Item 1.01 Entry Into a Material Definitive Agreement.
Agreement and Plan of Merger
On February 26, 2020, EQM Midstream Partners,
LP, a Delaware limited partnership (EQM), Equitrans Midstream Corporation, a Pennsylvania corporation (Equitrans Midstream), EQM
LP Corporation, a Delaware corporation and a wholly owned subsidiary of Equitrans Midstream (EQM LP), LS Merger Sub, LLC, a Delaware
limited liability company and a wholly owned subsidiary of EQM LP (Merger Sub), and EQGP Services, LLC, a Delaware limited liability
company, a wholly owned subsidiary of Equitrans Midstream and the general partner of EQM (the EQM General Partner), entered into
an Agreement and Plan of Merger (the EQM Merger Agreement), pursuant to which Merger Sub, will merge with and into EQM (the EQM
Merger), with EQM continuing and surviving as an indirect, wholly owned subsidiary of Equitrans Midstream following the EQM Merger.
Under the terms of the EQM Merger Agreement,
and subject to the satisfaction or waiver of certain conditions therein, at the effective time of the EQM Merger (the Effective
Time), (i) each outstanding EQM common unit (each, an EQM Common Unit), other than EQM Common Units owned by Equitrans Midstream
and its subsidiaries (each, a Public Common Unit), will be converted into the right to receive, subject to adjustment as described
in the EQM Merger Agreement, 2.44 shares of Equitrans Midstream common stock, no par value (Equitrans Midstream common stock) (the
Merger Consideration); (ii) (x) $600.0 million of the Series A Perpetual Convertible Preferred Units (each, a Series A Preferred
Unit) issued and outstanding immediately prior to the Effective Time will be redeemed by EQM, and (y) the remaining portion of
the Series A Preferred Units issued and outstanding immediately prior to the Effective Time will be exchanged for shares of a newly
authorized and created series of preferred stock, without par value, of Equitrans Midstream, convertible into Equitrans Midstream
common stock (the ETRN Preferred Shares); and (iii) each outstanding phantom unit relating to an EQM Common Unit issued pursuant
to the Amended and Restated EQGP Services, LLC 2012 Long-Term Incentive Plan, dated as of February 22, 2019 (the EQM LTIP), and
any other award issued pursuant to the EQM LTIP, whether vested or unvested, will be converted into the right to receive, with
respect to each EQM Common Unit subject thereto, the Merger Consideration (plus any accrued but unpaid amounts in relation to distribution
equivalent rights), less applicable tax withholding. The interests in EQM owned by Equitrans Midstream and its subsidiaries (including
the Class B units representing limited partner interests of EQM) will remain outstanding as limited partner interests in the surviving
entity. The EQM General Partner will continue to own the non-economic general partner interest in the surviving entity.
The Conflicts Committee (the EQM Conflicts
Committee) of the Board of Directors of the EQM General Partner (the EQM Board), by unanimous vote, (i) determined that the EQM
Merger Agreement and the transactions contemplated thereby, including the EQM Merger (the Transactions), are in the best interests
of EQM, its subsidiaries and each holder of Public Common Units (each, an Unaffiliated Partnership Unitholder), (ii) approved the
EQM Merger Agreement and the Transactions (the foregoing constituting “Special Approval” as defined in EQM’s
Fourth Amended and Restated Agreement of Limited Partnership dated as of April 10, 2019, as amended (the Partnership Agreement)),
(iii) recommended that the EQM Board approve the EQM Merger Agreement and the execution, delivery and performance of the EQM Merger
Agreement and the Transactions, and (iv) resolved, and recommended that the EQM Board resolve, to recommend approval of the EQM
Merger Agreement and the EQM Merger by the limited partners of EQM.
The EQM Board (acting, in part, upon the
recommendation of the EQM Conflicts Committee), by unanimous vote, (i) determined that the terms of the EQM Merger Agreement and
the Transactions are in the best interests of EQM, its subsidiaries and the limited partners of EQM, (ii) approved the EQM Merger
Agreement, the execution, delivery and performance of the EQM Merger Agreement and the Transactions and (iii) resolved to submit
the EQM Merger Agreement to a vote of the limited partners of EQM and recommend that the limited partners of EQM approve the EQM
Merger Agreement and the EQM Merger.
The Board of
Directors of Equitrans Midstream (the Equitrans Midstream Board), by unanimous vote, (i) determined that the execution,
delivery and performance of the EQM Merger Agreement and the Transactions and the issuance of Equitrans Midstream common
stock as the Merger Consideration (the Equitrans Midstream Stock Issuance) and the authorization and issuance of the ETRN
Preferred Shares (the ETRN Preferred Issuance), are in the best interests of Equitrans Midstream and the holders of the
outstanding shares of Equitrans Midstream common stock (the ETRN Shareholders), (ii) approved the EQM Merger Agreement, the
execution, delivery and performance of the EQM Merger Agreement and the Transactions, the Equitrans Midstream Stock Issuance
and the ETRN Preferred Issuance, (iii) directed that the Equitrans Midstream Stock Issuance be submitted to a vote of the
ETRN Shareholders, and (iv) resolved to recommend that the ETRN Shareholders approve the Equitrans Midstream Stock
Issuance.
EQM has agreed to, and the EQM General Partner
will use its reasonable best efforts to cause EQM to, cease and cause to be terminated any discussions or negotiations with any
person conducted heretofore with respect to a competing acquisition proposal, not to directly or indirectly solicit competing acquisition
proposals or to enter into discussions concerning, or provide confidential information in connection with, any unsolicited alternative
business combinations, subject to certain exceptions with respect to unsolicited proposals received by EQM. In addition, EQM has
agreed to call a special meeting of the holders of EQM Common Units (the EQM Special Meeting) to approve the EQM Merger Agreement.
The EQM Conflicts Committee may, subject to certain conditions, change its recommendation in favor of approval of the EQM Merger
Agreement and the EQM Merger if, in connection with receipt of a superior proposal or the occurrence of a Partnership Changed Circumstance
(as defined in the EQM Merger Agreement), it determines in good faith that failure to take such action would constitute a breach
of, or otherwise be inconsistent with, its duties under applicable law, as modified by the Partnership Agreement. However, even
if the EQM Conflicts Committee changes its recommendation, the EQM Merger Agreement and the EQM Merger require EQM to submit the
EQM Merger Agreement for approval by the limited partners of EQM.
The EQM Merger Agreement contains representations
and warranties from the parties and indemnification obligations, and each party has agreed to certain covenants, including, among
others, covenants relating to, among others, (i) the conduct of business during the interim period between the execution of the
EQM Merger Agreement and the Effective Time and (ii) the obligation to use reasonable best efforts to cause the EQM Merger to be
consummated.
Completion of the EQM Merger is conditioned
upon, among others: (i) approval (the Partnership Approval) of the EQM Merger Agreement and the EQM Merger by holders of a majority
of the outstanding EQM Common Units, Class B units, and Series A Preferred Units, with such Series A Preferred Units treated as
EQM Common Units on an as-converted basis, voting together as a single class; (ii) approval (the ETRN Shareholder Approval) of
the Equitrans Midstream Stock Issuance by a majority of votes cast at a special meeting of holders of shares of Equitrans Midstream
common stock (the ETRN Special Meeting); (iii) there being no law or injunction prohibiting consummation of the transactions contemplated
under the EQM Merger Agreement; (iv) the effectiveness of a registration statement on Form S-4, and no stop order suspending the
effectiveness of such registration statement, relating to the issuance of shares of Equitrans Midstream common stock pursuant to
the EQM Merger Agreement; (v) approval for listing on the New York Stock Exchange of the shares of Equitrans Midstream common stock
issuable pursuant to the EQM Merger Agreement; (vi) subject to specified materiality standards, the accuracy of certain representations
and warranties of each party; (vii) the delivery of a tax opinion to Equitrans Midstream in form and substance approved by EQT
Corporation, a Pennsylvania corporation (EQT), satisfying the requirements of an unqualified tax opinion (as defined in the Tax
Matters Agreement, dated November 12, 2018, between EQT and Equitrans Midstream) with respect to the transactions contemplated
by the EQM Merger Agreement; (viii) compliance with, or waiver, if permissible, by the respective parties in all material respects
with their respective covenants; and (ix) closing of the Restructuring (as defined below).
The EQM Merger Agreement contains provisions
granting each of Equitrans Midstream and EQM the right to terminate the EQM Merger Agreement for certain reasons, including, among
others, (i) by the mutual written consent of Equitrans Midstream and EQM; (ii) if the EQM Merger has not been consummated
on or before August 26, 2020; (iii) if any law, injunction, judgment or ruling enacted, promulgated, issued, entered, amended or
enforced by any governmental authority shall be in effect, and has become final and nonappealable, enjoining, restraining, preventing
or prohibiting the consummation of the Transactions or making the consummation of the Transactions illegal; (iv) if the EQM
Special Meeting shall have concluded and the Partnership Approval shall not have been obtained; (v) if the ETRN Special Meeting
shall have concluded and the ETRN Shareholder Approval shall not have been obtained or (vi) if a Partnership Adverse Recommendation
Change (as defined in the EQM Merger Agreement) shall have occurred prior to receipt of the Partnership Equityholder Approval (as
defined the EQM Merger Agreement) (provided that the Partnership may only terminate as a result of Partnership Changed Circumstances
(as defined in the EQM Merger Agreement)). The EQM Merger
Agreement contains provisions granting Equitrans Midstream the right to terminate the EQM Merger Agreement for certain reasons,
including if EQM or the EQM General Partner shall have breached or failed to perform its representations, warranties, covenants
or agreements set forth in the EQM Merger Agreement, which breach or failure (x) would give rise to a failure of certain of the
conditions to Equitrans Midstream’s obligations to consummate the Transactions under the EQM Merger Agreement and (y) is
incapable of being cured or is not cured within the earlier of 30 days of written notice of such breach or failure by Equitrans
Midstream, provided Equitrans Midstream shall not have the right to terminate if Equitrans Midstream, EQM LP or Merger Sub are
in material breach of any of their representations, warranties, covenants or agreements contained in the EQM Merger Agreement,
or (c) prior to receipt of Partnership Approval, EQM is in Willful Breach (as defined in the EQM Merger Agreement) of its obligations
set forth under the non-solicitation provisions of the EQM Merger Agreement; provided Equitrans Midstream shall not have the right
to terminate if Equitrans Midstream, EQM LP or Merger Sub are in material breach of any of its representations, warranties, covenants
or agreements contained in the EQM Merger Agreement. The EQM Merger Agreement contains provisions granting EQM the right to terminate
the EQM Merger Agreement if (a) Equitrans Midstream has breached or failed to perform its representations, warranties, covenants
or agreements set forth in the EQM Merger Agreement, which breach or failure (1) would give rise to a failure of certain of the
conditions to EQM’s obligations to consummate the Transactions under the EQM Merger Agreement and (2) is incapable of being
cured or is not cured within the earlier of 30 days of written notice of such breach or failure by EQM, provided EQM shall not
have the right to terminate if EQM or the EQM General Partner is in material breach of any of its representations, warranties,
covenants or agreements contained in the EQM Merger Agreement or (b) prior to receipt of the Partnership Approval (as defined in
the EQM Merger Agreement), in order to enter into an agreement providing for a Superior Proposal (as defined in the EQM Merger
Agreement). Upon termination of the EQM Merger Agreement under certain circumstances, EQM will be obligated to (i) pay Equitrans
Midstream a termination fee equal to $36.5 million and/or (ii) reimburse Equitrans Midstream for its expenses in an amount not
to exceed $10.0 million. The EQM Merger Agreement also provides that upon termination of the EQM Merger Agreement under certain
circumstances, Equitrans Midstream will be obligated to reimburse EQM for its expenses in an amount not to exceed $10.0 million.
The EQM Merger Agreement is attached as
Exhibit 2.1 to this Current Report on Form 8-K (this Current Report) and incorporated into this Item 1.01 by reference. The foregoing
summary has been included to provide investors and security holders with information regarding the terms of the EQM Merger Agreement
and is qualified in its entirety by the terms and conditions of the EQM Merger Agreement. It is not intended to provide any other
factual information about Equitrans Midstream, EQM, the EQM General Partner or their respective subsidiaries and affiliates. The
EQM Merger Agreement contains representations and warranties by each of the parties to the EQM Merger Agreement, which were made
only for purposes of the EQM Merger Agreement and as of specified dates. The representations, warranties and covenants in the EQM
Merger Agreement were made solely for the benefit of the parties to the EQM Merger Agreement; may be subject to limitations agreed
upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual
risk between the parties to the EQM Merger Agreement instead of establishing these matters as facts; and may be subject to standards
of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely
on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts
or condition of Equitrans Midstream, EQM, the EQM General Partner or any of their respective subsidiaries or affiliates. Moreover,
information concerning the subject matter of the representations, warranties and covenants may change after the date of the EQM
Merger Agreement, which subsequent information may or may not be fully reflected in Equitrans Midstream’s or EQM’s
public disclosures.
Preferred Restructuring Agreement
On February 26, 2020, Equitrans Midstream
and EQM entered into a Preferred Restructuring Agreement (the Restructuring Agreement) with all of the holders of Series A Preferred
Units (collectively, the Investors), pursuant to which (i) EQM will redeem $600.0 million of the Investor's Series A Preferred
Units issued and outstanding immediately prior to the effective time of the Restructuring Agreement and (ii) the remaining portion
of the Series A Preferred Units issued and outstanding immediately prior to the effective time of the Restructuring Agreement will
be exchanged for ETRN Preferred Shares on a one for one basis (the Private Placement), in each case, in connection with the occurrence
of the “Series A Change of Control” (as defined in the Partnership Agreement) that will occur upon the closing of the
EQM Merger (the Restructuring). The ETRN Preferred Shares to be issued in the Private Placement have not been registered
under the Securities Act of 1933, as amended (the Securities Act), in reliance upon the exemption provided in Section 4(a)(2) of
the Securities Act and/or Regulation D promulgated thereunder.
The Restructuring is expected to close substantially
concurrent with the closing of the EQM Merger (the Restructuring Closing), subject to the delivery of certain closing deliverables
and certain closing conditions, including, among others: (i) the continued accuracy of the representations and warranties contained
in the Restructuring Agreement; (ii) the performance by each party of its respective obligations under the Restructuring Agreement;
(iii) the absence of any suit, action or proceeding by any governmental authority restraining, precluding, enjoining or prohibiting
the Restructuring; (iv) the closing of the EQM Merger either prior to or concurrently with the Restructuring Closing; and (v) the
execution of certain agreements and delivery of certain documents related to the Restructuring, including the certificate of designations
to be filed by Equitrans Midstream with the Pennsylvania Department of State at the Restructuring Closing (the Certificate of Designations)
and a registration rights agreement to be entered into by and among Equitrans Midstream and the Investors (the Registration Rights
Agreement), each in substantially the form attached as an exhibit to the Restructuring Agreement.
Pursuant to the Restructuring Agreement,
in connection with the Restructuring Closing, Equitrans Midstream will file the Certificate of Designations with the Pennsylvania
Department of State in substantially the form attached as an exhibit to the Restructuring Agreement to, among other things, authorize
and establish the designations, rights and preferences of the ETRN Preferred Shares.
The ETRN Preferred Shares are a new class
of security that will rank pari passu with any other outstanding class or series of preferred stock of Equitrans Midstream and
senior to Equitrans Midstream common stock with respect to dividend rights and rights upon liquidation. The ETRN Preferred Shares
will vote on an as-converted basis with the Equitrans Midstream common stock and will have certain other class voting rights with
respect to any amendment to the Certificate of Designations or Equitrans Midstream’s articles of incorporation that would
be adverse (other than in a de minimis manner) to any of the rights, preferences or privileges of the ETRN Preferred Shares.
The holders of the ETRN Preferred Shares
will receive cumulative quarterly dividends at a rate per annum of 9.75% for each quarter ending on or before March 31, 2024, and
thereafter the quarterly dividends at a rate per annum equal to the sum of (i) three-month LIBOR as of a LIBOR Determination Date
(as defined in the Certificate of Designations) in respect of the applicable quarter and (ii) 8.15%; provided that the rate per
annum shall not be less than 10.50%. Equitrans Midstream will not be entitled to pay any dividends on any junior securities, including
any of the Equitrans Midstream common stock, prior to paying the quarterly dividends payable to the ETRN Preferred Shares, including
any previously accrued and unpaid dividends.
Each holder of
the ETRN Preferred Shares may elect to convert all or any portion of the ETRN Preferred Shares owned by it into Equitrans
Midstream common stock initially on a one-for-one basis, subject to certain anti-dilution adjustments and an adjustment for
any dividends that have accrued but not been paid when due and partial period dividends (referred to as the “conversion
rate”), at any time (but not more often than once per fiscal quarter) after April 10, 2021 (or earlier liquidation,
dissolution or winding up of Equitrans Midstream), provided that any conversion is for at least $20.0 million (calculated
based on the closing price of the Equitrans Midstream common stock on the trading day preceding notice of the conversion) or
such lesser amount if such conversion relates to all of a holder’s remaining ETRN Preferred Shares.
Equitrans Midstream may elect to convert
all or any portion of the ETRN Preferred Shares for Equitrans Midstream common stock at any time (but not more often than once
per quarter) after April 10, 2021 if (i) the shares of Equitrans Midstream common stock are listed for, or admitted to, trading
on a national securities exchange, (ii) the closing price per share of Equitrans Midstream common stock on the national securities
exchange on which the shares of Equitrans Midstream common stock are listed for, or admitted to, trading exceeds 140% of the price
at which the shares of Equitrans Midstream common stock were issued for the 20 consecutive trading days immediately preceding notice
of the conversion, (iii) the average daily trading volume of the shares of Equitrans Midstream common stock on the national securities
exchange on which the shares of Equitrans Midstream common stock are listed for, or admitted to, trading exceeds 1,000,000 shares
of Equitrans Midstream common stock for the 20 consecutive trading days immediately preceding notice of the conversion, (iv) Equitrans
Midstream has an effective registration statement on file with the Securities and Exchange Commission covering resales of the shares
of Equitrans Midstream common stock to be received by such holders upon any such conversion and (v) Equitrans Midstream has paid
all accrued quarterly dividends in cash to the holders.
Upon certain events involving a Change of
Control (as defined in the Certificate of Designations) in which more than 90% of the consideration payable to the holders of the
Equitrans Midstream common stock is payable in cash, the ETRN Preferred Shares will automatically convert into Equitrans Midstream
common stock at a conversion ratio equal to the issue price of the ETRN Preferred Shares (the ETRN Preferred Shares Issue Price)
multiplied by 110% plus any unpaid dividends on such date and any partial period dividend with respect to the ETRN Preferred Shares
for the quarter in which the conversion occurs, divided by the ETRN Preferred Shares Issue Price.
In connection with other Change of Control
events that do not satisfy the 90% cash consideration threshold described above, in addition to certain other conditions, each
holder of ETRN Preferred Shares may elect to (a) convert all, but not less than all, of its ETRN Preferred Shares into Equitrans
Midstream common stock at the then applicable conversion rate, (b) if Equitrans Midstream is not the surviving entity (or if Equitrans
Midstream is the surviving entity, but the Equitrans Midstream common stock will cease to be listed), require Equitrans Midstream
to use commercially reasonable efforts to cause the surviving entity in any such transaction to issue a substantially equivalent
security (or if Equitrans Midstream is unable to cause such substantially equivalent securities to be issued, to convert into Equitrans
Midstream common stock at a premium of 110% of the ETRN Preferred Shares Issue Price), (c) if Equitrans Midstream is the surviving
entity, continue to hold the ETRN Preferred Shares or (d) require Equitrans Midstream to redeem the ETRN Preferred Shares at a
price per share equal to 101% of the ETRN Preferred Shares Issue Price, plus accrued and unpaid dividends on the applicable ETRN
Preferred Shares and any partial period dividends for the quarter in which the redemption occurs, which redemption price may be
payable in cash, Equitrans Midstream common stock or a combination thereof at the election of the Board (and, if payable in Equitrans
Midstream common stock, such Equitrans Midstream common stock will be issued at 95% of the VWAP of the Equitrans Midstream common
stock for the 20-day period ending on the fifth trading day immediately preceding the consummation of the Change of Control). Any
holder of ETRN Preferred Shares that requires Equitrans Midstream to redeem its ETRN Preferred Shares pursuant to clause (d) above
will have the right to withdraw such election with respect to all, but not less than all, of its ETRN Preferred Shares at any time
prior to the fifth trading day immediately preceding the consummation of the Change of Control and instead elect to be treated
in accordance with any of clauses (a), (b) or (c) above.
At any time on or after January 1, 2024,
Equitrans Midstream will have the right to redeem ETRN Preferred Shares, in whole or in part, by paying cash for each ETRN Preferred
Share to be redeemed in an amount equal to the greater of (a) the sum of (i)(1) the ETRN Preferred Shares Issue Price multiplied
by (2) 110%, plus (ii) any unpaid dividends on such date and any partial period dividend with respect to the ETRN Preferred Shares
for the quarter in which the conversion occurs and (b) the amount the holder of such ETRN Preferred Share would receive if such
holder had converted such ETRN Preferred Share into shares of Equitrans Midstream common stock at the applicable conversion ratio
and Equitrans Midstream liquidated immediately thereafter.
Pursuant to the terms of the Restructuring
Agreement, in connection with the Restructuring Closing, Equitrans Midstream has agreed to enter into the Registration Rights Agreement
pursuant to which, among other things, Equitrans Midstream will give the Investors certain rights to require Equitrans Midstream
to file and maintain one or more registration statements with respect to the resale of the ETRN Preferred Shares and the shares
of Equitrans Midstream common stock that are issuable upon conversion of the ETRN Preferred Shares, and to require Equitrans Midstream
to initiate underwritten offerings for the ETRN Preferred Shares and the shares of Equitrans Midstream common stock that are issuable
upon conversion of the ETRN Preferred Shares.
The Restructuring Agreement is attached
hereto as Exhibit 10.1 to this Current Report and incorporated into this Item 1.01 by reference. The foregoing summary has been
included to provide investors and security holders with information regarding the terms of the Restructuring Agreement and is qualified
in its entirety by the terms and conditions of the Restructuring Agreement. It is not intended to provide any other factual information
about Equitrans Midstream, EQM or their subsidiaries and affiliates. The Restructuring Agreement contains representations and warranties
by each of the parties to the Restructuring Agreement, which were made only for purposes of the Restructuring Agreement and as
of specified dates. The representations and warranties in the Restructuring Agreement were made solely for the benefit of the parties
to the Restructuring Agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified
by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Restructuring Agreement
instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties
that differ from those applicable to investors. Investors should not rely on the representations and warranties or any descriptions
thereof as characterizations of the actual state of facts or condition of EQM, Equitrans Midstream or any of their subsidiaries
or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date
of the Restructuring Agreement, which subsequent information may or may not be fully reflected in EQM’s or Equitrans Midstream’s
public disclosures.
EQT Global GGA
On February 26, 2020 (the EQT Global GGA
Effective Date), EQM Gathering Opco, LLC, a Delaware limited liability company and a wholly owned subsidiary of EQM (EQM Opco),
entered into a Gas Gathering and Compression Agreement (the EQT Global GGA) with EQT, EQT Production Company, a Pennsylvania corporation
and wholly owned subsidiary of EQT (EQT Production), Rice Drilling B LLC, a Delaware limited liability company and wholly owned
subsidiary of EQT (Rice Drilling), and EQT Energy, LLC, a Delaware limited liability company and wholly owned subsidiary of EQT
(EQT Energy and, together with EQT, EQT Production and Rice Drilling, the Producer), for the provision by EQM Opco of gas gathering
services to Producer in the Marcellus and Utica Shales of Pennsylvania and West Virginia. Effective as of the EQT Global GGA Effective
Date, Producer will be subject to an initial annual minimum volume commitment of 3.0 billion cubic feet of natural gas per day.
The EQT Global GGA runs from the EQT Global GGA Effective Date through December 31, 2035, and will renew year to year thereafter
unless terminated by the Producer or EQM Opco. Pursuant to the EQT Global GGA, EQM Opco shall have certain obligations to build
additional connections to connect additional of Producer’s wells to the gathering system which are subject to geographical
limitations in relation to the dedicated area in Pennsylvania and West Virginia as well as the distance to the then-existing gathering
system.
In addition to
the fees related to gathering services, the EQT Global GGA provides for potential cash bonus payments payable by EQT to EQM
during the period beginning on the in-service date of the Mountain Valley Pipeline (the MVP) until the earlier of (i) 36
months following the in-service date of the MVP or (ii) December 31, 2024. The potential cash bonus payments are
conditioned upon the quarterly average of the NYMEX Henry Hub Natural Gas Spot Price exceeding certain price thresholds.
Following the MVP in-service date, the gathering
fees payable by EQT to EQM (or its affiliates) set forth in the EQT Global GGA are subject to potential reductions for certain
contract years set forth in the EQT Global GGA, conditioned upon the in-service date of the MVP, which provide for estimated aggregate
fee relief of $270 million in the first year after the in-service date of the MVP, $230 million in the second year after the in-service
date of the MVP, and $35 million in the third year after the in-service date of the MVP. In addition, if the MVP in-service date
has not occurred by January 1, 2022, EQT has an option, exercisable for a period of twelve months, to forgo $145 million of the
gathering fee relief in the first year after the MVP in-service date and $90 million of the gathering fee relief in the second
year after the MVP in-service date in exchange for a cash payment from EQM to EQT in the amount of $196 million.
The foregoing summary has been included
to provide investors and security holders with information regarding the terms of the EQT Global GGA and is qualified in its entirety
by the terms and conditions of the EQT Global GGA, a copy of which will be filed as an exhibit to a subsequent filing with the
Securities and Exchange Commission (the SEC) by EQM. It is not intended to provide any other factual information about EQM, Equitrans
Midstream or their respective subsidiaries and affiliates.
Credit Letter Agreement
On February 26, 2020, EQM and EQT Energy
entered into a letter agreement (the Credit Letter Agreement), pursuant to which, among other things, (i) EQM agreed to relieve
certain credit posting requirement for EQT, in an amount up to approximately $250.0 million, under its commercial agreements with
EQM, subject to EQT maintaining a minimum credit rating from two of the three rating agencies of (a) Ba3 with Moody’s Investor
Services, Inc., (b) BB- with S&P Global Ratings and (c) BB- with Fitch Investor Services, and (ii) EQM agreed to use commercially
reasonable good faith efforts to negotiate similar credit support arrangements for EQT in respect of its commitments to the MVP
joint venture.
The foregoing summary has been included
to provide investors and security holders with information regarding the terms of the Credit Letter Agreement and is qualified
in its entirety by the terms and conditions of the Credit Letter Agreement, a copy of which will be filed as an exhibit to a subsequent
filing with the SEC by EQM. It is not intended to provide any other factual information about EQM, Equitrans Midstream or their
respective subsidiaries and affiliates.
Water Services Letter Agreement
On February 26, 2020, EQM Opco and/or certain
affiliated entities (the Service Provider) entered into a letter agreement with EQT Production, Rice Drilling and/or certain affiliated
entities (the Customer), pursuant to which Customer agreed to utilize the Service Provider for the provision of water services
under one or more water services agreements (the Water Services Letter Agreement). The Water Services Letter Agreement is effective
as of the first day of the first month following the MVP in-service date and shall expire on the fifth anniversary of such date.
During each year of the Water Services Letter Agreement, Customer agreed that fees incurred to Service Provider for services pursuant
to the Water Services Letter Agreement shall be equal to or greater than $60.0 million per year.
The foregoing
summary has been included to provide investors and security holders with information regarding the terms of the Water
Services Letter Agreement and is qualified in its entirety by the terms and conditions of the Water Services Letter Agreement, a copy of which will be filed as an exhibit in a subsequent filing with the SEC by EQM. It is not intended to provide any other factual information about EQM or its subsidiaries and affiliates or Equitrans
Midstream. Investors should not rely on any descriptions thereof as characterizations of the actual state of facts or
condition of EQM or any of its subsidiaries or affiliates or Equitrans Midstream.