DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description under the subheading "Certain Definitions." References to the "notes" in
this section of the prospectus include both the old notes issued on September 13, 2016 and the new notes, unless the context otherwise requires. In this description, the term
"
Antero Midstream Partners
" refers only to Antero Midstream Partners LP and not to any of its Subsidiaries, the term
"
Finance Corp.
" refers to Antero Midstream Finance Corporation and the term "
Issuers
" refers to Antero
Midstream Partners and Finance Corp.
The
new notes will be issued and the old notes were issued under an indenture (as amended and supplemented, the "Indenture") dated as of September 13, 2016, by and among us,
Antero Midstream Finance Corporation, the Guarantors and Wells Fargo Bank, National Association, as trustee. The following is a summary of the material provisions of the Indenture. The terms of the
notes include those expressly stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"
TIA
").
The
following description is a summary of the material provisions of the Indenture. It does not restate that agreement in its entirety. We urge you to read the Indenture because it, and
not this description, will define your rights as holders of the notes. A copy of the Indenture is filed as an exhibit to the registration statement of which this prospectus is a part. Certain defined
terms used in this description but not defined below under "—Certain Definitions' have the meanings assigned to them in the Indenture.
The
registered holder of a note will be treated as the owner of it for all purposes, and all references to "holders" in this description are to holders of record unless otherwise
indicated. Only registered holders have rights under the Indenture.
If
the Exchange Offer contemplated by this prospectus is consummated, holders of old notes who do not exchange those notes for new notes in the Exchange Offer will vote together with
holders of new notes for all relevant purposes under the Indenture. In that regard, the Indenture requires that certain actions by the holders thereunder must be taken, and certain rights must be
exercised, by specified minimum percentages of the aggregate principal amount of the outstanding securities issued under the Indenture. In determining whether holders of the requisite percentage in
principal amount of notes have given any notice, consent or waiver or taken any other action permitted under the Indenture, any old notes that remain outstanding after the Exchange Offer will be
aggregated with the new notes, and the holders of such old notes and the new notes will vote together as a single class for all such purposes. Accordingly, all references herein to specified
percentages in aggregate principal amount of the notes outstanding shall be deemed to mean, at any time after the Exchange Offer is consummated, such percentages in aggregate principal amount of the
old notes and the new notes then outstanding.
Brief description of the notes and the guarantees
The notes
The new notes, like the old notes:
-
•
-
will be general unsecured obligations of the Issuers;
-
•
-
will be
pari passu
in right of payment with all existing and future senior Indebtedness of
either of the Issuers, including borrowings under the Credit Agreement;
-
•
-
will be senior in right of payment to any future subordinated Indebtedness of the Issuers; and
-
•
-
will be unconditionally guaranteed by the Guarantors.
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However,
the new notes will be effectively subordinated to all secured Indebtedness under the Credit Agreement, which is secured by substantially all of the assets of Antero Midstream
Partners and the Guarantors, to the extent of the value of the collateral securing such Indebtedness. See "Risk factors—Risks Related to the Notes and the Exchange Offer—Your
right to receive payments on these notes is effectively subordinated to the rights of our existing and future secured creditors. Further, the guarantees of these notes are effectively subordinated to
all our guarantors' existing and future secured indebtedness." The new notes will also be structurally subordinated to all liabilities of any future Subsidiaries of Antero Midstream Partners that are
not Guarantors. See "—The note guarantees."
As
of March 31, 2017, we had $840 million of total long-term debt outstanding, consisting of the notes and $200 million of indebtedness outstanding under the Credit
Agreement.
The note guarantees
Each guarantee of the new notes:
-
•
-
will be a general unsecured obligation of each Guarantor;
-
•
-
will be
pari passu
in right of payment with all existing and future senior Indebtedness of that
Guarantor, including its guarantee of the borrowings of Antero Midstream Partners under the Credit Agreement; and
-
•
-
will be senior in right of payment to any future subordinated Indebtedness of that Guarantor.
However,
the Note Guarantees will be effectively subordinated to all secured Indebtedness of the Guarantors, including their guarantees of Indebtedness under the Credit Agreement, to the
extent of the value of the collateral securing those guarantees. The Note Guarantees will also be structurally subordinated to all liabilities of any future Subsidiaries of Antero Midstream Partners
that do not guarantee the notes.
Currently,
all of our existing Subsidiaries (other than Finance Corp.) jointly and severally guarantee the old notes on a senior unsecured basis, and they will so guarantee the new notes
when issued. In the future, certain additional Subsidiaries of Antero Midstream Partners will be required to guarantee the notes under the circumstances described below under "—Certain
covenants—Additional guarantees." In the event of a bankruptcy, liquidation or reorganization of any of our non-guaranteeing Subsidiaries, such Subsidiaries will pay the holders of their
debt and their trade creditors before they will be able to distribute any of their assets to us.
All
of our Subsidiaries are currently "Restricted Subsidiaries." However, under the circumstances described below under the caption "—Certain
covenants—Designation of
restricted and unrestricted subsidiaries," the Indenture will permit us to designate certain of our Subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be subject to
the restrictive covenants in the Indenture. Our Unrestricted Subsidiaries will not guarantee the notes.
On
February 6, 2017, Antero Midstream Partners formed a joint venture, Sherwood Midstream LLC, to develop processing and fractionation assets in Appalachia with MarkWest
Energy Partners, L.P. Antero Midstream Partners and MarkWest Energy Partners, L.P. each own a 50% interest in Sherwood Midstream LLC. On May 26, 2016, Antero Midstream
Partners acquired for approximately $45 million a 15% interest in Stonewall Gathering Pipeline LLC, which operates a 67-mile natural gas pipeline on which Antero Resources is an anchor
shipper with a minimum volume commitment of 900 MMcf/d. Antero Midstream Partners accounts for its interests in Sherwood Midstream LLC and Stonewall Gathering Pipeline LLC as
unconsolidated affiliates. Neither Sherwood Midstream LLC nor Stonewall Gathering Pipeline LLC qualifies as a "Subsidiary" under the Indenture, and, therefore, they are not subject to
any of the restrictive covenants in the Indenture nor will they guarantee the notes.
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Finance Corp.
Finance Corp. is a Delaware corporation that is wholly-owned by Antero Midstream Partners and that was formed for the purpose of facilitating
the offering of certain debt securities of Antero Midstream Partners, including the notes, by acting as co-issuer. Finance Corp. is nominally capitalized and has no operations or revenues. As a
result, prospective purchasers of the notes should not expect Finance Corp. to participate in servicing the interest and principal obligations on the notes. See "—Certain
covenants—Restrictions on activities of Finance Corp."
Principal, maturity and interest
Currently, $650 million in aggregate principal amount of notes is outstanding. The Issuers may issue additional notes under the Indenture
from time to time. Any issuance of additional notes will be subject to all of the covenants in the Indenture, including the covenant described below under the caption "—Certain
covenants—Incurrence of indebtedness and
issuance of disqualified equity." The old notes, the new notes and any additional notes subsequently issued under the Indenture will be treated as a single series for all purposes under the Indenture,
including, without limitation, waivers, amendments, redemptions and offers to purchase, and any such additional notes will be fungible for tax or trading purposes with the old notes and the new notes
to the extent set forth in the applicable supplemental Indenture. Unless the context otherwise requires, for all purposes of the Indenture and this "Description of Notes," references to the notes
include any additional notes that the Issuers may issue in the future as well as the old notes and the new notes.
The
Issuers will issue new notes in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The new notes will mature on September 15, 2024.
Interest
on the new notes will accrue at the rate of 5.375% per annum and will be payable semi-annually in arrears on March 15 and September 15, commencing on
September 15, 2017. The Issuers will make each interest payment to the holders of record on the immediately preceding March 1 and September 1.
Interest
on the new notes will accrue from the date interest was most recently paid, March 15, 2017. Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
If
an interest payment date falls on a day that is not a business day, the interest payment to be made on such interest payment date will be made on the next succeeding business day with
the same force and effect as if made on such interest payment date, and no additional interest will accrue solely as a result of such delayed payment.
Methods of receiving payments on the notes
If a holder of notes has given wire transfer instructions to Antero Midstream Partners, the Issuers will pay all principal, interest and
premium, if any, on that holder's notes in accordance with those instructions. All other payments on the notes will be made at the office or agency of the paying agent and registrar within the City
and State of New York unless the Issuers elect to make interest payments by check mailed to the noteholders at their address set forth in the register of holders.
Paying agent and registrar for the notes
The trustee will initially act as paying agent and registrar. The Issuers may change the paying agent or registrar without prior notice to the
holders of the notes, and Antero Midstream Partners, Finance Corp. or any of Antero Midstream Partners' other Subsidiaries may act as paying agent or registrar.
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Transfer and exchange
A holder may transfer or exchange notes in accordance with the provisions of the Indenture. The registrar and the trustee may require a holder,
among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders are required to pay all taxes due on transfer or exchange. The Issuers
are not required to transfer or exchange any note selected for redemption. Also, the Issuers are not required to register the transfer of or exchange any note for a period of 15 days before a
selection of notes to be redeemed.
Note guarantees
The Note Guarantees are joint and several senior unsecured obligations of the Guarantors. The obligations of each Guarantor under its Note
Guarantee will be limited as necessary to prevent that Note Guarantee from constituting a fraudulent conveyance under applicable law. See "Risk factors—Risks relating to the
notes—Federal and state statutes allow courts, under specific circumstances, to void the notes and the guarantees and require noteholders to return payments received from us or our
guarantors."
Except
as set forth in the next paragraph, a Guarantor may not sell or otherwise dispose of all or substantially all of its properties or assets to, or consolidate with or merge with or
into (whether or not such Guarantor is the surviving Person), another Person, other than Antero Midstream Partners or another Guarantor, unless:
-
(1)
-
immediately
after giving effect to such transaction, no Default or Event of Default exists; and
-
(2)
-
either:
(a) the
Person acquiring the properties or assets in any such sale or disposition or the Person formed by or surviving any such consolidation or merger is a Guarantor, or
assumes all the obligations of that Guarantor under the Indenture, its Note Guarantee and any registration rights agreement then in effect pursuant to a supplemental Indenture in form reasonably
satisfactory to the trustee; or
(b) the
Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, if any.
The
Note Guarantee of a Guarantor and all of its other Obligations under the Indenture will be released:
(1) in
connection with any sale or other disposition of all or substantially all of the properties or assets of that Guarantor (including by way of merger or consolidation)
to a Person that is not (either before or after giving effect to such transaction) Antero Midstream Partners or a Restricted Subsidiary of Antero Midstream Partners, if the sale or other disposition
does not violate the covenant described under "—Repurchase at the option of holders—Asset sales";
(2) in
connection with any sale or other disposition of all of the Capital Stock of that Guarantor after which the applicable Guarantor is no longer a Restricted Subsidiary
of Antero Midstream Partners, if the sale or other disposition does not violate the covenant described under "—Repurchase at the option of holders—Asset sales";
(3) if
Antero Midstream Partners designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of the
Indenture;
(4) upon
the release or discharge of the Guarantee by such Guarantor with respect to Indebtedness under a Credit Facility or the Guarantee that resulted in the creation of
such Note Guarantee;
provided, however
, that if, at any time following such release or discharge, that Guarantor later Guarantees Indebtedness of either
Issuer under a Credit Facility, then such
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Guarantor
shall provide a Note Guarantee at such time if required in accordance with the covenant described below under the caption "—Certain covenants—Additional guarantees";
(5) upon
Legal or Covenant Defeasance or satisfaction and discharge of the Indenture as provided below under the captions "—Legal defeasance and covenant
defeasance" and "—Satisfaction and discharge'; or
(6) upon
the merger or consolidation of such Guarantor with and into an Issuer or another Guarantor that is the surviving Person in such merger or consolidation, or upon the
liquidation or dissolution of such Guarantor. See "—Repurchase at the option of holders—Asset sales."
Optional redemption
At any time prior to September 15, 2019, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount
of notes (including any additional notes) issued under the Indenture, upon prior notice as described below under "—Selection and notice," at a redemption price of 105.375% of the principal
amount, plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of notes on the relevant record date to receive interest due on an interest
payment date that is on or prior to the redemption date), with an amount of cash not greater than the net cash proceeds of one or more Equity Offerings by Antero Midstream Partners;
provided
that:
(1) at
least 65% of the aggregate principal amount of notes (including any additional notes) issued under the Indenture (excluding notes held by Antero Midstream Partners
and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and
(2) the
redemption occurs within 180 days of the date of the closing of such Equity Offering.
Except
pursuant to the preceding paragraph, the penultimate paragraph of this section relating to optional redemption and the penultimate paragraph of the section captioned
"—Repurchase at the option of holders—Change of control," the notes will not be redeemable at the Issuers' option prior to September 15, 2019.
On
or after September 15, 2019, the Issuers may redeem all or a part of the notes, upon prior notice as described below under "—Selection and notice," at the
redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest, if any, on the notes redeemed, to, but excluding, the applicable redemption date, if
redeemed during the twelve-month period beginning on September 15 of each year indicated below (subject to the rights of holders of notes on the relevant record date to receive interest due on
an interest payment date that is on or prior to the redemption date):
|
|
|
|
|
|
|
Year
|
|
Percentage
|
|
|
2019
|
|
|
104.031
|
%
|
|
2020
|
|
|
102.688
|
%
|
|
2021
|
|
|
101.344
|
%
|
|
2022 and thereafter
|
|
|
100.000
|
%
|
At
any time prior to September 15, 2019, the Issuers may also redeem all or a part of the notes, upon prior notice as described below under "—Selection and notice," at
a redemption price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, but excluding, the redemption date (subject
to the rights of holders of notes on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date). The notice need not set forth the
Applicable Premium but only the manner of calculation of the redemption price. The Indenture will provide that, with respect to any such
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redemption,
the Issuers will notify the trustee of the Applicable Premium with respect to the notes prior to the redemption date and that the trustee will not be responsible for such calculation.
Unless
the Issuers default in the payment of the redemption price, interest will cease to accrue on the notes or portions thereof called for redemption on the applicable redemption date.
Mandatory redemption
The Issuers will not be required to make mandatory redemption or sinking fund payments with respect to the notes. The Issuers may acquire the
notes by means other than a redemption, whether pursuant to a tender offer, open market purchase or otherwise, so long as the acquisition does not violate the terms of the Indenture.
Repurchase at the option of holders
Change of control
If a Change of Control occurs, Antero Midstream Partners will make an offer to each holder of notes to repurchase all or any part (equal to
$2,000 or an integral multiple of $1,000 in excess thereof) of that holder's notes pursuant to the offer described below (the "
Change of Control Offer
")
on the terms set forth in the Indenture. In the Change of Control Offer, Antero Midstream Partners will offer a payment in cash equal to 101% of the aggregate principal amount of notes repurchased,
plus accrued and unpaid interest, if any, on the notes repurchased to, but excluding, the date of purchase (the "
Change of Control Payment
") (subject to
the rights of holders of notes on the relevant record date to receive interest due on an interest payment date that is on or prior to the date of purchase).
Within
30 days following any Change of Control, Antero Midstream Partners will send a notice to each holder describing the transaction or transactions that constitute the Change
of Control and offering to repurchase notes on the "
Change of Control Payment Date
" specified in the notice, which date will be no earlier than
30 days and no later than 60 days from the date such notice is sent, pursuant to the procedures required by the Indenture and described in such notice. Antero Midstream Partners will
comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection
with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the
Indenture, Antero Midstream Partners will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of
the Indenture by virtue of such compliance.
On
the Change of Control Payment Date, Antero Midstream Partners will, to the extent lawful:
(1) accept
for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer;
(2) deposit
with the paying agent or depositary an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and
(3) deliver
or cause to be delivered to the trustee the notes properly accepted together with an officers' certificate stating the aggregate principal amount of notes or
portions of notes being purchased by Antero Midstream Partners.
The
paying agent or depositary will promptly mail to each holder of notes properly tendered the Change of Control Payment for such notes (or, if all the notes are then in global form, it
will make such payment through the facilities of DTC), and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new note equal in principal
amount to any unpurchased portion of the notes surrendered, if any;
provided
, that each new note will be in a
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principal
amount of $2,000 or an integral multiple of $1,000 in excess thereof. Antero Midstream Partners will publicly announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The
provisions described above that require the Issuers to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the
Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the holders of the notes to require that the Issuers
repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.
Antero
Midstream Partners will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by Antero Midstream Partners and purchases all notes properly
tendered and not withdrawn under the Change of Control Offer, (2) notice of redemption has been given pursuant to the Indenture as described above under the caption "—Optional
redemption," unless and until there is a default in payment of the applicable redemption price or (3) in connection with or in contemplation of any Change of Control, Antero Midstream Partners
makes an offer to purchase (an "
Alternate Offer
") any and all notes validly tendered and not withdrawn at a cash price equal to or higher than the
Change of Control Payment and purchases all notes properly tendered and not withdrawn under the Alternate Offer.
In
the event that holders of not less than 90% of the aggregate principal amount of the outstanding notes tender and do not withdraw their notes in a Change of Control Offer or Alternate
Offer and Antero Midstream Partners (or the third party making the Change of Control Offer as provided above) purchases all of the notes validly tendered and not withdrawn by such holders, the Issuers
will have the right, upon not less than 15 nor more than 60 days' prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer or Alternate
Offer described above, to redeem all of the notes that remain outstanding following such purchase at a redemption price equal to 101% of the aggregate principal amount of the notes, plus accrued and
unpaid interest on the notes that remain outstanding to, but excluding, the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on an
interest payment date that is on or prior to the redemption date).
The
definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the
properties or assets of Antero Midstream Partners and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require the Issuers to repurchase its notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the properties or assets of Antero Midstream Partners and its Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset sales
Antero Midstream Partners will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
(1) Antero
Midstream Partners (or the Restricted Subsidiary, as the case may be) receives consideration (including by way of relief from, or by any Person assuming
responsibilities for, any liabilities, contingent or otherwise) at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise
disposed of (such Fair Market Value to be determined on the date of contractually agreeing to such Asset Sale and which shall give effect to the assumption by another Person of any liabilities as
provided for in clause (a) of the following paragraph); and
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(2) at
least 75% of the consideration received in the Asset Sale by Antero Midstream Partners or such Restricted Subsidiary, together with the consideration received in all
other Asset Sales by Antero Midstream Partners or any Restricted Subsidiary since the Issue Date (on a cumulative basis), is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following will be deemed to be cash:
(a) any
liabilities, as shown on Antero Midstream Partners' most recent consolidated balance sheet, of Antero Midstream Partners or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to the notes or any Note Guarantees) that are assumed by the transferee of any such assets pursuant to a novation agreement
that releases Antero Midstream Partners or such Restricted Subsidiary from further liability;
(b) any
securities, notes or other Obligations received by Antero Midstream Partners or any such Restricted Subsidiary from such transferee that are within 90 days
after the Asset Sale (subject to ordinary settlement periods), converted by Antero Midstream Partners or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion;
(c) any
stock or assets of the kind referred to in clause (2) or (4) of the next succeeding paragraph; and
(d) accounts
receivable of a business retained by Antero Midstream Partners or any of its Restricted Subsidiaries, as the case may be, following the sale of such business,
provided
such accounts receivable
(x) are not past due more than 60 days, and (y) do not have a payment date greater than
90 days from the date of the invoices creating such accounts receivable.
Within
365 days after the receipt of any Net Proceeds from an Asset Sale, Antero Midstream Partners (or the applicable Restricted Subsidiary, as the case may be) may apply such
Net Proceeds:
(1) to
repay Senior Indebtedness of Antero Midstream Partners or its Restricted Subsidiaries (or to make an offer to repurchase or redeem such Indebtedness,
provided
that such repurchase or redemption closes
within 45 days after the end of such 365-day period);
(2) to
acquire all or substantially all of the properties or assets of, or any Capital Stock of, another Permitted Business, if, after giving effect to any such acquisition
of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary of Antero Midstream Partners;
(3) to
make a capital expenditure in a Permitted Business; or
(4) to
acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business.
Notwithstanding
the foregoing, if within 365 days after the receipt of any Net Proceeds from an Asset Sale, Antero Midstream Partners (or the applicable Restricted Subsidiary, as
the case may be) enters into a binding written agreement irrevocably committing Antero Midstream Partners or such Restricted Subsidiary to an application of funds of the kind described in
clause (2), (3) or (4) of the preceding paragraph, and as to which the only condition to closing is the receipt of required governmental approvals or, in the case of
clause (3), the completion of required construction of the applicable asset(s), Antero Midstream Partners or such Restricted Subsidiary shall be deemed not to be in violation of the preceding
paragraph. Any Net Proceeds that are applied pursuant to clause (2) or (4) of the preceding paragraph pursuant to any such binding agreement shall be deemed to have been applied
for such purpose within such 365-day period so long as they are so applied within two years after the date of receipt of such Net Proceeds.
Pending
the final application of any Net Proceeds, Antero Midstream Partners or any Restricted Subsidiary may temporarily reduce revolving credit borrowings (to the extent amounts
corresponding to
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such
reduction are permitted to be borrowed under the Indenture) or otherwise invest the Net Proceeds in any manner that is not prohibited by the Indenture.
Any
Net Proceeds from Asset Sales that are not applied or invested as provided in the second paragraph of this covenant will constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $30.0 million, within five days thereof, Antero Midstream Partners will make an offer (an "
Asset Sale Offer
") to all
holders of notes and all holders of other Indebtedness that is
pari passu
with the notes containing provisions similar to those set forth in the
Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of notes and such other
pari
passu
Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and
unpaid interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Antero Midstream Partners (or any Restricted
Subsidiary) may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of notes and other
pari
passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee will select the notes and the representative of such other
pari passu
Indebtedness will select such other
pari passu
Indebtedness to be purchased on a
pro rata
basis. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds will be reset at zero.
Antero
Midstream Partners will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws
and regulations are applicable in connection with each repurchase of notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the
Asset Sale provisions of the Indenture, Antero Midstream Partners will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the
Asset Sale provisions of the Indenture by virtue of such compliance.
The
Credit Agreement contains, and future agreements governing Antero Midstream Partners' Indebtedness may contain, prohibitions of certain events, including events that would constitute
a Change of Control or an Asset Sale and including repurchases of or other prepayments in respect of the notes. The exercise by the holders of notes of their right to require Antero Midstream Partners
to
repurchase the notes upon a Change of Control or an Asset Sale could cause a default under these other agreements, even if the Change of Control or Asset Sale itself does not, due to the financial
effect of such repurchases on Antero Midstream Partners or other circumstances. In the event a Change of Control or Asset Sale occurs at a time when Antero Midstream Partners is prohibited from
purchasing notes, Antero Midstream Partners could seek the consent of the lenders of the borrowings or the counterparties to agreements containing such prohibition to the purchase of notes or could
attempt to refinance such borrowings. If Antero Midstream Partners does not obtain a consent or repay those borrowings, Antero Midstream Partners will remain prohibited from purchasing notes. In that
case, Antero Midstream Partners' failure to purchase tendered notes would constitute an Event of Default under the Indenture which could, in all likelihood, constitute a default under the other
indebtedness. Finally, Antero Midstream Partners' ability to pay cash to the holders of notes upon a repurchase may be limited by Antero Midstream Partners' then existing financial resources. See
"Risk factors—Risks relating to the notes—We may not be able to repurchase notes upon certain change of control events."
Selection and Notice
If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption as follows:
(1) if
the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the notes are
listed; or
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(2) if
the notes are not listed on any national securities exchange, on a
pro rata
basis (or, in the case of notes in global
form, by such other method as The Depository Trust Company ("
DTC"
) may prescribe).
No
notes of $2,000 or less can be redeemed in part. Notices of redemption will be mailed by first class mail (or sent electronically in the case of notices to DTC), at least 15 but not
more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address, except that redemption notices may be given more than 60 days prior to a
redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the Indenture. Notice of any redemption of the notes (including upon an Equity
Offering or in connection with a transaction (or series of related transactions) that constitute a Change of Control) may, at the Issuers' discretion, be given prior to the completion thereof and be
subject to one or more conditions precedent, including,
but not limited to, completion of the related Equity Offering or Change of Control. In addition, if such redemption is subject to satisfaction of one or more conditions precedent, such notice shall
state that, in the Issuers' discretion, the redemption date may be delayed until such time (including more than 60 days after the date the notice of redemption was delivered) as any or all such
conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or
by the redemption date so delayed, or such notice may be rescinded at any time in the Issuers' discretion if in the good faith judgment of the Issuers any or all of such conditions will not be
satisfied.
If
any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new
note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the holder of notes upon cancellation of the original note.
Notes
called for redemption will become due on the date fixed for redemption. On and after the redemption date, interest will cease to accrue on notes or portions of notes called for
redemption, unless the Issuers default in making the redemption payment.
Certain covenants
Termination of covenants
If at any time (a) the notes are assigned an Investment Grade Rating from both Rating Agencies, (b) no Default or Event of Default
has occurred and is continuing under the Indenture and (c) Antero Midstream Partners has delivered to the trustee an officers' certificate certifying to the foregoing provisions of this
sentence (the "
Termination Date
"), Antero Midstream Partners and its Restricted Subsidiaries will no longer be subject to the provisions of the
Indenture described under the caption "—Repurchase at the option of holders—Asset sales" and under the following headings under the caption "—Certain covenants":
(1) "—Restricted
payments";
(2) "—Incurrence
of indebtedness and issuance of disqualified equity";
(3) "—Dividend
and other payment restrictions affecting subsidiaries";
(4) clause (4)
of the covenant described below under the caption "—Merger, consolidation or sale of assets";
(5) "—Transactions
with affiliates";
(6) "—Limitations
on Finance Corp. activities"; and
(7) "—Additional
guarantees."
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However,
Antero Midstream Partners and its Restricted Subsidiaries will remain subject to the provisions of the Indenture described above under the caption "—Repurchase at
the option of holders—Change of control," and the following provisions of the Indenture described in the following headings under the caption "—Certain covenants":
(1) "—Liens";
(2) "—Merger,
consolidation or sale of assets" (other than clause (4) of such covenant);
(3) "—Designation
of restricted and unrestricted subsidiaries"; and
(4) "—Reports."
After
the Termination Date, however, Antero Midstream Partners may not designate any of its Subsidiaries as an Unrestricted Subsidiary.
There
can be no assurance that the notes will ever achieve or maintain an Investment Grade Rating.
Restricted payments
Antero Midstream Partners will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(1) declare
or pay any dividend or make any other payment or distribution on account of Antero Midstream Partners' or any of its Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any merger or consolidation involving Antero Midstream Partners or any of its Restricted Subsidiaries) or to the direct or indirect
holders of Antero Midstream Partners' or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than distributions or dividends payable in Equity Interests of Antero
Midstream Partners (other than Disqualified Equity) and other than distributions or dividends payable to Antero Midstream Partners or a Restricted Subsidiary);
(2) purchase,
redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Antero Midstream
Partners) any Equity Interests of Antero Midstream Partners or any direct or indirect parent of Antero Midstream Partners;
(3) make
any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of Antero Midstream Partners or any
Guarantor that is contractually subordinated to the notes or to any Note Guarantee (excluding intercompany Indebtedness between or among Antero Midstream Partners and any of its Restricted
Subsidiaries), except a payment of interest or principal within one year of the Stated Maturity thereof; or
(4) make
any Restricted Investment
(all
such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as "
Restricted
Payments
"),
unless,
at the time of and after giving effect to such Restricted Payment, no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment and
either:
(1) if
the Fixed Charge Coverage Ratio for Antero Midstream Partners' Reference Period is not less than 1.75 to 1.00, such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by Antero Midstream Partners and its Restricted Subsidiaries (excluding Restricted Payments permitted by clauses (2), (3), (4) (to the
extent, in the case of
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clause (4),
payments are made other than to Antero Midstream Partners or a Restricted Subsidiary), (5), (6), (7), (9), (10) and (11) of the next succeeding paragraph) during the
quarter in which such Restricted Payment is made, is less than the sum, without duplication, of:
(a) Operating
Surplus as of the end of the immediately preceding quarter; plus
(b) 100%
of the aggregate net cash proceeds received by Antero Midstream Partners (including the Fair Market Value of any Permitted Business or long-term assets that are
used or useful in a Permitted Business to the extent acquired in consideration of Equity Interests of Antero Midstream Partners (other than Disqualified Equity)) since the Issue Date as a contribution
to its common equity capital or from the issue or sale of Equity Interests of Antero Midstream Partners (other than Disqualified Equity) or from the issue or sale of convertible or exchangeable
Disqualified Equity or convertible or exchangeable debt securities of Antero Midstream Partners that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Equity or debt securities) sold to a Subsidiary of Antero Midstream Partners); plus
(c) to
the extent that any Restricted Investment that was made after the Issue Date is sold for cash or Cash Equivalents or otherwise liquidated or repaid for cash or Cash
Equivalents, the return of capital or similar payment made in cash or Cash Equivalents with respect to such Restricted Investment (less the cost of disposition, if any); plus
(d) the
net reduction in Restricted Investments made after the Issue Date resulting from dividends, repayments of loans or advances, or other transfers of assets in each
case to Antero Midstream Partners or any of its Restricted Subsidiaries from any Person (including, without limitation, Unrestricted Subsidiaries) or from redesignations of Unrestricted Subsidiaries
as Restricted Subsidiaries, to the extent such amounts have not been included in Operating Surplus for any period commencing on or after the Issue Date (items (b), (c) and
(d) being referred to as "
Incremental Funds
"); minus
(e) the
aggregate amount of Incremental Funds previously expended pursuant to this clause (1) and clause (2) below; or
(2) if
the Fixed Charge Coverage Ratio for Antero Midstream Partners' Reference Period is less than 1.75 to 1.00, such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by Antero Midstream Partners and its Restricted Subsidiaries (excluding Restricted Payments permitted by clauses (2), (3), (4) (to the extent, in
the case of clause (4), payments are made other than to Antero Midstream Partners or a Restricted Subsidiary), (5), (6), (7), (9), (10) and (11) of the next succeeding paragraph)
during the quarter in which such Restricted Payment is made (such Restricted Payments for purposes of this clause (2) meaning only distributions on common units or subordinated units of Antero
Midstream Partners and any general partner interest or incentive distribution rights of the General Partner), is less than the sum, without duplication, of:
(a) $250.0 million
less the aggregate amount of all Restricted Payments made by Antero Midstream Partners and its Restricted Subsidiaries pursuant to this
clause (2)(a) during the period ending on the last day of the fiscal quarter immediately preceding the date of such Restricted Payment and beginning on the Issue Date; plus
(b) Incremental
Funds to the extent not previously expended pursuant to this clause (2) or clause (1) above.
The
preceding provisions will not prohibit:
(1) the
payment of any dividend or distribution or the consummation of an irrevocable redemption of subordinated Indebtedness within 60 days after the date of the
declaration of such
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dividend
or distribution, or the delivery of the irrevocable notice of redemption, as the case may be, if at the date of declaration or the date on which such irrevocable notice is delivered, such
dividend, distribution or redemption would have complied with the provisions of the Indenture (assuming, in the case of a redemption payment, the giving of the notice of such redemption payment would
have been deemed to be a Restricted Payment at such time and such deemed Restricted Payment would have been permitted at such time);
(2) the
making of any Restricted Payment in exchange for, or out of the net cash proceeds of, a substantially concurrent (a) capital contribution to Antero Midstream
Partners from any Person (other than a Restricted Subsidiary of Antero Midstream Partners) or (b) sale (other than to a Restricted Subsidiary of Antero Midstream Partners) of Equity Interests
(other than Disqualified Equity) of Antero Midstream Partners, with a sale being deemed substantially concurrent if such Restricted Payment occurs not more than 120 days after such sale;
provided
that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded or deducted from the
calculation of Operating Surplus and Incremental Funds;
(3) the
purchase, redemption, defeasance or other acquisition or retirement for value of any subordinated Indebtedness of Antero Midstream Partners or any Guarantor with the
net cash proceeds from an incurrence of, or in exchange for, Permitted Refinancing Indebtedness;
(4) the
payment of any distribution or dividend by a Restricted Subsidiary of Antero Midstream Partners to the holders of its Equity Interests (other than Disqualified
Equity) on
a pro rata
basis;
(5) so
long as no Default has occurred and is continuing or would be caused thereby, the repurchase, redemption or other acquisition or retirement for value of any Equity
Interests of Antero Midstream Partners or any Restricted Subsidiary of Antero Midstream Partners held by any current or former officer, director, consultant or employee of the General Partner, Antero
Midstream Partners or any of Antero Midstream Partners' Restricted Subsidiaries pursuant to any equity subscription agreement or plan, stock or unit option agreement, shareholders' agreement,
employment agreement or similar agreement;
provided
that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity
Interests may not exceed $5.0 million in any twelve-month period;
provided further
, that Antero Midstream partners may carry over and make in
subsequent twelve-month periods, in addition to the amounts permitted for such twelve-month period, up to $2.0 million of unutilized capacity under this clause (5) attributable to the
immediately preceding twelve-month period;
provided further
, that such amount in any twelve-month period may be increased by an amount not to exceed
(a) the cash proceeds received by Antero Midstream Partners from the sale of Equity Interests of Antero Midstream Partners to members of management, employees or directors of the General
Partner, Antero Midstream
Partners or its Restricted Subsidiaries that occurs after the Issue Date (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (1)(b) or (2)(b) of the preceding paragraph), plus (b) the cash proceeds of key man life insurance policies received by Antero Midstream Partners
after the Issue Date, less (c) the amount of any Restricted Payments made pursuant to clauses (a) and (b) of this clause (5);
(6) so
long as no Default has occurred and is continuing or would be caused thereby, payments of dividends on Disqualified Equity issued pursuant to the covenant described
below under the caption "—Incurrence of indebtedness and issuance of disqualified equity";
(7) purchases
or other acquisitions of Capital Stock (a) deemed to occur upon exercise of stock or unit options, warrants or other convertible securities if such
Capital Stock represents a portion of the exercise price of such options, warrants or other convertible securities or (b) made in lieu of withholding taxes resulting from any such exercise;
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(8) cash
payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for
Capital Stock of Antero Midstream Partners, or arising from stock or unit dividends, splits or business combinations;
(9) in
connection with an acquisition by Antero Midstream Partners or any of its Restricted Subsidiaries, the return to Antero Midstream Partners or any of its Restricted
Subsidiaries of Equity Interests of Antero Midstream Partners or any of its Restricted Subsidiaries constituting a portion of the purchase consideration in settlement of indemnification claims or
pursuant to purchase price adjustments under the acquisition agreement;
(10) so
long as no Default or Event of Default has occurred and is continuing, the purchase, redemption, defeasance or other acquisition or retirement for value of any
subordinated Indebtedness pursuant to provisions similar to those described under the captions "—Repurchase at the option of holders—Change of control" or "—Asset
sales";
provided
that all notes validly tendered and not withdrawn by holders in connection with a Change of Control Offer or Asset Sale Offer, as
applicable, have been purchased, redeemed, defeased or otherwise acquired or retired for value; and
(11) other
Restricted Payments in an aggregate amount not to exceed $25.0 million since the Issue Date.
The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed
to be transferred or issued by Antero Midstream Partners or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment, except that the amount of any non-cash dividend or
distribution paid in accordance with clause (1) of the preceding paragraph shall be the Fair Market Value as of the date on which such dividend or distribution is declared. The Fair Market
Value of any assets or securities that are required to be valued by this covenant will be determined in the manner prescribed in the definition of that term. For the purposes of determining compliance
with this "Restricted Payments" covenant, in the event that (a) a Restricted Payment meets the criteria of more than one of the categories of Restricted Payments described in the preceding
clauses (1) through (11), Antero Midstream Partners will be permitted to classify (or reclassify in whole or in part in its sole discretion) such Restricted Payment in any manner that complies
with this covenant and (b) a Restricted Payment is made pursuant to clause (1) or (2) of the preceding paragraph, Antero Midstream Partners will be permitted to classify whether
all or any portion thereof is being (and in the absence of such classification shall be deemed to have classified the minimum amount possible as having been) made with Incremental Funds.
Incurrence of indebtedness and issuance of disqualified equity
Antero Midstream Partners will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and Antero Midstream
Partners will not issue any Disqualified Equity and will not permit any of its Restricted Subsidiaries to issue any Disqualified Equity;
provided
,
however
,
that Antero Midstream Partners and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) and Antero Midstream Partners and
the Restricted Subsidiaries may issue Disqualified Equity, if the Fixed Charge Coverage Ratio for Antero Midstream Partners' Reference Period immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Equity is issued, as the case may be, would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Equity had been issued, as the case may be, at the beginning of such Reference Period.
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The
first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "
Permitted
Debt
") or the issuance of any Disqualified Equity described in clause (11) below:
(1) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of additional Indebtedness and letters of credit and the Guarantees thereof under
Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum
potential liability of Antero Midstream Partners and its Restricted Subsidiaries thereunder) not to exceed the greater of (a) $2.0 billion and (b) the sum of $1.4 billion
and 30% of Consolidated Net Tangible Assets (determined as of the date of incurrence and after giving effect to the use of proceeds therefrom);
(2) the
incurrence by Antero Midstream Partners and its Restricted Subsidiaries of any Existing Indebtedness;
(3) the
incurrence by the Issuers and the Guarantors of Indebtedness represented by (a) the notes and the related Note Guarantees issued on the Issue Date and
(b) any exchange notes (including the new notes) and the related Note Guarantees issued thereafter;
(4) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the
business of Antero Midstream Partners or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance,
replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), at any time outstanding, not to exceed the greater of (a) $100.0 million and (b) 5.0%
of Consolidated Net Tangible Assets (determined as of the date of incurrence and after giving effect to the use of proceeds therefrom);
(5) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are
used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of
this covenant or clause (2), (3), (4) or (10) of this paragraph or this clause (5);
(6) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Antero Midstream Partners and any of its
Restricted Subsidiaries;
provided, however
, that:
(a) if
Antero Midstream Partners or any Guarantor is the obligor on such Indebtedness and the payee is not Antero Midstream Partners or a Guarantor, such Indebtedness must
be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the notes, in the case of Antero Midstream Partners, or the Note Guarantee, in
the case of a Guarantor; and
(b) (i)
any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Antero Midstream Partners or a
Restricted Subsidiary of Antero Midstream Partners and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either Antero Midstream Partners or a Restricted
Subsidiary of Antero Midstream Partners, will be deemed, in each case, to constitute an incurrence of such Indebtedness by Antero Midstream Partners or such Restricted Subsidiary, as the case may be,
that was not permitted by this clause (6);
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(7) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of Hedging Obligations or Indebtedness under Treasury Management Arrangements;
(8) the
Guarantee by Antero Midstream Partners or any of its Restricted Subsidiaries of (a) Indebtedness of Antero Midstream Partners or a Restricted Subsidiary of
Antero Midstream Partners that was permitted to be incurred by another provision of this covenant or (b) Indebtedness incurred by Joint Ventures,
provided
that such Guarantee constitutes a
Permitted Investment; and
provided further
, in each case,
that if the Indebtedness being Guaranteed is subordinated to or
pari passu
with the notes or the Note Guarantees, then the Guarantee shall be
subordinated or
pari passu
, as applicable, to the same extent as the Indebtedness Guaranteed;
(9) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of Indebtedness in respect of workers' compensation claims, health or other types of
social security benefits, unemployment or other insurance or self-insurance obligations, insurance contracts, reclamation, statutory obligations, bankers' acceptances, and performance, payment, appeal
and surety bonds in the ordinary course of business, including Guarantees and obligations respecting standby letters of credit supporting such obligations, to the extent not drawn (in each case other
than an obligation for money borrowed) and replacements of any of the foregoing;
(10) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of Permitted Acquisition Indebtedness;
(11) the
issuance by Antero Midstream Partners or any of its Restricted Subsidiaries of Disqualified Equity to Antero Midstream Partners or any of its Restricted
Subsidiaries, as the case may be;
provided, however
, that:
(a) any
subsequent issuance or transfer of Equity Interests of a Restricted Subsidiary that results in any such Disqualified Equity being held, directly or indirectly, by a
Person other than Antero Midstream Partners or a Restricted Subsidiary of Antero Midstream Partners; and
(b) any
sale or other transfer of any such Disqualified Equity to a Person that is not either Antero Midstream Partners or a Restricted Subsidiary of Antero Midstream
Partners, will be deemed, in each case, to constitute issuance of such Disqualified Equity by Antero Midstream Partners or such Restricted Subsidiary that was not permitted by this clause;
(12) the
incurrence in the ordinary course of business by Antero Midstream Partners or any of its Restricted Subsidiaries of Indebtedness under letters of credit incurred
pursuant to a Credit Facility,
provided
that such obligations are reimbursed within 10 days following the drawing of such letter of credit;
(13) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of liability in respect of the Indebtedness of any Unrestricted Subsidiary of Antero
Midstream Partners or any Joint Venture but only to the extent that such liability is the result of Antero Midstream Partners' or any such Restricted Subsidiary's being a general partner of such
Unrestricted Subsidiary or Joint Venture and not as guarantor of such Indebtedness and provided that, after giving effect to any such incurrence, the aggregate principal amount of all Indebtedness
incurred under this clause (13) and then outstanding does not exceed $25.0 million; and
(14) the
incurrence by Antero Midstream Partners or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount at any time outstanding
not to exceed the greater of (a) $100.0 million and (b) 5.0% of Consolidated Net Tangible Assets (determined as of the date of incurrence and after giving effect to the use of
proceeds therefrom).
Antero
Midstream Partners will not incur, and will not permit Finance Corp. or any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in
right of
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payment
to any other Indebtedness of Antero Midstream Partners, Finance Corp. or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the notes and the
applicable Note Guarantee on substantially identical terms;
provided
,
however
, that no Indebtedness is
deemed to be contractually subordinated in right of payment to any other Indebtedness of Antero Midstream Partners, Finance Corp. or any such Guarantor solely by virtue of being unsecured or by virtue
of being secured on a first or junior Lien basis.
For
purposes of determining compliance with this "Incurrence of indebtedness and issuance of disqualified equity" covenant, in the event that an item of proposed Indebtedness meets the
criteria of more than one of the categories of Permitted Debt described in clauses (1) through (14) above, or is entitled to be incurred pursuant to the first paragraph of this covenant,
Antero Midstream Partners is permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that
complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which notes are first issued and authenticated under the Indenture will initially be deemed to have been
incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt.
The
accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms,
the reclassification of preferred stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Equity in the form of additional shares or units of the
same class of Disqualified Equity will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Equity for purposes of this covenant;
provided
, in each such case, that the amount
of any such accrual, accretion or payment is included in Fixed Charges of Antero Midstream Partners as
accrued to the extent required by the definition of such term. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that Antero Midstream Partners or any Restricted
Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.
The
amount of any Indebtedness outstanding as of any date will be:
(1) the
accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the
principal amount of the Indebtedness, in the case of any other Indebtedness; and
(3) in
respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:
(a) the
Fair Market Value of such assets at the date of determination; and
(b) the
amount of the Indebtedness of the other Person.
For
purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar equivalent principal amount of Indebtedness
denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed,
in the case of revolving credit debt;
provided
that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency,
and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such
U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed (i) the principal amount of such
Indebtedness being refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such refinancing. The principal
amount of any Indebtedness incurred to refinance other Indebtedness, if
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incurred
in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is
denominated that is in effect on the date of such refinancing.
Liens
Antero Midstream Partners will not and will not permit any Guarantor to, create, incur, assume or otherwise cause or suffer to exist or become
effective any Lien of any kind (other than Permitted Liens) securing Indebtedness, upon any of their property or assets, now owned or hereafter acquired, unless:
(1) in
the case of Liens securing subordinated Indebtedness of Antero Midstream Partners or a Guarantor, the notes or Note Guarantees, as applicable, are contemporaneously
secured by a Lien on such property or assets on a senior basis to the subordinated Indebtedness so secured with the same priority that the notes or Note Guarantees, as applicable, have to such
subordinated Indebtedness until such time as such subordinated Indebtedness is no longer so secured by a Lien; and
(2) in
the case of Liens securing Senior Indebtedness of Antero Midstream Partners or a Guarantor, the notes or Note Guarantees, as applicable, are contemporaneously secured
by a Lien on such property or assets on an equal and ratable basis with the Senior Indebtedness so secured until such time as such Senior Indebtedness is no longer so secured by a Lien.
Any
Lien on property or assets of Antero Midstream or a Guarantor created for the benefit of holders of the notes pursuant to the preceding paragraph shall provide by its terms that such
Lien shall be automatically and unconditionally released and discharged at such time as there are no other Liens of any kind (other than Permitted Liens) on such property or assets securing such
Indebtedness.
Dividend and other payment restrictions affecting subsidiaries
Antero Midstream Partners will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist
or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary that is not a Guarantor to:
(1) pay
dividends or make any other distributions on its Equity Interests to Antero Midstream Partners or any of its Restricted Subsidiaries, or pay any indebtedness owed to
Antero Midstream Partners or any of its Restricted Subsidiaries;
provided
that priority of any preferred equity or similar Equity Interest in receiving
dividends or liquidating distributions prior to the payment of dividends or liquidating distributions on common equity shall not be deemed to be a restriction on the ability to make distributions on
Equity Interests;
(2) make
loans or advances to Antero Midstream Partners or any of its other Restricted Subsidiaries; or
(3) sell,
lease or otherwise transfer any of its properties or assets to Antero Midstream Partners or any of its other Restricted Subsidiaries.
However,
the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:
(1) agreements
as in effect on the Issue Date and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those
agreements or the Indebtedness to which they relate;
provided
that the amendments, restatements, modifications, renewals, supplements, refundings,
replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend, distribution and other payment restrictions than those contained in those agreements
on the Issue Date;
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(2) the
Indenture, the notes and the Note Guarantees;
(3) agreements
governing other Indebtedness permitted to be incurred under the provisions of the covenant described above under the caption "—Incurrence of
indebtedness and issuance of disqualified equity" and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements;
provided
that the
restrictions therein are not materially more restrictive, taken as a whole, than those contained in the Indenture, the notes and the
Note Guarantees;
(4) applicable
law, rule, regulation or order;
(5) any
instrument governing Indebtedness or Equity Interest of a Person acquired by Antero Midstream Partners or any of its Restricted Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness or Equity Interest was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;
provided
that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of the Indenture to be incurred;
(6) customary
non-assignment provisions in transportation agreements or purchase and sale or exchange agreements, pipeline and water treatment agreements, or similar
operational agreements or in licenses or leases, in each case entered into in the ordinary course of business;
(7) purchase
money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or
leased of the nature described in clause (3) of the preceding paragraph;
(8) any
agreement (a) for the sale or other disposition of a Restricted Subsidiary that contains any such restrictions on that Restricted Subsidiary pending its sale
or other disposition or (b) for the sale or other disposition of a particular asset or line of business of a Restricted Subsidiary that imposes restrictions on assets subject to any agreement
of the nature described in clause (3) of the preceding paragraph;
(9) Permitted
Refinancing Indebtedness;
provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;
(10) Liens
permitted to be incurred under the provisions of the covenant described above under the caption "—Liens" that limit the right of the debtor to dispose
of the assets subject to such Liens;
(11) provisions
limiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale
agreements and other similar agreements entered into in the ordinary course of business;
(12) any
agreement or instrument relating to any property or assets acquired after the Issue Date, so long as such encumbrance or restriction relates only to the property or
assets so acquired and is not and was not created in anticipation of such acquisitions;
(13) restrictions
on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;
(14) any
instrument governing Indebtedness of a FERC Subsidiary,
provided
that such Indebtedness was otherwise permitted to
be incurred under the Indenture; and
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(15) encumbrances
or restrictions contained in, or in respect of, Hedging Obligations permitted under the Indenture from time to time.
Merger, consolidation or sale of assets
Neither of the Issuers may: (1) consolidate or merge with or into another Person (whether or not such Issuer is the surviving entity); or
(2) directly or indirectly, sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuers and the Restricted Subsidiaries,
taken as a whole, in one or more related transactions, to another Person, unless:
(1) either:
(a) such Issuer is the surviving entity; or (b) the Person formed by or surviving any such consolidation or merger (if other than such Issuer) or
to which such sale, assignment, transfer, conveyance or other disposition has been made is a Person organized or existing under the laws of the United States, any state of the United States or the
District of Columbia;
provided, however
, that Finance Corp. may not consolidate or merge with or into any Person other than a corporation satisfying
such requirement so long as Antero Midstream Partners is not a corporation;
(2) the
Person formed by or surviving any such consolidation or merger (if other than such Issuer) or the Person to which such sale, assignment, transfer, lease, conveyance
or other disposition has been made assumes all the obligations of such Issuer under the notes, the Indenture and any registration rights agreement then in effect pursuant to a supplemental Indenture
in form reasonably satisfactory to the trustee;
(3) immediately
after such transaction, no Default or Event of Default exists;
(4) in
the case of a transaction involving Antero Midstream Partners and not Finance Corp., Antero Midstream Partners or the Person formed by or surviving any such
consolidation or merger (if other than Antero Midstream Partners), or to which such sale, assignment, transfer, lease, conveyance or other disposition has been made will, on the date of such
transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable Reference Period, (a) be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption
"—Incurrence of indebtedness and issuance of disqualified equity" or (b) have a Fixed Charge Coverage Ratio not less than the Fixed Charge Coverage Ratio of Antero Midstream
Partners immediately prior to such transaction; and
(5) such
Issuer has delivered to the trustee an officers' certificate and an opinion of counsel, each stating that such consolidation, merger or disposition and such
supplemental Indenture (if any) comply with the Indenture and all conditions precedent therein relating to such transaction have been satisfied.
This
"Merger, consolidation or sale of assets" covenant will not apply to any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among Antero
Midstream Partners and its Restricted Subsidiaries. Clauses (3) and (4) of the first paragraph of this covenant will not apply to (1) any merger or consolidation of Antero
Midstream Partners with or into one of its Restricted Subsidiaries for any purpose or (2) with or into an Affiliate solely for the purpose of reorganizing Antero Midstream Partners in another
jurisdiction.
Notwithstanding
the preceding paragraph, Antero Midstream Partners is permitted to reorganize as any other form of entity in accordance with the procedures established in the Indenture;
provided
that:
(1) the
reorganization involves the conversion (by merger, sale, contribution or exchange of assets or otherwise) of Antero Midstream Partners into a form of entity other
than a limited partnership formed under Delaware law;
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(2) the
entity so formed by or resulting from such reorganization is an entity organized or existing under the laws of the United States, any state thereof or the District
of Columbia;
(3) the
entity so formed by or resulting from such reorganization assumes all the obligations of Antero Midstream Partners under the notes, the Indenture and any
registration rights agreement then in effect pursuant to a supplemental Indenture in form reasonably satisfactory to the trustee;
(4) immediately
after such reorganization no Default or Event of Default exists; and
(5) such
reorganization is not adverse to the holders of the notes (for purposes of this clause (5) it is stipulated that such reorganization shall not be considered
adverse to the holders of the notes solely because the successor or survivor of such reorganization (a) is subject to federal or state income taxation as an entity or (b) is considered
to be an "includible corporation" of an affiliated group of corporations within the meaning of Section 1504(b) of the Code or any similar state or local law).
Although
there is a limited body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, in
certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve "all or substantially all" of the properties or assets of a Person.
Transactions with affiliates
Antero Midstream Partners will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or
Guarantee with, or for the benefit of, any Affiliate of Antero Midstream Partners (each, an "
Affiliate Transaction
"), unless:
(1) the
Affiliate Transaction is on terms that are no less favorable to Antero Midstream Partners or the relevant Restricted Subsidiary than those that could have been
obtained in a comparable transaction by Antero Midstream Partners or such Restricted Subsidiary with an unrelated Person or, if in the good faith judgment of the Board of Directors of Antero Midstream
Partners, no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is fair to Antero Midstream Partners or the relevant Restricted Subsidiary
from a financial or commercial point of view; and
(2) Antero
Midstream Partners delivers to the trustee with respect to any Affiliate Transaction (or series of related Affiliate Transactions) involving aggregate
consideration in excess of $50.0 million, a resolution of the Board of Directors of Antero Midstream Partners set forth in an officers' certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of Antero Midstream Partners.
The
following items will not be deemed to be Affiliate Transactions and, therefore, are not subject to the provisions of the prior paragraph:
(1) reasonable
fees and compensation paid to or for the benefit of any employee, officer or director of Antero Midstream Partners, any of its Restricted Subsidiaries or the
General Partner, and any employment agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by Antero Midstream Partners or any of its
Restricted Subsidiaries existing on the Issue Date, or entered into thereafter in the ordinary course of business, and any
indemnities or other transactions permitted or required by bylaw, statutory provisions or any of the foregoing agreements, plans or arrangements;
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(2) transactions
between or among Antero Midstream Partners or its Restricted Subsidiaries;
(3) transactions
with a Person (other than an Unrestricted Subsidiary of Antero Midstream Partners) that is an Affiliate of Antero Midstream Partners solely because Antero
Midstream Partners owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;
(4) any
issuance or sale of Equity Interests (other than Disqualified Equity) of Antero Midstream Partners to Affiliates of Antero Midstream Partners;
(5) Restricted
Payments or Permitted Investments that do not violate the provisions of the Indenture described above under the caption "—Restricted payments";
(6) customary
compensation, indemnification and other benefits made available to officers, directors or employees of Antero Midstream Partners, a Restricted Subsidiary of
Antero Midstream Partners or the General Partner, including reimbursement or advancement of out-of-pocket expenses and provisions of officers' and directors' liability insurance;
(7) in
the case of gathering, processing, compression, transporting, fractionating, waste water treatment or other operational contracts, any such contracts are entered into
in the ordinary course of business on terms substantially similar to those contained in similar contracts entered into by Antero Midstream Partners or any Restricted Subsidiary and third parties, or
if neither Antero Midstream Partners nor any Restricted Subsidiary has entered into a similar contract with a third party, that the terms are no less favorable than those available from third parties
on an arm's length basis, as determined in good faith by a majority of the disinterested members of the Board of Directors of Antero Midstream Partners;
(8) the
existence of, or the performance by Antero Midstream Partners or any Restricted Subsidiary of its obligations under the terms of, any agreements that are described
in the Antero Midstream Partners Form 10-K Annual Report for the fiscal year ended December 31, 2015 under the heading "Certain Relationships and Related Transactions and Director
Independence" to which it is a party as of
September 13, 2016 and any amendments thereto, and any similar agreements which it may enter into thereafter;
provided, however
, that the
existence of, or the performance by Antero Midstream Partners or any Restricted Subsidiary of its obligations under, any future amendment to such agreements or under any such similar agreements shall
only be permitted by this clause (8) to the extent that the terms of any such amendment or new agreement, taken as a whole, are not less favorable to the Holders in any material respect as
determined in good faith by a majority of the disinterested members of the Board of Directors of Antero Midstream Partners;
(9) if
such Affiliate Transaction is with a Person in its capacity as a holder of Indebtedness or Equity Interests of Antero Midstream Partners or any of its Restricted
Subsidiaries, a transaction in which such Person is treated no more favorably than the other holders of such Indebtedness or Equity Interests;
(10) (a)
Guarantees by Antero Midstream Partners or any of its Restricted Subsidiaries of the performance of obligations of Unrestricted Subsidiaries or Joint Ventures in
the ordinary course of business, except for Guarantees of Indebtedness in respect of borrowed money, and (b) pledges by Antero Midstream Partners or any Restricted Subsidiary of Capital Stock
in Unrestricted Subsidiaries or Joint Ventures for the benefit of lenders or other creditors of Unrestricted Subsidiaries or Joint Ventures as contemplated by clause (13) of the definition of
"Permitted Liens" so long as any such transaction described in this clause (b), if involving aggregate consideration in excess of $50.0 million, has been approved by a majority of the
disinterested members of the Board of Directors of Antero Midstream Partners;
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(11) any
transaction in which the Partnership or any of its Restricted Subsidiaries, as the case may be, delivers to the trustee a letter from an accounting, appraisal or
investment banking firm of national standing stating that such transaction is fair to Antero Midstream Partners or such Restricted Subsidiary from a financial point of view or that such transaction
meets the requirements of clause (1) of the first paragraph of this covenant; and
(12) any
transactions between Antero Midstream Partners or any Restricted Subsidiary and any Person, a director of which is also a director of Antero Midstream Partners or a
Restricted Subsidiary,
provided
that such director abstains from voting as a director of Antero Midstream Partners or the Restricted Subsidiary, as
applicable, in connection with the approval of the transaction.
Limitations on Finance Corp. activities
Finance Corp. will not hold any material assets, become liable for any material obligations or engage in any significant business activities;
provided
that Finance Corp. may be a co-obligor or guarantor with respect to Indebtedness if Antero Midstream Partners is an obligor on such
Indebtedness and the net proceeds of such Indebtedness are received by Antero Midstream Partners, Finance Corp. or one or more Guarantors. At any time after Antero Midstream Partners is a corporation,
Finance Corp. may consolidate or merge with or into Antero Midstream Partners or any other Restricted Subsidiary.
Additional guarantees
If, after the Issue Date, any wholly-owned Domestic Subsidiary (other than Finance Corp.) of Antero Midstream Partners that is not already a
Guarantor Guarantees any Indebtedness of either of the Issuers under a Credit Facility in an aggregate principal amount in excess of $50.0 million, then that Subsidiary will become a Guarantor
by executing and delivering to the trustee a supplemental Indenture substantially in the form set forth in the Indenture within 30 business days of the date on which it Guaranteed such Indebtedness;
provided
that the preceding shall not apply to Subsidiaries of Antero Midstream Partners that have been properly designated as Unrestricted Subsidiaries
in accordance with the Indenture for so long as they continue to constitute Unrestricted Subsidiaries. Notwithstanding the preceding, any Note Guarantee of a Restricted Subsidiary that was incurred
pursuant to this paragraph will be released in the circumstances described above under the caption "—Note guarantees."
Designation of restricted and unrestricted subsidiaries
The Board of Directors of Antero Midstream Partners may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation
would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Antero Midstream Partners and
its Restricted Subsidiaries in the Subsidiary designated as Unrestricted will be deemed to be an Investment made as of the time of the designation and will either reduce the amount available for
Restricted Payments under the covenant described above under the caption "—Restricted payments" or qualify as a Permitted Investment under one or more clauses of the definition of that
term, as determined by Antero Midstream Partners;
provided
that any designation will only be permitted if the Investment would be
permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Any
designation of a Subsidiary of Antero Midstream Partners as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of a resolution of
the Board of Directors giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant
described above under the
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caption
"—Restricted payments." If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of Antero Midstream Partners as of such date and,
if such Indebtedness is not permitted to be incurred as of such date under the covenant described above under the caption "—Incurrence of indebtedness and issuance of disqualified equity,"
Antero Midstream Partners will be in default of such covenant.
The
Board of Directors of Antero Midstream Partners may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of Antero Midstream Partners;
provided
that such designation will be
deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Antero Midstream Partners of any
outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described above under the caption
"—Incurrence of indebtedness and issuance of disqualified equity," calculated on a pro forma basis as if such designation had occurred at the beginning of the Reference Period, and
(2) no Default or Event of Default would be in existence following such designation.
Reports
Whether or not required by the rules and regulations of the SEC, so long as any notes are outstanding, Antero Midstream Partners will furnish
(whether through hard copy or internet access) to the holders of notes and the trustee, within the time periods specified in the SEC's rules and regulations:
(1) all
quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if Antero Midstream Partners were required to file such
reports; and
(2) all
current reports that would be required to be filed with the SEC on Form 8-K if Antero Midstream Partners were required to file such reports.
All
such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports
;
provided
,
however
, that if at any time Antero Midstream Partners is no longer subject to the periodic reporting requirements of
the Exchange Act for any reason, it may complete any of the reports referred to in clauses (1) and (2) above as though its only registered securities were the notes. Each annual report
on Form 10-K will include a report on Antero Midstream Partners' consolidated financial statements by Antero Midstream Partners' independent registered public accounting firm. In addition,
Antero Midstream Partners will file a copy of each of the reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified
in the rules and regulations applicable to such reports (unless the SEC will not accept such a filing) and will post the reports on its website within those time periods.
If,
at any time Antero Midstream Partners is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, Antero Midstream Partners will nevertheless
continue filing the reports specified in the preceding paragraphs of this covenant with the SEC within the time periods specified above unless the SEC will not accept such a filing. If,
notwithstanding the foregoing, the SEC will not accept Antero Midstream Partners' filings for any reason, Antero Midstream Partners will post the reports referred to in the preceding paragraphs on its
website within the time periods that would apply if Antero Midstream Partners were required to file those reports with the SEC.
Any
and all Defaults or Events of Default arising from a failure to comply with this "Reports" covenant shall be deemed cured (and Antero Midstream Partners shall be deemed to be in
compliance with this covenant) upon furnishing or filing such information or report as contemplated by this covenant (but without regard to the date on which such information or report is so furnished
or filed);
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provided
that such cure shall not otherwise affect the rights of holders described below under "—Events of default and remedies" if all outstanding notes shall have
been accelerated in accordance with the terms of the Indenture and such acceleration has not been rescinded or cancelled prior to such cure.
In
addition, Antero Midstream Partners and the Guarantors will agree in the Indenture that, for so long as any notes remain outstanding, if at any time none of such entities is required
to file with the SEC the reports required by the preceding paragraphs, they will furnish to the holders of notes and to
securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Events of default and remedies
Each of the following is an "
Event of Default
":
(1) default
for 30 days in the payment when due of interest with respect to the notes;
(2) default
in the payment when due (at Stated Maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the notes;
(3) failure
by Antero Midstream Partners to make a Change of Control Offer or an Asset Sale Offer within the time periods set forth, or consummate a purchase of notes when
required pursuant to the terms described, under the captions "—Repurchase at the option of holders—Change of control" or "—Repurchase at the option of
holders—Asset sales," or to comply with the provisions described above under the caption "—Certain covenants—Merger, consolidation or sale of assets";
(4) failure
by Antero Midstream Partners for 180 days after notice to Antero Midstream Partners by the trustee or the holders of at least 25% in aggregate principal
amount of the notes then outstanding to comply with the covenant described above under the caption "—Certain covenants—Reports";
(5) failure
by Antero Midstream Partners for 60 days after notice to Antero Midstream Partners by the trustee or the holders of at least 25% in aggregate principal
amount of the notes then outstanding to comply with any of the other agreements in the Indenture;
(6) default
under any mortgage, Indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by
Antero Midstream Partners or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by Antero Midstream Partners or any of its Restricted Subsidiaries), whether such Indebtedness or
Guarantee now exists, or is created after the Issue Date, if that default:
(a) is
caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "
Payment Default
"); or
(b) results
in the acceleration of such Indebtedness prior to its express maturity,
and,
in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $50.0 million or more,
provided
,
however
, that if,
prior to any acceleration of the notes, (i) any such Payment Default is cured or waived, (ii) any such acceleration is rescinded, or (iii) such Indebtedness is repaid during the
30-day period commencing upon the end of any applicable grace period for such Payment Default or the occurrence of such acceleration, as applicable, any Event of Default caused by such Payment Default
or acceleration shall automatically be rescinded, so long as such rescission does not conflict with any judgment, decree or applicable law;
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(7) failure
by an Issuer or any of Antero Midstream Partners' Restricted Subsidiaries to pay final judgments entered by a court or courts of competent jurisdiction
aggregating in excess of $50.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;
(8) except
as permitted by the Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force
and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its Obligations under its Note Guarantee; and
(9) certain
events of bankruptcy or insolvency described in the Indenture with respect to Finance Corp., Antero Midstream Partners or any of its Restricted Subsidiaries that
is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary.
In
the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to Finance Corp., Antero Midstream Partners or any Restricted Subsidiary of
Antero Midstream Partners that is a Significant Subsidiary or any group of Restricted Subsidiaries of Antero Midstream Partners that, taken together, would constitute a Significant Subsidiary, all
outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default
occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding notes may declare all the notes to be due and payable immediately.
Holders
of the notes may not enforce the Indenture or the notes except as provided in the Indenture. Subject to certain limitations, holders of a majority in aggregate principal amount
of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the notes notice of any continuing Default or Event of Default if
it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal, interest or premium, if any.
Subject
to the provisions of the Indenture relating to the duties of the trustee in case an Event of Default occurs and is continuing, the trustee is under no obligation to exercise any
of the rights or powers under the Indenture at the request or direction of any holders of notes unless such holders have offered to the trustee indemnity or security satisfactory to the trustee
against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder of a note may pursue any remedy with respect to
the Indenture or the notes unless:
(1) such
holder has previously given the trustee notice that an Event of Default is continuing;
(2) holders
of at least 25% in aggregate principal amount of the then outstanding notes have requested the trustee to pursue the remedy;
(3) such
holders have offered the trustee security or indemnity satisfactory to the trustee against any loss, liability or expense;
(4) the
trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and
(5) holders
of a majority in aggregate principal amount of the then outstanding notes have not given the trustee a direction inconsistent with such request within such
60-day period.
The
holders of a majority in aggregate principal amount of the then outstanding notes by notice to the trustee may, on behalf of the holders of all of the notes, rescind an acceleration
or waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or premium, if any, on, or the
principal of, the notes.
The
Issuers and the Guarantors are required to deliver to the trustee annually a statement regarding compliance with the Indenture. Upon becoming aware of any Default or Event of
Default,
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the
Issuers and the Guarantors will be required to deliver to the trustee a statement specifying such Default or Event of Default.
No personal liability of directors, officers, employees and unitholders
No director, officer, partner, member, employee, incorporator, manager or unit holder or other owner of Equity Interest of the Issuers, the
General Partner or any Guarantor, as such, will have any liability for any obligations of the Issuers or the Guarantors under the notes, the Indenture, the Note Guarantees or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes and the Note Guarantees. The waiver may not be effective to waive liabilities under the federal securities laws.
Legal defeasance and covenant defeasance
The Issuers may, at their option and at any time, elect to have all of the Issuers' Obligations discharged with respect to the outstanding notes
and all Obligations of the Guarantors discharged with respect to their Note Guarantees ("
Legal Defeasance
") except for:
(1) the
rights of holders of outstanding notes to receive payments in respect of the principal of, or interest or premium, if any, on, such notes when such payments are due
from the trust referred to below;
(2) the
Issuers' obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the
maintenance of an office or agency for payment and money for security payments held in trust;
(3) the
rights, powers, trusts, duties and immunities of the trustee, and the Issuers' and the Guarantors' Obligations in connection therewith; and
(4) the
Legal Defeasance and Covenant Defeasance provisions of the Indenture.
In
addition, Antero Midstream Partners may, at its option and at any time, elect to have the obligations of the Issuers and the Guarantors released with respect to certain covenants
(including Antero Midstream Partners' obligation to make Change of Control Offers and Asset Sale Offers) that are described in the Indenture ("
Covenant
Defeasance
") and all Obligations of the Guarantor with respect to their Note Guarantees discharged, and thereafter any omission to comply with those covenants or Note
Guarantees will not constitute a Default or Event of Default. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and
insolvency events relating to Antero Midstream Partners) described under "—Events of default and remedies" will no longer constitute an Event of Default.
In
order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the
Issuers must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable Government Securities,
or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank or firm of independent
public accountants, to pay the principal of, or interest and premium, if any, on the outstanding notes on the stated date for payment thereof or on the applicable redemption date, as the case may be,
and the Issuers must specify whether the notes are being defeased to such stated date for payment or to a particular redemption date;
(2) in
the case of Legal Defeasance, the Issuers must deliver to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that (a) the
Issuers have received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon
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such
opinion of counsel will confirm that, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(3) in
the case of Covenant Defeasance, the Issuers must deliver to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the holders of the
outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;
(4) no
Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit (and any similar concurrent deposit relating to other Indebtedness) or the grant of Liens securing such borrowings);
(5) such
Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than
the Indenture or any other agreement governing other Indebtedness being defeased, discharged or replaced) to which Antero Midstream Partners or any of its Subsidiaries is a party or by which Antero
Midstream Partners or any of its Subsidiaries is bound;
(6) the
Issuers must deliver to the trustee an officers' certificate stating that the deposit was not made by the Issuers with the intent of preferring the holders of notes
over the other creditors of the Issuers or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Issuers; and
(7) the
Issuers must deliver to the trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance
or the Covenant Defeasance have been complied with.
Amendment, supplement and waiver
Except as provided in the next two succeeding paragraphs, the Indenture or the notes or the Note Guarantees may be amended or supplemented with
the consent of the holders of a majority in aggregate principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, notes), and any existing Default or Event of Default or compliance with any provision of the Indenture or the notes or the Note Guarantees may be waived with the consent of the
holders of a majority in aggregate principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer
for, notes).
Without
the consent of each holder of notes affected, an amendment, supplement or waiver may not (with respect to any notes held by a non-consenting holder):
(1) reduce
the principal amount of notes whose holders must consent to an amendment, supplement or waiver;
(2) reduce
the principal of or change the fixed maturity of any note or alter any of the provisions with respect to the redemption or repurchase of the notes (other than
provisions relating to minimum required notice of optional redemption or those provisions relating to the covenants described above under the caption "—Repurchase at the option of
holders');
(3) reduce
the rate of or change the time for payment of interest, including default interest, on any note;
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(4) waive
a Default or Event of Default in the payment of principal of, or interest or premium, if any, on, the notes (except a rescission of acceleration of the notes by
the holders of a majority in aggregate principal amount of the then outstanding notes and a waiver of the payment default that resulted from such acceleration);
(5) make
any note payable in money other than that stated in the notes;
(6) make
any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of, or
interest or premium, if any, on, the notes (other than as permitted by clause (7) below);
(7) waive
a redemption or repurchase payment with respect to any note (other than a payment required by one of the covenants described above under the caption
"—Repurchase at the option of holders");
(8) release
any Guarantor from any of its obligations under its Note Guarantee or the Indenture, except in accordance with the terms of the Indenture; or
(9) make
any change in the preceding amendment, supplement and waiver provisions.
Notwithstanding
the preceding, without the consent of any holder of notes, the Issuers, the Guarantors and the trustee may amend or supplement the Indenture, the notes or the Note
Guarantees:
(1) to
cure any ambiguity, defect or inconsistency;
(2) to
provide for uncertificated notes in addition to or in place of certificated notes;
(3) to
provide for the assumption of an Issuer's or a Guarantor's obligations to holders of notes and Note Guarantees in the case of a merger or consolidation or disposition
of all or substantially all of the Issuers' or such Guarantor's properties or assets, as applicable;
(4) to
make any change that would provide any additional rights or benefits to the holders of notes or that does not adversely affect the legal rights under the Indenture of
any such holder;
(5) to
conform the text of the Indenture, the notes or the Note Guarantees to any provision of this "Description of Notes" to the extent that such provision was intended to
be a verbatim recitation of a provision of the Indenture, the notes or Note Guarantees;
(6) to
provide for the issuance of additional notes in accordance with the limitations set forth in the Indenture as of the Issue Date;
(7) to
allow any Guarantor to execute a supplemental Indenture or a notation of a Note Guarantee with respect to the notes or to reflect the release of a Note Guarantee in
accordance with the Indenture;
(8) to
secure the notes or the Note Guarantees;
(9) to
comply with the rules of any applicable securities depository;
(10) to
comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA; or
(11) to
provide for the reorganization of Antero Midstream Partners as any other form of entity, in accordance with the next-to-last paragraph of "—Certain
covenants—Merger, consolidation or sale of assets."
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Satisfaction and discharge
The Indenture will be discharged and will cease to be of further effect as to all notes issued thereunder (except as to surviving rights of
registration of transfer or exchange of the notes and as otherwise specified in the Indenture), when:
(1) either:
(a) all
notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in
trust and thereafter repaid to the Issuers, have been delivered to the trustee for cancellation; or
(b) all
notes that have not been delivered to the trustee for cancellation have become due and payable or will become due and payable within one year by reason of the
sending of a notice of redemption or otherwise, and the Issuers or any Guarantor has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of
the holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without
consideration of any reinvestment of interest, in the opinion of a nationally recognized investment bank or firm of independent public accountants if the deposit includes any Government Securities, to
pay and discharge the entire Indebtedness on the notes not delivered to the trustee for cancellation for principal, premium, if any, and accrued interest, if any, to the date of Stated Maturity or
redemption;
(2) in
the case of clause (1)(b) above, no Event of Default has occurred and is continuing on the date of the deposit (other than an Event of Default resulting from
the borrowing of funds to be applied to such deposit and any similar deposit relating to other Indebtedness and, in each case, the granting of Liens to secure such borrowings), and such deposit will
not result in a breach or violation of, or constitute a default under, any material agreement or instrument to which Antero Midstream Partners or any of its Subsidiaries is a party or by which Antero
Midstream Partners or any of its Subsidiaries is bound (other than with respect to the borrowing of funds to be applied concurrently to make the deposit required to effect such satisfaction and
discharge and any similar concurrent deposit relating to other Indebtedness, and in each case the granting of Liens to such borrowings);
(3) the
Issuers or any Guarantor has paid or caused to be paid all sums payable by it under the Indenture; and
(4) the
Issuers have delivered irrevocable instructions to the trustee under the Indenture to apply the deposited money toward the payment of the notes at Stated Maturity or
on the redemption date, as the case may be.
In
addition, the Issuers must deliver to the trustee (a) an officers' certificate, stating that all conditions precedent set forth in clauses (1) through (4) above
have been satisfied, and (b) an opinion of counsel (which opinion of counsel may be subject to customary assumptions and qualifications), stating that all conditions precedent to satisfaction
and discharge set forth in clauses (2) and (4) above have been satisfied;
provided
that the opinion of counsel with respect to
clause (2) above may be to the knowledge of such counsel.
Concerning the trustee
If the trustee becomes a creditor of the Issuers or any Guarantor, the Indenture will limit the right of the trustee to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee is permitted to engage in other transactions; however, if it acquires
any conflicting interest (as defined in the TIA) it must eliminate
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such
conflict within 90 days, apply to the SEC for permission to continue as trustee with such conflict or resign.
The
holders of a majority in aggregate principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising
any remedy available to the trustee, subject to certain exceptions. The Indenture will provide that in case an Event of Default occurs and is continuing, the trustee is required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee is under no obligation to exercise any of its rights or powers under
the Indenture at the request of any holder of notes, unless such holder has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.
Governing law
The Indenture, the notes and the Guarantees are governed by, and will be construed in accordance with, the laws of the State of New York.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all defined terms
used therein, as well as any other capitalized terms used herein for which no definition is provided.
"
Acquired Debt
" means, with respect to any specified Person:
(1) Indebtedness
of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such
Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person, but excluding Indebtedness
which is extinguished, retired or repaid in connection with such Person merging with or become a Subsidiary of such specific Person; and
(2) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
"
Affiliate
" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" have correlative meanings.
"
Alternate Offer
" has the meaning assigned to that term under the caption "—Repurchase at the option of
holders—Change of control."
"
Applicable Premium
" means, with respect to any note at the time of determination, the greater of:
(1) 1.0%
of the principal amount of the note; or
(2) the
excess of:
(a) the
present value at such time of (i) the redemption price of the note at September 15, 2019 (such redemption price being set forth in the table appearing
above under the caption "—Optional redemption") plus (ii) all required interest payments due on the note through September 15, 2019 (excluding accrued but unpaid interest to
the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over
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(b) the
principal amount of the note, if greater.
"
Asset Sale
" means:
(1) the
sale, lease, conveyance or other disposition of any properties or assets; provided that the sale, lease, conveyance or other disposition of all or substantially all
of the properties or assets of Antero Midstream Partners and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the caption
"—Repurchase at the option of holders—Change of control" or the provisions described above under the caption "—Certain covenants—Merger, consolidation
or sale of assets" and not by the covenant described under the heading "Repurchase at the option of holders—Asset sales"; and
(2) the
issuance of Equity Interests in any of Antero Midstream Partners' Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries.
Notwithstanding
the preceding, none of the following items will be deemed to be an Asset Sale:
(1) any
sale, assignment, lease, license, transfer, abandonment or other disposition of (A) damaged, worn-out, unserviceable or other obsolete or excess equipment or
other property or (B) other property no longer necessary for the proper conduct of the business of Antero Midstream Partners or any of its Subsidiaries;
(2) any
single transaction or series of related transactions that: (a) involves assets having a Fair Market Value of less than $30.0 million or
(b) results in net proceeds to Antero Midstream Partners and its Restricted Subsidiaries of less than $30.0 million;
(3) a
transfer of properties or assets between or among Antero Midstream Partners and its Restricted Subsidiaries;
(4) an
issuance of Equity Interests by a Restricted Subsidiary of Antero Midstream Partners to Antero Midstream Partners or to a Restricted Subsidiary of Antero Midstream
Partners;
(5) the
sale or other disposition of products, services or accounts receivable in the ordinary course of business;
(6) the
sale or other disposition of cash or Cash Equivalents, Hedging Obligations or other financial instruments in the ordinary course of business;
(7) a
Restricted Payment that does not violate the covenant described above under the caption "—Certain covenants—Restricted payments" or a Permitted
Investment;
(8) any
trade or exchange by Antero Midstream Partners or any Restricted Subsidiary of properties or assets of any type for properties or assets of any type owned or held by
another Person,
provided
that the Fair Market Value of the properties or assets traded or exchanged by Antero Midstream Partners or such Restricted
Subsidiary (together with any cash or Cash Equivalents plus the amount of any liabilities assumed) is reasonably equivalent to the Fair Market Value of the properties or assets to be received by
Antero Midstream Partners or such Restricted Subsidiary (together with any cash or Cash Equivalents plus the amount of any liabilities assumed); and
provided
further
that any cash received must be applied in accordance with the provisions described above under the caption "—Repurchase at the option of
holders—Asset sales";
(9) the
creation or perfection of a Lien that is not prohibited by the covenant described above under the caption "—Certain covenants—Liens";
(10) surrender
or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind;
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(11) the
grant in the ordinary course of business of any non-exclusive license of patents, trademarks, registrations therefor and other similar intellectual property;
(12) any
sale or other disposition of Equity Interests in, or other securities of, an Unrestricted Subsidiary; and
(13) any
disposition of defaulted receivables that arose in the ordinary course of business for collection.
"
Asset Sale Offer
" has the meaning assigned to that term in the indenture.
"
Attributable Debt
" in respect of a sale-and-leaseback transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of the lease included in such sale-and-leaseback transaction including any period for which such lease has been extended or
may, at the option of the lessor, be extended. As used in the preceding sentence, "net rental payments" under any lease for any such period shall mean the sum of rental and other payments required to
be paid with respect to such period by the lessee thereunder, excluding any amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes, assessments, water rates
or similar charges. In the case of any lease that is terminable by the lessee upon payment of penalty, such net rental payment shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. For purposes of this definition, present value shall be calculated using a discount
rate equal to the rate of interest implicit in the subject transaction, determined in accordance with GAAP;
provided
,
however
, that if such
sale-and-leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be
determined in accordance with the definition of "Capital Lease Obligation."
"
Beneficial Owner
" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular "person"(as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all
securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The
terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. For purposes of this definition, a Person shall be deemed not to Beneficially Own securities that are the subject of a
stock or unit purchase agreement, merger agreement or similar agreement until consummation of the transactions or, as applicable, series of related transactions contemplated thereby.
"
Board of Directors
" means:
(1) with
respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;
(2) with
respect to a partnership, the board of directors or board of managers of the general partner of the partnership, including in the case of Antero Midstream Partners,
the board of directors of its General Partner, Antero Midstream Partners GP LLC, or any committee thereof duly authorized to act on behalf of such board;
(3) with
respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and
(4) with
respect to any other Person, the board or committee of such Person serving a similar function.
"
Capital Lease Obligation
" means an obligation that is required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be, at the time any determination thereof is to be
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made,
the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall
be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.
"
Capital Stock
" means:
(1) in
the case of a corporation, corporate stock;
(2) in
the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
(3) in
the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and
(4) any
other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing
Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.
"
Cash Equivalents
" means:
(1) securities
issued or fully guaranteed or insured by the United States government or any agency thereof having maturities of not more than twenty-four (24) months
from the date of acquisition thereof;
(2) time
deposits with, certificates of deposit, bankers' acceptances or Eurodollar time deposits of, any commercial bank that is a lender under the Credit Agreement or
(a) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under
the laws of the United States of America, any state thereof or the District of Columbia or any United States branch of a foreign bank, and is a member of the Federal Reserve System, (b) issues
long term securities with a rating of at least A– (or then equivalent grade, in each case with a stable outlook) by S&P and A3 (or then equivalent grade, in each case with a stable
outlook) by Moody's at the time of acquisition and (c) has combined capital and surplus of at least $500,000,000, in each case with maturities of not more than twenty-four (24) months
from the date of acquisition thereof;
(3) commercial
paper of an issuer rated at least "A-2" (or the then equivalent grade) by S&P or "P-2" (or the then equivalent grade) by Moody's at the time of acquisition or
guaranteed by a letter of credit issued by a financial institution rated at least A– (or then equivalent grade, in each case with stable outlook) by S&P and A3 (or then equivalent
grade, in each case with stable outlook) by Moody's at the time of acquisition and such financial institution otherwise meets the requirements of subsections (a) and (c) of
clause (2) of this definition, in each case having a tenor of not more than 270 days;
(4) taxable
and tax-exempt municipal securities rated at least A– (or then equivalent grade) by S&P and A3 (or then equivalent grade) by Moody's, including
variable rate municipal securities, having maturities or put rights of not more than twenty-four (24) months from the date of acquisition;
(5) corporate
or bank debt of an issuer rated at least A– (or then equivalent grade, in each case with a stable outlook) by S&P and A3 (or then equivalent
grade, in each case with stable outlook) by Moody's at the time of acquisition and having maturities of not more than twenty-four (24) months from the date of acquisition;
(6) repurchase
agreements relating to any of the investments listed in clauses (1) through (5) above with a market value at least equal to the consideration
paid in connection therewith, with any Person who regularly engages in the business of entering into repurchase agreements and has a
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combined
capital and surplus of not less than $500,000,000 whose long term securities are rated at least A– (or then equivalent grade) by S&P and A3 (or then equivalent grade) by
Moody's at the time of acquisition;
(7) asset-backed
securities having as the underlying asset securities issued or guaranteed by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage
Association rated at least A– (or then equivalent grade, in each case with stable outlook) by S&P and A3 (or then equivalent grade, in each case with case with stable outlook) by
Moody's at the time of acquisition and having maturities of not more than twenty-four (24) months from the date of acquisition; and
(8) Investments,
classified in accordance with GAAP as current assets of Antero Midstream Partners or any of its Subsidiaries, in money market mutual or similar funds having
assets in excess of $100,000,000, at least 95% of the assets of which are comprised of assets specified in clauses (1) through (7) above of this definition.
"
Change of Control
" means the occurrence of any of the following:
(1) the
direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the properties or assets of Antero Midstream Partners and its Subsidiaries taken as a whole to any "person' (as that term is used in Section 13(d) of the Exchange
Act), which occurrence is followed by a Rating Decline;
(2) the
adoption of a plan relating to the liquidation or dissolution of Antero Midstream Partners or the removal of the General Partner by the limited partners of Antero
Midstream Partners; or
(3) the
consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any "person" (as defined above), other than
a Qualified Owner, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the General Partner or of Antero Resources Investment LLC, measured by voting
power rather than number of shares or member interests, which occurrence is followed by a Rating Decline.
Notwithstanding
the preceding, (a) a conversion of Antero Midstream Partners from a limited partnership to a corporation, limited liability company or other form of entity or an
exchange of all of the outstanding limited partnership interests for capital stock in a corporation, for member interests in a limited liability company or for Equity Interests in such other form of
entity shall not constitute a Change of Control, so long as following such conversion or exchange the "persons" (as defined above) who Beneficially Owned the Capital Stock of Antero Midstream Partners
immediately prior to such transactions continue to Beneficially Own in the aggregate more than 50% of the Voting Stock of such entity, or continue to Beneficially Own sufficient Equity Interests in
such entity to elect a majority of its directors, managers, trustees or other persons serving in a similar capacity for such entity and (b) a "person" or "group" shall not be deemed to
Beneficially Own securities subject to a stock or asset purchase agreement, merger agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of
the transactions contemplated by such agreement.
"
Change of Control Offer
" has the meaning assigned to that term under the caption "—Repurchase at the option of
holders—Change of control."
"
Consolidated Cash Flow
" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such
period plus, without duplication:
(1) an
amount (to the extent not included in Consolidated Net Income) equal to the dividends or distributions paid during such period in cash or Cash Equivalents to such
Person or any of its Restricted Subsidiaries by a Person that is not a Restricted Subsidiary of such Person; plus
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(2) an
amount equal to any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale or the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries to the extent such loss was deducted in computing such
Consolidated Net Income; plus
(3) provision
for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period to the extent that such provision for taxes was deducted in
computing such Consolidated Net Income; plus
(4) the
Fixed Charges of such Person and its Restricted Subsidiaries for such period (together with items excluded from the definition of "Fixed Charges" pursuant to
clause (2) thereof), to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus
(5) depreciation,
amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other
non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of
such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income;
minus
(6) non-cash
items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business,
in each case, on a consolidated basis and determined in accordance with GAAP.
"
Consolidated Net Income
" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and
its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP;
provided
that:
(1) the
aggregate Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included
only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;
(2) the
Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, partners or members;
(3) the
cumulative effect of a change in accounting principles will be excluded;
(4) unrealized
losses and gains under derivative instruments included in the determination of Consolidated Net Income, including, without limitation those resulting from the
application of the Financial Accounting Standards Board's Accounting Standards Codification No. 815 will be excluded;
(5) any
gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale (including dispositions
pursuant to sale-and-leaseback transactions) or (b) the disposition of any securities by such Person or the extinguishment of any Indebtedness of such Person shall be excluded;
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(6) any
impairment charge or asset write-off pursuant to the Financial Accounting Standards Board's Accounting Standards Codification No. 350 "Goodwill and Other
Intangible Assets' shall be excluded;
(7) any
non-cash compensation charge arising from any grant of stock, stock options or other equity-based awards shall be excluded;
(8) any
unusual or nonrecurring gain, loss or charge, together with any related provision for taxes on such unusual or nonrecurring gain, loss or charge, shall be excluded;
and
(9) any
non-cash or other charges relating to any premium or penalty paid, write-off of deferred finance costs or other charges in connection with redeeming or retiring any
Indebtedness prior to its Stated Maturity shall be excluded.
"
Consolidated Net Tangible Assets
" means, at any date of determination, the aggregate amount of total assets included in the most recent
quarterly or annual consolidated balance sheet of Antero Midstream Partners prepared in accordance with GAAP less applicable reserves reflected in such balance sheet, after deducting the following
amounts: (a) all current liabilities reflected in such balance sheet, and (b) all goodwill, trademarks, patents, unamortized debt discounts and expenses and other like intangibles
reflected in such balance sheet, with such pro forma adjustments to total assets, reserves, current liabilities, goodwill, trademarks, patents, unamortized debt discounts and expenses and other like
intangibles as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of "Fixed Charge Coverage Ratio."
"
continuing
" means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived.
"
Credit Agreement
" means that certain Credit Agreement, dated as of November 10, 2014, among Antero Midstream Partners, each lender
and L/C Issuer from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and L/C Issuer, providing for revolving credit borrowings and
letters of credit, including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"
Credit Facilities
" means, one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper
facilities or Debt Issuances, in each case, with banks or other institutional lenders, providing for revolving credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders, other financiers or to special purpose entities formed to borrow from (or sell such receivables to) such lenders or other financiers against such receivables), letters of
credit, bankers' acceptances, other borrowings or Debt Issuances, in each case, as amended, restated, modified, renewed, extended, refunded, replaced or refinanced (in each case, without limitation as
to amount), in whole or in part, from time to time (including through one or more Debt Issuances) and any agreements and related documents governing Indebtedness or Obligations incurred to refinance
amounts then outstanding or permitted to be outstanding, whether or not with the original administrative agent, lenders, investment banks, insurance companies, mutual funds, other lenders, investors
or any of the foregoing and whether provided under the original agreement, indenture or other documentation relating thereto.
"
Customary Recourse Exceptions
" means, with respect to any Non-Recourse Debt of an Unrestricted Subsidiary or Joint Venture, exclusions
from the exculpation provisions with respect to such Non-Recourse Debt for fraud, misapplication of cash, waste, willful destruction, bad faith and other circumstances customarily excluded by lenders
from exculpation provisions or included in separate indemnification agreements in non-recourse financings.
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"
Debt Issuances
" means, with respect to Antero Midstream Partners or any of its Restricted Subsidiaries, one or more issuances after the
Issue Date of Indebtedness evidenced by notes, debentures, bonds or other similar securities or instruments.
"
Default
" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.
"
Disqualified Equity
" means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible, or for
which it is exchangeable, in each case, at the option of the holder of the Equity Interest), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder of the Equity Interest, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature,
except such Equity Interest that is solely redeemable with, or solely exchangeable for, any Equity Interest of such Person that is not Disqualified Equity. Notwithstanding the preceding sentence, any
Equity Interest that would constitute Disqualified Equity solely because the holders of the Equity Interest have the right to require Antero Midstream Partners to repurchase such Equity Interest upon
the occurrence of a change of control or an asset sale will not constitute Disqualified Equity if the terms of such Equity Interest provide that Antero Midstream Partners may not repurchase or redeem
any such Equity Interest pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "—Certain
covenants—Restricted payments."
"
Domestic Subsidiary
" means any Restricted Subsidiary of Antero Midstream Partners that was formed under the laws of the United States or
any state of the United States or the District of Columbia.
"
Equity Interests
" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security
that is convertible into, or exchangeable for, Capital Stock).
"
Equity Offering
" means any public or private sale of Equity Interests (other than Disqualified Equity) made for cash on a primary basis
by Antero Midstream Partners after the Issue Date, the net proceeds from which have not been applied to redeem, prepay or refinance any other Indebtedness (other than the temporary repayment of
Indebtedness under a revolving facility).
"
Exchange Act
" means the Securities Exchange Act of 1934, as amended.
"
Existing Indebtedness
" means the aggregate principal amount of any Indebtedness of Antero Midstream Partners and its Subsidiaries (other
than Indebtedness under the Credit Agreement) in existence on the Issue Date, until such amounts are repaid.
"
Fair Market Value
" means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving
distress or necessity of either party, as determined in good faith by (a) an executive officer of the General Partner if the value is less than $50.0 million or (b) the Board of
Directors of Antero Midstream Partners if the value is $50.0 million or more.
"
FERC Subsidiary
" means a Restricted Subsidiary that is subject to the regulatory jurisdiction of the Federal Energy Regulatory Commission
(or any successor thereto) as a natural gas company (as defined in Section 2(6) of the Natural Gas Act of 1938, as amended).
"
Fixed Charge Coverage Ratio
" means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such
Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays,
repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than revolving credit borrowings not constituting a permanent commitment reduction that are used to fund working capital)
or issues, repurchases or redeems Disqualified Equity subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or
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prior
to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated giving pro
forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of Disqualified
Equity, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable Reference Period.
In
addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions
(including, without limitation, a single asset, a division or segment or an entire company) that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers, asset purchase transactions or consolidations and including any related financing transactions during the Reference Period or subsequent to such
Reference Period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the Reference Period, including any Consolidated Cash Flow and any
pro forma expense and cost reductions that have occurred or are reasonably expected to occur, in the reasonable judgment of the chief financial or accounting officer of Antero Midstream Partners
(regardless of whether those cost savings or operating improvements could then be reflected in pro forma financial statements in accordance with Regulation S-X promulgated under the Securities
Act or any other regulation or policy of the SEC related thereto);
(2) the
Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein)
disposed of prior to the Calculation Date, will be excluded;
(3) the
Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed
of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its
Restricted Subsidiaries following the Calculation Date;
(4) if
any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the average rate in effect from the beginning
of the applicable period to the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging
Obligation has a remaining term as at the Calculation Date in excess of 12 months); and
(5) if
any Indebtedness is incurred under a revolving credit facility and is being given pro forma effect, the interest on such indebtedness shall be calculated based on the
average daily balance of such Indebtedness for the four fiscal quarters subject to the pro forma calculation.
"
Fixed Charges
" means, with respect to any specified Person for any period,
(1) the
sum, without duplication, of:
(a) the
consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt, discounts and other fees and charges incurred in respect of letters of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus
(b) the
consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus
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(c) any
interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such
Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus
(d) an
amount equal to all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Equity of such Person or any of its Restricted
Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of Antero Midstream Partners (other than Disqualified Equity) or to Antero Midstream Partners or a Restricted
Subsidiary of Antero Midstream Partners (such amount, the "Disqualified Dividend Amount");
provided
that, in the event such Person is not treated as a
partnership or other pass-through entity for U.S. federal income tax purposes, the amount included in Fixed Charges as a result of this clause (d) shall be the product of (i) the
Disqualified Dividend Amount, times (ii) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax
rate of such Person, expressed as a decimal, in each case, determined on a consolidated basis in accordance with GAAP; minus
(2) to
the extent included in (1) above, write-off of non-recurring deferred financing costs of such Person and its Restricted Subsidiaries during such period and any
charge related to, or any premium or penalty paid in connection with, paying any Indebtedness of such Person and its Restricted Subsidiaries prior to its Stated Maturity,
in
each case, on a consolidated basis and determined in accordance with GAAP.
"
GAAP
" means generally accepted accounting principles in the United States, which are in effect from time to time. Notwithstanding the
foregoing, the characterization of leases as operating or capital leases shall be determined in accordance with GAAP as in effect on the date of entry into the applicable lease.
If
there occurs a change in generally accepted accounting principles relating to revenue recognition resulting from the joint revenue recognition standard of the Financial Accounting
Standards Board and the International Accounting Standards Board, and such change would cause a change in the method of calculation of standards or terms as determined in good faith by Antero
Midstream Partners (an "
Accounting Change
"), then Antero Midstream Partners may elect, as evidenced by a written notice of Antero Midstream Partners to
the trustee, that such standards or terms shall be calculated as if such Accounting Change had not occurred. Any such election with respect to such Accounting Change may not thereafter be changed.
"
General Partner
" means Antero Midstream Partners GP LLC, a Delaware limited liability company, and its successors and
permitted assigns as general partner of Antero Midstream Partners or as the business entity with the ultimate authority to manage the business and operations of Antero Midstream Partners.
"
Government Securities
" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of America is pledged.
"
Guarantee
" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business,
direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any
Indebtedness, and the term "Guaranteed" has a correlative meaning.
"
Guarantors
" means each of:
(1) Antero
Midstream LLC, Antero Water LLC and Antero Treatment LLC;
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(2) each
of the Restricted Subsidiaries of Antero Midstream Partners that becomes a guarantor of the notes pursuant to the covenant described above under
"—Certain covenants—Additional guarantees"; and
(3) each
other Person executing a supplemental indenture in which such Person agrees to be a guarantor of the notes and to be bound by the terms of the indenture;
provided
that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its Note Guarantee is
released in accordance with the terms of the indenture.
"
Hedging Obligations
" means, with respect to any specified Person, the obligations of such Person incurred in the ordinary course of
business and not for speculative purposes under:
(1) interest
rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements entered into
with one or more financial institutions and designed to reduce costs of borrowing or to protect the Person or any of its Restricted Subsidiaries entering into the agreement against fluctuations in
interest rates with respect to Indebtedness incurred;
(2) other
agreements or arrangements designed to manage interest rates or interest rate risk; and
(3) other
agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices.
"
Indebtedness
" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:
(1) in
respect of borrowed money;
(2) evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);
(3) in
respect of banker's acceptances;
(4) representing
Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;
(5) representing
the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services
are completed; or
(6) representing
any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and Hedging Obligations), would
appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset (other than Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by Antero Midstream Partners or any Restricted Subsidiary of Antero Midstream
Partners, in each case, securing Indebtedness of such Unrestricted Subsidiary or Joint Venture, as applicable) of the specified Person (whether or not such Indebtedness is assumed by the specified
Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The term "Indebtedness" excludes, however, any repayment or
reimbursement obligation of such Person or any of its Restricted Subsidiaries with respect to Customary Recourse Exceptions, unless and until an event or circumstance occurs that triggers the Person's
or such Restricted Subsidiary's direct repayment or reimbursement obligation (as opposed to contingent or performance obligations) to the lender or other Person to whom such
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obligation
is actually owed, in which case the amount of such direct payment or reimbursement obligation shall constitute Indebtedness.
Notwithstanding
the foregoing, the following shall not constitute "Indebtedness":
(1) accrued
expenses and trade accounts payable arising in the ordinary course of business;
(2) any
Indebtedness which has been defeased in accordance with GAAP or defeased pursuant to the deposit of cash or Government Securities (in an amount sufficient to satisfy
all such Indebtedness at Stated Maturity or redemption, as applicable, and all payments of interest and premium, if any) in a trust or account created or pledged for the sole benefit of the holders of
such Indebtedness and subject to no other Liens, and the other applicable terms of the instrument governing such Indebtedness;
(3) any
obligation arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the
ordinary course of business;
provided, however
, that such obligation is extinguished within five Business Days of its incurrence; and
(4) any
obligation arising from any agreement providing for indemnities, Guarantees, purchase price adjustments, holdbacks, contingency payment obligations based on the
performance of the acquired or disposed assets or similar obligations (other than Guarantees of Indebtedness) incurred by any Person in connection with the acquisition or disposition of assets.
"
Investment Grade Rating
" of the notes, means that the notes shall have been assigned a Moody's rating of Baa3 or higher and an S&P rating
of BBB- or higher, or if one of such rating agencies shall not make a rating on the notes publicly available for reasons outside the control of the Issuers, then "Investment Grade Rating" shall mean
that the notes shall have been assigned such a rating by one of such rating agencies and an equivalent investment grade credit rating from any other "nationally recognized statistical rating
organization" registered under Section 15E of the Exchange Act selected by the Issuers.
"
Investments
" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates)
in the forms of loans (including Guarantees or other obligations), advances (excluding advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance
sheet of the lender and commission, travel and similar advances to officers and employees made in the ordinary course of business), or capital contributions, purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If
Antero Midstream Partners or any Subsidiary of Antero Midstream Partners sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of Antero Midstream Partners such
that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of Antero Midstream Partners, Antero Midstream Partners will be deemed to have made an Investment on
the date of any such sale or disposition equal to the Fair Market Value of Antero Midstream Partners' Investments in such Subsidiary that were not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant described above under the caption "—Certain covenants—Restricted payments."
"
Issue Date
" means the first date on which the notes were issued, authenticated and delivered under the Indenture, September 13,
2016.
"
Joint Venture
" means any Person that is not a direct or indirect Subsidiary of Antero Midstream Partners in which Antero Midstream
Partners or any of its Restricted Subsidiaries makes any Investment.
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"
Lien
" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction, other than a precautionary financing statement respecting a lease not intended as a security agreement. In no event shall a right of first refusal be deemed to
constitute a Lien.
"
Moody's
" means Moody's Investors Service, Inc., or any successor to the rating agency business thereof.
"
Net Income
" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and
before any reduction in respect of preferred stock dividends, excluding, however, any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in
connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries.
"
Net Proceeds
" means the aggregate cash proceeds received by Antero Midstream Partners or any of its Restricted Subsidiaries in respect of
any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of:
(1) the
direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation
expenses incurred as a result of the Asset Sale,
(2) taxes
paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements,
(3) amounts
required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the
subject of such Asset Sale and all distributions and payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Sale, and
(4) any
amounts to be set aside in any reserve established in accordance with GAAP or any amount placed in escrow, in either case for adjustment in respect of the sale price
of such properties or assets or for liabilities associated with such Asset Sale and retained by Antero Midstream Partners or any of its Restricted Subsidiaries until such time as such reserve is
reversed or such escrow arrangement is terminated, in which case Net Proceeds shall include only the amount of the reserve so reversed or the amount returned to Antero Midstream Partners or its
Restricted Subsidiaries from such escrow arrangement, as the case may be.
"
Non-Recourse Debt
" means Indebtedness:
(1) as
to which neither Antero Midstream Partners nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement
or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, except for Customary Recourse Exceptions, or (c) constitutes the
lender;
(2) as
to which the lenders will not have any recourse to the assets of Antero Midstream Partners or any of its Restricted Subsidiaries, except as contemplated by
clause (13) of the definition of "Permitted Liens" and except for Customary Resource Exceptions; and
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(3) no
default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any other Indebtedness of Antero Midstream Partners or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity.
"
Note Guarantee
" means the Guarantee by each Guarantor of the Issuers' obligations under the indenture and the notes, which may be
evidenced by a notation thereof executed pursuant to the provisions of the indenture.
"
Obligations
" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"
Operating Surplus
" has the meaning assigned to such term in the Partnership Agreement, as in effect on the Issue Date.
"
Partnership Agreement
" means the Agreement of Limited Partnership of Antero Midstream Partners LP dated as of November 10,
2014, as amended by Amendment No. 1 to the Agreement of Limited Partnership of Antero Midstream Partners LP, dated as of February 23, 2016, as such may be further amended,
modified or supplemented from time to time.
"
Permitted Acquisition Indebtedness
" means Indebtedness or Disqualified Equity of Antero Midstream Partners or any of its Restricted
Subsidiaries to the extent such Indebtedness or Disqualified Equity was Indebtedness or Disqualified Equity of (i) a Subsidiary prior to the date on which such Subsidiary became a Restricted
Subsidiary or (ii) a Person that merged or consolidated with Antero Midstream Partners or a Restricted Subsidiary;
provided
that on the date such
Subsidiary became a Restricted Subsidiary or the date such Person was merged or consolidated with Antero Midstream Partners or a Restricted Subsidiary, as applicable, after giving pro forma effect
thereto, (a) Antero Midstream Partners would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described above under the caption
"—Certain covenants—Incurrence of indebtedness and issuance of disqualified equity" or (b) the Fixed Charge Coverage Ratio for Antero Midstream Partners would be equal
to or greater than the Fixed Charge Coverage Ratio for Antero Midstream Partners immediately prior to such transaction;
provided
that such Indebtedness
was not incurred in contemplation of, or in connection with, such acquisition, merger or consolidation.
"
Permitted Business
" means (1) midstream transportation of crude oil, natural gas or other hydrocarbons, including gathering,
compression, processing, transporting and fractionating, (2) fresh water distribution and waste water treatment services, (3) any other business that generates gross income at least 90%
of which constitutes "qualifying income' under Section 7704(d) of the Internal Revenue Code of 1986, as amended, or (4) any activity that is ancillary, complementary or incidental to or
necessary or appropriate for the activities described in clauses (1), (2) and (3) of this definition, including entering into Hedging Obligations related to any of these
activities.
"
Permitted Business Investments
" means Investments by Antero Midstream Partners or any of its Restricted Subsidiaries in any Unrestricted
Subsidiary of Antero Midstream Partners or in any Joint Venture,
provided
that:
(1) either
(a) at the time of such Investment and immediately thereafter, Antero Midstream Partners could incur $1.00 of additional Indebtedness under the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "—Certain covenants—Incurrence of indebtedness and issuance of
disqualified equity" above or (b) such Investment does not exceed the aggregate amount of Incremental Funds (as defined in the
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covenant
described above under the caption "—Certain covenants—Restricted payments") not previously expended at the time of making such Investment;
(2) if
such Unrestricted Subsidiary or Joint Venture has outstanding Indebtedness at the time of such Investment, either (a) all such Indebtedness is Non-Recourse
Debt or is owed to Antero Midstream Partners or one of its Restricted Subsidiaries or (b) any such Indebtedness of such Unrestricted Subsidiaries or Joint Venture that is recourse to Antero
Midstream Partners or any of its Restricted Subsidiaries could, at the time such Investment is made, be incurred at that time by Antero Midstream Partners and its Restricted Subsidiaries under the
covenant described above under the caption "—Certain covenants—Incurrence of indebtedness and issuance of disqualified equity"; and
(3) such
Unrestricted Subsidiary's or Joint Venture's activities are not outside the scope of the Permitted Business.
"
Permitted Investments
" means:
(1) any
Investment in Antero Midstream Partners or in a Restricted Subsidiary of Antero Midstream Partners;
(2) any
Investment in Cash Equivalents;
(3) any
Investment by Antero Midstream Partners or any Restricted Subsidiary of Antero Midstream Partners in a Person, if as a result of such Investment:
(a) such
Person becomes a Restricted Subsidiary of Antero Midstream Partners; or
(b) such
Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its properties or assets to, or is liquidated into, Antero
Midstream Partners or a Restricted Subsidiary of Antero Midstream Partners;
(4) any
Investment made as a result of the receipt of non-cash consideration from:
(a) an
Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "—Repurchase at the option of
holders—Asset sales"; or
(b) a
disposition of assets deemed not to be an Asset Sale under the definition of "Asset sale";
(5) any
Investment in any Person solely in exchange for the issuance of Equity Interests (other than Disqualified Equity) of Antero Midstream Partners;
(6) any
Investments received in compromise or resolution of (a) obligations of trade creditors or customers that were incurred in the ordinary course of business of
Antero Midstream Partners or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or
customer, or as a result of a foreclosure, perfection or enforcement by Antero Midstream Partners or any of its Restricted Subsidiaries with
respect to any secured Investment in default; or (b) litigation, arbitration or other disputes with Persons who are not Affiliates;
(7) Investments
represented by Hedging Obligations permitted to be incurred;
(8) loans
or advances to employees made in the ordinary course of business of Antero Midstream Partners or any Restricted Subsidiary of Antero Midstream Partners in an
aggregate principal amount not to exceed $2.5 million at any one time outstanding;
(9) repurchases
of the notes;
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(10) any
Investments in prepaid expenses, negotiable instruments held for collection and lease, utility, workers' compensation and performance and other similar deposits and
prepaid expenses made in the ordinary course of business;
(11) Permitted
Business Investments; and
(12) other
Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant to this clause (12) that are at the time outstanding not to exceed the greater of
(a) $100.0 million and (b) 5.0% of Antero Midstream Partners' Consolidated Net Tangible Assets;
provided, however
, that any
Investment pursuant to this clause (12) made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after
such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (12) for so long as such
Person continues to be a Restricted Subsidiary;
provided, however
, that with respect to any Investment, Antero Midstream Partners may, in its sole discretion, allocate all or any portion
of any Investment and later re-allocate all or any portion of any Investment to one or more of the above clauses (1) through (12) so that the entire Investment would be a Permitted
Investment.
"
Permitted Liens
" means:
(1) Liens
securing any Indebtedness under any of the Credit Facilities and all Obligations and Hedging Obligations relating to such Indebtedness;
(2) Liens
in favor of Antero Midstream Partners or the Guarantors;
(3) Liens
on property of a Person existing at the time such Person is merged with or into or consolidated with Antero Midstream Partners or any Subsidiary of Antero
Midstream Partners;
provided
that such Liens were in existence prior to such merger or consolidation and do not extend to any assets other than those of
the Person merged into or consolidated with Antero Midstream Partners or the Subsidiary;
(4) Liens
on property existing at the time of acquisition of the property by Antero Midstream Partners or any Restricted Subsidiary of Antero Midstream Partners;
provided
that such Liens were in existence prior
to, such acquisition, and not incurred in contemplation of, such acquisition;
(5) Liens
and deposits to secure the performance of statutory obligations, surety or appeal bonds, workers compensation obligations, reimbursement obligations owed to
insurers, bids, performance bonds, true leases, other types of social security or other obligations of a like nature incurred in the ordinary course of business (including Liens to secure letters of
credit issued to assure payment of such obligations);
(6) Liens
existing on the Issue Date (other than Liens securing the Credit Facilities);
(7) Liens
for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded;
provided
that any reserve or other appropriate provision as is required in conformity with GAAP has been made
therefor;
(8) Liens
imposed by law, such as carriers', warehousemen's, landlord's, repairman's, mechanics' and other like Liens, in each case, incurred in the ordinary course of
business;
(9) defects,
irregularities and deficiencies in title of any rights of way, survey exceptions, easements or reservations of, or rights of others for, licenses,
rights-of-way, sewers, electric lines,
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telegraph
and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the
aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;
(10) inchoate
Liens arising under ERISA;
(11) Liens
created for the benefit of (or to secure) the notes (or the Note Guarantees);
(12) Liens
on any property or asset acquired, constructed or improved by Antero Midstream Partners or any of its Restricted Subsidiaries (a "Purchase Money Lien"), which
(a) are in favor of the seller of such property or assets, in favor of the Person developing, constructing, repairing or improving such asset or property, or in favor of the Person that
provided the funding for the acquisition, development, construction, repair or improvement cost, as the case may be, of such asset or property, (b) are created within 360 days after the
acquisition, development, construction, repair or improvement, (c) secure the purchase price or development, construction, repair or improvement cost, as the case may be, of such asset or
property in an amount up to 100% of the Fair Market Value of such acquisition, construction or improvement of such asset or property, and (d) are limited to the asset or property so acquired,
constructed or improved (including the proceeds thereof, accessions thereto and upgrades thereof);
(13) Liens
on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by Antero Midstream Partners or any Restricted Subsidiary of
Antero Midstream Partners to the extent securing Non-Recourse Debt or other Indebtedness of such Unrestricted Subsidiary or Joint Venture;
(14) Liens
in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of Antero Midstream Partners
or any of its Restricted Subsidiaries on deposit with or in possession of such bank;
(15) Liens
securing Hedging Obligations or Treasury Management Arrangements of Antero Midstream Partners or any of its Restricted Subsidiaries;
(16) Liens
securing any insurance premium financing under customary terms and conditions,
provided
that no such Lien may
extend to or cover any assets or property other than the insurance being acquired with such financing, the proceeds thereof and any unearned or refunded insurance premiums related thereto;
(17) Liens
incurred in the ordinary course of business of Antero Midstream Partners or any Restricted Subsidiary of Antero Midstream Partners with respect to Indebtedness
that at any one time outstanding does not exceed the greater of (a) $100.0 million and (b) 5.0% of Consolidated Net Tangible Assets;
(18) judgment
Liens not giving rise to an Event of Default so long as any appropriate legal proceedings that may have been initiated for the review of such judgment shall
not have been finally terminated or the period within which such legal proceedings may be initiated shall not have expired;
(19) Liens
resulting from the deposit of money or other cash equivalents in trust for the purpose of defeasing Indebtedness of Antero Midstream Partners or any of its
Restricted Subsidiaries;
(20) Liens
to secure any Permitted Refinancing Indebtedness permitted to be incurred under the indenture;
provided, however
,
that:
(a) the
new Lien is limited to all or part of the same property or assets that secured or, under the written agreements pursuant to which the original Lien arose, could
secure the
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original
Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and
(b) the
Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed
amount, of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged with such Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and
expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;
(21) Liens
relating to future escrow arrangements securing Indebtedness incurred in accordance with the indenture; and
(22) Liens
renewing, extending, refinancing or refunding a Lien permitted by clauses (1) through (21) above;
provided
that (a) the principal amount of Indebtedness secured by such Lien does not
exceed the principal amount of such Indebtedness outstanding
immediately prior to the renewal, extension, refinance or refund of such Lien, plus all accrued interest on the Indebtedness secured thereby and the amount of all fees, expenses and premiums incurred
in connection therewith, and (b) no assets encumbered by any such Lien other than the assets permitted to be encumbered immediately prior to such renewal, extension, refinance or refund are
encumbered thereby.
"
Permitted Refinancing Indebtedness
" means any Indebtedness of Antero Midstream Partners or any of its Restricted Subsidiaries issued in
exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge other Indebtedness of Antero Midstream Partners or any of its Restricted Subsidiaries
(other than intercompany Indebtedness);
provided
that:
(1) the
principal amount of such Permitted Refinancing Indebtedness does not exceed the principal amount of the Indebtedness renewed, refunded, refinanced, replaced,
defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith);
(2) such
Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater
than the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged;
(3) if
the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the notes or the Note Guarantees, such
Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes or the Note Guarantees, on terms at least as
favorable to the holders of notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; and
(4) such
Indebtedness is not incurred by a Restricted Subsidiary (other than Finance Corp. or a Guarantor) if Antero Midstream Partners or a Guarantor is the issuer or other
primary obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged.
"
Person
" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated
organization, limited liability company or government or other entity.
"
Qualified Owner
" means each of (i) Warburg Pincus & Co.; (ii) Paul M. Rady
("
Rady
"); (iii) Glen C. Warren, Jr. ("
Warren
"); (iv) Rady's wife or Warren's wife;
(v) any lineal descendant of either Rady or Warren; (vi) the guardian or other legal representative of either Rady or Warren; (vii) the estate of either Rady or Warren;
(viii) any trust of which at least one of the trustees is either Rady or Warren, or the principal beneficiaries of which are any one or more of the Persons referred to in the preceding
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clauses (ii)
through (vii); (ix) any Person that is controlled by any one or more of the Persons in the preceding clauses (i) through (viii); (x) any group (within the
meaning of the Exchange Act) that includes one or more of the Persons described in the preceding clauses (i) through (ix),
provided
that such
Persons described in the preceding clauses (i) through (ix) control more than 50% of the total voting power of such group; (xi) Antero Resources Corporation; and
(xii) Antero Resources Investment LLC. Any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) whose acquisition of Beneficial Ownership of any Voting Stock of
the General Partner or of Antero Resources Investment LLC constitutes a Change of Control in respect of which a Change of Control Offer or an Alternate Offer is made in accordance with the
requirements of the indenture will thereafter, together with its Affiliates, constitute an additional Qualifying Owner.
"
Rating Agencies
" means Moody's and S&P.
"
Rating Categories
" means:
(1) with
respect to S&P, any of the following categories: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories); and
(2) with
respect to Moody's, any of the following categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories).
"
Rating Decline
" means the occurrence of a decrease in the rating of the notes by one or more gradations by each of Moody's and S&P
(including gradations within the rating categories, as well as between categories), within 60 days before or after the earlier of (x) a Change of Control, (y) the date of public
notice of the occurrence of a Change of Control or (z) public notice of the intention of Antero Midstream Partners to effect a Change of Control (which 60-day period shall be extended so long
as the rating of the notes is under publicly announced consideration for possible downgrade by either Moody's or S&P);
provided, however
, that a Rating
Decline otherwise arising by virtue of a particular reduction in rating will not be deemed to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Decline
for purposes of the definition of Change of Control) unless each of Moody's and S&P making the reduction in rating to which this definition would otherwise apply announces or publicly confirms or
informs the trustee in writing at the request of Antero Midstream Partners or the trustee that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising
as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control has occurred at the time of the Rating Decline).
"
Reference Period
" means, with respect to any date of determination, the four most recent fiscal quarters of Antero Midstream Partners for
which internal financial statements are available.
"
Restricted Investment
" means an Investment other than a Permitted Investment.
"
Restricted Subsidiary
" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. References to
Restricted Subsidiaries are to Restricted Subsidiaries of Antero Midstream Partners unless otherwise indicated.
"
S&P
" means S&P Global Ratings, a division of S&P Global, Inc., or any successor to the rating agency business thereof.
"
SEC
" means the Securities and Exchange Commission.
"
Securities Act
" means the Securities Act of 1933, as amended.
"
Senior Indebtedness
" means with respect to any Person, Indebtedness of such Person, unless the instrument creating or evidencing such
Indebtedness provides that such Indebtedness is subordinate in right of payment to the notes or the Note Guarantee of such Person, as the case may be.
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"
Significant Subsidiary
" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.
"
Stated Maturity
" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the
payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Issue Date, and will not include any contingent obligations to repay, redeem or
repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.
"
Subsidiary
" means, with respect to any specified Person:
(1) any
corporation, association or other business entity (other than a partnership or limited liability company) of which more than 50% of the total voting power of shares
of the Voting Stock is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and
(2) any
partnership (whether general or limited) or limited liability company (a) the sole general partner or managing member of which is such Person or a Subsidiary
of such Person, or (b) if there are more than a single general partner or member, either (x) the only general partners or managing members of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof) or (y) such Person owns or controls, directly or indirectly, a majority of the outstanding general partner interests, member interests
or other Voting Stock of such partnership or limited liability company, respectively.
"
Treasury Management Arrangement
" means any agreement or other arrangement governing the provision of treasury or cash management
services, including deposit accounts, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, return check concentration, controlled disbursement, lockbox,
account reconciliation and reporting and trade finance services and other cash management services.
"
Treasury Rate
" means, as of the time of computation, the yield to maturity as of such time of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business
days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption
date to September 15, 2019;
provided, however
, that if the period from the redemption date to September 15, 2019, is less than one year,
the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used. Antero Midstream Partners will (i) calculate the Treasury
Rate on the second business day preceding the applicable redemption date and (ii) prior to such redemption date file with the trustee an officers' certificate setting forth the Applicable
Premium and the Treasury Rate and showing the calculation of each in reasonable detail.
"
Unrestricted Subsidiary
" means any Subsidiary of Antero Midstream Partners (other than Finance Corp. or any successor to it) that is
designated by the Board of Directors of Antero Midstream Partners as an Unrestricted Subsidiary pursuant to a resolution of such Board of Directors, but only to the extent that such Subsidiary:
(1) except
to the extent permitted by subclause (2)(b) of the definition of "Permitted Business Investments," has no Indebtedness other than Non-Recourse Debt;
(2) except
as permitted by the covenant described above under the caption "—Certain covenants—Transactions with affiliates," is not party to any
agreement, contract, arrangement or understanding with Antero Midstream Partners or any Restricted Subsidiary of Antero Midstream Partners unless the terms of any such agreement, contract, arrangement
or understanding are no
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less
favorable to Antero Midstream Partners or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of Antero Midstream Partners;
(3) is
a Person with respect to which neither Antero Midstream Partners nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe
for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and
(4) has
not Guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Antero Midstream Partners or any of its Restricted Subsidiaries,
except to the extent such Guarantee or credit support would be released, terminated or no longer exist upon such designation.
All
Subsidiaries of an Unrestricted Subsidiary shall be also Unrestricted Subsidiaries. Any designation of a Subsidiary of Antero Midstream Partners as an Unrestricted Subsidiary will be
evidenced to the trustee by filing with the trustee a Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the caption "—Certain covenants—Restricted payments." If, at any time, any Unrestricted Subsidiary would fail
to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will
be deemed to be incurred by a Restricted Subsidiary of Antero Midstream Partners as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described
above under the caption "—Certain covenants—Incurrence of indebtedness and issuance of disqualified equity," Antero Midstream Partners will be in default of such covenant.
"
Voting Stock
" of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled (without regard
to the occurrence of any contingency) to vote in the election of the Board of Directors of such Person.
"
Weighted Average Life to Maturity
" means, when applied to any Indebtedness at any date, the number of years obtained by dividing:
(1) the
sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the
making of such payment; by
(2) the
then outstanding principal amount of such Indebtedness.
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BOOK ENTRY, DELIVERY AND FORM
The new notes initially will be represented by one or more permanent global notes in registered form without interest coupons (the "Global
Notes").
The
Global Notes will be deposited upon issuance with the Trustee as custodian for The Depository Trust Company ("DTC") and registered in the name of DTC's nominee,
Cede & Co., in each case for credit to an account of a direct or indirect participant in DTC as described below. Beneficial interests in the Global Notes may be held through Euroclear
Bank N.V./S.A., as operator of the Euroclear System ("Euroclear"), and the Clearstream Banking, S.A. ("Clearstream") (as indirect participants in DTC).
The
Global Notes may be transferred, in whole but not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be
exchanged for notes in registered, certificated form ("Certificated Notes") except in the limited circumstances described below. See "—Exchange of Global Notes for Certificated Notes."
Depository Procedures
The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience.
These operations and procedures are solely within the control of their respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures
and urge investors to contact the systems or their participants directly to discuss these matters.
DTC
has advised us that DTC is a limited-purpose trust company created to hold securities for its participants and to facilitate the clearance and settlement of transactions in those
securities between these participants through electronic book-entry changes in accounts of its participants. The participants include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also available to indirect participants, which include other entities such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either directly or indirectly. Persons who are not participants may beneficially own securities held by or on behalf of DTC only
through the participants or the indirect participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the
participants and indirect participants.
DTC
has also advised us that, pursuant to procedures established by it:
(1) upon
deposit of the global notes, DTC will credit the accounts of participants designated by the Exchange Agent with portions of the principal amount of the global
notes; and
(2) ownership
of these interests in the global notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with
respect to the participants) or by the participants and the indirect participants (with respect to other owners of beneficial interest in the global notes).
Investors
in the Global Notes who are participants in DTC's system may hold their interests therein directly through DTC. Investors in the Global Notes who are not participants may hold
their interests
therein indirectly through organizations (including Euroclear and Clearstream) which are participants in such system.
Euroclear
and Clearstream will hold interests in the Global Notes on behalf of their participants through customers' securities accounts in their respective names on the books of their
respective depositaries. All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Interests held through
Euroclear or Clearstream may also be subject to the procedures and requirements of such systems. The laws of some
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states
require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons
will be limited to that extent. Because DTC can act only on behalf of participants, which in turn act on behalf of indirect participants, the ability of a Person having beneficial interests in a
Global Note to pledge such interests to persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate
evidencing such interests.
Except as described below, owners of interests in the Global Notes will not have notes registered in their names, will not receive physical delivery of notes in
certificated form and will not be considered the registered owners or "holders" thereof under the Indenture for any purpose.
Payments
in respect of the principal of, and interest and premium, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the
registered Holder under the Indenture. Under the terms of the Indenture, we and the Trustee will treat the Persons in whose names the notes, including the Global Notes, are registered as the owners
for the purpose of receiving payments and for all other purposes. Consequently, none of us, the Trustee or any agent of ours or the Trustee has or will have any responsibility or liability for:
(1) any
aspect of DTC's records or any participant's or indirect participant's records relating to, or payments made on account of, beneficial ownership interests in the
global notes or for maintaining, supervising or reviewing any of DTC's records or any participant's or indirect participant's records relating to the beneficial ownership interests in the Global
Notes; or
(2) any
other matter relating to the actions and practices of DTC or any of its participants or indirect participants.
DTC
has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the
relevant participants with the payment on the payment date in accordance with instructions provided to DTC. Each relevant participant is credited with an amount proportionate to its beneficial
ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the participants and the indirect participants to the beneficial owners of notes
will be governed by standing instructions and customary practices and will be the responsibility of the participants or the indirect participants and will not be the responsibility of DTC, the Trustee
or us. Neither we nor the Trustee will be liable for any delay by DTC or any of its participants in identifying the beneficial owners of the notes, and we and the Trustee may conclusively rely on and
will be protected in relying on instructions from DTC or its nominee for all purposes.
Subject
to the transfer restrictions set forth under "Notice to Investors," transfers between participants in DTC will be effected in accordance with DTC's procedures, and will be
settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.
Subject
to compliance with the transfer restrictions applicable to the notes described herein, cross-market transfers between the participants in DTC, on the one hand, and Euroclear and
Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of each of Euroclear and Clearstream, as the case may be, by their respective
depositaries; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements,
deliver instructions to its depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant global note to or from DTC, and making or receiving
payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear
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participants
and Clearstream participants may not deliver instructions directly to the depositaries for Euroclear or Clearstream.
DTC
has advised us that it will take any action permitted to be taken by a Holder of notes only at the direction of one or more participants to whose account DTC has credited the
interests in the global notes and only in respect of such portion of the aggregate principal amount of the notes as to which such participant or participants has or have given such direction. However,
if there is an Event of Default under the notes, DTC reserves the right to exchange the global notes for legended notes in certificated form, and to distribute such notes to its participants.
Although
DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the global notes among participants in DTC, Euroclear and
Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. None of us, the Trustee or any agent of ours or the
Trustee will have any responsibility for the performance by DTC, Euroclear, Clearstream, or their respective participants or indirect participants of their respective obligations under the rules and
procedures governing their operations.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for definitive notes in registered certificated form, which we refer to as certificated notes, if:
(1) DTC
notifies us that it (a) is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered
under the Exchange Act and, in either case, we fail to appoint a successor depositary within 120 days after the date of such notice;
(2) we,
at our option, notify the Trustee in writing that we elect to cause the issuance of the certificated notes; or
(3) there
shall have occurred and be continuing a Default or Event of Default with respect to the notes.
In
addition, beneficial interests in a Global Note may be exchanged for certificated notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the
Indenture. In all cases, certificated notes delivered in exchange for any Global Note or beneficial interests in global notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary procedures).
Exchange of Certificated Notes for Global Notes
Certificated notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the Trustee a
written certificate, in the form provided in the Indenture, to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such notes.
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