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Indicates material that has been omitted and for which confidential treatment has been requested. A complete version of this document has been filed with the Securities and Exchange Commission pursuant to Rule 406 promulgated under the Securities Act of 1933, as amended.

 

PRECEDENT AGREEMENT

 

This PRECEDENT AGREEMENT (“Precedent Agreement”) is made and entered into this 28 th day of March, 2006, by and between East Tennessee Natural Gas, LLC, a Delaware limited liability company (“ETNG” or “Pipeline”), and GeoMet, Inc., a Delaware corporation (“Customer”). Pipeline and Customer are sometimes referred to herein individually as a “Party,” or collectively as the “Parties.”

 

WITNESSETH:

 

WHEREAS, Pipeline proposes to construct and own a twenty-inch natural gas pipeline lateral that will be sufficient to transport up to 235,000 Dth/day of natural gas. Such pipeline lateral will extend from an interconnection with the facilities of ETNG located in Smyth County, Virginia to an interconnection with the existing facilities of CNX Gas, LLC in Tazewell County, Virginia (the “Project” or “Project Facilities” as appropriate);

 

WHEREAS, Customer desires to obtain firm transportation service from Pipeline on the Project Facilities under ETNG Lateral Rate Schedule; and

 

WHEREAS, subject to the terms and conditions of this Precedent Agreement, Pipeline is willing to endeavor to construct the Project Facilities and provide the firm transportation service Customer desires;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and intending to be legally bound, Pipeline and Customer agree to the following:

 

1. Subject to the terms and conditions of this Precedent Agreement, Pipeline shall proceed with due diligence to obtain from all governmental and regulatory authorities having competent jurisdiction over the premises, including, but not limited to, the Federal Energy Regulatory Commission (“Commission” or “FERC”), the authorizations and/or exemptions Pipeline determines are necessary: (i) for Pipeline to construct, own, operate, and maintain the Project facilities necessary to provide the firm transportation service contemplated herein; and (ii) for Pipeline to perform its obligations as contemplated in this Precedent Agreement (“Pipeline Authorization”). Pipeline reserves the right to file and prosecute any and all applications for such authorizations and/or exemptions, any supplements or amendments thereto, and, if necessary, any court review, which are consistent with this Precedent Agreement in a manner it deems to be in its best interest; provided, however, Pipeline shall pursue all authorizations and/or exemptions in a manner designed to implement the firm transportation service contemplated herein in a timely manner. During the term of this Precedent Agreement, Customer agrees to support and cooperate with, and to not oppose, obstruct or otherwise interfere with in any manner whatsoever, the efforts of Pipeline to obtain all authorizations and/or exemptions and supplements and amendments thereto necessary for Pipeline to construct, own, operate, and maintain the Project facilities and to provide the firm transportation service contemplated in this Precedent Agreement and to perform its obligations as contemplated by this Precedent Agreement.


2. Customer shall construct, or cause to be constructed, certain facilities in order for Customer to utilize the firm transportation service contemplated in this Precedent Agreement, including, but not limited to, an approximately (*)-mile, (*)-inch gas gathering pipeline that will extend from Customer’s production facilities in McDowell County, West Virginia to an interconnection with Pipeline’s Project Facilities in Tazewell County, Virginia (“Customer’s Required Facilities”). Customer shall obtain any necessary or desirable governmental, contractual and/or regulatory authorizations, approvals, certificates, permits, right-of-way easements and/or exemptions associated with Customer’s Facilities (“Customer’s Authorizations”).

 

3. Subject to the terms and conditions of this Precedent Agreement, Customer shall proceed with due diligence to obtain Customer’s Authorizations and to construct Customer’s Required Facilities. Customer reserves the right to file and prosecute any and all applications for Customer’


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