by the board of directors of EQM's general partner to be on terms no less favorable to EQM than those generally being provided to or available from unrelated third
parties; or
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then such resolution, course of action or transaction shall be conclusively deemed to be approved by RMP, all RMP partners, each person who acquires an interest in a partnership interest of RMP and each other person who
is bound by the RMP partnership agreement, and shall not constitute a breach of the RMP partnership agreement, any of its subsidiaries' governing documents, any agreement contemplated therein, or any fiduciary or other duty or obligation existing at
law, in equity or otherwise or obligation of any type whatsoever.
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determined by the board
of directors of EQM's general partner to be fair and reasonable to EQM, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to EQM).
EQM's general partner shall be authorized but not required in connection with its resolution of such conflict of interest to seek approval by a majority of the members of
the EQM Conflicts Committee acting in good faith or unitholder approval of such resolution, and EQM's general partner may also adopt a resolution or course of action that has not received EQM Conflicts Committee or unitholder approval.
|
Change of Management Provisions
|
The RMP partnership agreement contains specific provisions that are intended to discourage a person or group from attempting to remove RMP's general partner as general partner or from otherwise changing RMP's
management. If any person or group, other than RMP's general partner and its affiliates, acquires beneficial ownership of 20% or more of any class of RMP's units, that person or group loses voting rights on all of its units. This loss of voting
rights does not apply to (i) RMP's general partner and its affiliates (including EQT), (ii) a direct transferee of RMP's general partner or its affiliates, (iii) a transferee of such direct transferee who is notified by RMP's general
partner that it will not lose its voting rights or (iv) any person or group who is notified by RMP's general partner that it will not lose its voting rights. Please read "Meetings; Voting."
|
|
EQM's partnership agreement contains specific provisions that are intended to discourage a person or group from attempting to remove EQM's general partner or otherwise change EQM's management. If any person or group
other than EQM's general partner and its affiliates acquires beneficial ownership of 20% or more of any class of EQM's units, that person or group loses voting rights on all of its units. This loss of voting rights does not apply to (i) EQM's
general partner and its affiliates, (ii) a direct transferee of EQM's general partner and its affiliates, (iii) a transferee of such direct transferee who is notified by EQM's general partner that it will not lose its voting rights or
(iv) any person or group with the prior approval of the board of directors of EQM's general partner. Please read "Meeting; Voting."
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RMP
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|
EQM
|
The RMP partnership agreement also provides that if RMP's general partner withdraws without violating the RMP partnership agreement, RMP's general partner will have the right to require the successor general partner
to purchase the general partner interest and incentive distribution rights of RMP's general partner and its affiliates for a cash payment equal to the fair market value of those interests. If RMP's general partner does not exercise this right, the
general partner interest and incentive distribution rights held by it and its affiliates will automatically convert into common units. Please read "Withdrawal or Removal of the General Partner" for further discussion of certain consequences of
the withdrawal or removal of RMP's general partner.
|
|
The EQM partnership agreement also provides that if EQM's general partner is removed as EQM's general partner under circumstances where cause does not exist or if EQM's general partner withdraws without violating the
EQM partnership agreement, EQM's general partner will have the right to convert its general partner units and its incentive distribution rights into common units or to receive cash in exchange for those interests based on the fair market value of
those interests as of the effective date of its removal. Please read "Withdrawal or Removal of the General Partner" for further discussion of certain consequences of the withdrawal or removal of EQM's general partner.
|
Dissolution
|
RMP will continue as a limited partnership until dissolved, wound up and terminated under the RMP partnership agreement and the Delaware LP Act. RMP will dissolve upon:
|
|
EQM will continue as a limited partnership until dissolved, wound up and terminated under the EQM partnership agreement and the Delaware LP Act. EQM will dissolve upon:
|
the election of its
general partner to dissolve RMP, if approved by the holders of units representing a unit majority;
|
|
the election of EQM's
general partner to dissolve EQM, if approved by the holders of units representing a unit majority;
|
there being no limited
partners, unless RMP is continued without dissolution in accordance with the Delaware LP Act;
|
|
there being no limited
partners, unless EQM is continued without dissolution in accordance with applicable Delaware law;
|
the entry of a decree of
judicial dissolution of RMP; or
|
|
the entry of a decree of
judicial dissolution of EQM; or
|
the withdrawal or removal
of RMP's general partner or any other event that results in its ceasing to be RMP's general partner other than by reason of a transfer of its general partner interest in accordance with the RMP partnership agreement or its withdrawal or removal
following the approval and admission of a successor.
|
|
the withdrawal or removal
of EQM's general partner or any other event that results in its ceasing to be EQM's general partner, other than by reason of a transfer of its general partner interest in accordance with the EQM partnership agreement or withdrawal or removal followed
by approval and admission of a successor.
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|
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RMP
|
|
EQM
|
Upon a dissolution under the last clause above, the holders of a unit majority may also elect, within specific time limitations, to continue RMP's business on the same terms and conditions described in the RMP partnership agreement by appointing as
a successor general partner an entity approved by the holders of units representing a unit majority, subject to RMP's receipt of an opinion of counsel to the effect that:
the action would not result
in the loss of limited liability under Delaware law of any limited partner; and
neither the partnership nor any of its subsidiaries would be treated
as an association taxable as a corporation or otherwise be taxable as an entity for U.S. federal income tax purposes upon the exercise of that right to continue (to the extent not already so treated or taxed).
|
|
Upon a dissolution under the last clause above, the holders of a unit majority may also elect, within specific time limitations, to continue EQM's business on the same terms and conditions described in the EQM partnership agreement by appointing as
a successor general partner an entity approved by the holders of units representing a unit majority, subject to EQM's receipt of an opinion of counsel to the effect that:
the action would not result
in the loss of limited liability of any limited partner; and
neither EQM nor any of its subsidiaries would be treated as an association taxable as a corporation or otherwise be taxable as an entity
for U.S. federal income tax purposes upon the exercise of that right to continue (to the extent not already so treated or taxed).
|
Liquidation and Distribution of Proceeds
|
Upon RMP's dissolution, unless RMP's business is continued, the liquidator authorized to wind up its affairs will, acting with all of the powers of RMP's general partner that are necessary or appropriate, liquidate
RMP's assets and apply the proceeds of the liquidation as described in "Distributions of Cash Upon Liquidation." The liquidator may defer liquidation or distribution of RMP's assets for a reasonable period of time or distribute assets to
partners in kind if it determines that a sale would be impractical or would cause undue loss to RMP's partners.
|
|
Upon EQM's dissolution, unless EQM's business is continued, the liquidator authorized to wind up EQM's affairs will act with all of the powers of EQM's general partner that are necessary or appropriate to liquidate
EQM's assets and apply the proceeds of the liquidation as described in "Distributions of Cash Upon Liquidation." The liquidator may defer liquidation or distribution of EQM's assets for a reasonable period of time or distribute assets to
partners in kind if it determines that a sale would be impractical or would cause undue loss to EQM's partners.
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RMP
|
|
EQM
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Redemption of Ineligible Holders
|
|
|
|
If RMP's general partner, with the advice of counsel, determines RMP or any of its subsidiaries is subject to U.S. federal, state or local laws or regulations that create a substantial risk of cancellation or forfeiture of any property that RMP or
any of its subsidiaries has an interest in because of the nationality, citizenship or other related status of any limited partner (or its owners, to the extent relevant), then RMP's general partner may adopt such amendments to the RMP partnership
agreement as it determines necessary or advisable to:
obtain proof of the nationality, citizenship or other related status of RMP's limited partners (or their owners, to the extent relevant); and
permit RMP to redeem the units held by any person whose nationality, citizenship or other related status creates substantial risk of cancellation or forfeiture of any property
or who fails to comply with the procedures instituted by RMP's general partner to obtain proof of the nationality, citizenship or other related status. The redemption price in the case of such a redemption will be the average of the daily closing
prices per unit for the 20 consecutive trading days immediately prior to the date set for redemption.
|
|
In order to avoid any material adverse effect on the maximum applicable rates that can be charged to customers by EQM or its subsidiaries on assets that are subject to regulation by the FERC or an analogous regulatory body, EQM's general partner may
at any time require any or all limited partners or transferees of limited partners to certify that such limited partner is an entity:
whose, or whose owners', U.S. federal income tax status (or
lack of proof thereof) does not have or is not reasonably likely to have, as determined by EQM's general partner, a material adverse effect on the rates that can be charged to customers by EQM or its subsidiaries with respect to assets that are
subject to regulation by the FERC; or
as to whom EQM's general partner cannot make the determination above, if EQM's general partner determines that it is in EQM's best interest to permit such
individual or entity to own interests in EQM.
Furthermore, EQM's general partner may at any time request limited partners or transferees of limited partners to certify as
to, or provide other information with respect to, their nationality, citizenship or other related status in order to avoid a substantial risk of cancellation or forfeiture of any property in which EQM or its subsidiaries have an interest as the
result of any U.S. federal, state or local law or regulation.
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|
|
RMP
|
|
EQM
|
To avoid any adverse effect on the maximum applicable rates chargeable to customers by RMP or any of its future subsidiaries, or in order to reverse an adverse determination that has occurred regarding such maximum rate, the RMP partnership
agreement provides RMP's general partner the power to amend the RMP partnership agreement. If RMP's general partner, with the advice of counsel, determines that the U.S. federal income tax status (or lack of proof thereof) of one or more of RMP's
limited partners (or their owners, to the extent relevant), has, or is reasonably likely to have, a material adverse effect on the maximum applicable rates chargeable to customers by RMP or its subsidiaries, then RMP's general partner may adopt such
amendments to the RMP partnership agreement as it determines necessary or advisable to:
obtain proof of the U.S. federal income tax status of RMP's limited
partners (and their owners, to the extent relevant); and
permit RMP to redeem the units held by any person whose tax status has or is reasonably likely to have a material adverse effect on the
maximum applicable rates or who fails to comply with the procedures instituted by RMP's general partner to obtain proof of such person's U.S. federal income tax status. The redemption price in the case of such a redemption will be the average of the
daily closing prices per unit for the 20 consecutive trading days immediately prior to the date set for redemption.
|
|
If a limited partner fails to furnish the certification or other requested information within 30 days, falsely certificates as to its status or, if EQM's general partner determines upon review of such certification or other information, that a
limited partner does not meet the status set forth in the certification, EQM will have the right to redeem all of the limited partner interests held by such limited partner at a redemption price equal to the average of the daily closing prices per
unit for the 20 consecutive trading days preceding the date set for redemption.
The purchase price will be paid in cash or by delivery of a promissory note, as determined
by EQM's general partner. Any such promissory note will bear interest at the rate of 5.0% annually and be payable in three equal annual installments of principal and accrued interest, commencing one year after the redemption date. Further, the units
will not be entitled to any allocations of income or loss, distributions or voting rights while held by such unitholder.
|
Transfer of Common Units
|
|
|
|
Upon acceptance of the transfer of common units in accordance with the RMP partnership agreement, the transferee of common units shall be admitted as a limited partner with respect to the common units transferred when such transfer is reflected in
RMP's register and such limited partner becomes the record holder of the common units so transferred. Each transferee, whether or not such transferee executes the RMP partnership agreement:
will become bound;
|
|
Upon acceptance of the transfer of common units in accordance with the EQM partnership agreement, each transferee of common units shall be admitted as a limited partner with respect to the common units transferred when such transfer is reflected in
EQM's register and such limited partner becomes the record holder of the common units so transferred. Each transferee, whether or not such transferee executes the EQM partnership agreement:
will become bound and will be deemed to have agreed to be bound by the terms and conditions of the EQM partnership agreement;
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|
|
|
RMP
|
|
EQM
|
and will be deemed to have
agreed to be bound by the terms and conditions of the RMP partnership agreement; and
represents that the transferee has the capacity, power and authority
to enter into the RMP partnership agreement; and
makes the consents, acknowledgements and waivers contained in the RMP partnership agreement.
RMP is entitled to treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holder's rights are limited solely to those that it has against the nominee
holder as a result of any agreement between the beneficial owner and the nominee holder.
Common units are securities and any transfers are subject to the laws governing the
transfer of securities. Until a common unit has been transferred on RMP's books, RMP and the transfer agent may treat the record holder of the common unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange
regulations.
|
|
represents that the
transferee has the capacity, power and authority to enter into the EQM partnership agreement;
makes the consents, acknowledgements and waivers contained in the EQM
partnership agreement; and
makes certain certifications with respect to U.S. federal income tax status.
EQM is
entitled to treat the nominee holder of a common unit as the absolute owner in the event such nominee is the record holder of such common unit. In that case, the beneficial holder's rights are limited solely to those that it has against the nominee
holder as a result of any agreement between the beneficial owner and the nominee holder.
Common units are securities and are transferable according to the laws governing
transfer of securities. Until a common unit has been transferred on EQM's register, EQM and the transfer agent may treat the record holder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange
regulations.
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LEGAL MATTERS
The validity of the EQM common units to be issued in connection with the merger and being offered hereby will be passed upon for EQM by
Wachtell, Lipton, and Rosen & Katz. Certain tax matters relating to those common units and certain U.S. federal income tax consequences of the merger will be passed upon for EQM by Baker
Botts L.L.P. Certain U.S. federal income tax consequences of the merger will be passed upon for RMP by Baker Botts L.L.P.
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Table of Contents
EXPERTS
EQM
The combined financial statements of EQT Midstream Partners, LP and subsidiaries for the year ended December 31, 2017 appearing in
EQT Midstream Partners, LP's Current Report (Form 8-K) filed with the Securities and Exchange Commission on June 12, 2018, and the effectiveness of EQT Midstream
Partners, LP's internal control over financial reporting as of December 31, 2017 included in its Annual Report on Form 10-K have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such combined financial statements are incorporated herein
by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
RMP
The consolidated financial statements of Rice Midstream Partners LP appearing in Rice Midstream Partners LP's Annual Report
(Form 10-K) for the year ended December 31, 2017, and the effectiveness of Rice Midstream Partners LP's internal control over financial reporting as of December 31, 2017
have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
170
Table of Contents
WHERE YOU CAN FIND MORE INFORMATION
EQM has filed with the SEC a registration statement under the Securities Act of which this proxy statement/prospectus forms a part, which
registers the EQM common units to be issued to RMP unitholders in connection with the merger. The registration statement, including the exhibits and schedules attached to the registration statement,
contains additional relevant information about EQM and its common units. The rules and regulations of the SEC allow EQM and RMP to omit certain information that is included in the registration
statement from this proxy statement/prospectus.
EQM
and RMP file annual, quarterly and current reports and other information with the SEC. The SEC allows EQM and RMP to "incorporate by reference" into this proxy statement/prospectus
the information they file with the SEC, which means that they can disclose important information to you by referring you to those documents. This proxy statement/prospectus contains summaries of
certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by
reference to the actual documents. The information incorporated by reference is an important part of this proxy statement/prospectus, and information that EQM or RMP files later with the SEC will
automatically update and supersede this information as well as the information included in this proxy statement/prospectus. Some documents or information, such as that called for by Items 2.02
and 7.01 of Form 8-K, or the exhibits related thereto under Item 9.01 of Form 8-K, are deemed furnished and not filed in accordance with SEC rules. None of those documents and
none of that information is incorporated by reference into this proxy statement/prospectus. EQM and RMP incorporate by reference the documents listed below and any future filings they make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial registration statement (of which this proxy statement/prospectus forms a part) and prior to
the effectiveness of the registration statement, as well as between the date of this proxy statement/prospectus and the date on which the special meeting of RMP's unitholders is held:
EQM
-
-
Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 15, 2018;
-
-
Quarterly Report on Form 10-Q for the three month period ended March 31, 2018 filed on April 26, 2018, as amended by the
Quarterly Report on Form 10-Q/A filed on June 18, 2018;
-
-
Current Reports on Form 8-K filed on February 27, 2018, March 20, 2018, April 26, 2018, May 22, 2018,
June 12, 2018 and June 20, 2018 (two filings) (to the extent filed but not furnished); and
-
-
the description of the EQM common units contained in the Registration Statement filed on Form 8-A filed on June 18, 2012, and
including any other amendments or reports filed for the purpose of updating such description.
EQM
will provide a copy of any document incorporated by reference in this proxy statement/prospectus and any exhibit specifically incorporated by reference in the documents it
incorporates by reference, without charge, by written or oral request directed to EQM at the following address and telephone number:
EQT
Midstream Partners, LP
625 Liberty Avenue, Suite 1700
Pittsburgh, Pennsylvania 15222
(412) 553-5700
Attention: Corporate Secretary
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RMP
-
-
Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 15, 2018;
-
-
Quarterly Report on Form 10-Q for the three month period ended March 31, 2018, filed on April 26, 2018;
-
-
Current Reports on Form 8-K filed on March 20, 2018 and April 26, 2018 (to the extent filed but not furnished); and
-
-
the description of the RMP common units contained in the Registration Statement filed on Form 8-A filed on December 16, 2014, and
including any other amendments or reports filed for the purpose of updating such description.
RMP
will provide a copy of any document incorporated by reference in this proxy statement/prospectus and any exhibit specifically incorporated by reference in the documents it
incorporates by reference, without charge, by written or oral request directed to RMP at the following address and telephone number:
Rice
Midstream Partners LP
625 Liberty Avenue, Suite 1700
Pittsburgh, Pennsylvania 15222
(412) 553-5700
Attention: Corporate Secretary
EQM
and RMP also make available free of charge on their Internet websites at www.eqtmidstreampartners.com and www.ricemidstream.com, respectively, the reports and other information filed
by EQM and RMP with the SEC, as soon as reasonably practicable after such material is electronically filed or furnished to the SEC. Neither EQM's nor RMP's websites, nor the information contained on
their websites, is part of this proxy statement/prospectus or the documents incorporated by reference.
The
SEC maintains an Internet website that contains reports, proxy and information statements and other material that are filed through the SEC's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) System. This system can be accessed at www.sec.gov. You can find information that EQM and RMP file with the SEC by reference to their names or to their SEC file numbers. You also may
read and copy any document EQM or RMP files with the SEC at the SEC's public reference room located at 100 F Street, N.E., Room 1580, and Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information about the public reference room and its copy charges. EQM's and RMP's SEC filings are also available to the public through the New York Stock
Exchange at 20 Broad Street, New York, New York 10005.
In order to receive timely delivery of requested documents in advance of the special meeting, your request should be received no later than July 18, 2018.
If you request any documents, EQM or RMP will mail them to you by first class mail, or another equally prompt means, within one business day after receipt of your request.
Neither
EQM nor RMP has authorized anyone to give any information or make any representation about the merger, EQM or RMP that is different from, or in addition to, that contained in
this proxy statement/prospectus or in any of the materials that have been incorporated by reference. Therefore, if anyone distributes this type of information, you should not rely on it. If you are in
a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this proxy statement/prospectus or the solicitation of proxies is
unlawful, or you are a person to whom it is unlawful to direct these types or activities, then the offer presented in this proxy statement/prospectus does not extend to you. The information contained
in this proxy statement/prospectus speaks only as of its date, or in the case of information in a document incorporated by reference, as of the date of such document, unless the information
specifically indicates that another date applies.
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Annex A
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
Dated as of April 25, 2018
among
EQT MIDSTREAM PARTNERS, LP,
EQT MIDSTREAM SERVICES, LLC,
EQM ACQUISITION SUB, LLC,
EQM GP ACQUISITION SUB, LLC,
RICE MIDSTREAM PARTNERS LP,
RICE MIDSTREAM MANAGEMENT LLC,
and,
solely for purposes of Sections 5.15 and 5.16 and Article VIII,
EQT CORPORATION
Table of Contents
TABLE OF CONTENTS
A-i
Table of Contents
A-ii
Table of Contents
A-iii
Table of Contents
INDEX OF DEFINED TERMS
|
|
|
Defined Term
|
|
Where Defined
|
Affiliate
|
|
Section 8.13
|
Agreement
|
|
Preamble
|
Antitrust Laws
|
|
Section 8.13
|
Balance Sheet Date
|
|
Section 3.5(d)
|
Benefit Plan
|
|
Section 8.13
|
Book-Entry Units
|
|
Section 2.1(c)
|
business day
|
|
Section 8.13
|
Certificate
|
|
Section 2.1(c)
|
Certificate of GP Merger
|
|
Section 1.4
|
Certificate of Merger
|
|
Section 1.4
|
Clayton Act
|
|
Section 8.13
|
Closing
|
|
Section 1.3
|
Closing Date
|
|
Section 1.3
|
Code
|
|
Section 2.2(j)
|
Contract
|
|
Section 3.3(a)
|
control
|
|
Section 8.13
|
controlled by
|
|
Section 8.13
|
DLLCA
|
|
Section 8.13
|
Drop-Down Agreements
|
|
Section 8.13
|
Drop-Down Transactions
|
|
Section 8.13
|
DRULPA
|
|
Section 8.13
|
Effective Time
|
|
Section 1.4
|
Enforceability Exceptions
|
|
Section 3.3(a)
|
Environmental Law
|
|
Section 8.13
|
Environmental Permit
|
|
Section 8.13
|
EQGP
|
|
Recitals
|
EQM
|
|
Preamble
|
EQM Benefit Plans
|
|
Section 4.11(a)
|
EQM Charter Documents
|
|
Section 4.1(d)
|
EQM Conflicts Committee
|
|
Recitals
|
EQM Disclosure Schedule
|
|
ARTICLE IV
|
EQM Entities
|
|
Preamble
|
EQM Equity Plans
|
|
Section 8.13
|
EQM Expenses
|
|
Section 7.3(e)
|
EQM Gathering Holdings
|
|
Section 8.13
|
EQM GP
|
|
Preamble
|
EQM GP Agreement
|
|
Section 8.13
|
EQM GP Board
|
|
Recitals
|
EQM GP Charter Documents
|
|
Section 8.13
|
EQM GP Interest
|
|
Section 8.13
|
EQM GP Unit
|
|
Section 8.13
|
EQM Incentive Distribution Rights
|
|
Section 8.13
|
EQM Intellectual Property
|
|
Section 4.16
|
EQM Joint Ventures
|
|
Section 8.13
|
EQM Limited Partner
|
|
Section 8.13
|
EQM Limited Partner Interest
|
|
Section 8.13
|
EQM Material Adverse Effect
|
|
Section 4.1(a)
|
EQM Material Contracts
|
|
Section 4.14(a)
|
A-iv
Table of Contents
|
|
|
Defined Term
|
|
Where Defined
|
EQM Non-Qualifying Income Cushion
|
|
Section 7.3(f)
|
EQM Partnership Agreement
|
|
Section 8.13
|
EQM Partnership Interest
|
|
Section 8.13
|
EQM Permits
|
|
Section 4.8(b)
|
EQM SEC Documents
|
|
Section 4.5(a)
|
EQM Special Approval
|
|
Section 8.13
|
EQM Subsidiary Documents
|
|
Section 4.1(d)
|
EQM Unaffiliated Unitholders
|
|
Section 8.13
|
EQM Unit
|
|
Section 8.13
|
EQM Unit Majority
|
|
Section 8.13
|
EQM Unitholders
|
|
Section 8.13
|
EQT
|
|
Preamble
|
ERISA
|
|
Section 8.13
|
ERISA Affiliates
|
|
Section 8.13
|
Exchange Act
|
|
Section 3.4
|
Exchange Agent
|
|
Section 2.2(a)
|
Exchange Fund
|
|
Section 2.2(b)
|
Exchange Ratio
|
|
Section 2.1(a)
|
Federal Trade Commission Act
|
|
Section 8.13
|
FPA
|
|
Section 3.21
|
GAAP
|
|
Section 8.13
|
Governmental Authority
|
|
Section 8.13
|
GP Merger
|
|
Recitals
|
GP Merger Effective Time
|
|
Section 1.4
|
GP Merger Sub
|
|
Preamble
|
GP Merger Sub Charter Documents
|
|
Section 8.13
|
Hazardous Substance
|
|
Section 8.13
|
HSR Act
|
|
Section 8.13
|
ICA
|
|
Section 3.21
|
IDR Purchase and Sale Agreement
|
|
Section 8.13
|
IDR Transaction
|
|
Section 8.13
|
Indemnified Person
|
|
Section 5.8(a)
|
Intended Tax Treatment
|
|
Section 2.2(k)
|
Intervening Event
|
|
Section 8.13
|
Knowledge
|
|
Section 8.13
|
Law
|
|
Section 3.8(a)
|
Laws
|
|
Section 3.8(a)
|
Liens
|
|
Section 3.1(c)
|
Material Adverse Effect
|
|
Section 8.13
|
Maximum Amount
|
|
Section 5.8(c)
|
Merger
|
|
Recitals
|
Merger Consideration
|
|
Section 2.1(a)
|
Merger Sub
|
|
Preamble
|
Merger Sub Charter Documents
|
|
Section 8.13
|
Multiemployer Plan
|
|
Section 8.13
|
NGA
|
|
Section 3.21
|
NGPA
|
|
Section 3.21
|
NYSE
|
|
Section 8.13
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Outside Date
|
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Section 7.1(b)(i)
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PBGC
|
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Section 3.11(d)
|
A-v
Table of Contents
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Defined Term
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Where Defined
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Permit
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Section 8.13
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Person
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Section 8.13
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Proceeding
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Section 5.8(a)
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Proxy Statement
|
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Section 3.4
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PUHCA
|
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Section 3.21
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Registration Statement
|
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Section 3.9
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Remedial Actions
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Section 5.4(d)
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Representatives
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Section 5.3(a)
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Restraints
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Section 6.1(c)
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rights-of-way
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Section 3.15(b)
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RMGH
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Section 3.2(e)
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RMP
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Preamble
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RMP Adverse Recommendation Change
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Section 5.3(a)
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RMP Alternative Proposal
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Section 8.13
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RMP Base Amount
|
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Section 7.3(f)
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RMP Benefit Plans
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Section 3.11(a)
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RMP Board Recommendation
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Section 5.1(b)
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RMP Charter Documents
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Section 3.1(d)
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RMP Conflicts Committee
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Recitals
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RMP Disclosure Schedule
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ARTICLE III
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RMP Entities
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Preamble
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RMP Equity Plans
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Section 8.13
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RMP Existing Credit Facility
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Section 5.10(b)
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RMP Expenses
|
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Section 7.3(e)
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RMP Fairness Opinion
|
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Section 3.18
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RMP Financial Advisor
|
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Section 3.18
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RMP GP
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Preamble
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RMP GP Agreement
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Section 8.13
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RMP GP Board
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Recitals
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RMP GP Charter Documents
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Section 8.13
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RMP GP Interest
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Section 8.13
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RMP Incentive Distribution Right
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Section 8.13
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RMP Intellectual Property
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Section 3.16
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RMP Limited Partner
|
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Section 8.13
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RMP Limited Partner Interest
|
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Section 8.13
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RMP Material Adverse Effect
|
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Section 3.1(a)
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RMP Material Contracts
|
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Section 3.14(a)
|
RMP Non-Qualifying Income Cushion
|
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Section 7.3(g)
|
RMP Partnership Agreement
|
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Section 8.13
|
RMP Partnership Interest
|
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Section 8.13
|
RMP Permits
|
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Section 3.8(b)
|
RMP Phantom Unit Award
|
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Section 2.3
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RMP Recommendation Change Notice
|
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Section 5.3(d)(ii)(A)
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RMP SEC Documents
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Section 3.5(a)
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RMP Special Approval
|
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Section 8.13
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RMP Subsidiary Documents
|
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Section 3.1(d)
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RMP Superior Proposal
|
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Section 8.13
|
RMP Superior Proposal Notice
|
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Section 5.3(d)(i)(C)
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RMP Superior Proposal Notice Period
|
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Section 5.3(d)(i)(D)
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RMP Termination Fee
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Section 7.3(a)
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Defined Term
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Where Defined
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RMP Unaffiliated Unitholders
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Section 8.13
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RMP Unit
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Section 8.13
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RMP Unitholder Approval
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Section 3.3(c)
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RMP Unitholders
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Section 8.13
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RMP Unitholders Meeting
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Section 5.1(b)
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Sarbanes-Oxley Act
|
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Section 3.5(a)
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SEC
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Section 8.13
|
Securities Act
|
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Section 3.1(c)
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Sherman Act
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Section 8.13
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Subsidiary
|
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Section 8.13
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Surviving Entity
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Section 1.1
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Surviving GP Entity
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Section 1.2
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Tax
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Section 8.13
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Tax Guidance
|
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Section 7.3(f)
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Tax Return
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Section 8.13
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Taxes
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Section 8.13
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Treasury Regulations
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Section 8.13
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under common control with
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Section 8.13
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Unit Majority
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Section 8.13
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WARN Act
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Section 3.12
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Willful Breach
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Section 8.13
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Table of Contents
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of April 25, 2018 (this "
Agreement
"), is by
and among EQT Midstream Partners, LP, a Delaware limited partnership ("
EQM
"), EQT Midstream Services, LLC, a Delaware limited liability
company and the general partner of EQM ("
EQM GP
"), EQM GP Acquisition Sub, LLC, a Delaware limited liability company and indirect
wholly owned subsidiary of EQM ("
GP Merger Sub
"), EQM Acquisition Sub, LLC, a Delaware limited liability company and indirect wholly owned
subsidiary of EQM ("
Merger Sub
" and, together with EQM, EQM GP and GP Merger Sub, the "
EQM
Entities
"), Rice Midstream Partners LP, a Delaware limited partnership ("
RMP
"), Rice Midstream Management, LLC, a
Delaware limited liability company and the general partner of RMP ("
RMP GP
" and, together with RMP, the "
RMP
Entities
"), and, solely for purposes of
Sections 5.15
and
5.16
and
Article VIII
, EQT Corporation, a Pennsylvania corporation ("
EQT
").
W I T N E S S E T H:
WHEREAS, the parties intend that (i) Merger Sub be merged with and into RMP (the
"
Merger
"), with RMP surviving the Merger as a wholly owned subsidiary of EQM and (ii) concurrently with or immediately following the
Merger, GP Merger Sub be merged with and into RMP GP (the "
GP Merger
"), with RMP GP surviving the GP Merger as a wholly
owned subsidiary of EQM;
WHEREAS,
the Conflicts Committee ("
EQM Conflicts Committee
") of the Board of Directors (the "
EQM GP
Board
") of EQM GP, by unanimous vote, in good faith (a) determined that this Agreement and the transactions contemplated hereby are in the best interests of EQM
and the EQM Unaffiliated Unitholders (as defined herein), (b) approved this Agreement and the consummation of the transactions contemplated hereby, including the Merger, the GP Merger
and the issuance of the Merger Consideration (as defined herein) (the foregoing constituting EQM Special Approval (as defined herein)), and (c) resolved to recommend to the EQM GP Board
the approval of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, the GP Merger and the issuance of the Merger Consideration;
WHEREAS,
upon the receipt of such approval and recommendation of the EQM Conflicts Committee, at a meeting duly called and held, the EQM GP Board, by unanimous vote, in good faith
(a) determined that this Agreement and the transactions contemplated hereby are in the best interests of EQM and the EQM Unitholders and (b) approved this Agreement and the consummation
of the transactions contemplated hereby, including the Merger, the GP Merger and the issuance of the Merger Consideration (as defined herein);
WHEREAS,
the Conflicts Committee (the "
RMP Conflicts Committee
") of the Board of Directors of RMP GP (the
"
RMP GP Board
"), by unanimous vote, in good faith (a) determined that this Agreement and the transactions contemplated hereby are in the
best interests of RMP and the RMP Unaffiliated Unitholders (as defined herein), (b) approved this Agreement and the consummation of the transactions contemplated hereby, including the Merger
and the GP Merger (the foregoing constituting RMP Special Approval (as defined herein)), (c) resolved to recommend to the RMP GP Board the approval of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger and the GP Merger, and (d) resolved to recommend, and to direct the RMP GP Board to recommend, the
approval of this Agreement and the Merger, by the RMP Limited Partners (as defined herein);
WHEREAS,
upon the receipt of such approval and recommendation of the RMP Conflicts Committee, at a meeting duly called and held, the RMP GP Board, by unanimous vote, in good faith
(a) determined that this Agreement and the transactions contemplated hereby are in the best interests of RMP and the RMP Unaffiliated Unitholders, (b) approved this Agreement and the
consummation of the transactions contemplated hereby, including the Merger and the GP Merger, (c) directed that this Agreement be
submitted to a vote of the RMP Limited Partners, and (d) resolved to recommend approval of this Agreement and the Merger by the RMP Limited Partners;
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WHEREAS,
EQM Gathering Holdings, as the sole member of Merger Sub and GP Merger Sub, respectively, has approved this Agreement and approved the execution, delivery and performance
of this Agreement and the transactions contemplated hereby, including the Merger and the GP Merger, on the terms and subject to the conditions set forth in this Agreement;
WHEREAS,
EQT GP Holdings, LP ("
EQGP
") as the sole member of EQM GP, has approved this Agreement and the transactions
contemplated hereby, including the Merger and the GP Merger, on the terms and subject to the conditions set forth in this Agreement;
WHEREAS,
Rice Midstream Holdings LLC, as the sole member of RMP GP, has approved this Agreement and the transactions contemplated hereby, including the Merger and
the GP Merger, on the terms and subject to the conditions set forth in this Agreement;
WHEREAS,
concurrently with the execution of this Agreement, the parties thereto are entering into the Drop-Down Agreement and the IDR Purchase and Sale Agreement (each as defined
herein); and
WHEREAS,
the Board of Directors of EQT approved this Agreement and the consummation of the transactions contemplated hereby solely with respect to, and the transactions contemplated by,
Section 5.15
,
Section 5.16
and
Article VIII
.
NOW,
THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the RMP
Entities, the EQM Entities and, solely for purposes of
Section 5.15
,
Section 5.16
and
Article VIII
, EQT agree as follows:
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Table of Contents
ARTICLE I
THE MERGER AND THE GP MERGER
Section 1.1
The Merger.
Upon the terms and subject to the conditions set forth in this Agreement, and
in accordance with the DRULPA and DLLCA, at the Effective Time, Merger Sub shall be
merged with and into RMP, the separate limited liability company existence of Merger Sub will cease, and RMP will continue its existence as a limited partnership under Delaware law as the surviving
entity in the Merger (the "
Surviving Entity
").
Section 1.2
The GP Merger.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DLLCA, at the GP Merger Effective Time, GP
Merger Sub shall be merged with and into RMP GP, the separate limited liability company existence of GP Merger Sub will cease, and RMP GP will continue its existence as a limited
liability company under Delaware law as the surviving entity in the GP Merger (the "
Surviving GP Entity
").
Section 1.3
Closing.
Subject to the provisions of
Article VI
, the closing of the Merger and the GP Merger (the
"
Closing
") shall take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019 at
8:00 A.M., Eastern Time, on the second business day after the satisfaction or waiver of the conditions set forth in
Article VI
(other than
conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), or at such other place, date and time as EQM and RMP shall agree.
The date on which the Closing actually occurs is referred to as the "
Closing Date
."
Section 1.4
Effective Time.
(a) Subject
to the provisions of this Agreement, at the Closing, the parties will cause a certificate of merger, executed in accordance with the relevant provisions of the
DRULPA and DLLCA (the "
Certificate of Merger
"), in such form as necessary to effect the Merger, to be duly filed with the Secretary of State of the
State of Delaware. The Merger will become effective at such time as the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such later date or time as
may be agreed by EQM and RMP in writing and specified in the Certificate of Merger (the effective time of the Merger being hereinafter referred to as the "
Effective
Time
").
(b) Concurrently
with or as soon as practicable following the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, a certificate of
merger, executed in accordance with the relevant provisions of the DLLCA (the "
Certificate of GP Merger
"), in such form as necessary to effect
the GP Merger, shall be duly filed by the parties hereto with the Secretary of State of the State of Delaware. The GP Merger will become effective at such time as the Certificate
of GP Merger has been duly filed with the Secretary of State of the State of Delaware or at such later date or time as may be agreed by EQM and RMP in writing and specified in the Certificate
of GP Merger (the effective time of the GP Merger being hereinafter referred to as the "
GP Merger Effective Time
").
Section 1.5
Effects of the Merger and the GP Merger.
(a) The
Merger shall have the effects set forth herein and in the applicable provisions of the DRULPA and DLLCA. At the Effective Time: (i) the certificate of limited
partnership of RMP as in effect immediately prior to the Effective Time shall continue as the certificate of limited partnership of the Surviving Entity until thereafter changed or amended as provided
by applicable Law (as defined herein); (ii) the RMP Partnership Agreement shall continue as the partnership agreement of RMP until thereafter changed or amended as provided therein or by
applicable Law in each case consistent with the obligations set forth in
Section 5.8
; (iii) RMP GP shall continue as the sole
general partner of the Surviving Entity with a non-economic general partner interest in the Surviving Entity; (iv) the limited liability company interests in Merger Sub shall be converted
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Table of Contents
into
a single RMP Unit; (v) EQM Gathering Holdings shall be admitted as the sole limited partner of the Surviving Entity and all limited partners of RMP immediately prior to the Merger shall
simultaneously cease to be limited partners of RMP; (vi) the Surviving Entity shall continue without dissolution; and (vii) the books and records of the Surviving Entity shall be revised
to reflect the foregoing.
(b) The GP
Merger shall have the effects set forth herein and in the applicable provisions of the DLLCA. At the GP Merger Effective Time: (i) the
certificate of formation of RMP GP as in effect immediately prior to the GP Merger Effective Time shall continue as the certificate of formation of the Surviving GP Entity until
thereafter changed or amended as provided by applicable Law; (ii) all limited liability company interests of GP Merger Sub issued and outstanding immediately prior to the GP
Merger Effective Time shall be converted into 100% of the limited liability company interests of the Surviving GP Entity; (iii) the limited liability company agreement of RMP GP
as in effect immediately prior to the GP Merger Effective Time shall continue as the limited liability company agreement of the Surviving GP Entity; (iv) EQM Gathering Holdings
shall be admitted as the sole member of the Surviving GP Entity; (v) the sole member of RMP GP immediately prior to the GP Merger shall simultaneously cease to be a member
of the Surviving GP Entity; (vi) the Surviving GP Entity shall continue without dissolution; and (vii) the books and records of the Surviving GP Entity shall be
revised to reflect the foregoing.
ARTICLE II
EFFECT ON RMP UNITS AND RMP INCENTIVE DISTRIBUTION RIGHTS
Section 2.1
Conversion of RMP Units and Cancellation of RMP Incentive Distribution Rights.
At the
Effective Time, by virtue of the Merger and without any action on the part of the parties or the holder of any securities of or interests in the parties:
(a)
Conversion of RMP Units.
Subject to
Section 2.2(h)
and
Section 2.4
, each RMP
Unit issued and outstanding or deemed issued and outstanding in accordance with
Section 2.3
as of immediately prior to the Effective Time shall
be converted into the right to receive 0.3319 (the "
Exchange Ratio
") EQM Units (the "
Merger
Consideration
"), subject to adjustment in accordance with
Section 2.4
, which EQM Units will be duly authorized, validly
issued, fully paid (to the extent required under the EQM Partnership Agreement) and non-assessable (except as set forth in the EQM Partnership Agreement or as such non-assessability may be affected by
matters described in Sections 17-303, 17-607 and 17-804 of the DRULPA).
(b)
Cancellation of RMP Incentive Distribution Rights.
The RMP Incentive Distribution Rights (as defined
herein) outstanding immediately prior to the Effective Time shall be automatically canceled and shall cease to
exist. In connection with such cancellation, EQT EQGP shall retain its rights to any capital account in RMP associated, as of immediately prior to the Merger, with the RMP Incentive Distribution
Rights acquired by EQGP pursuant to the IDR Purchase and Sale Agreement.
(c)
Book-Entry Unit and Certificates.
As of the Effective Time, all RMP Units converted into the Merger
Consideration pursuant to this
Article II
shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of RMP Units in book-entry form ("
Book-Entry
Units
") or a certificate that immediately prior to the Effective Time represented any RMP Units (a "
Certificated Unit
") shall
cease to have any rights with respect thereto, except the right to receive the Merger Consideration and any distributions to which such holder is entitled pursuant to
Section 2.2(g)
, in each case
to be issued or paid in consideration therefor upon surrender of such RMP Unit in accordance with
Section 2.2(c)
, without interest, and the right to be admitted as an EQM Limited Partner. Upon such
surrender of a RMP Unit in accordance with
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Table of Contents
this
Agreement and the recording of the name of such Person as a limited partner of EQM on the books and records of EQM, such Person shall automatically and effective as of the Effective Time be
admitted as an EQM Limited Partner and be bound by the EQM Partnership Agreement as such. By
its acceptance of EQM Units, an RMP Unitholder confirms its agreement to be bound by all of the terms and conditions of the EQM Partnership Agreement.
Section 2.2
Exchange of Certificates.
(a)
Exchange Agent.
Prior to the Closing Date, EQM shall appoint an exchange agent reasonably acceptable to
RMP (the "
Exchange Agent
")
for the purpose of exchanging Certificated Units and Book-Entry Units for the Merger Consideration. As soon as reasonably practicable after the Effective Time, but in no event more than five business
days following the Effective Time, EQM will send, or will cause the Exchange Agent to send, to each holder of record of RMP Units as of the Effective Time a letter of transmittal (which shall specify
that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificated Units (or effective affidavits of loss in lieu thereof) and Book-Entry Units
to the Exchange Agent) in such forms as EQM and RMP may reasonably agree, including instructions for use in effecting the surrender of Certificated Units (or effective affidavits of loss in lieu
thereof) and Book-Entry Units to the Exchange Agent in exchange for the Merger Consideration.
(b)
Deposit.
At or prior to the Closing, EQM shall cause to be deposited with the Exchange Agent, in trust
for the benefit of the holders of RMP Units, an amount of EQM Units
(which shall be in non-certificated book-entry form) issuable upon due surrender of the Certificated Units (or effective affidavits of loss in lieu thereof) or Book-Entry Units pursuant to the
provisions of this
Article II
. Following the Effective Time, EQM agrees to make available to the Exchange Agent, from time to time as needed,
cash in U.S. dollars sufficient to pay any distributions pursuant to
Section 2.2(g)
and any EQM Units sufficient to pay any Merger Consideration,
in each case, that may be payable from time to time following the Effective Time. All book-entry units representing EQM Units deposited with, and cash made available to, the Exchange Agent (including
pursuant to
Section 2.2(h)
) shall be referred to in this Agreement as the "
Exchange Fund
." The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger Consideration contemplated to be issued or paid pursuant to this
Article II
and such distributions as a holder of RMP
Units may be entitled to receive pursuant to Section 2.2(g) out of the Exchange Fund.
The Exchange Fund shall not be used for any other purpose. The Exchange Agent shall invest any cash included in the Exchange Fund as directed by EQM;
provided
, that no such investment or losses thereon
shall affect the Merger Consideration payable to holders of RMP Units and EQM shall promptly cause
to be provided additional funds to the Exchange Agent for the benefit of holders of RMP Units in the amount of any such losses.
(c)
Exchange.
Each holder of RMP Units that have been converted into the right to receive the Merger
Consideration, upon surrender to the Exchange Agent of a properly completed
letter of transmittal, duly executed and completed in accordance with the instructions thereto, a certificate (or effective affidavits of loss in lieu thereof) representing each Certificated Unit, or
Book-Entry Unit and such other documents as may reasonably be required by the Exchange Agent, will be entitled to receive in exchange therefor the number of EQM Units representing, in the aggregate,
(i) the whole number of EQM Units that such holder has the right to receive in accordance with the provisions of this
Article II
and
(ii) a check in the amount of such distributions as such holder has the right to receive pursuant to
Section 2.2(g)
. The Merger
Consideration and such other amounts as reflected in the immediately preceding sentence shall be paid as promptly as practicable after receipt by the Exchange Agent of the certificates (or effective
affidavits of loss in lieu thereof) representing each Certificated Unit or Book-Entry Units and letter of transmittal in accordance with the foregoing. No interest shall be paid or accrued on any
Merger Consideration or on any unpaid distributions payable to holders of RMP Units. Until so
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surrendered,
each such RMP Unit shall, after the Effective Time, represent for all purposes only the right to receive such Merger Consideration. The Merger Consideration paid upon surrender of
Certificated Units (or effective affidavits of loss in lieu thereof) or Book-Entry Units shall be deemed to have been paid in full satisfaction of all rights pertaining to the RMP Units.
(d)
Other Payees.
If any payment is to be made to a Person other than the Person in whose name the
applicable surrendered Certificated Unit (or effective affidavits of loss in lieu
thereof) or Book-Entry Unit is registered, it shall be a condition of such payment that the Person requesting such payment shall pay any transfer or other similar Taxes required by reason of the
making of such payment to a Person other than the registered holder of the surrendered Certificated Unit (or effective affidavits of loss in lieu thereof) or Book-Entry Unit or shall establish to the
satisfaction of EQM and the Exchange Agent that such Tax has been paid or is not payable. If any portion of the Merger Consideration is to be registered in the name of a Person other than the Person
in whose name the applicable surrendered Certificated Unit (or effective affidavits of loss in lieu thereof) or Book-Entry Unit is registered, it shall be a condition to the registration thereof that
any surrendered certificate shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such delivery of the Merger Consideration shall pay to the Exchange
Agent any transfer or other similar Taxes required as a result of such registration in the name of a Person other than the registered holder of such Certificated Unit (or effective affidavits of loss
in lieu thereof) or Book-Entry Unit or establish to the satisfaction of EQM and the Exchange Agent that such Tax has been paid or is not payable.
(e)
No Further Transfers.
From and after the Effective Time, there shall be no further registration on the
books of RMP of transfers of RMP Units. From and after the Effective Time, the
holders of Certificated Units (or effective affidavits of loss in lieu thereof) or Book-Entry Units outstanding immediately prior to the Effective Time shall cease to have any rights with respect to
such RMP Units except as otherwise provided in this Agreement or by applicable Law. If, after the Effective Time, Certificated Units (or effective affidavits of loss in lieu thereof) or Book-Entry
Units are presented to the Exchange Agent or EQM, they shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth in,
this
Article II
.
(f)
Termination of Exchange Fund.
Any portion of the Exchange Fund that remains unclaimed by the RMP
Unitholders 12 months after the Effective Time shall be returned to EQM, upon demand,
and any such holder who has not exchanged such holder's RMP Units for the Merger Consideration in accordance with this
Section 2.2
prior to that
time shall thereafter look only to the Surviving Entity for delivery of the Merger Consideration in respect of such holder's RMP Units. Notwithstanding the foregoing, EQM, RMP and the Surviving Entity
shall not be liable to any RMP Unitholder for any Merger Consideration duly delivered to a public official pursuant to applicable abandoned property Laws. Any Merger Consideration remaining unclaimed
by RMP Unitholders immediately prior to such time as such amounts would otherwise escheat to, or become property of, any Governmental Authority shall, to the extent permitted by applicable Law, become
the property of EQM free and clear of any claims or interest of any Person previously entitled thereto.
(g)
Distributions.
No distributions with respect to EQM Units issued in the Merger shall be paid to the
holder of any unsurrendered Certificated Units (or effective affidavits of
loss in lieu thereof) or Book-Entry Units until such Certificated Units (or effective affidavits of loss in lieu thereof) or Book-Entry Units are surrendered as provided in this
Section 2.2
.
Following such surrender, subject to the effect of escheat, Tax or other applicable Law, there shall be paid, without interest, to
the record holder of the EQM Units, if any, issued in exchange therefor (i) at the time of such surrender, all distributions payable in respect of any such EQM Units with a record date after
the Effective Time and a payment date on or prior to the date of such surrender
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and
not previously paid and (ii) at the appropriate payment date, the distributions payable with respect to such EQM Units with a record date after the Effective Time but with a payment date
subsequent to such surrender. For purposes of distributions in respect of EQM Units, all EQM Units to be issued
pursuant to the Merger shall be entitled to distributions pursuant to the immediately preceding sentence as if issued and outstanding as of the Effective Time.
(h)
No Fractional Units.
No certificates or scrip representing fractional EQM Units shall be issued upon
the surrender for exchange of Certificated Units (or effective affidavits of loss
in lieu thereof) or Book-Entry Units. Notwithstanding any other provision of this Agreement, all fractional EQM Units that a holder of RMP Units converted pursuant to the Merger would otherwise be
entitled to receive as Merger Consideration in the Merger (after taking into account all Certificated Units (or effective affidavits of loss in lieu thereof) or Book-Entry Units) will be aggregated
and then, if a fractional EQM Unit results from that aggregation, be rounded up to the nearest whole EQM Unit.
(i)
Lost, Stolen or Destroyed Certificates.
If any certificate representing a Certificated Unit shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming
such certificate to be lost, stolen or destroyed and, if required by EQM, the posting by such Person of a bond, in such reasonable amount as EQM may direct, as indemnity against any claim that may be
made against it with respect to such Certificated Unit, the Exchange Agent will issue in exchange for such lost, stolen or destroyed certificate the Merger Consideration to be paid in respect of the
RMP Units represented by such certificate as contemplated by this
Article II
and pay any distributions pursuant to
Section 2.2(g)
.
(j)
Withholding Taxes.
EQM, RMP and the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person pursuant to this Agreement such
amounts as are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the
"
Code
"), and the Treasury Regulations promulgated thereunder, or under any provision of applicable state, local or non-U.S. Tax Law (and to the extent
deduction and withholding is required, such deduction and withholding may be taken in EQM Units). To the extent amounts are so withheld and timely paid over to the appropriate Tax authority, such
withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such withholding was made. If withholding is taken in EQM Units, EQM and the
Exchange Agent shall be treated as having sold such EQM Units for an amount of cash equal to the fair market value of such EQM Units at the time of such deemed sale and paid such cash proceeds to the
appropriate Tax authority.
(k)
Tax Characterization of Merger.
Each of the parties hereto acknowledges and agrees that, for U.S.
federal (and applicable state and local) income tax purposes, (i) the Merger is intended
to be treated as an "assets-over" partnership merger transaction under Treasury Regulations Sections 1.708-1(c)(1) and 1.708-1(c)(3)(i), whereby RMP is intended to be the terminating
partnership and EQM is intended to be the resulting partnership, and as a result, the Merger shall be treated for U.S. federal (and applicable state and local) income tax purposes as (A) a
contribution of all of the assets and liabilities of RMP to EQM in exchange for partnership interests in EQM, immediately followed by (B) a liquidating distribution by RMP of such partnership
interests in EQM to the partners of RMP as of immediately prior to the Merger and (ii) none of EQM, RMP, any holder of EQM Units or other partnership interest in EQM, or any holder of RMP Units
or other partnership interest in RMP is intended to recognize taxable gain (other than any gain resulting from (A) any actual or constructive distribution of cash or other property or
(B) any decrease in partnership liabilities pursuant to Section 752 of the Code) (the "
Intended Tax Treatment
"). Unless required to do so
as a result of a "determination" as defined in Section 1313(a) of the Code, each of the parties hereto agrees not to make any Tax filings or otherwise take any position inconsistent with the
Intended Tax Treatment and to cooperate with
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the
other party to make any filings, statements, or reports required to effect, disclose or report the Intended Tax Treatment.
Section 2.3
Treatment of RMP Phantom Units.
Each award of phantom units in respect of RMP Units (each,
an "
RMP Phantom Unit Award
") that is outstanding
immediately prior to the Effective Time shall, as of the Effective Time, by virtue of the Merger and without any action on the part of the holder of any such RMP Phantom Unit Award, be fully vested
and converted into the right to receive the Merger Consideration, subject to applicable tax withholding, in respect of each RMP Unit subject thereto. Effective as of no later than the Effective Time,
the RMP GP Board (or, if appropriate, any committee administering any RMP Equity Plans) and the EQM GP Board (or the appropriate committee thereof) shall adopt resolutions and take any
other actions that may be reasonably necessary to effect the provisions of this
Section 2.3
.
Section 2.4
Adjustments.
Notwithstanding any provision of this
Article II
to the contrary (but without in any way limiting the
covenants in
Section 5.2
), if between the date of this Agreement and the Effective Time the number of outstanding RMP Units or EQM Units shall
have been changed into a different number of units or a different class by reason of the occurrence or record date of any unit dividend, subdivision, reclassification, recapitalization, split,
split-up, unit distribution, combination, exchange of units or similar transaction, the Exchange Ratio shall be appropriately adjusted to reflect fully the effect of such unit dividend, subdivision,
reclassification, recapitalization, split, split-up, unit distribution, combination, exchange of units or similar transaction and to provide the holders of RMP Units the same economic effect as
contemplated by this Agreement prior to such event.
Section 2.5
No Dissenters' or Appraisal Rights.
No dissenters' or appraisal rights shall be available
with respect to the Merger, the GP Merger or the other transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE RMP ENTITIES
Except as disclosed in (a) the RMP SEC Documents filed or publicly furnished with the SEC on or after December 31, 2016 and prior
to the date of this Agreement (but excluding any disclosure contained in any such RMP SEC Documents under the heading "Risk Factors" or "Cautionary Statements" or similar heading (other than any
factual information contained within such headings, disclosure or statements)) or (b) the disclosure letter delivered by RMP to EQM (the "
RMP Disclosure
Schedule
") prior to the execution of this Agreement (
provided
that (i) disclosure in any section of such RMP Disclosure
Schedule shall be deemed to be disclosed with respect to any other section of this Agreement to the extent that it is reasonably apparent on the face of such disclosure that it is applicable to such
other section notwithstanding the omission of a reference or cross reference thereto and (ii) the mere inclusion of an item in such RMP Disclosure Schedule as an exception to a representation
or warranty shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had, would have or would reasonably be
expected to have, an RMP Material Adverse Effect), the RMP Entities hereby represent and warrant to EQM as follows:
Section 3.1
Organization, Standing and Power.
(a) Each
of the RMP Entities and their respective Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction in
which it is incorporated, formed or organized, as applicable, and has all requisite partnership, corporate, limited liability company or other applicable power and authority necessary to own or lease
all of its properties and assets and to carry on
its business as it is now being conducted, except where the failure to have such power or authority would not, individually or in the aggregate, have a Material Adverse Effect on RMP (an
"
RMP Material Adverse Effect
").
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(b) Each
of the RMP Entities and their respective Subsidiaries is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not, individually or in the aggregate, have an RMP Material Adverse Effect.
(c) Except
as set forth on
Section 3.1(c)
of the RMP Disclosure Schedule, all of the outstanding partnership
interests, limited liability company interests, shares of capital stock of, or other equity interests in, each material Subsidiary of RMP that are owned directly or indirectly by RMP have been duly
authorized and validly issued in accordance with the organizational documents of each such entity (in each case as in effect on the date of this Agreement) and are fully paid (in the case of an
interest in a limited partnership or limited liability company, to the extent required under the organizational documents of such entity) and nonassessable (to the extent such Subsidiary is a
corporate entity) and are owned free and clear of all liens, pledges, charges, mortgages, encumbrances, options, rights of first refusal or other preferential purchase rights, adverse rights or claims
and security interests of any kind or nature whatsoever (including any restriction on the right to vote or transfer the same, except for such transfer restrictions as set forth in the organizational
documents of such Subsidiary and for such transfer restrictions of general applicability as may be provided under the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "
Securities Act
"), and the "blue sky" laws of the various States of the United States) (collectively,
"
Liens
"). All such interests and shares of capital stock of each Subsidiary are owned directly or indirectly by RMP.
(d) RMP
has made available to EQM correct and complete copies of its certificate of limited partnership and the RMP Partnership Agreement (the "
RMP
Charter Documents
"), and correct and complete copies of the comparable organizational documents of each of its material Subsidiaries (the "
RMP
Subsidiary Documents
") and of RMP GP, in each case as amended to the date of this Agreement. All such RMP Charter Documents, RMP Subsidiary Documents and RMP GP
Charter Documents are in full force and effect and none of RMP, its material Subsidiaries and RMP GP is in violation of any of their provisions.
(e) RMP GP
has not engaged in business, activity or operations other than acting as general partner of RMP, and RMP GP has no assets (other than the
RMP GP Interest). RMP GP has no liabilities of any nature (whether or not accrued or contingent) other than liabilities incurred as a matter of law by virtue of acting as general partner
of RMP. RMP GP is not a party to any document or agreement in its
individual capacity (as opposed to its capacity as general partner of RMP). RMP GP has no employees and has not and is not obligated to sponsor, maintain or contribute to any Benefit Plan.
Section 3.2
Capitalization.
(a) As
of the close of business on April 24, 2018, the issued and outstanding limited partner interests and general partner interests of RMP consisted of
(i) 102,303,108 RMP Units, (ii) the RMP Incentive Distribution Rights and (iii) the RMP GP Interest.
Section 3.2(a)
of the RMP Disclosure Schedule sets forth the number of RMP Units that were issuable pursuant to RMP Equity Plans as of April 24, 2018, including the number of RMP Units that were subject to
outstanding awards under the RMP Equity Plans (whether settleable in RMP Units or cash) as of such date. All outstanding RMP Units and RMP Incentive Distribution Rights have been duly authorized and
validly issued and are fully paid (to the extent required under the RMP Partnership Agreement), nonassessable (except as set forth in the RMP Partnership Agreement or as such nonassessability may be
affected by matters described in Sections 17-303, 17-607 and 17-804 of the DRULPA), and except as set forth in the RMP Partnership Agreement, free of preemptive rights.
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Except
(A) as set forth above in this
Section 3.2(a)
or (B) as otherwise expressly permitted by
Section 5.2(a)
, as of the date of this
Agreement there are not, and as of the Effective Time there will not be, any partnership interests, voting
securities or other equity interests of RMP issued and outstanding or any subscriptions, options, warrants, calls, convertible or exchangeable securities, rights, commitments or agreements of any
character providing for the issuance of any RMP Partnership Interests or other partnership interests, voting securities or other equity interests of RMP, including any representing the right to
purchase or otherwise receive any of the foregoing.
(b) Since
the Balance Sheet Date (as defined herein) to the date of this Agreement, RMP has not issued any RMP Partnership Interests or other partnership interests, voting
securities or other equity interests, or any securities convertible into or exchangeable or exercisable for any RMP Partnership Interests or other partnership interests, voting securities or other
equity interests, other than as set forth above in
Section 3.2(a)
. Except for equity or equity-based awards outstanding under RMP Equity Plans
and disclosed in accordance with
Section 3.2(a)
, none of RMP or any of its Subsidiaries has issued or is bound by any outstanding subscriptions,
options, warrants, calls, convertible or exchangeable securities, rights, commitments or agreements of any character providing for the issuance or disposition of any partnership interests, shares of
capital stock, voting securities or equity interests of any Subsidiary of RMP. Except (i) as set forth in the RMP Charter Documents, as in effect as of the date of
this Agreement, or (ii) in connection with the vesting, settlement or forfeiture of, or Tax withholding with respect to, any equity or equity-based awards granted under RMP Equity Plans
disclosed in
Section 3.2(a)
and outstanding as of the date of this Agreement, there are no outstanding obligations of RMP or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any RMP Partnership Interests or other partnership interests, shares of capital stock, voting securities or equity interests (or any options,
warrants or other rights to acquire any RMP Partnership Interests or other partnership interests, shares of capital stock, voting securities or equity interests) of RMP or any of its Subsidiaries.
(c) RMP GP
is the sole general partner of RMP. RMP GP is the sole record and beneficial owner of the RMP GP Interest, and such RMP GP Interest
has been duly authorized and validly issued in accordance with applicable Law and the RMP Partnership Agreement. RMP GP owns the RMP GP Interest free and clear of any Liens.
(d) Rice
Midstream Holdings LLC is the sole member of RMP GP. Rice Midstream Holdings LLC is the sole record and beneficial owner of all limited
liability company interests in RMP GP, and such limited liability company interests have been duly authorized and validly issued in accordance with applicable Law and the Amended and Restated
Limited Liability Company Agreement of RMP GP. Rice Midstream Holdings LLC owns the limited liability company interests in RMP GP free and clear of any Liens.
(e) As
of the date of this Agreement, Rice Midstream GP Holdings LP, a Delaware limited partnership ("
RMGH
"),
owns, beneficially and of record, all of the RMP Incentive Distribution Rights, free and clear of any Liens.
Section 3.3
Authority; Noncontravention; Voting Requirements.
(a) Each
of the RMP Entities has all necessary power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, including
the Merger and the GP Merger, subject to obtaining the RMP Unitholder Approval for the Merger. The execution, delivery and performance by the RMP Entities of this Agreement, and the
consummation of the transactions contemplated hereby, including the Merger and the GP Merger, have been duly authorized and approved by the RMP GP Board, which, at a meeting duly called
and held, has, on behalf of RMP and RMP GP, by unanimous vote, in good faith (i) determined that this Agreement and the transactions contemplated hereby, including the Merger and
the GP Merger, are in the best interests of RMP and the RMP Unaffiliated Unitholders, (ii) approved this
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Agreement
and the transactions contemplated hereby, including the Merger and the GP Merger, (iii) directed that this Agreement be submitted to a vote of the RMP Limited Partners and
(iv) resolved to recommend approval of this Agreement and the Merger by the RMP Limited Partners, and except for obtaining the RMP Unitholder Approval for the approval of this Agreement and the
Merger, no other entity action on the part of the RMP Entities is necessary to authorize the execution, delivery and performance by the RMP Entities of this Agreement and the consummation of the
transactions contemplated hereby, including the Merger and the GP Merger. Rice Midstream Holdings LLC, as the sole member of RMP GP, has approved this Agreement and the
transactions contemplated hereby, including the Merger and the GP Merger. This Agreement has been duly executed and delivered by the RMP Entities and, assuming due authorization, execution and
delivery of this Agreement by the other parties hereto, constitutes the legal, valid and binding obligation of each of the RMP Entities, enforceable against each of them in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws affecting the enforcement of creditors' rights
and remedies generally and by general principles of equity (whether applied in a Proceeding (as defined herein) at law or in equity) (collectively, the "
Enforceability
Exceptions
").
(b) Neither
the execution and delivery of this Agreement by the RMP Entities nor the consummation by the RMP Entities of the transactions contemplated hereby, nor compliance
by the RMP Entities with any of the terms or provisions of this Agreement, will (i) assuming that the RMP Unitholder Approval is obtained, conflict with or violate any provision of the RMP
Charter Documents, the RMP GP Charter Documents or any of the RMP Subsidiary Documents, (ii) except as set forth on
Section 3.3(b)
of the RMP Disclosure Schedule and assuming that the authorizations, consents and approvals referred to in
Section 3.4
and the RMP Unitholder
Approval are obtained and the filings referred to in
Section 3.4
are made, (x) violate any Law, judgment, writ or injunction of any
Governmental Authority applicable to RMP, RMP GP or any of their Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in the loss of any
benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of, RMP, RMP GP or any of their Subsidiaries under any of
the terms, conditions or provisions of any loan or credit agreement, debenture, note, bond, mortgage, indenture, deed of trust, license, lease, contract or other agreement, instrument or obligation
(each, a "
Contract
"), or RMP Permit (including any Environmental Permit) to which RMP, RMP GP or any of their Subsidiaries is a party, or by
which they or any of their respective properties or assets may be bound or affected or (iii) result in the exercisability of any right to purchase or acquire any material asset of RMP,
RMP GP or any of their Subsidiaries, except, in the case of clauses (ii)(x) and (ii)(y), for such violations, conflicts, losses, defaults, terminations, cancellations, accelerations or
Liens as, individually or in the aggregate, would not reasonably be expected to have an RMP Material Adverse Effect.
(c) The
affirmative vote or consent of the holders of a Unit Majority at the RMP Unitholders Meeting or any adjournment or postponement thereof in favor of the approval of
this Agreement and the Merger (the "
RMP Unitholder Approval
") is the only vote or approval of the holders of any class or series of RMP Partnership
Interests or other partnership interests, equity interests or capital stock of RMP or any of its Subsidiaries which is necessary to approve this Agreement and the transactions contemplated hereby.
Section 3.4
Governmental Approvals.
Except for (a) filings required under, and in compliance with
other applicable requirements of, the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "
Exchange Act
"), and the Securities Act, including the
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filing
of a proxy statement with the SEC in connection with the Merger (the "
Proxy Statement
"), (b) the filing of the Certificate of Merger and
the Certificate of GP Merger with the Secretary of State of the State of Delaware, (c) any filings required under, and in compliance with other applicable requirements of, the HSR Act
and other Antitrust Laws or (d) any consents, authorizations, approvals, filings or exemptions in connection with compliance with the rules of the NYSE, no consents or approvals of, or filings,
declarations or registrations with, any Governmental Authority are necessary for the execution, delivery and performance of this Agreement by the RMP Entities and the consummation by the RMP Entities
of the transactions contemplated hereby, other than such other consents, approvals, filings, declarations or registrations that, if not obtained, made or given, would not, individually or in the
aggregate, reasonably be expected to result in an RMP Material Adverse Effect.
Section 3.5
RMP SEC Documents; Undisclosed Liabilities.
(a) RMP
and its Subsidiaries have filed and furnished all reports, schedules, forms, certifications, prospectuses, and registration, proxy and other statements required to
be filed or furnished by them with the SEC since December 31, 2016 (collectively and together with all documents filed or publicly furnished on a voluntary basis on Form 8-K, and in each
case including all exhibits and schedules thereto and documents incorporated by reference therein, the "
RMP SEC Documents
"). The RMP SEC Documents, as
of their respective effective dates (in the case of the RMP SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC
filing dates (in the case of all other RMP SEC Documents), or, if amended, as finally amended prior to the date of this Agreement, complied in all material respects with the requirements of the
Exchange Act, the Securities Act and the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder (the "
Sarbanes-Oxley
Act
"), as the case may be, applicable to such RMP SEC Documents, and none of the RMP SEC Documents as of such respective dates contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments received from the SEC staff with respect to the RMP SEC Documents. To the
Knowledge of RMP, none of the RMP SEC Documents is the subject of ongoing SEC review or investigation.
(b) The
consolidated financial statements of RMP included in the RMP SEC Documents as of their respective dates (if amended, as of the date of the last such amendment)
comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited quarterly statements, as indicated in the notes thereto) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position of RMP and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations, cash
flows and changes in partners' capital for the periods then ended (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments, none of which has been or will be,
individually or in the aggregate, material to RMP and its consolidated Subsidiaries, taken as a whole).
(c) RMP
has established and maintains internal control over financial reporting and disclosure controls and procedures (as such terms are defined in Rule 13a-15 and
Rule 15d-15 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to RMP, including its consolidated Subsidiaries, required
to be disclosed by RMP in the reports that it files or submits under the Exchange Act is accumulated and communicated to RMP's principal executive officer and its principal financial officer to allow
timely decisions regarding required disclosure; and such disclosure controls and procedures are effective to ensure that information required to be disclosed by RMP in the reports that it files or
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submits
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. RMP's principal executive officer and its principal financial
officer have disclosed, based on their most recent evaluation, to RMP's auditors and the audit committee of the RMP GP Board (i) all significant deficiencies in the design or operation
of internal controls over financial reporting which could adversely affect RMP's ability to record, process, summarize and report financial data and have identified for RMP's auditors any material
weaknesses in internal controls over financial reporting and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in RMP's internal
controls over financial reporting. The principal executive officer and the principal financial officer of RMP have made all certifications required by the Sarbanes-Oxley Act, the Exchange Act and any
related rules and regulations promulgated by the SEC with respect to the RMP SEC Documents, and the statements contained in such certifications were complete and correct when made. The management of
RMP has
completed its assessment of the effectiveness of RMP's internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended
December 31, 2017, and such assessment concluded that such controls were effective. To the Knowledge of RMP, as of the date of this Agreement there are no facts or circumstances that would
prevent its principal executive officer and principal financial officer from giving the certifications and attestations required pursuant to the rules and regulations adopted pursuant to
Section 404 of the Sarbanes-Oxley Act, without qualification, when next due.
(d) Except
(i) as reflected or otherwise reserved against on the balance sheet of RMP and its Subsidiaries as of December 31, 2017 (the
"
Balance Sheet Date
") (including the notes thereto) included in the RMP SEC Documents filed by RMP and publicly available prior to the date of this
Agreement, (ii) for liabilities and obligations incurred since the Balance Sheet Date in the ordinary course of business and (iii) for liabilities and obligations incurred under or in
accordance with this Agreement or in connection with the transactions contemplated hereby, neither RMP nor any of its Subsidiaries has any liabilities or obligations of any nature (whether or not
accrued or contingent) that would be required to be reflected or reserved against on a consolidated balance sheet of RMP prepared in accordance with GAAP or the notes thereto, other than as have not
and would not reasonably be expected to have, individually or in the aggregate, an RMP Material Adverse Effect.
(e) Neither
RMP nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar
Contract (including any Contract or arrangement relating to any transaction or relationship between or among RMP and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate,
including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any "off-balance sheet arrangements" (as defined in Item 303(a) of
Regulation S-K of the SEC)), where the purpose of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, RMP in RMP's published financial
statements or any RMP SEC Documents.
Section 3.6
Absence of Certain Changes or Events.
(a) Since
the Balance Sheet Date, there has not been an RMP Material Adverse Effect.
(b) Since
the Balance Sheet Date, (i) except for this Agreement and the transactions contemplated hereby, RMP and its Subsidiaries have carried on and operated their
respective businesses in all material respects in the ordinary course of business consistent with past practice and (ii) neither RMP nor any of its Subsidiaries has taken any action described
in
Section 5.2(a)
that, if taken after the date of this Agreement and prior to the Effective Time without the prior written consent of EQM, would
violate such provisions.
Section 3.7
Legal Proceedings.
There are no investigations or proceedings pending (or, to the Knowledge
of RMP, threatened) by any Governmental Authority with respect to RMP, RMP GP or
any
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of
their Subsidiaries or actions, suits or proceedings pending (or, to the Knowledge of RMP, threatened) against RMP, RMP GP or any of their Subsidiaries or any of their respective properties
or assets, at law or in equity before any Governmental Authority, and there are no orders, judgments, decrees or similar rulings of any Governmental Authority against RMP, RMP GP or any of
their Subsidiaries, in each case except for those that would not reasonably be expected to have, individually or in the aggregate, an RMP Material Adverse Effect.
Section 3.8
Compliance with Laws; Permits.
(a) RMP,
RMP GP and their Subsidiaries are, and since the later of December 31, 2015 and their respective dates of incorporation, formation or organization
have been, in compliance with and are not in default under or in violation of any applicable federal, state, local or foreign or provincial law, statute, tariff, ordinance, rule, regulation, judgment,
order, injunction, stipulation, determination, award or decree or agency requirement of or undertaking to any Governmental Authority, including common law (collectively,
"
Laws
" and each, a "
Law
"), except where such non-compliance, default or violation would not have,
individually or in the aggregate, an RMP Material Adverse Effect.
(b) RMP,
RMP GP and their Subsidiaries are in possession of all Permits (including Environmental Permits) necessary for RMP, RMP GP and their Subsidiaries to
own, lease and operate their properties and assets or to carry on their businesses as they are now being conducted (the "
RMP Permits
"), except where the
failure to have any of the RMP Permits would not have, individually or in the aggregate, an RMP Material Adverse Effect. All RMP Permits are in full force and effect, except where the failure to be in
full force and effect would not have, individually or in the aggregate, an RMP Material Adverse Effect. No suspension or cancellation of any of the RMP Permits is pending or, to the Knowledge of RMP,
threatened, except where such suspension or cancellation would not have, individually or in the aggregate, an RMP Material Adverse Effect. RMP, RMP GP and their Subsidiaries are not, and since
December 31, 2015 have not been, in violation or breach of, or default under, any RMP Permit, except where such violation, breach or default would not have, individually or in the aggregate, an
RMP Material Adverse Effect. As of the date of this Agreement, to the Knowledge of RMP, no event or condition has occurred or exists which would result in a violation of, breach, default or loss of a
benefit under, or acceleration of an obligation of RMP, RMP GP or any of their Subsidiaries under, any RMP Permit, or has caused (or would cause) an applicable Governmental Authority to fail or
refuse to issue, renew or extend any RMP Permit (in each case, with or without
notice or lapse of time or both), except for violations, breaches, defaults, losses, accelerations or failures that would not have, individually or in the aggregate, an RMP Material Adverse Effect.
(c) Without
limiting the generality of
Section 3.8(a)
, none of RMP, its Subsidiaries, or, to the knowledge of RMP, any
consultant, agent or representative of any of the foregoing (in their respective capacities as such), (i) has violated the U.S. Foreign Corrupt Practices Act, and any other U.S. and foreign
anti-corruption Laws that are applicable to RMP or its Subsidiaries; (ii) has, to the knowledge of RMP, been given written notice by any Governmental Authority of any facts which, if true,
would constitute a violation of the U.S. Foreign Corrupt Practices Act or any other U.S. or foreign anti-corruption Laws by any such person; and (iii) to the knowledge of RMP, is being (and has
not been) investigated by any Governmental Authority except, in each case of the foregoing clauses (i) through (iii), as would not have, individually or in the aggregate, a RMP Material Adverse
Effect.
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Section 3.9
Information Supplied.
None of the
information supplied (or to be supplied) in writing by or on behalf of RMP specifically for inclusion or incorporation by reference in (a) the
registration statement on Form S-4 to be filed with the SEC by EQM in connection with the issuance of EQM Units in connection with the Merger (as amended or supplemented from time to time, the
"
Registration Statement
") will, at the time the Registration Statement, or any amendment or supplement thereto, is filed with the SEC or at the time it
becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the
statements made therein not misleading, and (b) the Proxy Statement will, on the date it is first mailed to RMP Unitholders, and at the time of the RMP Unitholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement will comply as to form in all material respects with the applicable requirements of the Exchange Act. Notwithstanding the foregoing, RMP makes no
representation or warranty with respect to information supplied by or on behalf of EQM for inclusion or incorporation by reference in any of the foregoing documents.
Section 3.10
Tax Matters.
Except as would not have, individually or in the aggregate, an RMP Material
Adverse Effect: (a) all Tax Returns required to be filed by or with respect to
RMP or any of its Subsidiaries have been duly and timely filed, and all such Tax Returns are true, correct and complete, (b) all Taxes owed by RMP or any of its Subsidiaries, or for which RMP
or any of its Subsidiaries may be liable, that are or have become due have been timely paid in full, (c) RMP and its Subsidiaries have timely complied with all applicable Tax withholding,
collection and deposit requirements, (d) there are no Liens for Taxes (other than statutory Liens for current-period Taxes (x) that are not yet due and payable or (y) that are
being contested in good faith and for which adequate reserves have been established in accordance with GAAP) on any of the assets of RMP or any of its Subsidiaries, (e) there are no audits,
examinations, investigations or other proceedings pending or threatened in writing in respect of Taxes or Tax matters of RMP or any of its Subsidiaries, (f) there is no written claim against
RMP or any of its Subsidiaries for any Taxes, and no assessment, deficiency or adjustment has been asserted, proposed, or threatened in writing with respect to any Tax Return of or with respect to RMP
or any of its Subsidiaries, (g) in the last three (3) years, no claim has been made in writing by a Governmental Authority in a jurisdiction where RMP or any of its Subsidiaries does not
file income or franchise Tax Returns that RMP or such Subsidiary is or may be subject to income or franchise taxation in that jurisdiction, (h) none of RMP or any of its Subsidiaries is a party
to a Tax allocation, sharing or indemnification agreement, and no payments are due or will become due by RMP or any of its Subsidiaries pursuant to any such agreement, in each case, other than
(x) agreements solely between or among RMP and/or its Subsidiaries or (y) provisions contained in commercial agreements the primary purpose of which is not Taxes (including, without
limitation, leases, employment agreements, commercial contracts and credit agreements), (i) none of RMP or any of its Subsidiaries has been a member of an affiliated, combined, consolidated,
unitary or similar group with respect to Taxes (including any affiliated group within the meaning of Section 1504 of the Code and any similar group under state, local or non-U.S. law), or has
any liability for the Taxes of any Person (other than RMP or any of its Subsidiaries), or as a transferee or successor, (j) each of RMP and any of its Subsidiaries that is classified as a
partnership for U.S. federal income tax purposes has in effect a valid election under Section 754 of the Code, (k) RMP is properly classified as a partnership for U.S. federal income tax
purposes, and not as an association or a publicly traded partnership taxable as a corporation under Section 7704 of the Code, and has been properly treated as such (or properly treated as
disregarded as separate from its owner for U.S. federal income tax purposes) since its formation, (l) at least 90% of the gross income of RMP for each taxable year since its formation through
and including the current taxable year has been treated as "qualifying income" within the meaning of Section 7704(d) of the Code, (m) each Subsidiary of RMP is, and since its formation
or acquisition by RMP has been, either a partnership or disregarded as an entity separate from its owner
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for
U.S. federal income tax purposes, (n) neither RMP nor any of its Subsidiaries has taken or agreed to take any action that would reasonably be expected to prevent the Merger from qualifying
for the Intended Tax Treatment, nor is RMP or any of its Subsidiaries aware of any agreement, plan or other circumstance that would reasonably be expected to prevent the Merger from qualifying for the
Intended Tax Treatment and (o) neither RMP nor any of its Subsidiaries has ever entered into or been a party to any "listed transaction" as defined in Section 1.6011-4(b)(2) of the
Treasury Regulations.
Section 3.11
Employee Benefits.
(a) RMP
has made available to EQM all material RMP Benefit Plans. "
RMP Benefit Plans
" means all Benefit Plans that are
sponsored, maintained, contributed to or required to be contributed to by RMP or any of its Subsidiaries, or under which RMP or any of its Subsidiaries has any obligation or liability, whether actual
or contingent, in each case, for the benefit of current or former officers, employees, directors or consultants of RMP or its Subsidiaries.
(b) Except
as would not have, individually or in the aggregate, an RMP Material Adverse Effect, (i) none of RMP or any of its Subsidiaries contributes to, is required
to contribute to, or has in the last six years contributed to or been required to contribute to a Multiemployer Plan and (ii) none of RMP or any of its Subsidiaries has incurred any "withdrawal
liability" (within the meaning of Section 4201 of ERISA) to a Multiemployer Plan that has not been satisfied in full or has (or is reasonably expected to have) any other actual or contingent
liability with respect to any Multiemployer Plan.
(c) Except
as would not have, individually or in the aggregate, an RMP Material Adverse Effect, none of RMP, any of its Subsidiaries, or any of their respective ERISA
Affiliates has in the last six years sponsored, maintained, contributed to or been required to contribute to, or has (or is reasonably expected to have) any actual or contingent liability with respect
to any Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412 of the Code.
(d) With
respect to each RMP Benefit Plan that is subject to Section 302 or Title IV of ERISA, except as would not have, individually or in the aggregate, an RMP
Material Adverse Effect: (i) the minimum funding standard under Section 302 of ERISA and Sections 412 and 430 of the Code has been satisfied and no waiver of any minimum funding
standard or any extension of any amortization period has been requested or granted; (ii) all premiums to the Pension Benefit Guaranty Corporation
("
PBGC
") have been timely paid in full, and (iii) no liability (other than for premiums to the PBGC) under Title IV of ERISA has been or is
expected to be incurred by RMP or any of its Subsidiaries.
(e) Except
for such claims which would not have, individually or in the aggregate, an RMP Material Adverse Effect, no action, dispute, suit, claim, arbitration, or legal,
administrative or other proceeding or governmental action is pending or, to the Knowledge of RMP, threatened with respect to any RMP Benefit Plan, other than claims for benefits in the ordinary
course, (i) alleging any breach of the material terms of such plan or any fiduciary duties with respect thereto or (ii) alleging any violation of any applicable Law with respect to such
plan.
(f) Each
RMP Benefit Plan has been maintained, funded and administered in compliance with its terms and with applicable Law, including ERISA and the Code, except for such
non-compliance which would not have, individually or in the aggregate, an RMP Material Adverse Effect.
(g) Except
as would not have, individually or in the aggregate, an RMP Material Adverse Effect, with respect to any RMP Benefit Plan, all contributions, premiums and other
payments due from any of RMP or its Subsidiaries required by applicable Law or the terms of any RMP Benefit Plan have been made or properly accrued under any such plan to any fund, trust or account
established thereunder or in connection therewith by the due date thereof.
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(h) Except
as would not have, individually or in the aggregate, an RMP Material Adverse Effect, neither RMP nor any of its Subsidiaries has any liability for
post-termination or retiree life or medical benefits to former officers, employees, directors or consultants, or beneficiaries or dependents of any of the foregoing, except for continuation coverage
as required by Section 4980B of the Code or Part 6 of Title I of ERISA provided at no expense to RMP or any of its Subsidiaries.
(i) Except
as would not have, individually or in the aggregate, an RMP Material Adverse Effect, none of RMP, its ERISA Affiliates or any other Person, including any
fiduciary, has engaged in any "prohibited transaction" (as defined in Section 4975 of the Code or Section 406 of ERISA), which would reasonably be expected to subject any of the RMP
Benefit Plans or their related trusts, RMP, any of its ERISA Affiliates or any Person that RMP or any of its ERISA Affiliates has an obligation to indemnify, to any Tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA.
(j) Except
pursuant to retention or other arrangements put in place after the date of this Agreement in compliance with the terms of this Agreement, or as otherwise
expressly contemplated by this Agreement, the consummation of the transactions contemplated hereby will not, either alone or in combination with any other event, (i) accelerate the time of
payment or vesting, or increase the amount of any compensation or benefits due to any employee, consultant or officer of RMP, RMP GP or any of their respective Subsidiaries, (ii) result
in any forgiveness of indebtedness or an obligation to fund benefits with respect to any such individual or (iii) result in any limitation on the right of the RMP Entities or any of their
Affiliates to amend, merge, terminate or receive a reversion of assets from any RMP Benefit Plan or related trust.
Section 3.12
Labor Matters.
(a) Except
for such matters which would not have, individually or in the aggregate, an RMP Material Adverse Effect, none of RMP, RMP GP or any of their respective
Subsidiaries has received written notice during the past two years of the intent of any Governmental Authority responsible for the
enforcement of labor, employment, occupational health and safety or workplace safety and insurance/workers compensation laws to conduct an investigation of RMP, RMP GP or any of their
respective Subsidiaries with respect to such matters and, to the Knowledge of RMP, no such investigation is in progress.
(b) Except
for such matters which would not have, individually or in the aggregate, an RMP Material Adverse Effect, (i) there are no (and have not been during the
two-year period preceding the date of this Agreement) strikes or lockouts with respect to any employees of RMP, RMP GP or any of their respective Subsidiaries, (ii) to the Knowledge of
RMP, there is no (and has not been during the two-year period preceding the date of this Agreement) union organizing effort pending or threatened against RMP, RMP GP or any of their respective
Subsidiaries, (iii) there is no (and has not been during the two-year period preceding the date of this Agreement) unfair labor practice, labor dispute (other than routine individual
grievances) or labor arbitration proceeding pending or, to the Knowledge of RMP, threatened against RMP, RMP GP or any of their respective Subsidiaries and (iv) there is no (and has not
been during the two year period preceding the date of this Agreement) slowdown, or work stoppage in effect or, to the Knowledge of RMP, threatened with respect to any employees of RMP, RMP GP
or any of their respective Subsidiaries.
(c) None
of RMP, RMP GP or any of their respective Subsidiaries has any liabilities under the Worker Adjustment and Retraining Act of 1988 (the
"
WARN Act
") as a result of any action taken by RMP, RMP GP, or any of their respective Subsidiaries that would have, individually or in the
aggregate, an RMP Material Adverse Effect.
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(d) Except
for such non-compliance which would not have, individually or in the aggregate, an RMP Material Adverse Effect, RMP, RMP GP and each of their respective
Subsidiaries is, and during the two year period preceding the date of this Agreement has been, in compliance with all applicable Laws in respect of employment and employment practices, terms and
conditions of employment, wages and hours and occupational safety and health (including classifications of service providers as employees and/or independent contractors).
Section 3.13
Environmental Matters.
Except as would not, individually or in the aggregate, have an RMP
Material Adverse Effect: (a) each of RMP and its Subsidiaries is and, since the later of
December 31, 2015 and their respective dates of incorporation, formation or organization, has been in compliance with all applicable Environmental Laws, (b) there has been no release of
any Hazardous Substance by RMP or any of its Subsidiaries, or to the Knowledge of RMP, any other Person in any manner that would give rise to RMP or any of its Subsidiaries incurring any remedial
obligation or corrective action requirement under applicable Environmental Laws, (c) there are no investigations, actions, claims, suits or proceedings pending or, to the Knowledge of RMP,
threatened against RMP or any of its Subsidiaries or involving any real property currently or, to the Knowledge of RMP, formerly owned, operated or leased by or for RMP or any Subsidiary alleging
noncompliance with or liability under, any Environmental Law and (d) to RMP's Knowledge, no Hazardous Substance has been disposed of, released or transported in violation of any applicable
Environmental Law, at or from any properties owned or operated by RMP or any of its Subsidiaries or as a result of any operations or activities of, or on behalf of, RMP or any of its Subsidiaries.
Section 3.14
Contracts.
(a) Except
for this Agreement, any RMP Benefit Plans, or as filed with the SEC prior to the date of this Agreement, neither RMP nor any of its Subsidiaries is a party to or
bound by, as of the date of this Agreement, any Contract (whether written or oral) (i) which is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K
of the SEC) to RMP; or (ii) which constitutes a contract or commitment relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset) in excess of $10,000,000, other than Contracts solely between or among RMP and one or more of its Subsidiaries (all contracts of the type described in this
Section 3.14(a)
being referred to herein as "
RMP Material Contracts
").
(b) Except
as would not have, individually or in the aggregate, an RMP Material Adverse Effect: (i) each RMP Material Contract is valid and binding on RMP and its
Subsidiaries, as applicable, and is in full force and effect; (ii) RMP and each of its Subsidiaries has in all material respects performed all obligations required to be performed by it to date
under each RMP Material Contract; (iii) neither RMP nor any of its Subsidiaries has received written notice of, or to the Knowledge of RMP, knows of, the existence of any event or condition
which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of RMP or any of its Subsidiaries under any such RMP Material Contract; and (iv) to
the Knowledge of RMP, as of the date of this Agreement no other party to any RMP Material Contract is in default thereunder, nor does any condition exist that with notice or lapse of time or both
would constitute a default by any such other party thereunder.
Section 3.15
Property.
(a) Except
as would not have, individually or in the aggregate, an RMP Material Adverse Effect, RMP or a Subsidiary of RMP owns and has good title to all of its owned real
property (other than severed oil, gas and/or mineral rights and other hydrocarbon interests) and good title to all its owned personal property, and has valid leasehold interests in all of its leased
real properties (other than hydrocarbon interests) free and clear of all Liens, in each case, sufficient to conduct their respective businesses as currently conducted (except in all cases for Liens
permissible
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under
or not prohibited by any applicable material loan agreements and indentures (together with all related mortgages, deeds of trust and other security agreements)). Except as would not have,
individually or in the aggregate, an RMP Material Adverse Effect, all leases under which RMP or any of its Subsidiaries lease any real or personal property (other than hydrocarbon interests) are valid
and effective against RMP or any of its Subsidiaries and, to the Knowledge of RMP, the counterparties thereto, in accordance with their respective terms and there is not, under any of such leases, any
existing material default by RMP or any of its Subsidiaries or, to the Knowledge of RMP, the counterparties thereto, or, to the Knowledge of RMP, any event which, with notice or lapse of time or both,
would become a material default by RMP or any of its Subsidiaries, or, to the Knowledge of RMP, the counterparties thereto.
(b) RMP
and its Subsidiaries have such consents, easements, rights-of-way, permits or licenses from each person (collectively,
"
rights-of-way
") as are sufficient to conduct their businesses in all material respects as currently conducted, except such rights-of-way that, if not
obtained (or which, if obtained, if the same were to expire or be revoked or terminated), would not, individually or in the aggregate, have an RMP Material Adverse Effect. Except as would not,
individually or in the aggregate, have an RMP Material Adverse Effect, each of RMP and its Subsidiaries has fulfilled and performed all its obligations with respect to such rights-of-way which are
required to be fulfilled or performed as of the date of this Agreement (subject to all applicable waivers, modifications, grace periods and extensions) and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof or would result in any impairment of the rights of the holder of any such rights-of-way, except for rights reserved to, or vested
in, any municipality or other Governmental Authority or any railroad by the terms of any right, power, franchise, grant, license, permit, or by any other provision of any applicable Law, to terminate
or to require annual or other periodic payments as a condition to the continuance of such right.
Section 3.16
Intellectual Property.
Except as would not have, individually or in the aggregate, an RMP
Material Adverse Effect, either RMP or an Affiliate of RMP owns, or is licensed or otherwise
possesses adequate rights to use, all material trademarks, trade names, service marks, service names, mark registrations, logos, assumed names, domain names, registered and unregistered copyrights,
patents or applications and registrations, and trade secrets (collectively, the "
RMP Intellectual Property
") used in their respective businesses as
currently conducted. Except as would not have, individually or in the aggregate, an RMP Material Adverse Effect, (a) there are no pending or, to the Knowledge of RMP, threatened claims by any
Person alleging infringement or misappropriation by RMP or any of its Subsidiaries of such Person's intellectual property, (b) to the Knowledge of RMP, the conduct of the business of RMP and
its Subsidiaries does not infringe or misappropriate any intellectual property rights of any Person, (c) neither RMP nor any of its Subsidiaries has made any claim of a violation or
infringement, or misappropriation by others of its rights to or in connection with the RMP Intellectual Property, and (d) to the Knowledge of RMP, no Person is infringing or misappropriating
any RMP Intellectual Property.
Section 3.17
Insurance.
Section 3.17
of the RMP
Disclosure Schedule lists the annual premiums paid by RMP for directors and
officers liability insurance policies. Except as would not have, individually or in the aggregate, an RMP Material Adverse Effect, (i) RMP and its Subsidiaries maintain, or are entitled to the
benefits of, insurance covering their properties, operations, personnel and businesses in amounts customary for the businesses in which they operate and (ii) none of RMP or its Subsidiaries has
received notice from any insurer or agent of such insurer that substantial capital improvements or other expenditures will have to be made in order to continue such insurance, and all such insurance
is outstanding and duly in force.
Section 3.18
Opinion of Financial Advisor.
The RMP Conflicts Committee has received the opinion of
Jefferies LLC (the "
RMP Financial Advisor
"), dated
the date of this Agreement, to the effect that, as of such date, and subject to the assumptions and qualifications set forth therein, the Exchange
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Ratio
is fair, from a financial point of view, to RMP and the RMP Unaffiliated Unitholders (the "
RMP Fairness Opinion
"). RMP has been authorized by the
RMP Financial Advisor to permit the inclusion of the RMP Fairness Opinion in the Registration Statement and the Proxy Statement.
Section 3.19
Brokers and Other Advisors.
Except for the RMP Financial Advisor, the fees and expenses of
which will be paid by RMP, no broker, investment banker or financial advisor is entitled to any
broker's, finder's or financial advisor's fee or commission, or the reimbursement of expenses, in connection with the Merger, the GP Merger or the other transactions contemplated hereby based
on arrangements made by or on behalf of RMP or any of its Subsidiaries. RMP has heretofore made available to EQM a correct and complete copy of RMP's engagement letter with the RMP Financial Advisor,
which letter describe all fees payable to the RMP Financial Advisor, in connection with the transactions contemplated hereby and all agreements under which any such fees or any expenses are payable
and all indemnification and other agreements with the RMP Financial Advisor, entered into in connection with the transactions contemplated hereby.
Section 3.20
State Takeover Statutes.
The action of the RMP GP Board in approving this Agreement
and the transactions contemplated hereby is sufficient to render inapplicable to this Agreement
and the transactions contemplated hereby any state takeover laws and any applicable provision of the RMP Partnership Agreement. There is no unitholder rights plan in effect, to which RMP is a party or
otherwise bound.
Section 3.21
Regulatory Matters.
Except as would not, individually or in the aggregate, have an RMP
Material Adverse Effect, there are no proceedings pending, or to the Knowledge of RMP,
threatened, alleging that RMP or any of its Subsidiaries is in material violation of the Natural Gas Act, 15 U.S.C. § 717,
et seq
.
(the "
NGA
"), the Natural Gas Policy Act of 1978, 15 U.S.C. § 3301,
et seq
. (the
"
NGPA
"), the Interstate Commerce Act, 49 U.S.C. App. § 1,
et
seq
. (1988) (the "
ICA
"), the Federal Power Act, 16 U.S.C. § 791a,
et
seq
. (the "
FPA
"), or the Public Utility Holding Company Act of 2005, 42 U.S.C. §§ 16451-16453
("
PUHCA
"), or the laws, rules and regulations of any applicable state public utility commission or department, as the case may be.
Section 3.22
Investment Company Act.
RMP is not, nor immediately after the Closing will be, subject to
regulation under the Investment Company Act of 1940, as amended.
Section 3.23
No Other Representations or Warranties.
Except for the representations and warranties set
forth in this
Article III
, none of RMP, RMP GP or
any other Person makes or has made any express or implied representation or warranty with respect to RMP, RMP GP or with respect to any other information provided to any EQM Entity in
connection with the Merger, the GP Merger or the other transactions contemplated hereby. Without limiting the generality of the foregoing, none of RMP, RMP GP or any other Person will
have or be subject to any liability or other obligation to any EQM Entity or any other Person resulting from the distribution to any EQM Entity (including their respective Representatives), or any EQM
Entity's (or such Representatives') use of, any such information, including any information, documents, projections, forecasts or other materials made available to any EQM Entity in certain "data
rooms" or management presentations in expectation of the Merger or the GP Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE EQM ENTITIES
Except as disclosed in (a) the EQM SEC Documents filed or publicly furnished with the SEC on or after December 31, 2016 and prior
to the date of this Agreement (but excluding any disclosure contained in any such EQM SEC Documents under the heading "Risk Factors" or "Forward-Looking Statements" or similar heading (other than any
factual information contained within such headings, disclosure or statements)) or (b) the disclosure letter delivered by EQM to RMP (the "
EQM Disclosure
Schedule
") prior to the execution of this Agreement (
provided
that (i) disclosure in any section of such
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EQM
Disclosure Schedule shall be deemed to be disclosed with respect to any other section of this Agreement to the extent that it is reasonably apparent on the face of such disclosure that it is
applicable to such other section notwithstanding the omission of a reference or cross reference thereto and (ii) the mere inclusion of an item in such EQM Disclosure Schedule as an exception to
a representation or warranty shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had, would have or would
reasonably be expected to have, an EQM Material Adverse Effect), the EQM Entities hereby represent and warrant to RMP as follows:
Section 4.1
Organization, Standing and Power.
(a) Each
of the EQM Entities and their respective Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction in
which it is incorporated, formed or organized, as applicable, and has all requisite partnership, corporate, limited liability company or other applicable power and authority necessary to own or lease
all of its properties and assets and to carry on its business as it is now being conducted, except where the failure to have such power or authority would not, individually or in the aggregate, have a
Material Adverse Effect on EQM (an "
EQM Material Adverse Effect
").
(b) Each
of the EQM Entities and their respective Subsidiaries is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, have an EQM Material Adverse Effect.
(c) All
the outstanding partnership interests, limited liability company interests, shares of capital stock of, or other equity interests in, each material Subsidiary of EQM
that are owned directly or indirectly by EQM have been duly authorized and validly issued in accordance with the organizational documents of each such entity (in each case as in effect on the date of
this Agreement) and are fully paid (in the case of an interest in a limited partnership or limited liability company, to the extent required under the organizational documents of such entity) and
nonassessable (to the extent such Subsidiary is a corporate entity) and are owned free and clear of all Liens. Except (i) as set forth in Section 4.1(c) of the EQM Disclosure Schedule
and (ii) for those of the EQM Joint Ventures, all such interests and shares of capital stock of each Subsidiary are owned directly or indirectly by EQM.
(d) EQM
has made available to RMP correct and complete copies of its certificate of limited partnership and the EQM Partnership Agreement (the "
EQM
Charter Documents
") and correct and complete copies of the comparable organizational documents of each of its material Subsidiaries (the "
EQM Subsidiary
Documents
") and of EQM GP, in each case as amended to the date of this Agreement. All such EQM Charter Documents, EQM Subsidiary Documents and EQM GP Charter
Documents are in full force and effect, and none of EQM, its material Subsidiaries or EQM GP is in violation of any of their provisions.
(e) EQM GP
has not engaged in business, activity or operations other than acting as general partner of EQM, and EQM GP has no assets (other than the
EQM GP Interest). EQM GP has no liabilities of any nature (whether or not accrued or contingent) other than liabilities incurred as a matter of law by virtue of acting as general partner
of EQM. EQM GP is not a party to any document or agreement in its individual capacity (as opposed to its capacity as general partner of EQM). EQM GP has no employees and has not and is
not obligated to sponsor, maintain or contribute to any Benefit Plan.
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Section 4.2
Capitalization.
(a) As
of the close of business on April 24, 2018, the issued and outstanding limited partner interests and general partner interests of EQM consisted of
(i) 80,591,366 EQM Units, (ii) the EQM Incentive Distribution Rights and (iii) 1,443,015 EQM GP Units.
Section 4.2(a)
of the EQM Disclosure Schedule sets forth the number of EQM Units that were issuable pursuant to EQM Equity Plans as of April 24, 2018, including the number of EQM Units that were subject to
outstanding awards under the EQM Equity Plans (whether settleable in EQM Units or cash) as of such date. All outstanding EQM
Partnership Interests have been duly authorized and validly issued and are fully paid (to the extent required under the EQM Partnership Agreement), nonassessable (except as set forth in the EQM
Partnership Agreement or as such nonassessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the DRULPA) and, except as set forth in the EQM Partnership
Agreement, free of preemptive rights. Except (A) as set forth above in this
Section 4.2(a)
, (B) as contemplated by the Drop-Down
Agreement or (C) as otherwise expressly permitted by
Section 5.2(b)
, as of the date of this Agreement there are not, and as of the
Effective Time there will not be, any partnership interests, voting securities or other equity interests of EQM issued and outstanding or any subscriptions, options, warrants, calls, convertible or
exchangeable securities, rights, commitments or agreements of any character providing for the issuance of any EQM Partnership Interests or other partnership interests, voting securities or other
equity interests of EQM, including any representing the right to purchase or otherwise receive any of the foregoing.
(b) Since
the Balance Sheet Date to the date of this Agreement, EQM has not issued any EQM Partnership Interests or other partnership interests, voting securities or other
equity interests, or any securities convertible into or exchangeable or exercisable for any EQM Partnership Interests or other partnership interests, voting securities or other equity interests, other
than as set forth above in
Section 4.2(a)
. Except for equity or equity-based awards outstanding under EQM Equity Plans and disclosed above in
Section 4.2(a)
, none of EQM or any of its Subsidiaries has issued or is bound by any outstanding subscriptions, options, warrants, calls,
convertible or exchangeable securities, rights, commitments or agreements of any character providing for the issuance or disposition of any partnership interests, shares of capital stock, voting
securities or equity interests of any Subsidiary of EQM (other than, with respect to the EQM Joint Ventures, as set forth in the definitive agreements for such EQM Joint Ventures). Except
(i) as set forth in the EQM Charter Documents, as in effect as of the date of this Agreement or (ii) in connection with the vesting, settlement or forfeiture of, or Tax withholding with
respect to, any equity or equity-based awards outstanding as of the date of this Agreement, there are no outstanding obligations of EQM or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any partnership interests, shares of capital stock, voting securities or equity interests (or any options, warrants or other rights to acquire any partnership interests, shares of capital
stock, voting securities or equity interests) of EQM or any of its Subsidiaries (other than, with respect to the EQM Joint Ventures, as set forth in the definitive agreements for such EQM Joint
Ventures).
(c) EQM GP
is the sole general partner of EQM. EQM GP is the sole record and beneficial owner of the EQM GP Interest and the EQM Incentive Distribution
Rights, and such EQM GP Interest and the EQM Incentive Distribution Rights have been duly authorized and validly issued in accordance with applicable Law and the EQM Partnership Agreement.
EQM GP owns the EQM GP Interest and the EQM Incentive Distribution Rights free and clear of any Liens.
(d) EQGP
is the sole member of EQM GP. EQGP is the sole record and beneficial owner of all limited liability company interests in EQM GP, and such limited
liability company interests have been duly authorized and validly issued in accordance with applicable Law and the Amended and Restated Limited Liability Company Agreement of EQM GP. EQGP owns
the limited liability company interests in EQM GP free and clear of any Liens.
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(e) All
of the issued and outstanding limited liability company interests of each of Merger Sub and GP Merger Sub are owned, beneficially and of record, by EQM
Gathering Holdings. Each of Merger Sub and GP Merger Sub has been formed solely for the purpose of engaging in the Merger or the GP Merger, respectively, and the other transactions
contemplated by this Agreement. Except for obligations and liabilities incurred in connection with its formation and the Merger, the GP Merger and the other transactions contemplated by this
Agreement, neither Merger Sub nor GP Merger Sub has or will have incurred, directly or indirectly, any obligations or engaged in any business activities of any type or kind whatsoever or
entered into any agreements or arrangements with any Person.
(f) When
issued pursuant to the terms of this Agreement, all EQM Units constituting the Merger Consideration will be duly authorized, validly issued, fully paid (to the
extent required under the EQM Partnership Agreement), nonassessable (except as set forth in the EQM Partnership Agreement or as such nonassessability may be affected by matters described in
Sections 17-303, 17-607 and 17-804 of the DRULPA) and, except as set forth in the EQM Partnership Agreement, free of preemptive rights.
Section 4.3
Authority; Noncontravention.
(a) Each
of the EQM Entities has all necessary power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, including
the Merger and the GP Merger. The execution, delivery and performance by the EQM Entities of this Agreement, and the consummation of the transactions contemplated hereby, including the Merger
and the GP Merger, have been duly authorized by all necessary entity action on the part of the EQM Entities, and no other entity action on the part of the EQM Entities is necessary to authorize
the execution, delivery and performance by the EQM Entities of this Agreement and the consummation of the transactions contemplated hereby, including the Merger and the GP Merger. This
Agreement has been duly executed and delivered by the applicable EQM Entities and, assuming due authorization, execution and delivery of this Agreement by the other parties hereto, this Agreement
constitutes a legal, valid and binding obligation of each of the applicable EQM Entities, enforceable against each of them in accordance with its terms, except as such enforcement may be limited by
the Enforceability Exceptions.
(b) Neither
the execution and delivery of this Agreement by the EQM Entities, nor the consummation by the EQM Entities of the transactions contemplated hereby, nor
compliance by the EQM Entities with any of the terms or provisions of this Agreement, will (i) conflict with or violate any provision of the EQM Charter Documents, the EQM GP Charter
Documents, the Merger Sub Charter Documents, the GP Merger Sub Charter Documents or any of the EQM Subsidiary Documents, (ii) assuming that the authorizations, consents and approvals
referred to in
Section 4.4
are obtained and the filings referred to in
Section 4.4
are
made, (x) violate any Law, judgment, writ or injunction of any
Governmental Authority applicable to EQM, EQM GP or any of their Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in the loss of any
benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of, EQM, EQM GP or any of their Subsidiaries under any of
the terms, conditions or provisions of any Contract or EQM Permit (including any Environmental Permit) to which EQM, EQM GP or any of their Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected or (iii) result in the exercisability of any right to purchase or acquire any material asset of EQM, EQM GP or any of their
Subsidiaries, except, in the case of clauses (ii)(x) and (ii)(y), for such violations, conflicts, losses, defaults, terminations, cancellations, accelerations or Liens as,
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individually
or in the aggregate, would not reasonably be expected to have an EQM Material Adverse Effect.
(c) No
vote or approval of the holders of any class or series of EQM Partnership Interests or other partnership interests, equity interests or capital stock of EQM or any of
its Subsidiaries (other than Merger Sub and GP Merger Sub, with respect to which all such approvals have been obtained as of the date hereof) is necessary to approve this Agreement and the
transactions contemplated hereby in accordance with the EQM Partnership Agreement.
(d) None
of the EQM Entities nor any of their respective Subsidiaries holds any limited partner interests, capital stock, voting securities or equity interests of RMP or any
of its Subsidiaries, or holds any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any such limited partner interests, shares of capital
stock, voting securities or equity interests, or any rights, warrants, options, calls, commitments or any other agreements of any character to purchase or acquire any such limited partner interests,
shares of capital stock, voting securities or equity interests or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for, any such limited
partner interests, shares of capital stock, voting securities or equity interests.
Section 4.4
Governmental Approvals.
Except for (a) filings required under, and compliance with
other applicable requirements of, the Exchange Act and the Securities Act, including the filing
of the Registration Statement and the Proxy Statement with the SEC, (b) the filing of the Certificate of Merger and the Certificate of GP Merger with the Secretary of State of the State
of Delaware, (c) any filings required under, and in compliance with other applicable requirements of, the HSR Act and other Antitrust Laws or (d) any consents, authorizations, approvals,
filings or exemptions in connection with compliance with the rules of the NYSE, no consents or approvals of, or filings, declarations or registrations with, any Governmental Authority are necessary
for the execution, delivery and performance of this Agreement by the EQM Entities and the consummation by the EQM Entities of the transactions contemplated hereby, other than such other consents,
approvals, filings, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to result in an EQM Material Adverse Effect.
Section 4.5
EQM SEC Documents; Undisclosed Liabilities.
(a) EQM
and its Subsidiaries have filed and furnished all reports, schedules, forms, certifications, prospectuses, and registration, proxy and other statements required to
be filed or furnished by them with the SEC since December 31, 2016 (collectively and together with all documents filed or publicly furnished on a voluntary basis on Form 8-K, and in each
case including all exhibits and schedules thereto and documents incorporated by reference therein, the "
EQM SEC Documents
"). The EQM SEC Documents, as
of their respective effective dates (in the case of the EQM SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC
filing dates (in the case of all other EQM SEC Documents), or, if amended, as finally amended prior to the date of this Agreement, complied in all material respects with the requirements of the
Exchange Act, the Securities Act and the Sarbanes-Oxley Act, as the case may be, applicable to such EQM SEC Documents, and none of the EQM SEC Documents as of such respective dates contained any
untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments received from the SEC staff with respect to the EQM SEC Documents. To the Knowledge of
EQM, none of the EQM SEC Documents is the subject of ongoing SEC review or investigation.
(b) The
consolidated financial statements of EQM included in the EQM SEC Documents as of their respective dates (if amended, as of the date of the last such amendment)
comply as to
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form
in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in
the case of unaudited quarterly statements, as indicated in the notes thereto) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of EQM and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations, cash flows and
changes in equity for the periods then ended (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments, none of which has been or will be, individually or in the
aggregate, material to EQM and its consolidated Subsidiaries, taken as a whole).
(c) EQM
has established and maintains internal control over financial reporting and disclosure controls and procedures (as such terms are defined in Rule 13a-15 and
Rule 15d-15 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to EQM, including its consolidated Subsidiaries, required
to be disclosed by EQM in the reports that it files or submits under the Exchange Act is accumulated and communicated to EQM's principal executive officer and its principal financial officer to allow
timely decisions regarding required disclosure; and such disclosure controls and procedures are effective to ensure that information required to be disclosed by EQM in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. EQM's principal executive officer and its principal financial
officer have disclosed, based on their most recent evaluation, to EQM's auditors and the audit committee of the EQM GP Board (i) all significant deficiencies in the design or operation
of internal controls over financial reporting which could adversely affect EQM's ability to record, process, summarize and report financial data and have identified for EQM's auditors any material
weaknesses in internal controls over financial reporting and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in EQM's internal
controls over financial reporting. The principal executive officer and the principal financial officer of EQM have made all certifications required by the Sarbanes-Oxley Act, the Exchange Act and any
related rules and regulations promulgated by the SEC with respect to the EQM SEC Documents, and the statements contained in such certifications were complete and correct when made. The management of
EQM has completed its assessment of the effectiveness of EQM's internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the
year ended December 31, 2017, and such assessment concluded that such controls were effective. To the Knowledge of EQM, as of the date of this Agreement, there are no facts or circumstances
that would prevent its principal executive officer and principal financial officer from giving the certifications and attestations required pursuant to the rules and regulations adopted pursuant to
Section 404 of the Sarbanes-Oxley Act, without qualification, when next due.
(d) Except
(i) as reflected or otherwise reserved against on the balance sheet of EQM and its consolidated Subsidiaries as of the Balance Sheet Date (including the
notes thereto) included in the EQM SEC Documents filed by EQM and publicly available prior to the date of this Agreement, (ii) for liabilities and obligations incurred since the Balance Sheet
Date in the ordinary course of business and
(iii) for liabilities and obligations incurred under or in accordance with this Agreement or in connection with the transactions contemplated hereby, neither EQM nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether or not accrued or contingent) that would be required to be reflected or reserved against on a consolidated balance sheet of EQM prepared in
accordance with GAAP or the notes thereto, other than as have not and would not reasonably be expected to have, individually or in the aggregate, an EQM Material Adverse Effect.
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(e) Neither
EQM nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar
Contract (including any Contract or arrangement relating to any transaction or relationship between or among EQM and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate,
including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any "off-balance sheet arrangements" (as defined in Item 303(a) of
Regulation S-K of the SEC)), where the purpose of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, EQM in EQM's published financial
statements or any EQM SEC Documents.
Section 4.6
Absence of Certain Changes or Events.
(a) Since
the Balance Sheet Date, there has not been an EQM Material Adverse Effect.
(b) Since
the Balance Sheet Date, (i) except for this Agreement and the transactions contemplated hereby, EQM and its consolidated Subsidiaries have carried on and
operated their respective businesses in all material respects in the ordinary course of business consistent with past practice and (ii) neither EQM nor any of its Subsidiaries has taken any
action described in
Section 5.2(b)
that, if taken after the date of this Agreement and prior to the Effective Time without the prior written
consent of RMP, would violate such provisions.
Section 4.7
Legal Proceedings.
There are no investigations or proceedings pending (or, to the Knowledge
of EQM, threatened) by any Governmental Authority with respect to EQM, EQM GP or
any of their Subsidiaries or actions, suits or proceedings pending (or, to the Knowledge of EQM, threatened) against EQM, EQM GP or any of their Subsidiaries or any of their respective
properties or assets, at law or in equity before any Governmental Authority, and there are no orders, judgments, decrees or similar rulings of any Governmental Authority against EQM, EQM GP or
any of their Subsidiaries, in each case except for those that would not reasonably be expected to have, individually or in the aggregate, an EQM Material Adverse Effect.
Section 4.8
Compliance with Laws; Permits.
(a) EQM,
EQM GP and their Subsidiaries are, and since the later of December 31, 2015 and their respective dates of incorporation, formation or organization
have been, in compliance with and are not in default under or in violation of any applicable Laws, except where such non-compliance, default or violation would not have, individually or in the
aggregate, an EQM Material Adverse Effect.
(b) EQM,
EQM GP and their Subsidiaries are in possession of all Permits (including Environmental Permits) necessary for EQM, EQM GP and their Subsidiaries to
own, lease and operate their properties and assets or to carry on their businesses as they are now being conducted (the "
EQM Permits
"), except where the
failure to have any of the EQM Permits would not have, individually or in the aggregate, an EQM Material Adverse Effect. All EQM Permits are in full force and effect, except where the failure to be in
full force and effect would not have, individually or in the aggregate, an EQM Material Adverse Effect. No suspension or cancellation of any of the EQM Permits is pending or, to the Knowledge of EQM,
threatened, except where such suspension or cancellation would not have, individually or in the aggregate, an EQM Material Adverse Effect. EQM, EQM GP and their Subsidiaries are not, and since
December 31, 2015 have not been, in violation or breach of, or default under, any EQM Permit, except where such violation, breach or default would not have, individually or in the aggregate, an
EQM Material Adverse Effect. As of the date of this Agreement, to the Knowledge of EQM, no event or condition has occurred or exists which would result in a violation of, breach, default or loss of a
benefit under, or acceleration of an obligation of EQM, EQM GP or any of their Subsidiaries under, any EQM Permit, or has caused (or would cause) an applicable Governmental Authority to fail or
refuse to issue, renew or extend any EQM Permit (in each case, with or without notice or lapse of time or both), except for violations, breaches, defaults, losses, accelerations or failures that would
not have, individually or in the aggregate, an EQM Material Adverse Effect.
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(c) Without
limiting the generality of
Section 4.8(a)
, none of EQM, its Subsidiaries, or, to the knowledge of EQM, any
consultant, agent or representative of any of the foregoing (in their respective capacities as such), (i) has violated the U.S. Foreign Corrupt Practices Act, and any other U.S. and foreign
anti-corruption Laws that are applicable to EQM or its Subsidiaries; (ii) has, to the knowledge of EQM, been given written notice by any Governmental Authority of any facts which, if true,
would constitute a violation of the U.S. Foreign Corrupt Practices Act or any other U.S. or foreign anti-corruption Laws by any such person; and (iii) to the knowledge of EQM, is being (and has
not been) investigated by any Governmental Authority except, in each case of the foregoing clauses (i) through (iii), as would not have, individually or in the aggregate, an EQM Material
Adverse Effect.
(d) None
of EQM or any of its Subsidiaries has any liabilities under the WARN Act that would have, individually or in the aggregate, an EQM Material Adverse Effect. Except
for such non-compliance which would not have, individually or in the aggregate, an EQM Material Adverse Effect, EQM and each of its Subsidiaries is, and during the two year period preceding the date
of this Agreement has been, in compliance with all applicable Laws in respect of employment and employment practices, terms and conditions of employment, wages and hours and occupational safety and
health (including classifications of service providers as employees and/or independent contractors).
Section 4.9
Information Supplied.
None of the information supplied (or to be supplied) in writing by or
on behalf of EQM specifically for inclusion or incorporation by reference in (a) the
Registration Statement will, at the time the Registration Statement, or any amendment or supplement thereto, is filed with the SEC or at the time it becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under
which they are made, not misleading, and (b) the Proxy Statement will, on the date it is first mailed to RMP Unitholders, and at the time of the RMP Unitholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. The Registration Statement and Proxy
Statement will comply as to form in all material respects with the applicable requirements of the Securities Act or Exchange Act, as applicable. Notwithstanding the foregoing, EQM makes no
representation or warranty with respect to information supplied by or on behalf of RMP for inclusion or incorporation by reference in any of the foregoing documents.
Section 4.10
Tax Matters.
Except as would not have, individually or in the aggregate, an EQM Material
Adverse Effect: (a) all Tax Returns required to be filed by or with respect to
EQM or any of its Subsidiaries have been duly and timely filed, and all such Tax Returns are true, correct and complete, (b) all Taxes owed by EQM or any of its Subsidiaries, or for which EQM
or any of its Subsidiaries may be liable, that are or have become due have been timely paid in full, (c) EQM and its Subsidiaries have timely complied with all applicable Tax withholding,
collection and deposit requirements, (d) there are no Liens for Taxes (other than statutory Liens for current-period Taxes (x) that are not yet due and payable or (y) that are
being contested in good faith and for which adequate reserves have been established in accordance with GAAP) on any of the assets of EQM or any of its Subsidiaries, (e) there are no audits,
examinations, investigations or other proceedings pending or threatened in writing in respect of Taxes or Tax matters of EQM or any of its Subsidiaries, (f) there is no written claim against
EQM or any of its Subsidiaries for any Taxes, and no assessment, deficiency or adjustment has been asserted, proposed, or threatened in writing with respect to any Tax Return of or with respect to EQM
or any of its Subsidiaries, (g) in the last three (3) years, no claim has been made in writing by a Governmental Authority in a jurisdiction where EQM or any of its Subsidiaries does not
file income or franchise Tax Returns that EQM or such Subsidiary is or may be subject to income or franchise taxation in that jurisdiction, (h) none of EQM or any of its Subsidiaries
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is
a party to a Tax allocation, sharing or indemnification agreement, and no payments are due or will become due by EQM or any of its Subsidiaries pursuant to any such agreement, in each case, other
than (x) agreements solely between or among EQM and/or its Subsidiaries or (y) provisions contained in commercial agreements the primary purpose of which is not Taxes (including, without
limitation, leases, employment agreements, commercial contracts and credit agreements), (i) none of EQM or any of its Subsidiaries has been a member of an affiliated, combined, consolidated,
unitary or similar group with respect to Taxes (including any affiliated group within the meaning of Section 1504 of the Code and any similar group under state, local or non-U.S. law), or has
any liability for the Taxes of any Person (other than EQM or any of its Subsidiaries), or as a transferee or successor, (j) each of EQM and any of its Subsidiaries that is classified as a
partnership for U.S. federal income tax purposes has in effect a valid election under Section 754 of the Code, (k) EQM is properly classified as a partnership for U.S. federal income tax
purposes, and not as an association or a publicly traded partnership taxable as a corporation under Section 7704 of the Code, and has been properly treated as such (or properly treated as
disregarded as separate from its owner for U.S. federal income tax purposes) since its formation, (l) at least 90% of the gross income of EQM for each taxable year since its formation through
and including the current taxable year has been treated as "qualifying income" within the meaning of Section 7704(d) of the Code, (m) each Subsidiary of EQM, other than EQT Midstream
Finance Corporation, is, and since its formation or acquisition by EQM has been, either a partnership or disregarded as an entity separate from its owner for U.S. federal income tax purposes,
(n) neither EQM nor any of its Subsidiaries has taken or agreed to take any action that would reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment, nor is
EQM or any of its Subsidiaries aware of any agreement, plan or other circumstance that would reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment and
(o) neither EQM nor any of its Subsidiaries has ever entered into or been a party to any "listed transaction" as defined in Section 1.6011-4(b)(2) of the Treasury Regulations.
Section 4.11
Employee Benefits.
(a) EQM
has made available to RMP all material EQM Benefit Plans. "
EQM Benefit Plans
" means all Benefit Plans that are
sponsored, maintained, contributed to or required to be contributed to by EQM or any of its Subsidiaries, or under which EQM or any of its Subsidiaries has any obligation or liability, whether actual
or contingent, in each case, for the benefit of current or former officers, employees, directors or consultants of EQM or its Subsidiaries.
(b) Except
as would not have, individually or in the aggregate, an EQM Material Adverse Effect, (i) none of EQM or any of its Subsidiaries contributes to, is required
to contribute to, or has in the last six years contributed to or been required to contribute to a Multiemployer Plan and (ii) none of EQM or any of its Subsidiaries has incurred any "withdrawal
liability" (within the meaning of Section 4201 of ERISA) to a Multiemployer Plan that has not been satisfied in full or has (or is reasonably expected to have) any other actual or contingent
liability with respect to any Multiemployer Plan.
(c) Except
as would not have, individually or in the aggregate, an EQM Material Adverse Effect, none of EQM, any of its Subsidiaries, or any of their respective ERISA
Affiliates has in the last six years sponsored, maintained, contributed to or been required to contribute to, or has (or is reasonably expected to have) any actual or contingent liability with respect
to any Benefit Plan that is subject to Title IV or Section 302 of ERISA or Section 412 of the Code.
(d) With
respect to each EQM Benefit Plan that is subject to Section 302 or Title IV of ERISA, except as would not have, individually or in the aggregate, an EQM
Material Adverse Effect: (i) the minimum funding standard under Section 302 of ERISA and Sections 412 and 430 of the Code has been satisfied and no waiver of any minimum funding
standard or any extension of any amortization period has been requested or granted; (ii) all premiums to the PBGC have been timely paid in full, and (iii) no liability (other than for
premiums to the PBGC) under Title IV of ERISA has been or is expected to be incurred by EQM or any of its Subsidiaries.
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(e) Except
for such claims which would not have, individually or in the aggregate, an EQM Material Adverse Effect, no action, dispute, suit, claim, arbitration, or legal,
administrative or other proceeding or governmental action is pending or, to the Knowledge of EQM, threatened with respect to any EQM Benefit Plan, other than claims for benefits in the ordinary
course, (i) alleging any breach of the material terms of such plan or any fiduciary duties with respect thereto or (ii) alleging any violation of any applicable Law with respect to such
plan.
(f) Each
EQM Benefit Plan has been maintained, funded and administered in compliance with its terms and with applicable Law, including ERISA and the Code, except for such
non-compliance which would not have, individually or in the aggregate, an EQM Material Adverse Effect.
(g) Except
as would not have, individually or in the aggregate, an EQM Material Adverse Effect, with respect to any EQM Benefit Plan, all contributions, premiums and other
payments due from any of EQM or its Subsidiaries required by applicable Law or the terms of any EQM Benefit Plan have been made or properly accrued under any such plan to any fund, trust or account
established thereunder or in connection therewith by the due date thereof.
(h) Except
as would not have, individually or in the aggregate, an EQM Material Adverse Effect, neither EQM nor any of its Subsidiaries has any liability for
post-termination or retiree life or medical benefits to former officers, employees, directors or consultants, or beneficiaries or dependents of any of the foregoing, except for continuation coverage
as required by Section 4980B of the Code or Part 6 of Title I of ERISA provided at no expense to EQM or any of its Subsidiaries.
(i) Except
as would not have, individually or in the aggregate, an EQM Material Adverse Effect, none of EQM, its ERISA Affiliates or any other Person, including any
fiduciary, has engaged in any "prohibited transaction" (as defined in Section 4975 of the Code or Section 406 of ERISA), which would reasonably be expected to subject any of the EQM
Benefit Plans or their related trusts, EQM, any of its ERISA Affiliates or any Person that EQM or any of its ERISA Affiliates has an obligation to indemnify, to any Tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA.
(j) Except
pursuant to retention or other arrangements put in place after the date of this Agreement in compliance with the terms of this Agreement, the consummation of the
transactions contemplated hereby will not, either alone or in combination with any other event, (i) accelerate the time of payment or vesting, or increase the amount of any compensation or
benefits due to any employee, consultant or officer of EQM, EQM GP or any of their respective Subsidiaries, (ii) result in any forgiveness of indebtedness or an obligation to fund
benefits with respect to any such individual or (iii) result in any limitation on the right of the EQM Entities or any of their Affiliates to amend, merge, terminate or receive a reversion of
assets from any EQM Benefit Plan or related trust.
Section 4.12
Labor Matters.
(a) Except
for such matters which would not have, individually or in the aggregate, an EQM Material Adverse Effect, none of EQM, EQM GP or any of their respective
Subsidiaries has received written notice during the past two years of the intent of any Governmental Authority responsible for the enforcement of labor, employment, occupational health and safety or
workplace safety and insurance/workers compensation laws to conduct an investigation of EQM, EQM GP or any of their respective Subsidiaries with respect to such matters and, to the Knowledge of
EQM, no such investigation is in progress.
(b) Except
for such matters which would not have, individually or in the aggregate, an EQM Material Adverse Effect, (i) there are no (and have not been during the
two-year period preceding
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the
date of this Agreement) strikes or lockouts with respect to any employees of EQM, EQM GP or any of their respective Subsidiaries, (ii) to the Knowledge of EQM, there is no (and has
not been during the two-year period preceding the date of this Agreement) union organizing effort pending or threatened against EQM, EQM GP or any of their respective Subsidiaries,
(iii) there is no (and has not been during the two-year period preceding the date of this Agreement) unfair labor practice, labor dispute (other than routine individual grievances) or labor
arbitration proceeding pending or, to the Knowledge of EQM, threatened against EQM, EQM GP or any of their respective Subsidiaries and (iv) there is no (and has not been during the two
year period preceding the date of this Agreement) slowdown, or work stoppage in effect or, to the Knowledge of EQM, threatened with respect to any employees of EQM, EQM GP or any of their
respective Subsidiaries.
(c) None
of EQM, EQM GP or any of their respective Subsidiaries has any liabilities under the WARN Act as a result of any action taken by EQM, EQM GP, or any
of their respective Subsidiaries that would have, individually or in the aggregate, an EQM Material Adverse Effect.
(d) Except
for such non-compliance which would not have, individually or in the aggregate, an EQM Material Adverse Effect, EQM, EQM GP and each of their respective
Subsidiaries is, and during the two year period preceding the date of this Agreement has been, in compliance with all applicable Laws in respect of employment and employment practices, terms and
conditions of employment, wages and hours and occupational safety and health (including classifications of service providers as employees and/or independent contractors).
Section 4.13
Environmental Matters.
Except as would not, individually or in the aggregate, have an EQM
Material Adverse Effect: (a) each of EQM and its Subsidiaries is and, since the later of
December 31, 2015 and their respective dates of incorporation, formation or organization, has been in compliance with all applicable Environmental Laws, (b) there has been no release of
any Hazardous Substance by EQM or any of its Subsidiaries, or to the Knowledge of EQM, any other Person in any manner that would give rise to EQM or any of its Subsidiaries incurring any remedial
obligation or corrective action requirement under applicable Environmental Laws, (c) there are no investigations, actions, claims, suits or proceedings pending or, to the Knowledge of EQM,
threatened against EQM or any of its Subsidiaries or involving any real property currently or, to the Knowledge of EQM, formerly owned, operated or leased by or for EQM or any Subsidiary alleging
noncompliance with or liability under, any Environmental Law and (d) to the Knowledge of EQM, no Hazardous Substance has been disposed of, released or transported in violation of any applicable
Environmental Law, at or from any properties owned or operated by EQM or any of its Subsidiaries or as a result of any operations or activities of, or on behalf of, EQM or any of its Subsidiaries.
Section 4.14
Contracts.
(a) Except
for this Agreement, any EQM Benefit Plans, or as filed with the SEC prior to the date of this Agreement, neither EQM nor any of its Subsidiaries is a party to or
bound by, as of the date of this Agreement, any Contract (whether written or oral) (i) which is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K
of the SEC) to EQM; or (ii) which constitutes a contract or commitment relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset) in excess of $50,000,000 (all contracts of the type described in this
Section 4.14(a)
being referred
to herein as "
EQM Material Contracts
").
(b) Except
as would not have, individually or in the aggregate, an EQM Material Adverse Effect: (i) each EQM Material Contract is valid and binding on EQM and any of
its Subsidiaries, as applicable, and is in full force and effect; (ii) EQM and each of its Subsidiaries has in all material respects performed all obligations required to be performed by it to
date under each EQM Material Contract; (iii) neither EQM nor any of its Subsidiaries has received written notice
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of,
or to the Knowledge of EQM, knows of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of EQM
or any of its Subsidiaries under any such EQM Material Contract; and (iv) there is no (and has not been during the two year period preceding the date of this Agreement) slowdown, or work
stoppage in effect or, to the Knowledge of EQM, threatened with respect to any employees of EQM and any of its Subsidiaries.
(c) EQM
has provided to the RMP Conflicts Committee a true, correct and complete copy of the Drop-Down Agreement (including any amendments thereto). None of the EQM Entities
is party to or bound by any agreement that would modify any of the EQM Entities' rights under the Drop-Down Agreement.
Section 4.15
Property.
(a) Except
as would not have, individually or in the aggregate, an EQM Material Adverse Effect, EQM or a Subsidiary of EQM owns and has good title to all of its owned real
property (other than severed oil, gas and/or mineral rights and other hydrocarbon interests) and good title to all its owned personal property, and has valid leasehold interests in all of its leased
real properties (other than hydrocarbon interests) free and clear of all Liens, in each case, sufficient to conduct their respective businesses as currently conducted (except in all cases for Liens
permissible under or not prohibited by any applicable material loan agreements and indentures (together with all related mortgages, deeds of trust and other security agreements)). Except as would not
have, individually or in the aggregate, an EQM Material Adverse Effect, all leases under which EQM or any of its Subsidiaries lease any real or personal property (other than hydrocarbon interests) are
valid and effective against EQM or any of its Subsidiaries and, to the Knowledge of EQM, the counterparties thereto, in accordance with their respective terms and there is not, under any of such
leases, any existing material default by EQM or any of its Subsidiaries or, to the Knowledge of EQM, the counterparties thereto, or, to the Knowledge of EQM, any event which, with notice or lapse of
time or both, would become a material default by EQM or any of its Subsidiaries, or, to the Knowledge of EQM, the counterparties thereto.
(b) EQM
and its Subsidiaries have such rights-of-way as are sufficient to conduct their businesses in all material respects as currently conducted, except such rights-of-way
that, if not obtained (or which, if obtained, if the same were to expire or be revoked or terminated), would not, individually or in the aggregate, have an EQM Material Adverse Effect. Except as would
not, individually or in the aggregate, have an EQM Material Adverse Effect, each of EQM and its Subsidiaries has fulfilled and performed all its obligations with respect to such rights-of-way which
are required to be fulfilled or
performed as of the date of this Agreement (subject to all applicable waivers, modifications, grace periods and extensions) and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or would result in any impairment of the rights of the holder of any such rights-of-way, except for rights reserved to, or vested in, any municipality or
other Governmental Authority or any railroad by the terms of any right, power, franchise, grant, license, permit, or by any other provision of any applicable Law, to terminate or to require annual or
other periodic payments as a condition to the continuance of such right.
Section 4.16
Intellectual Property.
Except as would not have, individually or in the aggregate, an EQM
Material Adverse Effect, either EQM or a Subsidiary of EQM owns, or is licensed or otherwise
possesses adequate rights to use, all material trademarks, trade names, service marks, service names, mark registrations, logos, assumed names, domain names, registered and unregistered copyrights,
patents or applications and registrations, and trade secrets (collectively, the "
EQM Intellectual Property
") used in their respective businesses as
currently conducted. Except as would not have, individually or in the aggregate, an EQM Material Adverse Effect, (a) there are no pending or, to the Knowledge of
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EQM,
threatened claims by any Person alleging infringement or misappropriation by EQM or any of its Subsidiaries of such Person's intellectual property, (b) to the Knowledge of EQM, the conduct
of the business of EQM and its Subsidiaries does not infringe or misappropriate any intellectual property rights of any Person, (c) neither EQM nor any of its Subsidiaries has made any claim of
a violation or infringement, or misappropriation by others of its rights to or in connection with the EQM Intellectual Property, and (d) to the Knowledge of EQM, no Person is infringing or
misappropriating any EQM Intellectual Property.
Section 4.17
Insurance.
Except as would not have, individually or in the aggregate, an EQM Material
Adverse Effect, (i) EQM and its Subsidiaries maintain, or are entitled to the
benefits of, insurance covering their properties, operations, personnel and businesses in amounts customary for the businesses in which they operate and (ii) none of EQM or its Subsidiaries has
received notice from any insurer or agent of such insurer that substantial capital improvements or other expenditures will have to be made in order to continue such insurance, and all such insurance
is outstanding and duly in force.
Section 4.18
Brokers and Other Advisors.
Except for Evercore Group L.L.C., the fees and expenses of
which will be paid by EQM, no broker, investment banker or financial advisor is entitled to any
broker's, finder's or financial advisor's fee or commission, or the reimbursement of expenses, in connection with the Merger, the GP Merger or the other transactions contemplated hereby based
on arrangements made by or on behalf of EQM or any of its Subsidiaries.
Section 4.19
State Takeover Statutes.
The action of the EQM GP Board in approving this Agreement
and the transactions contemplated hereby is sufficient to render inapplicable to this Agreement
and the transactions contemplated hereby any state takeover laws and any applicable provision of the EQM Partnership Agreement.
Section 4.20
Regulatory Matters.
Except as would not, individually or in the aggregate, have an EQM
Material Adverse Effect, there are no proceedings pending, or to the Knowledge of EQM,
threatened, alleging that EQM or any of its Subsidiaries is in material violation of the NGA, the NGPA, the ICA, the FPA, or PUHCA, or the laws, rules and regulations of any applicable state public
utility commission or department, as the case may be.
Section 4.21
Investment Company Act.
EQM is not, nor immediately after the Closing will be, subject to
regulation under the Investment Company Act of 1940, as amended.
Section 4.22
No Other Representations or Warranties.
Except for the representations and warranties set
forth in this
Article IV
, none of EQM, Merger Sub or any
other Person makes or has made any express or implied representation or warranty with respect to the EQM Entities or with respect to any other information provided to RMP in connection with the
transactions contemplated hereby. Without limiting the generality of the foregoing, none of EQM, Merger Sub or any other Person will have or be subject to any liability or other obligation to RMP or
any other Person resulting from the distribution to RMP (including its Representatives), or RMP's (or such Representatives') use of, any such information, including any information, documents,
projections, forecasts or other materials made available to RMP in any "data rooms" or management presentations in expectation of the Merger or the GP Merger.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1
Preparation of the Registration Statement and the Proxy Statement; RMP Unitholders Meeting.
(a) As
soon as practicable following the date of this Agreement, RMP and EQM shall jointly prepare and RMP shall file with the SEC the Proxy Statement, and RMP and EQM shall
jointly prepare and EQM shall file with the SEC the Registration Statement, in which the Proxy
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Statement
will be included as a prospectus. Each of RMP and EQM shall use its reasonable best efforts to have the Registration Statement declared effective under the Securities Act as promptly as
practicable after such filing and keep the Registration Statement effective for so long as necessary to consummate the transactions contemplated hereby. RMP and EQM shall use their respective
reasonable best efforts to cause the Proxy Statement to be mailed to the RMP Unitholders as promptly as practicable after the Registration Statement is declared effective under the Securities Act. No
filing of, or amendment or supplement to, the Registration Statement will be made by EQM, and no filing of, or amendment or supplement to, the Proxy Statement will be made by RMP, without providing
the other party a reasonable opportunity to review and comment thereon. If at any time prior to the Effective Time any information relating to RMP or EQM, or any of their respective Affiliates,
directors or officers, is discovered by RMP or EQM that should be set forth in an amendment or supplement to any of the Registration Statement or the Proxy Statement, so that any such document would
not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading,
the party that discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall be jointly prepared and promptly
filed with the SEC and, to the extent required by Law, disseminated to the RMP Unitholders. The parties shall notify each other promptly of the receipt of any comments from the SEC or the staff of the
SEC and of any request by the SEC or the staff of the SEC for amendments or supplements to either the Proxy Statement or the Registration Statement or for additional information and shall supply each
other with copies of (i) all correspondence between it or any of its Representatives, on the one hand, and the SEC or the staff of the SEC, on the other hand, with respect to the Proxy
Statement, the Registration Statement or the transactions contemplated hereby and (ii) all orders of the SEC relating to the Registration Statement.
(b) RMP
shall, as soon as practicable following the date of this Agreement, establish a record date for, duly call, give notice of, convene and hold a special meeting of the
RMP Unitholders (the "
RMP Unitholders Meeting
") for the purpose of obtaining the RMP Unitholder Approval. Subject to
Section 5.3
, RMP shall,
through the RMP GP Board and the RMP Conflicts Committee, recommend to the RMP Unitholders approval of this
Agreement and the Merger (the "
RMP Board Recommendation
"). Unless the RMP GP Board has effected an RMP Adverse Recommendation Change in
accordance with
Section 5.3
, RMP shall use its reasonable best efforts to solicit from the RMP Unitholders proxies in favor of the Merger and to
take all other action necessary or advisable to secure the RMP Unitholder Approval. The Proxy Statement shall include a copy of the RMP Fairness Opinion and (subject to
Section 5.3
) the RMP Board
Recommendation. Notwithstanding anything in this Agreement to the contrary, unless this Agreement is terminated in
accordance with
Section 7.1
, RMP shall submit this
Agreement for approval by the RMP Unitholders at such RMP Unitholders Meeting. Notwithstanding anything in this Agreement to the contrary, RMP may (and if requested by EQM shall) postpone or adjourn
the RMP Unitholders Meeting (i) to solicit additional proxies for the purpose of obtaining the RMP Unitholder Approval, (ii) for the absence of quorum, (iii) to allow reasonable
additional time for the filing and/or mailing of any supplemental or amended disclosure that the RMP Conflicts Committee has determined after consultation with outside legal counsel is necessary under
applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the RMP Unitholders prior to the RMP Unitholders Meeting and (iv) if RMP has delivered any
notice contemplated by
Section 5.3(d)
and the time periods contemplated by
Section 5.3(d)
have not expired.
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Section 5.2
Conduct of Business.
(a) Except
(i) as expressly permitted by this Agreement, (ii) as set forth in
Section 5.2(a)
of the RMP
Disclosure Schedule, (iii) as required by applicable Law, (iv) as provided for or contemplated by any RMP Material Contract in effect as of the date of this Agreement (including the RMP
Partnership Agreement) or (v) as agreed in writing by EQM (which consent shall not be unreasonably withheld, delayed or conditioned), during the period from the date of this Agreement until the
Effective Time, RMP and RMP GP shall, and shall cause each of their Subsidiaries to, (A) conduct its business in the ordinary course of business consistent with past practice,
(B) use commercially reasonable efforts to maintain and preserve intact its business organization and the goodwill of those having business relationships with it and retain the services of its
present officers and key employees, (C) use commercially reasonable efforts to keep in full force and effect all material RMP Permits and all material insurance policies maintained by RMP and
its Subsidiaries, other than changes to such policies made in the ordinary course of business, and (D) use commercially reasonable efforts to comply in all material respects with all applicable
Laws and the requirements of all RMP Material Contracts. Without limiting the generality of the foregoing, except (1) as expressly permitted by this Agreement, (2) as set forth in the
corresponding provision of
Section 5.2(a)
of the RMP Disclosure Schedule, (3) as required by applicable Law, (4) as required by any
RMP Material Contract in effect as of the date of this Agreement (including the RMP Partnership Agreement) or (5) as agreed in writing by EQM, during the period from the date of this Agreement
to the Effective Time, RMP shall not, and shall not permit any of its Subsidiaries to:
(i) (A)
issue, sell, grant, dispose of, accelerate the vesting of or modify, as applicable, any of its RMP Partnership Interests, partnership interests, limited liability
company interests, shares of capital stock, voting securities or equity interests, or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe
for, any RMP Partnership Interests, partnership interests, limited liability company interests, shares of capital stock, voting securities or equity interests, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any of its RMP Partnership Interests, partnership interests, limited liability company interests, shares of capital stock,
voting securities or equity interests or any securities or rights
convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for, any of the foregoing, other than (i) in connection with the vesting or settlement of any equity or
equity-based award that is outstanding on, or granted after, the date of this Agreement in accordance with the terms thereof and (ii) in connection with the granting of any awards under the RMP
Equity Plans in the ordinary course of business; (B) redeem, purchase or otherwise acquire any of its outstanding partnership interests, limited liability company interests, shares of capital
stock, voting securities or equity interests, or any rights, warrants, options, calls, commitments or any other agreements of any character to acquire any of its partnership interests, limited
liability company interests, shares of capital stock, voting securities or equity interests, other than Tax withholding with respect to any equity or equity-based award that is outstanding on, or
granted after, the date of this Agreement in accordance with the terms thereof; (C) declare, set aside for payment or pay any distribution on any RMP Units or other RMP Partnership Interests,
or otherwise make any payments to the RMP Unitholders in their capacity as such (other than (x) distributions by a direct or indirect Subsidiary of RMP to its parent and (y) subject to
Section 5.14
, RMP's regular quarterly distributions and associated distributions in respect of the RMP Incentive Distribution Rights in amounts
consistent with publicly issued guidance as of the date hereof); or (D) split, combine, subdivide or reclassify any RMP Units or other RMP Partnership Interests;
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(ii) (A)
incur, refinance or assume any indebtedness for borrowed money or guarantee any such indebtedness for borrowed money (or enter into a "keep well" or similar
agreement with respect to such indebtedness) or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of RMP or any of its Subsidiaries, other
than, subject to
Section 5.10(b)
, additional borrowings under the RMP Existing Credit Facility not in excess of the amount set forth in
Section 5.2(a)(ii) of the RMP Disclosure Schedule or (B) except as contemplated by
Section 5.10(b)
and except for
(x) repayments or repurchases required pursuant to the terms of such indebtedness or debt securities and (y) any repayments of the RMP Existing Credit Facility, prepay or repurchase any
long-term indebtedness for borrowed money or debt securities of RMP or any of its Subsidiaries;
(iii) sell,
transfer, lease, farmout or otherwise dispose of (including pursuant to a sale leaseback transaction or an asset securitization transaction) (A) any of
its properties or assets that do not generate cash on a recurring basis with a fair market value in excess of $25,000,000 in the aggregate and (B) any of its properties or assets that generate
cash on a recurring basis (including securities of Subsidiaries), except in the case of clause (A), (w) pursuant to Contracts in force at the date of this Agreement and listed on
Section 5.2(a)(iii)
of the RMP Disclosure Schedule, correct and complete copies of which have been made available to EQM and other potential
transactions listed on
Section 5.2(a)(iii)
of the RMP Disclosure Schedule, (x) dispositions of obsolete or worthless equipment which is
replaced with equipment and materials of comparable or better value and utility, (y) transactions (including sales of natural gas, natural gas liquids and other produced hydrocarbons and
minerals) in the ordinary course of business consistent with past practice or (z) sales, transfers, leases, farmouts or other disposals to RMP or any of its Subsidiaries;
(iv) make
any capital expenditure or capital expenditures (which shall include, any investments by contribution to capital, property transfers, purchase of securities or
otherwise) in excess of $50,000,000 in the aggregate, except for any such capital expenditures set forth in
Section 5.2(a)(iv)
of the RMP
Disclosure Schedule or except as may be reasonably required to conduct emergency operations, repairs or replacements on any well, pipeline, or other facility;
(v) directly
or indirectly acquire by merging or consolidating with, or by purchasing all of or a substantial equity interest in, or by any other manner, any Person or
division, business or equity interest of any Person, other than acquisitions (A) in the ordinary course of business or (B) outside the ordinary course of business that, in the aggregate,
do not have a purchase price in excess of $50,000,000;
(vi) make
any loans or advances to any Person (other than (A) to its employees in the ordinary course of business consistent with past practice, (B) loans and
advances to RMP or any of its Subsidiaries and (C) trade credit granted in the ordinary course of business consistent with past practice);
(vii) (A)
except (x) for Contracts relating to indebtedness permitted under this Agreement or (y) as in the ordinary course of business consistent with past
practice, (1) enter into any contract or agreement that would be an RMP Material Contract in which the annual revenues or payments are anticipated to be in excess of $15,000,000 or
(2) terminate or amend in any material respect any RMP Material Contract, or (B) (w) waive any material rights under any RMP Material Contract, (x) enter into or extend the term
or scope of any RMP Material Contract that materially restricts RMP or any of its Subsidiaries from engaging in any line of business or in any geographic area, (y) enter into any RMP Material
Contract that would be breached by, or require the consent of any third party in order to continue in full force following, consummation of the transactions contemplated hereby, or (z) release
any Person from, or modify or waive any provision of, any standstill, confidentiality or similar agreement, in each case, related to a sale of RMP or any of its material Subsidiaries;
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(viii) (A)
change its fiscal year or any method of Tax accounting, (B) make, change or revoke any material Tax election (including any entity classification election
under Treasury Regulations Section 301.7701-3), (C) settle or compromise any material liability for Taxes, or any audit, examination or other legal proceeding in respect of a material
amount of Taxes, (D) surrender any claim for a refund of a material amount of Taxes, (E) enter into a "closing agreement" within the meaning of Section 7121 of the Code (or any
analogous or similar provision of any state, local or foreign Law), (F) request any Tax ruling from any Governmental Authority, or (G) file any material amended Tax Return;
(ix) make
any changes in financial accounting methods, principles or practices (or change an annual financial accounting period), except insofar as may be required by a
change in GAAP or applicable Law;
(x) amend
the RMP Charter Documents, the RMP Subsidiary Documents or the RMP GP Charter Documents;
(xi) adopt
a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization, merger, consolidation or other reorganization (other than
transactions exclusively between wholly owned Subsidiaries of RMP);
(xii) except
as provided under any agreement entered into prior to the date of this Agreement, pay, discharge, settle or satisfy any suit, action, claims or proceeding, in
excess of $15,000,000 in the aggregate;
(xiii) take
any action which would reasonably be expected to, in any material respect, impede or delay the ability of the parties to satisfy any of the conditions to or the
consummation of the transactions contemplated hereby;
(xiv) engage
in any activity or conduct its business in a manner that would cause less than 90% of the gross income of RMP for any calendar quarter since its formation and
prior to the Effective Time to be treated as "qualifying income" within the meaning of Section 7704(d) of the Code or that would otherwise cause RMP to be taxable as a corporation under
Section 7704 of the Code; or
(xv) agree,
in writing or otherwise, to take any of the foregoing actions.
(b) Except
(i) as expressly permitted by this Agreement, (ii) as set forth in
Section 5.2(b)
of the EQM
Disclosure Schedule, (iii) as required by applicable Law, (iv) as provided for or contemplated by any EQM Material Contract in effect as of the date of this Agreement or (v) as
agreed in writing by RMP (which consent shall not be unreasonably withheld, delayed or conditioned), during the period from the date of this Agreement until the Effective Time EQM and EQM GP
shall, and shall cause each of their consolidated Subsidiaries to: (w) conduct its business in the ordinary course of business consistent with past practice, (x) use commercially
reasonable efforts to comply in all material respects with all applicable Laws and the requirements of all EQM Material Contracts, (y) use commercially reasonable efforts to maintain and
preserve intact its business organization and the goodwill of those having business relationships with it and retain the services of its present officers and key employees, and (z) use its
commercially reasonable efforts to keep in full force and effect all material EQM Permits and all material insurance policies maintained by EQM, its consolidated Subsidiaries, other than changes to
such policies made in the ordinary course of business. Without limiting the generality of the foregoing, except (A) as expressly permitted by this Agreement, (B) as set forth in the
corresponding provision of
Section 5.2(b)
of the EQM Disclosure Schedule, (C) as required by applicable Law, (D) as required by any
EQM Material Contract in effect as of the date of this Agreement or
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(E) as
agreed in writing by RMP, during the period from the date of this Agreement to the Effective Time, EQM shall not and shall not permit any of its consolidated Subsidiaries to:
(i) (A)
issue, sell, grant, or dispose of, accelerate the vesting of or modify, as applicable, any of its partnership interests, shares of capital stock, voting securities
or equity interests, or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any of its partnership interests, shares of capital stock,
voting securities or equity interests, or any rights, warrants, options, calls, commitments or any other agreements of any character to purchase or acquire any of its partnership interests, shares of
capital stock, voting securities or equity interests or any securities or rights convertible into, exchangeable or exercisable for, or evidencing the right to subscribe for any of the foregoing, other
than (x) any such actions involving equity or equity-based awards that are outstanding on, or granted after, the date of this Agreement (it being understood that nothing in this Agreement shall
restrict the granting of any awards under the EQM Equity Plans) and (y) issuances of up to 5,889,282 EQM Units as consideration in the Drop-Down Transactions; (B) redeem, purchase or
otherwise acquire any of its outstanding partnership interests, shares of capital stock, voting securities or equity interests, or any rights, warrants, options, calls, commitments or any other
agreements of any character to acquire any of its partnership interests, shares of capital stock, voting securities or equity interests, other than Tax withholding with respect to, any equity or
equity-based award that is outstanding on, or granted after, the date of this Agreement in accordance with the terms thereof; (C) declare, set aside for payment or pay any distribution on any
EQM Units, or otherwise make any payments to the EQM Unitholders in their capacity as such (other than (x) distributions by a direct or indirect Subsidiary of EQM to its parent or
(y) subject to
Section 5.14
, EQM's regular quarterly distributions and associated distributions to the EQM GP and in respect of the
EQM Incentive Distribution Rights in amounts consistent with publicly issued guidance as of the date hereof); or (D) split, combine, subdivide or reclassify any of its partnership units or
other interests;
(ii) other
than any debt securities or options, warrants, calls or other rights to acquire any debt securities issued or sold by Mountain Valley Pipeline, LLC or its
Subsidiaries, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of EQM or any of its Subsidiaries in an aggregate principal amount exceeding
$2,500,000,000;
(iii) amend
the EQM Charter Documents or EQM GP Charter Documents (other than amendments to the EQM Charter Documents that are approved by EQM GP or an EQM
Unit Majority);
(iv) adopt
a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization (other than transactions exclusively
between wholly owned Subsidiaries of EQM);
(v) engage
in any activity or conduct its business in a manner that would cause less than 90% of the gross income of EQM for any calendar quarter since its formation and
prior to the Effective Time to be treated as "qualifying income" within the meaning of Section 7704(d) of the Code or that would otherwise cause EQM to be taxable as a corporation under
Section 7704 of the Code;
(vi) make,
or permit any of its Subsidiaries to make, any acquisition of any other Person or business or merge, consolidate or enter into any other business combination
transaction or agreement with any Person, in each case, that would reasonably be expected to prevent, materially impede or materially delay the consummation of the Merger or the GP Merger;
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(vii) file a
registration statement relating to the primary offering, issuance and sale of EQM Units by EQM; or
(viii) agree,
in writing or otherwise, to take any of the foregoing actions.
Section 5.3
No Solicitation by RMP.
(a) RMP
shall, and shall cause its Subsidiaries and shall use its reasonable best efforts to cause RMP's and its Subsidiaries' respective directors, officers, employees,
investment bankers, financial advisors, attorneys, accountants, agents and other representatives (collectively, "
Representatives
") to, immediately cease
and cause to be terminated any discussions or negotiations with any Person conducted heretofore with respect to an RMP Alternative Proposal, request the return or destruction of all confidential
information previously provided to such parties by or on behalf of RMP or its Subsidiaries and immediately prohibit any access by any Person (other than EQM and its Representatives) to any physical or
electronic data room relating to a possible RMP Alternative Proposal. Except as permitted by this
Section 5.3
, (x) without the prior
written consent of EQM, RMP shall not, and shall cause its Subsidiaries not to, and use its reasonable best efforts to cause its Representatives not to, directly or indirectly (i) solicit,
initiate, knowingly facilitate, knowingly encourage (including by way of furnishing confidential information) or knowingly induce or take any other action intended to lead to any inquiries or any
proposals that constitute or could reasonably be expected to lead to an RMP Alternative Proposal, (ii) grant any waiver or release of any standstill or similar agreement with respect to any
units of RMP or of any of its Subsidiaries, (iii) enter into any confidentiality agreement, merger agreement, letter of intent, agreement in principle, unit purchase agreement, asset purchase
agreement or unit exchange agreement, option agreement or other similar agreement relating to an RMP
Alternative Proposal, (iv) file with the SEC a Proxy Statement that does not include the RMP Board Recommendation, or (v) withdraw, modify or qualify, or propose publicly to withdraw,
modify or qualify, in a manner adverse to EQM, the RMP Board Recommendation or publicly recommend the approval or adoption of, or publicly approve or adopt, or propose to publicly recommend, approve
or adopt, any RMP Alternative Proposal, or fail to recommend against acceptance of any tender offer or exchange offer for RMP Units within ten (10) business days after commencement of such
offer, or resolving or agreeing to take any of the foregoing actions, and (y) subject to
Section 5.3(b)
, within five business days of
receipt of a written request of EQM following the receipt by RMP of any RMP Alternative Proposal, RMP shall publicly reconfirm the RMP Board Recommendation;
provided
, that EQM shall not be permitted to
make such request on more than one occasion in respect of each RMP Alternative Proposal and each material
modification to an RMP Alternative Proposal, if any (the taking of any action described in clauses (x)(iv) or (v) or the failure to take the action described in clause (y) being
referred to as an "
RMP Adverse Recommendation Change
"). Without limiting the foregoing, it is understood that any violation of the foregoing
restrictions by RMP's Subsidiaries or Representatives shall be deemed to be a breach of this
Section 5.3
by RMP, other than in the case where
(x) such breach is a result of an isolated action by a Person that is a Representative of RMP (other than a director or officer of RMP or RMP GP), (y) such breach was not caused
by, or within the Knowledge of, RMP and (z) RMP takes appropriate actions to remedy such breach upon discovery thereof.
(b) Notwithstanding
anything to the contrary contained in
Section 5.3(a)
, if at any time following the date of this
Agreement and prior to obtaining the RMP Unitholder Approval, (i) RMP has received an unsolicited written RMP Alternative Proposal that the RMP GP Board (upon the recommendation of the
RMP Conflicts Committee) believes is bona fide, (ii) the RMP GP Board (upon the recommendation of the RMP Conflicts Committee), after consultation with its financial advisors and outside
legal counsel, determines in good faith that (A) such RMP Alternative Proposal constitutes or would reasonably be expected to lead to or result in an RMP Superior Proposal and
(B) failure to take such action would be inconsistent with its duties under
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applicable
Law as modified by the RMP Partnership Agreement and (iii) such RMP Alternative Proposal did not result from a Willful Breach of this
Section 5.3
, then RMP may, subject to clauses (x) and
(y) below, (A) furnish information, including confidential
information, with respect to RMP and its Subsidiaries to the Person making such RMP Alternative Proposal and (B) participate in discussions or negotiations regarding such RMP Alternative
Proposal;
provided
that (x) RMP will not, and will use reasonable best efforts to cause its Representatives not to, disclose any non-public
information to such Person unless RMP has, or first enters into, a confidentiality agreement with such Person of the nature generally used in similar circumstances, as determined by RMP in its
reasonable business judgment and (y) RMP will provide to EQM non-public information about RMP or its Subsidiaries that was not previously provided or made available to EQM prior to or
substantially concurrently with providing or making available such non-public information to such other Person.
(c) In
addition to the other obligations of RMP set forth in this
Section 5.3
, RMP shall promptly advise EQM, orally
and in writing, and in no event later than 24 hours after receipt, if any proposal, offer, inquiry or other contact is received by, any information is requested from, or any discussions or
negotiations are sought to be initiated or continued with, RMP in respect of any RMP Alternative Proposal, and shall, in any such notice to EQM, indicate the identity of the Person making such
proposal, offer, inquiry or other contact and the terms and conditions of any proposals or offers or the nature of any inquiries or contacts (and shall include with such notice copies of any written
materials received from or on behalf of such Person relating to such proposal, offer, inquiry or request), and thereafter shall promptly keep EQM reasonably informed of all material developments
affecting the status and terms of any such proposals, offers, inquiries or requests (and RMP shall promptly provide EQM with copies of any additional written materials received by RMP or that RMP has
delivered to any third party making an RMP Alternative Proposal that relate to such proposals, offers, inquiries or requests) and of the status of any such discussions or negotiations.
(d) Notwithstanding
any other provision of this Agreement, at any time prior to obtaining the RMP Unitholder Approval, the RMP GP Board and the RMP Conflicts
Committee may effect an RMP Adverse Recommendation Change in response to an unsolicited RMP Alternative Proposal or an Intervening Event if the RMP GP Board (upon the recommendation of the RMP
Conflicts Committee), after consultation with its outside legal counsel and financial advisors, determines in good faith that the failure to take such action would be inconsistent with its duties
under applicable Law as modified by the RMP Partnership Agreement and:
(i) if
the RMP GP Board (upon the recommendation of the RMP Conflicts Committee) intends to effect such RMP Adverse Recommendation Change in response to an RMP
Alternative Proposal:
(A) such
RMP Alternative Proposal is bona fide, in writing and has not been withdrawn or abandoned;
(B) the
RMP GP Board (upon the recommendation of the RMP Conflicts Committee) has determined, after consultation with its outside legal counsel and financial
advisors, that such RMP Alternative Proposal constitutes an RMP Superior Proposal after giving effect to all of the adjustments offered by EQM pursuant to clause (E) below;
(C) RMP
has provided prior written notice to EQM in accordance with
Section 8.9
(the "
RMP
Superior Proposal Notice
") of the RMP GP Board's intention to effect an RMP Adverse Recommendation Change, and such RMP Superior Proposal Notice has specified the
identity of the Person making such RMP Alternative Proposal, the material terms and conditions of such RMP Alternative Proposal, and complete copies of any written
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(e) Nothing
contained in this Agreement shall prevent RMP or the RMP GP Board from issuing a "stop, look and listen" communication pursuant to Rule 14d-9(f)
under the Exchange Act or complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act with respect to an RMP Alternative Proposal if the RMP GP Board determines in good faith
(after consultation with outside legal counsel) that its failure to do so would be reasonably likely to constitute a violation of applicable Law;
provided
that any RMP Adverse Recommendation Change may
only be made in accordance with
Section 5.3(d)
. For the avoidance of doubt, a public statement that describes RMP's receipt of an RMP Alternative Proposal and the operation of
this Agreement with respect thereto shall not be deemed an RMP Adverse Recommendation Change.
Section 5.4
Reasonable Best Efforts.
(a) Subject
to the terms and conditions of this Agreement (including
Section 5.4(d)
), the EQM Entities, on the one
hand, and the RMP Entities, on the other hand, shall cooperate with the other and use (and shall cause their respective Subsidiaries to use) their reasonable best efforts to (i) take, or cause
to be taken, all appropriate actions, and do, or cause to be done, all things, necessary, proper or advisable to cause the conditions to the Closing to be satisfied as promptly as practicable (and in
any event no
later than the Outside Date) and to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated hereby, including preparing and filing promptly and fully
all documentation to effect all necessary filings, notifications, notices, petitions, statements, registrations, submissions of information, applications and other documents (including any required or
recommended filings under applicable Antitrust Laws), (ii) obtain as promptly as practicable (and in any event no later than the Outside Date) all approvals, consents, clearances, expirations
or terminations of waiting periods, registrations, permits, authorizations and other confirmations from any Governmental Authority or third party necessary, proper or advisable to consummate the
transactions contemplated hereby, (iii) defend any lawsuits or other legal proceedings, whether judicial or administrative, including by Governmental Authorities, challenging this Agreement or
the consummation of the transactions contemplated hereby or seek to have lifted or rescinded any injunction or restraining order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby and (iv) obtain all necessary consents, approvals or waivers from third parties.
(b) In
furtherance and not in limitation of the foregoing, (i) each party hereto (including by their respective Subsidiaries) agrees to make an appropriate filing (if
required) of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated hereby as promptly as practicable and in any event within 15 business days after the
date of this Agreement or after any later date on which the parties agree that there is an HSR Act filing requirement (unless a later date is mutually agreed to by the parties hereto) and to supply as
promptly as practicable any additional information and documentary material that may be requested by any Governmental Authority pursuant to the HSR Act or any other Antitrust Law and use its
reasonable best efforts to take, or cause to be taken (including by their respective Subsidiaries), all other actions consistent with this
Section 5.4
necessary to cause the expiration or
termination of any applicable waiting periods under the HSR Act and to obtain approvals or
consents under any other applicable Antitrust Laws as promptly as practicable (and in any event no later than the Outside Date); and (ii) EQM and RMP shall each use its reasonable best efforts
to (A) take all actions necessary to ensure that no state takeover statute or similar Law is or becomes applicable to any of the transactions contemplated hereby and (B) if any state
takeover statute or similar Law becomes applicable to any of the transactions contemplated hereby, take all actions necessary to ensure that such transaction may be consummated as promptly as
practicable
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on
the terms contemplated by this Agreement and otherwise minimize the effect of such Law on the transaction.
(c) Each
of the parties hereto shall use (and shall cause their respective Subsidiaries to use) its reasonable best efforts to (i) cooperate in all respects with each
other in connection with any filing or submission with a Governmental Authority in connection with the transactions contemplated hereby,
including by providing the other parties a reasonable opportunity to review and comment thereon, and in connection with any investigation or other inquiry by or before a Governmental Authority
relating to the transactions contemplated hereby, including any proceeding initiated by a private Person, (ii) promptly inform the other party of (and supply to the other party) any
communication received by such party from, or given by such party to, any Governmental Authority and any material communication received or given in connection with any proceeding by a private Person,
in each case regarding any of the transactions contemplated hereby, (iii) permit the other party to review in advance and incorporate the other party's reasonable comments in any communication
or submission to be given by it to any Governmental Authority with respect to obtaining any approvals, consents, clearances or expirations or terminations of waiting periods required under any
Antitrust Law in connection with the transactions contemplated hereby and (iv) consult with the other party in advance of any meeting or teleconference with any Governmental Authority or, in
connection with any proceeding by a private Person, with any other Person, and, to the extent not prohibited by the Governmental Authority or other Person, give the other party the opportunity to
attend and participate in such meetings and teleconferences. Subject to
Section 5.6(b)
, the parties shall take reasonable efforts to share
information protected from disclosure under the attorney-client privilege, work product doctrine, joint defense privilege or any other privilege pursuant to this
Section 5.4
in a manner so as to
preserve the applicable privilege.
(d) The
EQM Entities and the RMP Entities (including by causing their respective Subsidiaries) agree to use their reasonable best efforts to (i) resolve any
objections that a Governmental Authority or other Person may assert under any Antitrust Law with respect to the transactions contemplated hereby and (ii) avoid or eliminate each and every
impediment under any Antitrust Law that may be asserted by any Governmental Authority with respect to the transactions contemplated hereby, in each case, so as to enable the Closing to occur as
promptly as practicable and in any event no later than the Outside Date, including (A) offering, negotiating, accepting and agreeing to dispose or hold separate any part of the EQM Entities,
the RMP Entities' or their respective Subsidiaries' businesses, operations or assets (or a combination thereof) or (B) offering, negotiating, accepting and agreeing to restrict the manner in
which the EQM Entities, the RMP Entities or any of their respective Subsidiaries may carry on business in any part of the world (the actions described in subsections (ii)(A) and (ii)(B)
together, "
Remedial Actions
");
provided
,
however
, that
notwithstanding anything to the contrary contained in this Agreement, the EQM Entities, the RMP Entities and their Affiliates and Subsidiaries shall not be required to take any Remedial Action, take
any other action, or enter into any other agreement if such Remedial Action or other action or agreement, individually or in the aggregate, would reasonably be expected to have a material adverse
impact on (x) the EQM Entities and their Subsidiaries, prior to the Merger, taken as a whole, (y) the RMP Entities and their Subsidiaries, taken as a whole or (z) the EQM Entities
and their Subsidiaries, after the Merger, taken as a whole. Neither the EQM Entities nor the RMP Entities shall, without the other parties' prior written consent, offer, negotiate, accept or agree to
any Remedial Action or other action or agreement with respect to the EQM Entities' or the RMP Entities' businesses, operations or assets, or any restrictions on their businesses.
Section 5.5
Public Announcements.
The initial press release with respect to the execution of this
Agreement shall be a joint press release to be reasonably agreed upon by EQM and RMP. Thereafter,
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neither
EQM nor RMP shall issue or cause the publication of any press release or other public announcement (to the extent not previously issued or made in accordance with this Agreement) with respect
to this Agreement or the transactions contemplated hereby without the prior consent of the other party (which consent shall not be unreasonably withheld or delayed), except as may be required by Law
or by any applicable listing agreement with the NYSE or other national securities exchange as determined in the good faith judgment of the party proposing to make such release (in which case such
party shall not issue or cause the publication of such press release or other public announcement without prior consultation with the other party);
provided
,
however
, that RMP shall not be required by this
Section 5.5
to consult with any other party with respect to a public announcement in connection with the receipt
and existence of an RMP
Alternative Proposal that the RMP GP Board (upon the recommendation of the RMP Conflicts Committee) believes is bona fide and matters related thereto or an RMP Adverse Recommendation Change but
nothing in this proviso shall limit any obligation of RMP under
Section 5.3(d)
to negotiate with EQM in good faith;
provided
,
further
, that each party and their respective controlled affiliates may make statements that
are consistent with statements made in previous press releases, public disclosures or public statements made by EQM or RMP in compliance with this
Section 5.5
.
Section 5.6
Access to Information; Confidentiality.
(a) Upon
reasonable notice and subject to applicable Laws relating to the exchange of information, each party shall, and shall cause each of its Subsidiaries to afford to
the other party and its Representatives reasonable access during normal business hours (and, with respect to books and records, the right to copy) to all of its and its Subsidiaries' properties,
commitments, books, Contracts, records and correspondence (in each case, whether in physical or electronic form), officers, employees, accountants, counsel, financial advisors and other
Representatives; provided, that such access shall be provided on a basis that minimizes the disruption to the operations of the requested party and its Representatives. Each party shall furnish
promptly to the other party (i) a copy of each report, schedule and other document filed or submitted by it pursuant to the requirements of federal or state securities Laws and a copy of any
communication (including "comment letters") received by such party from the SEC concerning compliance with securities Laws and (ii) all other information concerning its and its Subsidiaries'
business, properties and personnel as the other party may reasonably request (including information necessary to prepare the Proxy Statement). Each party and its Representatives shall hold information
received from the other party pursuant to this
Section 5.6
in confidence.
(b) This
Section 5.6
shall not require either party to permit any access, or to disclose any information, that in the
reasonable, good faith judgment (after consultation with counsel, which may be in-house counsel) of such party would reasonably be expected to result in (i) any violation of any contract or Law
to which such party or its Subsidiaries is a party or is subject or cause any privilege (including attorney-client privilege) that such party or any of its Subsidiaries would be entitled to assert to
be undermined with respect to such information and such undermining of such privilege could in such party's good faith judgment (after consultation with counsel) adversely affect in any material
respect such party's position in any pending or, what such party believes in good faith (after consultation with
counsel) could be, future litigation or (ii) if such party or any of its Subsidiaries, on the one hand, and the other party or any of its Subsidiaries, on the other hand, are adverse parties in
a litigation, such information being reasonably pertinent thereto;
provided
that, in the case of clause (i), the parties hereto shall cooperate
in seeking to find a way to allow disclosure of such information (including by entering into a joint-defense or similar agreement) to the extent doing so (A) would not (in the good faith belief
of the party being requested to disclose the information (after consultation with counsel, which may be in-house counsel)) reasonably be likely to result in the violation of any such contract or Law
or reasonably be likely to cause such privilege to be undermined with respect to such information or (B) could reasonably (in the good
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faith
belief of the party being requested to disclose the information (after consultation with counsel, which may be in-house counsel)) be managed through the use of customary "clean-room"
arrangements pursuant to which appropriately designated Representatives of the other party shall be provided access to such information;
provided
,
further
,
that the party being requested to disclose the information shall (1) notify the other party that such disclosures are reasonably likely
to violate its or its Subsidiaries' obligations under any such contract or Law or are reasonably likely to cause such privilege to be undermined, (2) communicate to the other party in
reasonable detail the facts giving rise to such notification and the subject matter of such information (to the extent it is able to do so in accordance with the first proviso in this
Section 5.6(b)
) and (3) in the case where such disclosures are reasonably likely to violate its or its Subsidiaries' obligations under any
contract, use reasonable commercial efforts to seek consent from the applicable third party to any such contract with respect to the disclosures prohibited thereby (to the extent not otherwise
expressly prohibited by the terms of such contract).
(c) No
investigation, or information received, pursuant to this
Section 5.6
will modify any of the representations and
warranties of the parties hereto.
Section 5.7
Notification of Certain Matters.
RMP shall give prompt notice to EQM, and EQM shall give
prompt notice to RMP, of (i) any notice or other communication received by such party from any
Governmental Authority in connection with the transactions contemplated hereby or from any Person alleging that the consent of such Person is or may be required in connection with the transactions
contemplated hereby, if the subject matter of such communication or the failure of such party to obtain such consent is reasonably likely to be material to RMP or EQM, (ii) any actions, suits,
claims, investigations or proceedings commenced or, to such party's knowledge, threatened against, relating to or involving or otherwise affecting such party or any of its Subsidiaries and that relate
to the transactions contemplated hereby, (iii) the discovery of any fact or circumstance that, or the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would
result in the failure to be satisfied of any of the conditions to the Closing in
Article VI
and (iv) any material failure of such party to
comply with or satisfy any covenant or agreement to be complied with or satisfied by it hereby which would result in the failure to be satisfied of any of the conditions to the Closing in
Article VI
;
provided
that, in the case of clauses (iii) and (iv), the failure to comply
with this
Section 5.7
shall not result in the failure to be satisfied of any of the conditions to the Closing in
Article VI
, or give rise to any
right to terminate this Agreement under
Article VII
, if
the underlying fact, circumstance, event or failure would not in and of itself give rise to such failure or right.
Section 5.8
Indemnification and Insurance.
(a) For
purposes of this
Section 5.8
, (i) "
Indemnified Person
"
shall mean any person who is now, or has been or becomes at any time prior to the Effective Time, an officer or director of RMP, RMP GP or any of their respective Subsidiaries and also with
respect to any such Person, in their capacity as a director, officer, employee, member, trustee or fiduciary of another corporation, foundation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise (whether or not such other entity or enterprise is affiliated with RMP) serving at the request of or on behalf of RMP or RMP GP or any of their respective
Subsidiaries and together with such Person's heirs, executors or administrators and (ii) "
Proceeding
" shall mean any actual or threatened claim,
action, suit, proceeding or investigation, whether civil, criminal, administrative, investigative or otherwise and whether or not such claim, action, suit, proceeding or investigation results in a
formal civil or criminal litigation or regulatory action.
(b) From
and after the Effective Time, to the fullest extent that RMP, RMP GP or any applicable Subsidiary thereof would be permitted to indemnify an Indemnified
Person, EQM and EQM GP agree to (i) indemnify and hold harmless against any cost or expenses (including attorneys' fees), judgments, fines, losses, claims, damages or liabilities and
amounts paid in
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settlement
(including all interest, assessments and other charges paid or payable in connection with or in respect of any thereof) in connection with any Proceeding, and provide advancement promptly,
and in any event within 10 days after any written request, of expenses to, all Indemnified Persons to the fullest extent permitted under applicable Law and (ii) honor the provisions
regarding elimination of liability of directors, indemnification of officers, directors and employees and advancement of expenses contained in the RMP Charter Documents and comparable governing
instruments of RMP GP and any Subsidiary of RMP or RMP GP immediately prior to the Effective Time and ensure that the organizational documents of the Surviving Entity and the
Surviving GP Entity shall, for a period of six years following the Effective Time, contain provisions no less favorable with respect to indemnification, advancement of expenses and exculpation
of present and former directors, officers and agents of RMP, RMP GP and their respective Subsidiaries than are presently set forth in the RMP Charter Documents and comparable governing
instruments of RMP GP. Any right of indemnification of an Indemnified Person pursuant to this
Section 5.8(b)
shall not be amended,
repealed or otherwise modified at any time in a manner that would adversely affect the rights of such Indemnified Person as provided herein.
(c) The
Surviving Entity and the Surviving GP Entity shall maintain in effect for six years from the Effective Time RMP's and RMP GP's current directors' and
officers' liability insurance policies covering acts or omissions occurring at or prior to the Effective Time with respect to Indemnified Persons
(
provided
that the Surviving Entity or the Surviving GP Entity may substitute therefor policies with reputable carriers of at least the same
coverage containing terms and conditions that are no less favorable to the Indemnified Persons);
provided
,
however
, that in no event shall the Surviving
Entity or the Surviving GP Entity be required to expend pursuant to this
Section 5.8(c)
more than an amount per year equal to 300% of current annual premiums paid by RMP or RMP GP for
such insurance (the
"
Maximum Amount
"). In the event that, but for the proviso to the immediately preceding sentence, the Surviving Entity or the Surviving GP Entity
would be required to expend more than the Maximum Amount, the Surviving Entity or the Surviving GP Entity shall obtain the maximum amount of such insurance as is available for the Maximum
Amount. If RMP in its sole discretion elects, then, in lieu of the obligations of EQM and the Surviving Entity or the Surviving GP Entity under this
Section 5.8(c)
, RMP or RMP GP may,
prior to the Effective Time, purchase a "tail policy" with respect to acts or omissions occurring or
alleged to have occurred prior to the Effective Time that were committed or alleged to have been committed by such Indemnified Persons in their capacity as such;
provided
that in no event shall the cost
of such policy exceed six times the Maximum Amount.
(d) The
rights of any Indemnified Person under this
Section 5.8
shall be in addition to any other rights such
Indemnified Person may have under the organizational documents of RMP, RMP GP, the Surviving Entity or the Surviving GP Entity, the DRULPA or the DLLCA. The provisions of this
Section 5.8
shall survive the consummation of the transactions contemplated hereby for a period of six years and are expressly intended to
benefit each of the Indemnified Persons and their respective heirs and representatives;
provided
,
however
, that in the event that any claim or claims for
indemnification or advancement set forth in this
Section 5.8
are asserted or made within such six-year period, all rights to indemnification and advancement in respect of any such claim or
claims shall continue until disposition
of all such claims. If either the Surviving Entity or the Surviving GP Entity, or in each case any of its successors or assigns, (i) consolidates with or merges into any other Person, or
(ii) transfers or conveys all or substantially all of its businesses or assets to any other Person, then, in each such case, to the extent necessary, a proper provision shall be made so that
the successors and assigns of the Surviving Entity or the Surviving GP Entity, as applicable, shall assume the obligations of the Surviving Entity set forth in this
Section 5.8
.
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Section 5.9
Securityholder Litigation.
RMP shall give
EQM the opportunity to participate in the defense or settlement of any securityholder litigation against RMP and/or its officers and directors
relating to the transactions contemplated hereby;
provided
that RMP shall not be required to provide information if doing so would be reasonably
expected to threaten the loss of any attorney-client privilege or other applicable legal privilege.
Section 5.10
Financing Matters.
(a) RMP
hereby consents to EQM's use of and reliance on any audited or unaudited financial statements relating to RMP and its consolidated Subsidiaries, or any entities or
businesses acquired by RMP reasonably requested by EQM to be used in any financing or other activities of EQM, including any filings that EQM desires to make with the SEC. In addition, RMP will use
commercially reasonable efforts, at EQM's sole cost and expense, to obtain the consents of any auditor to the inclusion of the financial statements referenced above in appropriate filings with the
SEC. Prior to the Closing, RMP will provide such assistance (and will cause its Subsidiaries and its and their respective
personnel and advisors to provide such assistance), as EQM may reasonably request in order to assist EQM in connection with financing activities, including any public offerings to be registered under
the Securities Act or private offerings. Such assistance shall include, but not be limited to, the following: (i) providing such information, and making available such personnel as EQM may
reasonably request; (ii) participation in, and assistance with, any marketing activities related to such financing; (iii) participation by senior management of RMP in, and their
assistance with, the preparation of rating agency presentations and meetings with rating agencies; (iv) taking such actions as are reasonably requested by EQM or its financing sources to
facilitate the satisfaction of all conditions precedent to obtaining such financing; and (v) taking such actions as may be required to permit any cash and marketable securities of RMP or EQM to
be made available to finance the transactions contemplated hereby at the Effective Time.
(b) RMP
shall, and shall cause its Subsidiaries, to deliver at the Closing lien and guarantee terminations and releases, as applicable, and instruments of release and
discharge (including a customary payoff letter) with respect to (i) that certain Credit Agreement, dated as of December 22, 2014, by and among RMP, as parent guarantor, Rice Midstream
OpCo LLC, as borrower, Wells Fargo Bank, N.A., as administrative agent, and the lenders and other parties from time to time party thereto, as it may be amended, modified or supplemented from
time to time (the "
RMP Existing Credit Facility
") and (ii) at EQM's request, any other indebtedness of RMP, and to give any other notices
requested by EQM in order to facilitate repayment of the RMP Existing Credit Facility and any such other indebtedness. In addition, RMP shall use reasonable best efforts to assist EQM, at EQM's
request, in facilitating the termination, amendment, or assumption of any derivative transactions of RMP or any Subsidiary thereof in connection with the consummation of the transactions contemplated
hereby.
Section 5.11
Fees and Expenses.
Except as otherwise provided in
Section 7.2
and
Section 7.3
, all fees and expenses incurred in connection with the transactions contemplated hereby including all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred by a party in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the
transactions contemplated hereby, shall be the obligation of the respective party incurring such fees and expenses (other than the filing fee payable to the SEC in connection with the Registration
Statement and the expenses incurred in connection with the filing of the Registration Statement and the printing and mailing of the Proxy Statement, which shall be borne by EQM). EQM shall have sole
responsibility for the payment of all filing fees under applicable Antitrust Laws, including the filing fee payable under the HSR Act.
Section 5.12
Section 16 Matters.
Prior to the Effective Time, EQM and RMP shall take all such
steps as may be required (to the extent permitted under applicable Law) to cause any dispositions of
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RMP
Units (including derivative securities with respect to RMP Units) or acquisitions of EQM Units (including derivative securities with respect to EQM Units) resulting from the transactions
contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to RMP, or will become subject to such reporting
requirements with respect to EQM, to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 5.13
Listing.
EQM shall cause the EQM Units to be issued pursuant to and in accordance with
this Agreement to be approved for listing (subject, if applicable, to notice of
issuance) for trading on the NYSE prior to the Closing.
Section 5.14
Distributions.
After the date of this Agreement until the Effective Time, each of EQM and
RMP shall coordinate with the other regarding the declaration of any distributions in
respect of EQM Units, RMP Units and the record dates and payment dates relating thereto, it being the intention of the parties that holders of RMP Units shall not receive, for any quarter,
distributions both in respect of RMP Units and also distributions in respect of EQM Units that they receive in exchange therefor in the Merger, but that they shall receive for any such quarter either:
(a) only distributions in respect of RMP Units or (b) only distributions in respect of EQM Units that they receive in exchange therefor in the Merger.
Section 5.15
Conflicts Committees.
(a) Prior
to the Effective Time, EQT shall not, and shall cause its Subsidiaries not to, without the consent of the RMP Conflicts Committee, eliminate the RMP Conflicts
Committee, or revoke or diminish the authority of the RMP Conflicts Committee, or remove or cause the removal of any director of the RMP GP Board that is a member of the RMP Conflicts Committee
either as a member of the RMP GP Board or the RMP Conflicts Committee, without the affirmative vote of the RMP Conflicts Committee. For the avoidance of doubt, this
Section 5.15(a)
shall not
apply to the filling of any vacancies caused by the death, incapacity or resignation of any director in accordance with
the provisions of the RMP GP Agreement.
(b) Prior
to the Effective Time, EQT shall not, and shall cause its Subsidiaries not to, without the consent of the EQM Conflicts Committee, eliminate the EQM Conflicts
Committee, or revoke or diminish the authority of the EQM Conflicts Committee, or remove or cause the removal of any director of the EQM GP Board that is a member of the EQM Conflicts Committee
either as a member of the EQM GP Board or the EQM Conflicts Committee, without the affirmative vote of the EQM Conflicts Committee. For the avoidance of doubt, this
Section 5.15(b)
shall not
apply to the filling of any
vacancies caused by the death, incapacity or resignation of any director in accordance with the provisions of the EQM GP Agreement.
(c) EQT
represents and warrants to EQM and RMP, respectively, that it has provided to the EQM Conflicts Committee and the RMP Conflicts Committee a true, correct and
complete copy of the IDR Purchase and Sale Agreement (including any amendments thereto), and neither EQT nor RMGH is a party to or bound by any agreement that would modify any of their respective
rights under the IDR Purchase and Sale Agreement.
Section 5.16
Voting and Consent.
EQT covenants and agrees that, until the Effective Time or the earlier
of a termination of this Agreement, at the RMP Unitholders Meeting or any other meeting of
RMP Limited Partners or any vote of RMP Limited Partner Interests in connection with a vote of the RMP Limited Partners, however called, EQT will vote, or cause to be voted, all RMP Limited Partner
Interests then owned beneficially or of record by it or any of its Subsidiaries, as of the record date for such meeting, in favor of the approval of this Agreement (as it may be amended or otherwise
modified from time to time) and the Merger and the approval of any actions required in furtherance thereof. EQT consents to, and has caused or shall cause, to the extent necessary and to the extent
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permitted
by the organizational documents thereof, each of its Subsidiaries to consent to, this Agreement and the transactions contemplated by this Agreement.
Section 5.17
Tax Opinions.
Each of the parties shall use its respective reasonable best efforts to
obtain the opinions of counsel referenced in
Section 6.1(f)
,
Section 6.2(c)
and
Section 6.3(c)
, including by executing and delivering customary tax representation letters to each such counsel in form and substance reasonably
satisfactory to such counsel.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1
Conditions to Each Party's Obligation to Effect the Merger and the GP Merger.
The
respective obligations of each party hereto to effect the Merger and the GP Merger shall be subject to the satisfaction (or waiver, if permissible
under applicable Law) on or prior to the Closing Date of the following conditions:
(a)
RMP Unitholder Approval.
The RMP Unitholder Approval shall have been obtained in accordance with
applicable Law and the RMP Partnership Agreement;
(b)
Regulatory Approval.
Any waiting period applicable to the transactions contemplated hereby under the
HSR Act shall have been terminated or shall have expired;
(c)
No Injunctions or Restraints.
No Law, injunction, judgment or ruling enacted, promulgated, issued,
entered, amended or enforced by any Governmental Authority (collectively,
"
Restraints
") shall be in effect enjoining, restraining, preventing or prohibiting consummation of the transactions contemplated hereby or making the
consummation of the transactions contemplated hereby illegal;
(d)
Registration Statement.
The Registration Statement shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC; and
(e)
Unit Listing.
The EQM Units deliverable to the RMP Unitholders as contemplated by this Agreement shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
(f)
Tax Opinions.
(i) EQM shall have received an opinion of Baker Botts L.L.P. dated as of the Closing
Date to the effect that (i) at least 90% of the gross income of
EQM for all of the calendar year that immediately precedes the calendar year that includes the Closing Date and each calendar quarter of the calendar year that includes the Closing Date for which the
necessary financial information is available is from sources treated as "qualifying income" within the meaning of Section 7704(d) of the Code and (ii) at least 90% of the combined gross
income of each of EQM and RMP for all of the calendar year that immediately precedes the calendar year that includes the Closing Date and each calendar quarter of the calendar year that includes the
Closing Date for which the necessary financial information is available is from sources treated as "qualifying income" within the meaning of Section 7704(d) of the Code. In rendering such
opinion, such counsel shall be entitled to receive and rely upon representations, warranties and covenants of officers of the EQM Entities and the RMP Entities and any of their respective affiliates
as to such matters as such counsel may reasonably request.
(g) RMP
shall have received an opinion of Baker Botts L.L.P dated as of the Closing Date to the effect that at least 90% of the gross income of RMP for all of the calendar
year that immediately precedes the calendar year that includes the Closing Date and each calendar quarter of the calendar year that includes the Closing Date for which the necessary financial
information is
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available
is from sources treated as "qualifying income" within the meaning of Section 7704(d) of the Code. In rendering such opinion, such counsel shall be entitled to receive and rely upon
representations, warranties and covenants of officers of the RMP Entities and any of its respective affiliates as to such matters as such counsel may reasonably request.
(h)
Drop-Down Transactions.
All conditions precedent to the Drop-Down Transactions shall have been
fulfilled or waived in accordance with the Drop-Down Agreement as in effect as of the date
hereof, and closing of the Drop-Down Transactions shall have been consummated, or the parties to the Drop-Down Agreement shall be ready, willing and able to consummate the Drop-Down Transactions
substantially simultaneously with the Closing, on the terms reflected in the Drop-Down Agreement as in effect as of the date hereof.
(i)
IDR Transaction.
All conditions precedent to the IDR Transaction shall have been fulfilled or waived in
accordance with the IDR Purchase and Sale Agreement as in effect as of the
date hereof, and closing of the IDR Transaction shall have been consummated on the terms reflected in the IDR Purchase and Sale Agreement as in effect as of the date hereof.
Section 6.2
Conditions to Obligations of EQM Entities to Effect the Merger and the GP Merger.
The
obligations of the EQM Entities to effect the Merger and the GP Merger are further subject to the satisfaction (or waiver, if permissible under
applicable Law) on or prior to the Closing Date of the following conditions:
(a)
Representations and Warranties.
(i) The representations and warranties of the RMP Entities contained in
Section 3.3(a)
,
Section 3.3(c)
and
Section 3.6(a)
, shall be true and correct in all respects,
in each case
both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date); (ii) the
representations and warranties of the RMP Entities contained in
Section 3.2(a)
and
Section 3.2(b)
shall be true and correct except for any
de minimis
inaccuracies, both when made
and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date); and (iii) all other
representations and warranties of the RMP Entities set forth herein shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except, in the case of this clause (iii), where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or "RMP Material Adverse Effect" set forth in any individual such representation or warranty, other than in
Section 3.5
and
Section 3.9
and the definition of RMP Material Contract in
Section 3.14
) does not have, and would not reasonably be expected to have,
individually or in the aggregate, an RMP Material Adverse Effect. EQM
shall have received a certificate signed on behalf of RMP by an executive officer of RMP GP to such effect.
(b)
Performance of Obligations of the RMP Entities.
Each of the RMP Entities shall have performed in all
material respects all obligations required to be performed by it under this Agreement at or prior to the
Closing Date, and EQM shall have received a certificate signed on behalf of RMP by an executive officer of RMP GP to such effect.
(c)
Tax Opinions.
EQM shall have received an opinion of Baker Botts L.L.P. dated as of the Closing
Date to the effect that for U.S. federal income tax purposes
(i) EQM should not recognize any income or gain as a result of the Merger, and (ii) no gain or loss should be recognized by holders of EQM Units or other partnership interests in EQM as
a result of the Merger (other than any gain resulting from any decrease in partnership liabilities pursuant to Section 752 of the Code). In rendering such opinion, such counsel shall be
entitled to receive and rely upon representations, warranties and covenants of officers of the EQM Entities and the RMP Entities and any of their respective affiliates as to such matters as such
counsel may reasonably request.
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Section 6.3
Conditions to Obligation of RMP Entities to Effect the Merger and the GP Merger.
The
obligations of the RMP Entities to effect the Merger and the GP Merger are further subject to the satisfaction (or waiver, if permissible under
applicable Law) on or prior to the Closing Date of the following conditions:
(a)
Representations and Warranties.
(i) The representations and warranties of the EQM Entities contained in
Section 4.3(a)
and
Section 4.6(a)
shall be true and correct in all respects, in each case both when made and at and as of the Closing Date, as if
made at and as of
such time (except to the extent expressly made as of an earlier date, in which case as of such date); (ii) the representations and warranties of the EQM Entities contained in
Section 4.2(a)
and
Section 4.2(b)
shall be true and correct except for any
de minimis
inaccuracies, both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of
an earlier date, in which case as of such date); and (iii) all other representations and warranties of the EQM Entities set forth herein shall be true and correct both when made and at and as
of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except, in the case of this clause (iii),
where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "EQM Material Adverse Effect" set forth in any
individual such representation or warranty, other than in
Section 4.5
and
Section 4.9
and
the definition of EQM Material Contract in
Section 4.14
) does not have, and would not reasonably be expected to have, individually or in the
aggregate, an EQM Material Adverse Effect. RMP shall have received a certificate signed on behalf of EQM by an executive officer of EQM GP to such effect.
(b)
Performance of Obligations of the EQM Entities.
The EQM Entities shall have performed in all material
respects all obligations required to be performed by them under this Agreement at or prior to the Closing
Date, and RMP shall have received a certificate signed on behalf of EQM by an executive officer of EQM GP to such effect.
(c)
Tax Opinions.
RMP shall have received an opinion of Baker Botts L.L.P. dated as of the Closing
Date to the effect that for U.S. federal income tax purposes
(i) RMP should not recognize any income or gain as a result of the Merger and (ii) no gain or loss should be recognized by holders of RMP Units or other partnership interests in RMP as a
result of the Merger (other than any gain resulting from (A) any actual or constructive distribution of cash or other property or (B) any decrease in partnership liabilities pursuant to
Section 752 of the Code). In rendering such opinion, such counsel shall be entitled to receive and rely upon representations, warranties and covenants of officers of the RMP Entities and the
EQM Entities and any of their respective affiliates as to such matters as such counsel may reasonably request.
Section 6.4
Frustration of Closing Conditions.
None of the RMP Entities or the EQM Entities may rely on
the failure of any condition set forth in
Section 6.1
,
Section 6.2
or
Section 6.3
, as the
case may be, to be satisfied if such failure was caused by such party's failure to use its reasonable best efforts to
consummate the Merger, the GP Merger and the other transactions contemplated hereby, or other breach of or noncompliance with this Agreement.
ARTICLE VII
TERMINATION
Section 7.1
Termination.
This Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Effective Time:
(a) by
the mutual written consent of RMP and EQM duly authorized by each of the RMP GP Board and the EQM GP Board, respectively;
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(b) by
either of RMP or EQM:
(i) if
the Closing shall not have been consummated on or before December 31, 2018 (the "
Outside Date
");
provided
, that the right to terminate this
Agreement under this
Section 7.1(b)(i)
shall not be
available (A) to RMP or EQM if the inability to satisfy such condition was due to the failure of, in the case of RMP, RMP or RMP GP, and, in the case of EQM, EQM, EQM GP, Merger
Sub or GP Merger Sub, to perform any of its obligations under this Agreement or (B) to RMP or EQM if in the case of RMP, EQM, EQM GP, Merger Sub or GP Merger Sub, and in
the case of EQM, RMP or RMP GP, has filed (and is then pursuing) an action seeking specific performance as permitted by
Section 8.8
;
(ii) if
any Restraint having the effect set forth in
Section 6.1(c)
shall be in effect and shall have become final and
nonappealable;
provided
,
however
, that the right to terminate this Agreement under this
Section 7.1(b)(ii)
shall not be available to EQM or RMP if such Restraint was due to the failure of, in the case of RMP, RMP or RMP GP,
and, in the case of EQM, EQM, EQM GP, Merger Sub or GP Merger Sub, to perform any of its obligations under this Agreement;
(iii) if
the RMP Unitholders Meeting and any postponements or adjournments thereof shall have concluded and the RMP Unitholder Approval shall not have been obtained; or
(iv) if
the IDR Purchase and Sale Agreement or the Drop-Down Agreement shall have been terminated in accordance with its terms; or
(c) by
EQM (which termination may be effected by the EQM Conflicts Committee with the consent, authorization or approval of the EQM Board):
(i) if
an RMP Adverse Recommendation Change shall have occurred prior to the RMP Unitholders Meeting;
(ii) prior
to the receipt of the RMP Unitholder Approval, if RMP shall be in Willful Breach of its obligations pursuant to the first three sentences of
Section 5.1(b)
or
Section 5.3
, other than in the case where (x) such Willful Breach
is a result of an isolated action by a Person that is a Representative of RMP (other than a director or officer of RMP or RMP GP), (y) such Willful Breach was not caused by, or within
the Knowledge of, RMP and (z) RMP takes appropriate actions to remedy such Willful Breach upon discovery thereof;
provided
that EQM shall not
have the right to terminate this Agreement pursuant to this
Section 7.1(c)(ii)
if EQM is then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement; or
(iii) if
RMP shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement (or if any of the
representations or warranties of the RMP Entities set forth in this Agreement shall fail to be true), which breach or failure (A) would (if it occurred or was continuing as of the Closing Date)
give rise to the failure of a condition set forth in
Section 6.2(a)
or
(b)
and
(B) is incapable of being cured, or is not cured by RMP or RMP GP within 30 days following receipt of written notice from EQM of such breach or failure;
provided
that EQM shall not have
the right to terminate this Agreement pursuant to this
Section 7.1(c)(iii)
if any EQM Entity is then in material breach of any of its representations, warranties, covenants or agreements contained
in
this Agreement.
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(d) by
RMP (which termination may be effected by the RMP Conflicts Committee with the consent, authorization or approval of the RMP Board), if EQM shall have breached or
failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement (or if any of the representations or warranties of EQM set forth in this Agreement shall
fail to be true), which breach or failure (A) would (if it occurred or was continuing as of the Closing Date) give rise to the failure of a condition set forth in
Section 6.3(a)
or
(b)
and (B) is incapable of being cured, or is not cured, by EQM
within 30 days following receipt of written notice from RMP of such breach or failure;
provided
, that RMP shall not have the right to terminate
this Agreement pursuant to this
Section 7.1(d)
if RMP is then in material breach of any of its representations, warranties, covenants or
agreements contained in this Agreement.
Section 7.2
Effect of Termination.
In the event of
the termination of this Agreement as provided in
Section 7.1
, written notice thereof shall
be given to the other party or parties, specifying the provision of this Agreement pursuant to which such termination is made, and this Agreement shall forthwith become null and void (other than the
provisions in
Section 5.11
,
Section 7.2
and
Section 7.3
and in the last sentence of
Section 5.6(a)
, and the provisions in
Article VIII
, all of which shall survive termination of this Agreement), and there shall be no liability on
the part of any EQM Entity or RMP
Entity or their respective directors, officers and Affiliates, except (a) RMP or EQM may have liability as provided in
Section 7.3
, and
(b) subject to
Sections 7.3(d)
,
(f)
and
(g)
, nothing shall relieve any party hereto from any
liability or damages for any failure to consummate the Merger, the GP Merger and the other
transactions contemplated hereby when required pursuant to this Agreement or any party from liability for fraud or a Willful Breach of any covenant or other agreement contained in this Agreement.
Section 7.3
Fees and Expenses.
(a) In
the event that (A) an RMP Alternative Proposal shall have been publicly proposed or publicly disclosed prior to, and not withdrawn at the time of, the date of
the RMP Unitholders Meeting (or, if the RMP Unitholders Meeting shall not have occurred, prior to the termination of this Agreement pursuant to
Section 7.1(b)(i)
[
Outside
Date
]), (B) this Agreement is
terminated by RMP or EQM pursuant to
Section 7.1(b)(i)
[
Outside Date
] or
Section 7.1(b)(iii)
[
Failed RMP Unitholder Vote
], and (C) RMP
enters into a definitive agreement with respect to, or consummates, any RMP Alternative Proposal within 12 months after the date this Agreement is terminated (whether or not such RMP
Alternative Proposal is the same RMP Alternative Proposal referred to in clause (A)), then, subject to
Section 7.3(f)
, RMP shall pay to
EQM a termination fee equal to $63,400,000, less any EQM Expenses previously paid by RMP pursuant to
Section 7.3(e)
(the
"
RMP Termination Fee
"), upon the earlier of the public announcement that RMP has entered into such definitive agreement or the consummation of any such
transaction. For purposes of this
Section 7.3(a)
, the term "
RMP Alternative Proposal
" shall have
the meaning assigned to such term in
Section 8.13
, except that the references to "20% or more" shall be deemed to be references to "50% or more."
(b) In
the event this Agreement is terminated by RMP or EQM pursuant to
Section 7.1(b)(iii)
[
Failed RMP Unitholder Vote
] in a case where an RMP Adverse Recommendation Change has occurred, or by EQM pursuant to
Section 7.1(c)(i)
[
RMP Adverse Recommendation Change
] or
Section 7.1(c)(ii)
[
RMP Willful Breach
] (without limiting EQM's remedies
described in
Section 8.8
), then RMP shall pay to EQM, within two business days after the date of termination, the RMP Termination Fee.
(c) Subject
to
Section 7.3(f)
, any payment of the RMP Termination Fee shall be made in cash by wire transfer of same
day funds to an account designated in writing by EQM.
(d) In
the event that RMP shall fail to pay the RMP Termination Fee required pursuant to this
Section 7.3
when due,
such fee shall accrue interest for the period commencing on the date
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such
fee became past due, at a rate equal to the legal rate of interest provided for in Section 2301 of Title 6 of the Delaware Code. In addition, if RMP shall fail to pay the RMP Termination
Fee when due, RMP shall also pay all of EQM's reasonable costs and expenses (including attorneys' fees) in connection with efforts to collect such fee. The RMP Entities and the EQM Entities
acknowledge that the provisions of this
Section 7.3
are an integral part of the transactions contemplated hereby and that, without these
agreements, neither the RMP Entities nor the EQM Entities would enter into this Agreement. The parties agree that in the event that RMP pays the RMP Termination Fee to EQM, no RMP Entity shall have
any further liability to any EQM Entity of any kind in respect of this Agreement and the transactions contemplated hereby, and that in no event shall RMP be required to pay the RMP Termination Fee on
more than one occasion.
(e) Notwithstanding
anything to the contrary in this Agreement (except
Sections 7.3(f)
and
7.3(g)
), (i) in the event of termination of this Agreement by RMP pursuant
to
Section 7.1(d)
[
EQM Uncured Breach
], then EQM shall promptly, but in no
event later than three business days after receipt of an invoice (with supporting documentation) therefor from RMP, pay RMP's designee all of the reasonably documented out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers, financing sources, experts and consultants) incurred by RMP and its Affiliates in connection with this Agreement and the
transactions contemplated hereby up to a maximum amount of $5,000,000 (the "
RMP Expenses
");
provided
,
however
, that in no event shall EQM have any obligation to make any such payment if, at the time of such termination, this Agreement was terminable by
EQM pursuant to
Section 7.1(c)(iii)
[
RMP Uncured Breach
] and
(ii) in the event of termination of this Agreement by EQM pursuant to
Section 7.1(c)(iii)
[
RMP Uncured
Breach
], then RMP shall promptly, but in no event later than three business days after receipt of an invoice (with supporting documentation) therefor from EQM, pay
EQM's designee all of the reasonably documented out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financing sources, experts and consultants)
incurred by EQM and its Affiliates in connection with this Agreement and the transactions contemplated hereby up to a maximum amount of $5,000,000 (the "
EQM
Expenses
");
provided
,
however
, that in no event shall RMP have any obligation to
make any such payment if, at the time of such termination, this Agreement was terminable by RMP pursuant to
Section 7.1(d)
[
EQM Uncured Breach
].
(f) Notwithstanding
anything to the contrary in this Agreement, in the event that RMP is required to pay the RMP Termination Fee or the EQM Expenses, RMP shall pay to EQM an
amount equal to the lesser of (i) the sum of the RMP Termination Fee and the EQM Expenses (such sum, the "
RMP Base
Amount
") and (ii) the maximum amount, if any, that can be paid to EQM without causing EQM to fail the gross income requirement in Section 7704(c)(2) of the Code,
treating the RMP Termination Fee and the EQM Expenses as non-qualifying income and after taking into consideration all other sources of non-qualifying income (computed by treating as non-qualifying
income any income that is not of the type that Baker Botts L.L.P. has opined or will opine is qualifying income as defined in Section 7704(d) of the Code) (such maximum amount, the
"
EQM Non-Qualifying Income Cushion
"), as determined by EQM's independent accountants. Notwithstanding the foregoing, in the event EQM receives an
opinion from outside counsel or a ruling from the IRS ("
Tax Guidance
") providing that EQM's receipt of the RMP Base Amount would either constitute
qualifying income (as defined in Section 7704(d) of the Code) or be excluded from gross income for purposes of Section 7704 of the Code, RMP shall, upon receiving notice that EQM has
received the Tax Guidance, pay to EQM any unpaid portion of the RMP Base Amount within five (5) business days. In the event that EQM is not able to receive the full RMP Base Amount due to the
above limitations, RMP shall place the unpaid portion in escrow by wire transfer within three (3) days of termination and shall not release any portion thereof to EQM unless and until EQM
receives either: (x) a letter from independent nationally recognized accounting firm indicating the EQM Non-Qualifying Income Cushion for any subsequent year (in
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which
case RMP shall pay to EQM the lesser of the unpaid portion of the RMP Base Amount or the EQM Non-Qualifying Income Cushion specified within five (5) business days after RMP has been
notified thereof) or (y) Tax Guidance providing that EQM's receipt of such portion would either constitute qualifying income (as defined in Section 7704(d) of the Code) or be excluded
from gross income for purposes of Section 7704 of the Code (in which case RMP shall pay to EQM any unpaid portion of the RMP Base Amount within five (5) business days after RMP has been
notified thereof). The obligation of RMP to pay any unpaid portion of the RMP Base Amount shall terminate on December 31 following the date that is five (5) years from the date of this
Agreement. Any amounts remaining in escrow after the obligation of RMP to pay the RMP Base Amount terminates shall be retained by RMP.
(g) Notwithstanding
anything to the contrary in this Agreement, in the event that EQM is required to pay the RMP Expenses, EQM shall pay to RMP an amount equal to the lesser
of (i) the RMP Expenses and (ii) the maximum amount, if any, that can be paid to RMP without causing RMP to fail the gross income requirement in Section 7704(c)(2) of the Code,
treating the RMP Expenses as non-qualifying income and after taking into consideration all other sources of non-qualifying income (computed by treating as non-qualifying income any income that is not
of the type that Baker Botts L.L.P. has opined or will opine is qualifying income as defined in Section 7704(d) of the Code) (such maximum amount, the "
RMP
Non-Qualifying Income Cushion
"), as determined by RMP's independent accountants. Notwithstanding the foregoing, in the event RMP receives Tax Guidance providing that RMP's
receipt of the RMP Expenses would either constitute qualifying income (as defined in Section 7704(d) of the Code) or be excluded from gross income for purposes of Section 7704 of the
Code, EQM shall, upon receiving notice that RMP has received the Tax Guidance, pay to RMP
any unpaid portion of the RMP Expenses within five (5) business days. In the event that RMP is not able to receive the full RMP Expenses due to the above limitations, EQM shall place the unpaid
portion in escrow by wire transfer within three (3) days of termination and shall not release any portion thereof to RMP unless and until RMP receives either: (x) a letter from
independent nationally recognized accounting firm indicating the RMP Non-Qualifying Income Cushion for any subsequent year (in which case EQM shall pay to RMP the lesser of the unpaid portion of the
RMP Expenses or the RMP Non-Qualifying Income Cushion specified within five (5) business days after EQM has been notified thereof) or (y) Tax Guidance providing that RMP's receipt of
such portion would either constitute qualifying income (as defined in Section 7704(d) of the Code) or be excluded from gross income for purposes of Section 7704 of the Code (in which
case EQM shall pay to RMP any unpaid portion of the RMP Expenses within five (5) business days after EQM has been notified thereof). The obligation of EQM to pay any unpaid portion of the RMP
Expenses shall terminate on December 31 following the date that is five (5) years from the date of this Agreement. Any amounts remaining in escrow after the obligation of EQM to pay the
RMP Expenses terminates shall be retained by EQM.
ARTICLE VIII
MISCELLANEOUS
Section 8.1
No Survival.
Except as otherwise provided in this Agreement, the representations,
warranties and agreements of each party hereto shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any other party hereto, whether prior to or after the execution of this Agreement. The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or, except as otherwise provided in
Section 7.2
, upon the termination of this Agreement pursuant
to
Section 7.1
, as the case may be, except that the agreements set forth in
Article II
and
Section 5.8
and
Section 5.11
and any other agreement in this Agreement that contemplates
performance after the Effective Time shall survive the Effective Time and those set forth in
Section 5.11
,
Section 7.2
and
Section 7.3
, in the last sentence of
Section 5.6(a)
and this
Article VIII
shall survive termination of
this Agreement.
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Section 8.2
Amendment or Supplement.
At any time prior to the Effective Time, this Agreement may be
amended or supplemented in any and all respects, whether before or after receipt of the RMP
Unitholder Approval, by written agreement of the parties, by action taken or authorized by the RMP GP Board and the EQM GP Board;
provided
,
however
, that the RMP GP Board and EQM GP Board may not take or authorize any
such action unless it has first been approved in writing by the RMP Conflicts Committee or the EQM Conflicts Committee, as applicable;
provided
,
further
,
that following approval of this Agreement and the Merger by the RMP Unitholders, there shall be no amendment or change to the provisions of
this Agreement which by Law or stock exchange rule would require further approval by the RMP Unitholders without such approval. Unless otherwise expressly set forth in this Agreement, whenever a
determination, decision, approval or consent of RMP or the RMP GP Board or of EQM or the EQM GP Board is required pursuant to this Agreement, such determination, decision, approval or
consent must be authorized by the RMP GP Board and EQM GP Board, as applicable;
provided
,
however
, that the RMP GP Board and EQM GP
Board, as applicable, may not take or authorize any such action unless such action has first
been approved in writing by the RMP Conflicts Committee or the EQM Conflicts Committee, as applicable. In the event the RMP GP Board or the EQM GP Board, as applicable, takes or
authorizes any action under this
Section 8.2
that is counter to any action or recommendation by the RMP Conflicts Committee or the EQM Conflicts
Committee, as applicable, or was not approved in writing by such conflicts committee as required by this
Section 8.2
, then the RMP Conflicts
Committee or the EQM Conflicts Committee, as applicable, may rescind its approval of this Agreement, with such rescission resulting in the rescission of "Special Approval" under Section 7.9 of
the RMP Partnership Agreement or the EQM Partnership Agreement, as applicable. For the avoidance of doubt, any rescission of "Special Approval" under the RMP Partnership Agreement pursuant to the
prior sentence shall not, in and of itself, constitute an RMP Adverse Recommendation Change under this Agreement.
Section 8.3
Extension of Time, Waiver.
At any time prior to the Effective Time, any party may, subject
to applicable Law, (a) waive any inaccuracies in the representations and warranties of any
other party hereto, (b) extend the time for the performance of any of the obligations or acts of any other party hereto, (c) waive compliance by the other party with any of the
agreements contained herein or, except as otherwise provided herein, waive any of such party's conditions or (d) make or grant any consent under this Agreement; provided, however, that the
RMP GP Board or the EQM GP Board may not take or authorize any action under this Section 8.3 or otherwise grant any consent under this Agreement unless it has first been approved
in writing by the RMP Conflicts Committee or EQM Conflicts Committee, as applicable. Notwithstanding the foregoing, no failure or delay by any RMP Entity or any EQM Entity in exercising any right
hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder. Any agreement
on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. In the event the RMP GP Board or the
EQM GP Board, as applicable, takes or authorizes any action under this Section 8.3 that is counter to any action or recommendation by the RMP Conflicts Committee or the EQM Conflicts
Committee, as applicable, or was not approved in writing by such conflicts committee as required by this
Section 8.3
, then the RMP Conflicts
Committee or the EQM Conflicts Committee, as applicable, may rescind its approval of this Agreement, with such rescission resulting in the rescission of "Special Approval" under Section 7.9 of
the RMP Partnership Agreement or the EQM Partnership Agreement, as applicable. For the avoidance of doubt, any rescission of "Special Approval" under the RMP Partnership Agreement pursuant to the
prior sentence shall not, in and of itself, constitute an RMP Adverse Recommendation Change under this Agreement.
Section 8.4
Assignment.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by any
of the parties without the prior written consent of the other parties, except that (a) EQM may assign, in its sole discretion, any of or all its rights, interests and obligations under this
Agreement to any wholly
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owned
Subsidiary of EQM, but no such assignment shall relieve EQM of any of its obligations hereunder and (b) RMP may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to any wholly owned Subsidiary of RMP, but no such assignment shall relieve RMP of any of its obligations hereunder;
provided
that in the case of clause (a) or
(b) above, any such assignment shall not materially impede or delay the consummation of the
transactions contemplated by this Agreement. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their
respective successors and permitted assigns. Any purported assignment not permitted under this
Section 8.4
shall be null and void.
Section 8.5
Counterparts.
This Agreement may be executed in counterparts (each of which shall be deemed
to be an original but all of which taken together shall constitute one and the same
agreement) and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. Signatures to this Agreement transmitted by facsimile
transmission, by electronic mail in "portable document format" (".pdf") form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will
have the same effect as physical delivery of the paper document bearing the original signature.
Section 8.6
Entire Agreement; No Third-Party Beneficiaries.
This Agreement, the RMP Disclosure Schedule,
the EQM Disclosure Schedule and any certificates delivered by any party pursuant to this Agreement
(a) constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement
and thereof and (b) shall not confer upon any Person other than the parties hereto any rights (including third-party beneficiary rights or otherwise) or remedies hereunder, except for, in the
case of clause (b), (i) the provisions of
Section 5.8
and
Section 8.12
and
(ii) the right of the RMP Unitholders to receive the Merger Consideration after the Closing (a claim by the RMP Unitholders with respect to which may not be made unless and until the Closing
shall have occurred) and the right of holders of RMP equity awards to receive the Merger Consideration to which they are entitled pursuant to this Agreement after the Closing (a claim by such holders
with respect to which may not be made unless and until the Closing shall have occurred).
Section 8.7
Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This
Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, applicable to contracts executed in and to be performed
entirely within that State.
(b) Each
of the parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for
recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns, shall be
brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept
jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for
itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any
reason other than the failure to serve in accordance with this
Section 8.7
, (ii) any claim that it or its property is exempt or immune
from the jurisdiction of any such court or from any legal process
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commenced
in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the
fullest extent permitted by the applicable Law, any claim that (A) the suit, action or proceeding in such court is brought in an inconvenient forum, (B) the venue of such suit, action or
proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Each party hereto expressly acknowledges that the foregoing waiver is
intended to be irrevocable under the Law of the State of Delaware and of the United States of America; provided, however, that each such party's consent to jurisdiction and service contained in this
Section 8.7(b)
is solely for the purpose referred to in this
Section 8.7(b)
and shall not
be deemed to be a general submission to such courts or in the State of Delaware other than for such purpose.
(c) EACH
PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
Section 8.8
Specific Enforcement.
The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or were otherwise breached and it is accordingly agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case, in accordance with this
Section 8.8
in the Delaware Court of Chancery or any
federal court sitting in the State of Delaware, this being in addition to any other remedy
to which they are entitled at law or in equity. Each of the parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief as provided herein on
the basis that (a) either party has an adequate remedy at law or (b) an award of specific performance is not an appropriate remedy for any reason at law or equity (it being understood
that nothing in this sentence shall prohibit the parties hereto from raising other defenses to a claim for specific performance or other equitable relief under this Agreement). Each party further
agrees that no party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this
Section 8.8
, and
each party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar
instrument. The parties agree that in the event that EQM receives the RMP Termination Fee, EQM may not seek any award of specific performance under this
Section 8.8
.
Section 8.9
Notices.
All notices, requests and other communications to any party hereunder shall be in
writing and shall be deemed given if delivered personally, by facsimile or email
(which is confirmed), or sent by overnight courier (providing proof of delivery) to the parties at the following addresses:
If
to the EQM Entities, to:
EQT
Midstream Partners, LP
c/o EQT Midstream Services, LLC
625 Liberty Avenue, Suite 1700
Pittsburgh, PA 15222
Fax No.: (412) 553-7781
Attn: Conflicts Committee Chair c/o Corporate Secretary
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with
a copy (which shall not constitute notice) to:
Richards,
Layton & Finger, P.A.
One Rodney Square
920 North King Street
Wilmington, DE 19801
Fax No.: (302) 651-7701
Email: Raju@rlf.com
Attn: Srinivas M. Raju
If
to the RMP Entities, to:
Rice
Midstream Partners LP
c/o Rice Midstream Management LLC
625 Liberty Avenue, Suite 1700
Pittsburgh, PA 15222
Fax No.: (412) 553-7781
Attn: Conflicts Committee Chair c/o Corporate Secretary
with
a copy (which shall not constitute notice) to:
Latham &
Watkins LLP
811 Main Street, Suite 3700
Houston, Texas 77002
Fax No.: (713) 546-5401
Email: Ryan.Maierson@lw.com
Nick.Dhesi@lw.com
Attn: Ryan J. Maierson
Nick S. Dhesi